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Are the Company’s founders active in SMA’s Managing Board?

No, all  four founders are members of SMA's Supervisory Board.

Who are the members of the Managing Board of SMA Solar Technology AG?

Since April 1, 2010, the Managing Board of SMA Solar Technology AG consists of the following members: Jürgen Dolle (CHRO), Roland Grebe (CTO), Pierre-Pascal Urbon (CEO/CFO) and Marko Werner (CSO).

Name	Area of Responsibility	Member since	End of term
Jürgen Dolle	Human Resources	2010	2015
Roland Grebe	Development	2009	2014
Pierre-Pascal Urbon	CEO, Finance	2006	2017
Marko Werner	Sales & Marketing	2009	2014

What is the remuneration of SMA’s Managing Board?

REMUNERATION REPORT

The Remuneration Report summarizes the principles that are decisive when it comes to determining the remuneration of the Supervisory Board and the Managing Board and also explains the structure and the emoluments payable.

MANAGING BOARD EMOLUMENTS

The remuneration system for the Managing Board – including the most important contractual elements – is decided at a plenary session of the Supervisory Board. All the contracts concluded with Managing Board members currently in force have a term of five years. The Supervisory Board regularly examines the remuneration system for the Managing Board and lays down targets for the variable components of the emoluments. The criteria when determining the commensurateness of the remuneration include the tasks of the individual members of the Managing Board, their personal performance, the economic situation and success of the Company and the benchmark remuneration customary in the peer environment. The remuneration is assessed in a way that ensures that it is competitive in the market for highly qualified managerial staff. Apart from statutory requirements, the remuneration system also complies with the stipulations of the German Corporate Governance Code and with case law and was approved by the Annual General Meeting on May 27, 2010. The remuneration of the Managing Board will consist of the following components in which the fixed component of the emoluments is 40% to 50% and the variable component and the long-term bonus in the case of good business performance amounts to 50% to 60% of the total remuneration before additional benefits. At least one half of the variable component of the emoluments must correspond to the long-term bonus.

Non-performance based fixed remuneration

The annual fixed emoluments are divided up into 13 monthly salaries. The 13th monthly salary is paid together with the salary for November, on a pro-rata basis in the case of persons taking up or leaving their posts during the year.

Performance-based variable remuneration

The members of the Managing Board also receive a performance- based variable salary, which depends on earnings before taxes (EBT) as recorded in the Consolidated Financial Statements for the current fiscal year audited by the auditor. In the case of negative earnings in any given fiscal year, they are set off against the earnings recorded for the next fiscal year. The target value (EBT) is adjusted annually by the Supervisory Board. If at least 100% of the target value is attained, then the full agreed variable remuneration may be claimed. If less than 20% of the target value is attained, no claim may be asserted for the variable component. Intermediate values are determined on a linear basis. If the target value is exceeded, this does not entitle payment of a higher variable component of the emoluments (cap). A maximum of one half of the performance-based annual remuneration that it is anticipated will become due is paid out after submission of the Half-Yearly Financial Report. The remainder is paid out after the approval of the Consolidated Financial Statements, which usually takes place at the end of March of the following year. If the Managing Board member’s duties do not extend beyond one full fiscal year, then he/she receives one twelfth of the performance-based variable remuneration determined for the entire fiscal year for each month of the fiscal year in which he/she carries out his/her duties.

Long-term bonus

Managing Board members also receive a long-term bonus, which depends on the mean EBT margin as recorded on the Consolidated Financial Statements audited by the auditors over a period of three fiscal years. The target value (EBT margin) is determined annually by the Supervisory Board for the following three fiscal years. If 100% of the target value is attained, then the full agreed long-term bonus may be claimed whereas if less than 50% is attained, no bonus is payable. Values in-between are determined on a linear basis. If the target value is exceeded, this does not entitle payment of a higher long-term bonus (cap). The bonus is payable at the very earliest upon expiry of the three-year period. Payment takes place after the third Consolidated Financial Statements have been approved, usually at the end of March, even if the employment contract ends before the end of the performance period. If the employment contract still has a term of at least two years to run when payment becomes due, then the Managing Board member is expected to invest the net amount payable, in part, in shares in SMA Solar Technology AG and to hold these shares until his/her Managing Board duties in the Company have concluded.

Additional benefits

All Managing Board members are entitled to

Ø  a company car,

Ø  the employer’s contribution up to the contribution assessment ceiling of the statutory social insurance scheme (pension, health, nursing care), even in the case of voluntary insurance and without furnishing any proof, and

Ø  appropriate D&O insurance.

Any taxes due must be borne by the Managing Board member.

