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The Remuneration Committee exercised its discretion to make alterations to the Remuneration Policy in respect of the remuneration package for Mr Winkelmann, on the basis that the circumstances prior to agreeing the remuneration package with Mr Winkelmann were both exceptional and genuinely unforeseen. The Remuneration Committee has balanced the Company’s need to secure Mr Winkelmann’s services at this critical time with a desire to ensure he is not rewarded for failure.
The following terms of Mr Winkelmann’s remuneration package shall form part of the remuneration policy: In order to compensate Mr Winkelmann for disadvantages relating to his pension incurred as a result of joining the Company, the Company granted Mr Winkelmann a one-off payment in the amount of EUR 300,000, payable 1 February 2017.
Mr Winkelmann was granted an annual gross basic salary of EUR 950,000 and a maximum variable payment (as determined by the Remuneration Committee) of EUR 950,000 subject to achievement of certain targets. Mr Winkelmann’s variable compensation will be settled in cash.
Mr Winkelmann is entitled to a one-off fixed minimum bonus of EUR 400,000 his first year in the office, payable 31 January 2018. Such payment will be set off against any other annual bonus paid to Mr Winkelmann in the course of his employment with the Company.
Mr Winkelmann’s service contract has an indefinite term with a notice period of six months for either party to take effect no earlier than 31 January 2019. Where the Company serves ordinary notice to terminate (ordentliche Kündigung) the employment contract which takes effect prior to 31 January 2021, Mr Winkelmann will be entitled to receive a severance payment equal to the total amount of his contractual base salary which would otherwise be payable for the period from the date the termination becomes effective up to 31 January 2021.
Where the Company has terminated the employment contract and there is a dispute between the parties as to the effectiveness of the termination of employment and/or whether Mr Winkelmann has any outstanding claims to remuneration or compensation against the Company, the Company will be required to continue to pay Mr Winkelmann’s contractual entitlements into an escrow account (EUR 400,000 on 31 January 2018; and his monthly salary and benefits) up to a maximum of EUR 4,500,000 (taking into account any other amounts received by Mr Winkelmann in connection with his employment with the Company), unless the parties either reach a settlement agreement or a court of first instance passes a judgment on this matter such that a lesser amount is payable. On reaching any settlement or receiving the court judgment, Mr Winkelmann will become entitled to the relevant amount, if any, from the escrow account
In order to secure the Company’s payment obligations under the service agreement for the period up to 31 January 2021, an irrevocable bank guarantee has been provided in favour of Mr Winkelmann in the amount of up to EUR 4,500,000.