48. Related Party Disclosures

IAS 24 defines related parties as companies and individuals which directly or indirectly control or exert significant influence over the HHLA Group or over which the HHLA Group has control, joint control or significant influence.

The shareholders HGV Hamburger Gesellschaft für Vermögens- und Beteiligungsmanagement mbH, Hamburg (HGV), the Free and Hanseatic City of Hamburg, and, in the previous year, HHLA Beteiligungsgesellschaft mbH, Hamburg, which was merged with HGV – its shareholder – in the year under review, companies over which the Free and Hanseatic City of Hamburg has control or significant influence, the members of HHLA’s Executive and Supervisory Boards, and the subsidiaries, associates and joint ventures in the HHLA Group are therefore defined as related parties. HGV is the final parent company of HHLA which publishes Consolidated Financial Statements. HHLA is the parent company of the HHLA Group.

In the previous year, liabilities towards related parties with control over the Group included a loan of € 65,000 thousand from HGV to the Real Estate subgroup, which attracted interest of 4.50 % p. a. until its repayment in full in the year under review. In addition, HHLA has receivables from cash clearing with HGV totalling € 43,900 thousand (previous year: € 23,400 thousand). HHLA’s receivables accrued interest at a rate of between 0.10 and 0.15 % p. a. (previous year: between 0.10 and 1.00 % p. a.) in the reporting period. The interest rates for HHLA’s liabilities were between 0.20 and 0.25 % p. a. (previous year: between 0.20 and 1.10 % p. a.).

Obligations from finance leases amounting to € 106,646 thousand (previous year: € 106,869 thousand) for the lease of four mega-ship berths from HPA are included in other transactions with related parties.

Expenses attributable to related parties mostly include rent for land and quay walls in the port and the Speicherstadt historical warehouse district.

Furthermore, HGV and the Free and Hanseatic City of Hamburg as parties related to HHLA have provided comfort letters and guarantees to lender banks for loans granted to companies in the HHLA Group. The nominal amount of the associated liabilities from bank loans is € 183,000 thousand (previous year: € 208,000 thousand), of which around € 95,916 thousand plus interest was still outstanding on the balance sheet date (previous year: € 133,959 thousand).

With effect from 18 October 2007, a partial loss compensation agreement was concluded between HHLA and HGV. HGV hereby undertakes to assume each annual deficit posted by the HHLA Real Estate subgroup as per commercial law during the term of the agreement. This applies insofar as the deficit is not compensated for by transferring amounts from retained earnings, other revenue reserves or the capital reserve which were carried forward as profit or transferred to these reserves during the term of the contract in accordance with Section 272 (2) (4) of the German Commercial Code (HGB).

Expenses and income from related parties are on standard market terms. The amounts outstanding at the year-end are not secured and – with the exception of overnight funds in clearing and the loan liability to HGV in the previous year – do not attract interest.

No loans or comparable benefits were granted to the members of the Executive and Supervisory Boards in the reporting year or in the previous year.

Remuneration for Key Management Personnel

The relevant group of people includes the current and former members of the Executive Board and their surviving dependants. The Supervisory Board and their immediate families also count as related parties. Apart from the details provided below, there were no notifiable transactions with related parties or their close relatives in the 2015 financial year.

Executive Board Remuneration

In accordance with Article 11 (2) of HHLA’s articles of association, the Supervisory Board is responsible for signing and terminating service contracts with members of the Executive Board. The Supervisory Board in its entirety also establishes and regularly reviews the remuneration system for the Executive Board – including the core contractual components – based on recommendations by the Personnel Committee. As well as the responsibilities and performance of the Executive Board member concerned, the Personnel Committee primarily takes into account HHLA’s size and activities, its financial and economic position, the amount and structure of Executive Board remuneration at comparable companies, and the relationship of the remuneration of the Executive Board to the remuneration of the upper levels of management and the staff in general.

The remuneration paid to Executive Board members is made up of non-performance-related fixed remuneration, a performance-related bonus, pension entitlements and other benefits. The performance-related bonus is usually set using a three-year assessment period as a basis. The calculation is based on the average earnings before interest and taxes (EBIT) for the last three years (before additions to pension provisions and less any extraordinary income from the disposal of real estate and companies), the total average return on capital employed (ROCE) and the achievement of targets relating to environmental issues (reduction of the carbon footprint of each container handled and transported) and social issues (broken down into training and continuing professional development, health and employment) over the same period. Target ranges were set for each of the sustainability components. Achieving these targets triggers the payment of the relevant bonus. When making these calculations, roughly equal weight is given to EBIT on the one hand and the above-mentioned sustainability components on the other. The variable remuneration is capped at 150 % of the basic salary. It is paid out once the Annual Financial Statements have been approved.

In addition to this, there is a pension commitment for each Executive Board member. Pensions are paid to former Executive Board members after either five or eight years’ service on the Executive Board if they leave the Board for reasons unrelated to the Board member or that they have no influence over, or as a result of incapacity or due to reaching their retirement age. Pensions consist of a percentage of the entitlement salary, which is based on the annual basic salary. The percentage is between 35 and 50 %. Surviving spouses of Executive Board members receive a widow(er)’s pension of 55 to 60 % and children receive an orphan’s allowance of 12 to 20 % of the pension entitlement.

Should the pension entitlement have been suspended or no longer apply, transitional or interim pay applies for a limited period on the basis of the fixed remuneration.

The service contracts valid during the year under review include a change of control clause. This stipulates that Executive Board members will receive their financial entitlement for the remaining duration of their contract, discounted by 2 % p. a. and discharged in a one-off payment, should they lose their seat on the Board. This does not affect their pension entitlements.

See the remuneration report, which forms part of the Combined Management Report, for details of the remuneration paid to individual Board members.

Other benefits comprise benefits in kind, which principally relate to the use of a company car and the payment of insurance premiums.

Benefits totalling € 685 thousand (previous year: € 695 thousand) were paid to former members of the Executive Board and their surviving dependants. Provisions of € 13,911 thousand (previous year: € 13,104 thousand) have been recognised for pension commitments to current Executive Board members and provisions of € 11,398 thousand (previous year: € 12,741 thousand) have been recognised for pension commitments to former Executive Board members and their surviving dependants.

Supervisory Board Remuneration

In accordance with Section 16 of HHLA’s articles of association, Supervisory Board members are remunerated as resolved by the Annual General Meeting. This remuneration is based on the scope of the Supervisory Board members’ activities as well as on the company’s financial position and results. The current remuneration clause was adopted at the Annual General Meeting held on 13 June 2013.

The members of the Supervisory Board receive fixed remuneration of € 13,500 per financial year. The Chairman receives three times this amount and the Vice Chairman is paid one and a half times the basic figure. Supervisory Board members who belong to a committee receive an additional € 2,500 per committee per financial year, while the Chairman of the respective committee receives € 5,000, but altogether no more than € 10,000. Furthermore, Supervisory Board members receive an attendance fee of € 250 for each meeting of the Supervisory Board or one of its committees. Supervisory Board members who have belonged to the Supervisory Board or a committee for less than one full financial year receive a corresponding pro rata payment.

The remuneration paid to the Supervisory Board in the financial year under review totalled € 300 thousand (previous year: € 275 thousand).