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Last Update: 03/12/2009
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Part of the audited Consolidated Financial Statements and Management´s Analysis

Compensation of Board members

This report meets the disclosure requirements of the German Commercial Code extended by the additional requirements for the Board of Executive Directors based on the German Law on the Disclosure of Compensation of Members of the Board (Vorstandsvergütungs-Offenlegungsgesetz) and is aligned with the recommendations of the German Corporate Governance Code.

The compensation of Board members is determined upon the proposal of the Personnel Committee  and confirmed by the Supervisory Board. The amount of compensation is individually determined by the Personnel Committee. The determination of the amount and structure of the compensation depends on the company’s size and its financial position as well as the performance of the Board of Executive Directors. Globally operating European-based companies serve as a reference. A review of the amount and structure of compensation of Board members regularly takes place every three years. The last review took place on April 27, 2006. This review resulted in an increase of the variable bonus as of 2007.

The compensation of Board members is composed of:

1. a fixed annual salary,

2. an annual variable bonus,

3. stock price-based compensation in the form of virtual stock options (hereafter options) as a long-term component,

4. non-monetary compensation and other additional compensation in varying amounts, and

5. company pension benefits.

The amount of the annual variable compensation, the value of the options granted and the company pension are largely determined by company performance. This means, in terms of total compensation, significance is attached to company performance.

The compensation components are shown in detail below:

1. The annual fixed compensation is paid in equal monthly payments.

2. The return on assets (ROA) is used to determine the variable compensation of all groups of employees and also determines the Board member’s annual variable compensation (variable bonus). The variable bonus for the prior fiscal year is payable after the Annual Meeting. Board members, as other employee groups, may contribute a portion of their bonus up to a maximum of €30,000 annually into a deferred compensation program. Board members have taken advantage of this offering to varying degrees.

3. Board members may also participate in the BASF option program (BOP) for senior executives (see table below). For further details on the BASF option program, see Stock Price-Based Compensation.

4. Non-monetary compensation and other additional compensation include: delegation allowances, accident insurance premiums and other similar benefits, as well as the personal use of, or benefit from, communication equipment, company cars and security measures made available by the company. The members of the Board did not receive loans or advances from the company.

5. For details on the company pension benefits, see Pension benefits.

Based on these principles, individual Board members received the following compensation:

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Thousand €

Non-performance related compensation

 

Performance-related compensation

 

Options granted2

 

 

Year

Fixed salary

Non-monetary compensation and other additional compensation

 

Variable bonus1

Total cash compensation

Number

Market value at option grant date

Total compensation (cash compen-sation plus options granted)

1

The variable bonus is based on the return on assets, which is also used to determine the variable compensation of other groups of employees. The shown figure includes all contributions, if any, made to the deferred compensation program.

2

The 2007 figures have been adjusted for the two-for-one stock split conducted in the second quarter of 2008.

3

Includes expenses for security measures on residence following appointment to the Board of Executive Directors.

4

Payment is made in local currency based on a theoretical (pro rata temporis) net salary in Germany. As a result, there is a deviation from the contractually agreed fixed gross salary (€550,000 yearly).

5

Includes delegation allowances, such as the assumption of prevailing local rental fees.

Dr. Jürgen Hambrecht
Chairman of the Board
of Executive Directors

2008

1,100

112

 

2,220

3,432

74,328

967

4,399

2007

1,100

140

 

2,800

4,040

60,168

1,172

5,212

Dr. h.c. Eggert Voscherau
Vice Chairman of the Board of Executive Directors
(until April 24, 2008)

2008

244

33

 

492

769

769

2007

732

145

 

1,862

2,739

40,008

779

3,518

Dr. Harald Schwager
(since January 1, 2008)

2008

550

3373

 

1,110

1,997

14,728

192

2,189

2007

 

Dr. Kurt Bock

2008

5554

8555

 

1,110

2,520

37,160

483

3,003

2007

550

106

 

1,400

2,056

30,080

586

2,642

Dr. John Feldmann

2008

550

71

 

1,110

1,731

37,160

483

2,214

2007

550

93

 

1,400

2,043

30,080

586

2,629

Dr. Hans-Ulrich Engel
(since March 4, 2008)

2008

457

3253

 

925

1,707

11,944

155

1,862

2007

 

Dr. Andreas Kreimeyer

2008

550

98

 

1,110

1,758

37,160

483

2,241

2007

550

96

 

1,400

2,046

30,080

586

2,632

Dr. Stefan Marcinowski

2008

550

83

 

1,110

1,743

37,160

483

2,226

2007

550

102

 

1,400

2,052

30,080

586

2,638

Dr. Martin Brudermüller

2008

550

9415

 

1,110

2,601

37,160

483

3,084

2007

550

9645

 

1,400

2,914

30,080

586

3,500

Peter Oakley
(until January 14, 2008)

2008

113

22

 

231

366

366

2007

550

123

 

1,400

2,073

30,080

586

2,659

Klaus Peter Löbbe
(until July 31, 2007)

2008

 

2007

3094

6215

 

1,072

2,002

30,080

586

2,588

 

Total 2008:

5,219

2,877

 

10,528

18,624

286,800

3,729

22,353

 

Total 2007:

5,441

2,390

 

14,134

21,965

310,736

6,053

28,018

In 2007, personnel expenses were allotted to the options issued, however in 2008 the options lead to earnings. These earnings refer to the sum of all options from the programs BOP 2001 to BOP 2008. The figure is derived by the difference in the value of the options on December 31, 2008, compared with the value on December 31, 2007, considering the options exercised and granted in 2008. The value of the options is based primarily on the development of the BASF share price and its outperformance compared with the benchmark index chosen for the programs BOP 2001 to BOP 2008. Because the value of the options on December 31, 2008 was lower than the value of the options on December 31, 2007, there were no personnel expenses for 2008, but rather earnings. The main reason for the lower value of the options on December 31, 2008 was the decreased price of BASF shares.

The earnings for the year 2008 relating to the options issued were as follows: Dr. Jürgen Hambrecht €1,055 thousand (2007: personnel expenses amounting to €6,268 thousand); Dr. h.c. Eggert Voscherau €766 thousand (2007: personnel expenses amounting to €3,226 thousand); Dr. Harald Schwager €151 thousand (2007: –); Dr. Kurt Bock €1,045 thousand (2007: personnel expenses amounting to €2,978 thousand); Dr. John Feldmann €621 thousand (2007: personnel expenses amounting to €3,333 thousand); Dr. Hans-Ulrich Engel €1,458 thousand (2007: –); Dr. Andreas Kreimeyer €416 thousand (2007: personnel expenses amounting to €1,327 thousand); Dr. Stefan Marcinowski €446 thousand (2007: personnel expenses amounting to €3,574 thousand); Dr. Martin Brudermüller €790 thousand (2007: personnel expenses amounting to €1,095 thousand); and Peter Oakley €1,755 thousand (2007: personnel expenses amounting to €3,788 thousand).

The earnings and personnel expenses reported here are purely accounting figures which do not equate with the actual cash gains in case options are exercised. The members of the Board decide on the timing and scope of the exercise of options of the individual years while taking into account the general terms and conditions and ceilings of the BASF option program (BOP) for senior executives.

Considering a deductible the members of the Board are covered by loss liability insurance concluded by the company (D & O insurance).
More information on the BASF option program (BOP)

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