a) Board members, whose current mandate began before January 1, 2008
A Board member, that leaves the company before the age of 60, whose employment contract is not renewed or is revoked, is entitled to pension benefits. In such a case, the company is entitled to offset compensation received for any other work done against pension benefits.
End-of-service following a change-of-control event: A change-of-control event, in terms of this provision, occurs when a shareholder informs BASF of a shareholding of at least 25%, or the increase of such a holding.
If a Board member’s position is revoked within one year following a change-of-control event, the Board member will continue to receive the contractually agreed payments (fixed compensation and variable bonus) for the remaining contractual term of office. In addition, the Board member will receive a severance payment, depending on the remaining contractual term of office, up to a maximum of 2.5 years of compensation (based on the fixed compensation and the previous year’s variable bonus). The sum of the severance payment and continuing compensation may not exceed five years of compensation. Furthermore, the Board member may receive the fair value of the option rights acquired in connection with BOP within a period of three months. The premature termination of service due to the revocation of a Board member’s position entitles the Board member to pension benefits. When calculating the amount of the pension benefits, the missing years of service up to the age of 60 years will be considered.
The aforementioned is also applicable upon the occurrence of a change-of-control event, if the time to the end of the current contractual term of office is less than two years and the appointment is not subsequently extended by a minimum of two years.
The aforementioned payments are only payable if the Board member has not given cause for the termination or non-renewal of his service contract.
b) Contracts as of January 1, 2008
The contracts of new Board members since January 1, 2008 contain the following significant changes:
A Board member who leaves the company before the age of 60 is only entitled to pension benefits, if the Board member served on the Board for at least 10 years or if the time needed to reach the legal retirement age is less than 10 years. The company is entitled to offset compensation received for any other work done against pension benefits.
If a Board member’s position is revoked within one year following a change-of-control event, the Board member will continue to receive the contractually agreed payments for the remaining contractual term of office as a one-off payment (fixed compensation and the variable bonus based on a ROA of 12%).
As of January 1, 2009, these changes also apply to extensions of current contractual terms, which began before January 1, 2008.
A general limit on severance pay is contained within the contracts for new Board members and term extensions as of January 1, 2009. Accordingly, payments made to a Board member upon premature termination of their contract, without serious cause, may not exceed the value of two years’ compensation (severance payment cap) nor compensate more than the remaining term of the contract. The severance payment cap will be calculated on the basis of the total compensation for the past full financial year and if appropriate also the expected total compensation for the current financial year. Payments promised in the event of premature termination of a Management Board member’s contract due to a change-of-control should not exceed 150% of the severance payment cap.