Other contractual benefits

In the event of death or permanent disability, the emoluments will continue to be paid for six months. In the event of early termination of duties on the Managing Board without a good cause, the compensation payable is limited to the total remuneration for the remaining term of the contract and up to a maximum of one year’s emoluments (severance pay cap). If the employment contract with a member of the Managing Board ends because it is amicably cancelled within a period of nine months from a change of control, this member is also entitled to a severance payment amounting to his/her remuneration claims. The same calculation basis applies as in the case of the severance pay cap. All members of the Managing Board are subject to a post-termination covenant not to compete for a period of two years that provides for a compensation payment amounting to 50% of the average gross monthly salary per month. The calculation basis is the annual salary (fixed and variable components) paid out for the last full calendar year. The Managing Board member must set off any monies earned while he/she is otherwise employed during the non-compete period. The maximum cash value of the compensation sums payable in the case of a covenant not to compete after conclusion of Managing Board duties amounts to € 0.386 million for each of the Managing Board members Jürgen Dolle, Roland Grebe, Pierre-Pascal Urbon and Marko Werner. Günther Cramer, Peter Drews and Uwe Hertel waived their rights to compensation payments for the post-contractual covenant not to compete upon conclusion of their Managing Board duties. The total emoluments payable to all members of the Managing Board amounted to € 2.617 million (2010: € 2.489 million) in fiscal year 2011 of which € 0.543 million (previous year: € 0.996 million) correspond to variable performance-based emoluments. The Managing Board members receive no separate remuneration for carrying out tasks at subsidiaries.

No credits were granted nor were any advances paid to Managing Board members during the fiscal year. There are no pension commitments.

SUPERVISORY BOARD EMOLUMENTS

At the Annual General Meeting held on April 30, 2008, remuneration of the Supervisory Board from the fiscal year 2008 onwards was newly regulated in Section 11 of the Articles of Incorporation. Since then, it has remained unchanged. Under these arrangements, at the end of the fiscal year the Supervisory Board members receive a fixed remuneration of € 10,000 in addition to reimbursement of their cash expenses. In addition, they receive annual variable emoluments based on the Company’s success amounting to € 200 per € 1 million of net earnings as recorded in the Company’s Annual Financial Statements, however not exceeding € 20,000. The variable remuneration is payable after the Annual General Meeting that resolves on granting discharge to the Supervisory Board for the fiscal year. The remuneration payable to the Chairman amounts to twice the amount mentioned above and the remuneration payable to his/her deputy amounts to one and a half times the aforementioned amounts. If a Supervisory Board member does not participate in one or several meetings of the Supervisory Board, then his remuneration is reduced in accordance with the provisions of the Articles of Association.

Supervisory Board members who sit on a committee also receive 1,500 per meeting day and each committee chairman receives twice the aforementioned amount. No remuneration is payable for meetings of the Nomination Committee. The remuneration is payable at the end of the fiscal year. Supervisory Board members who have only sat on the Supervisory Board or a committee for part of the fiscal year receive remuneration pro-rata temporis.

No other remuneration or benefits for personally rendered services, in particular consultancy and mediation services, were granted to Supervisory Board members. Similarly, in the year under review, no Supervisory Board member was granted credits or advances.

The performance-based remuneration payable to Supervisory Board members does not contain any components that depend on the Company’s long-term success (e. g. share options or phantom stocks). As at December 31, 2011, eleven of the members of the Supervisory Board held shares in SMA.

The total emoluments payable to the members of the Supervisory Board amounted to a total of € 0.484 million in the fiscal year 2011 (2010: € 0.353 million) of which € 0.268 million (2010: € 0.217 million) were variable emoluments. The increase in the total amount of emoluments paid is attributable to the expansion of the Supervisory Board from six members to the new figure of twelve members in the course of the previous year and to the fact that committees were set up.

Beyond the remuneration of the Supervisory Board, the employee representatives that are employees of the Company receive fee payments unrelated to their Supervisory Board duties. From such duties, the employee representatives received a total of € 0.379 million (previous year: € 0.522 million). SMA Solar Technology AG concluded a consultancy contract with Mr. Cramer for the duration of his Board duties in the German Solar Industry Association (BSW) that is limited both in terms of time and content. There is no remuneration for these duties. However, other expenses totaling approximately € 7,900 were incurred.

OTHER

The Company has taken out professional indemnity insurance (D & O insurance) for the members of the corporate bodies of all companies of the SMA Group. It is effected or extended every year. The insurance covers the personal liability risk of the members resulting from a breach of duty when exercising their duties in the event any claims for economic losses are asserted against them. The deductible in the policy for the fiscal year 2011 was 10% of the damage, however no higher than 1,5 times the fixed annual emoluments of the member of the corporate body.

 

Why was the Supervisory Board of SMA extended from six to twelve members?

Due to the positive development of SMA during recent years, the number of employees has increased to more than 5,500 (incl. temporary employees). It was therefore necessary to expand the Supervisory Board to twelve members as well as to compose the Board on a parity basis. On February 23, 2010, the Management Board gave a notice according to Section 97 of the German Stock Corporation Act. The Supervisory Board is now composed of six shareholder representatives and six employee representatives. The employee representatives, thereof two trade union representatives and one executive employee representative, were elected by the employees. The six shareholder representatives were elected by the Annual General Meeting on May 27, 2010.