Remuneration Report

Executive Board Remuneration

Following preparatory work by its Personnel Committee, the full Supervisory Board is responsible for setting remuneration for individual Executive Board members. The full Supervisory Board is also responsible for regularly examining and making decisions about adjustments to the remuneration system for the Executive Board, although the preparatory work is actually done by the Personnel Committee. When conducting their reviews, the Personnel Committee and the Supervisory Board take into account the recommendations of the German Corporate Governance Code, the tasks and services provided by each member of the Executive Board, and in particular 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 current remuneration system for members of the Executive Board was approved by the company’s Annual General Meeting on 14 June 2012. Under this system, remuneration for members of the Executive Board consists of a non-performance-related fixed component, a performance-related bonus, pension commitments and fringe benefits.

Level of Remuneration for Executive Board Members in 2015 Based on Different Scenarios

1   Per container handled and transported
2   Plus fringe benefits

Executive Board members receive their fixed remuneration in the form of twelve monthly payments. This fixed salary also includes fringe benefits in the form of non-monetary compensation. These consist of the right to use an appropriate company car (also for private purposes) and the payment of insurance premiums by the company. The members of the Executive Board pay tax on these benefits as components of their remuneration.

The performance-related bonus is set on the basis of a three-year assessment period. The calculation is based on the average earnings before interest and taxes (EBIT) for the last three years (before additions to pension provisions and reduced by 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) in 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 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 a minimum of five or eight years’ service on the Executive Board if they leave the Board for reasons unrelated to their person or for which they are not responsible, or as a result of incapacity or reaching retirement age. Pensions consist of a percentage of the entitlement salary, which in turn is based on the annual basic salary. This percentage is between 35 and 50 %. The actual amount depends on the Executive Board member’s length of service, whereby adjustments are made not on a linear basis over the contract term, but rather in the case of contract extensions. Several different forms of income are taken into account on an individual basis, such as earnings from self-employment or employment and, in some cases, income from statutory pensions and related benefits from public funds.

Surviving spouses of Executive Board members receive a widow(er)’s pension of 55 to 60 % of the pension entitlement and children receive an orphan’s allowance of 12 to 20 % of the pension. 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 in the reporting period include a compensation provision relating to change of control or comparable circumstances. This entitles Executive Board members to receive their remuneration entitlements as a lump sum for the remaining duration of their respective contracts, discounted by 2 % per annum, should they lose their Executive Board seat in such circumstances. This does not affect their pension entitlements. Should the service contracts be terminated prematurely for another reason without good cause, the payment of compensation by the company shall be limited to the remaining term of the contract.

The members of the Executive Board were not granted any loans or similar payments. Total remuneration disbursed to the members of the Executive Board for their services in the 2015 financial year amounted to approximately € 2.93 million (previous year: € 2.96 million). Former members of the Executive Board and their surviving dependants received total payments of € 684,938 (previous year: € 695,281). Total provisions of € 11,398,460 were formed for pension obligations to former members of the Executive Board and their surviving dependants (previous year: € 12,740,591).

While extending Dr. Behn’s and Dr. Lappin’s memberships on the Executive Board and the corresponding employment contracts in the 2015 financial year, the Personnel Committee and the Supervisory Board also reviewed remuneration for Executive Board members with the aid of an independent external consultant. Based on the recommendations made by the independent expert, the Supervisory Board resolved to increase fixed remuneration from € 325,000 to € 350,000. Variable remuneration was also limited to 100 % of the fixed remuneration (rather than 150 %, as it was). Both of these adjustments will come into force with the beginning of the term of contract on 1 May 2016. Dr. Lappin’s contract extension also includes a 50 % increase in his pension entitlement salary due to his 13 years of service with the company and as there is otherwise no linear increase. This increase will come into force in May 2016. In addition to the service cost for the 2015 financial year of € 160,044, this resulted in a past service cost of € 547,172 that was also recognised in the reporting period.

Finally, in the course of their extension, the two employment contracts were also adjusted to comply more closely with the recommendations of the German Corporate Governance Code. These contracts now fully comply with the recommendations of the German Corporate Governance Code. A severance cap now also applies for these contracts, which states that not more than two annual salaries (including other benefits) and also not more than the total remuneration for the remaining term may be paid in cases of premature termination of Executive Board contracts (including termination due to a change of control). The employment contracts of the two other Executive Board members do not currently contain any corresponding restriction to two annual salaries as the contracts were concluded for the duration of the term of office and cannot be changed by either party during this term. Should new contracts or extensions be agreed, a corresponding restriction will be included.

Individual Remuneration of the Executive Board

The following figures comply with the recommendations in Section 4.2.5 of the German Corporate Governance Code (GCGC) newly introduced in 2013.