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64 ANNUAL REPORT 2014Deutsche EuroShop MANAGEMENT REPORT probable annual remuneration for the current financial year shall be applicable. A long-term incentive (LTI) remunera- tion component was agreed for the first time in 2010. The amount of the LTI is based on the change in market capitalisation of Deutsche EuroShop AG between 1 July 2010 and 30 June 2015. Market capitalisation is calculated by multiplying the share price by the number of Company shares issued. On 1 July 2010, ac- cording to information provided by the Ger- man stock exchange, market capitalisation stood at €983.5 million. If there is a positive change in market capi- talisation over the above five-year period of up to €500 million, Mr Böge will receive 0.2% and Mr Borkers 0.025% of the change. For any change over and above this amount, Mr Böge will receive 0.1% and Mr Borkers 0.0125%. The LTI will be paid out to Mr Borkers in Decem- ber 2015, and to Mr Böge in five equal annual instalments, the first being paid on 1 January 2016. In the event that the employment con- tract is terminated prematurely by the Compa- ny, any entitlements arising from the LTI until that date will be paid out prematurely. Between 1 July 2010 and 31 December 2014, the market capitalisation of the Com- pany rose to €1,952.6 million (31 December 2013: €1,717.1 million), an increase of €969.1 million (31 December 2013: €733.6 million) since 1 July 2010. The present value of the po- tential entitlement to the long-term incentive arising therefrom was €1,550 thousand at year- end (31 December 2013: €1,302 thousand), An allocation to the provision of €481 thou- sand (2013: €306 thousand) was included for this purpose during the financial year. Remuneration of the Executive Board 2014 The remuneration of the Executive Board totalled €1,237 thousand, which breaks down as follows: € thousand Non-performance- related remuneration Performance-related remuneration Ancillary benefits Total Total Previous year Claus-Matthias Böge 300 450 69 819 827 Olaf Borkers 168 239 11 418 410 468 689 81 1,237 1,237 In addition to the prospective bonuses for the financial year, the performance-related remu- neration also includes the difference between the prospective and final bonuses for the previ- ous year (€-2 thousand). The ancillary benefits for each Executive Board member include the provision of a car for business and private use as well as contri- butions to a pension scheme. No advances or loans were granted to mem- bers of the Executive Board. The Company has not entered into any commitments or contin- gent liabilities in favour of these persons. Remuneration system for the Supervisory Board The remuneration of the Supervisory Board is based on section 8 (4) of the Articles of As- sociation of Deutsche EuroShop AG. In ac- cordance with the Articles of Association, the remuneration amounts to €50,000 for the chairman, €37,500 for the deputy chairman and €25,000 for each of the other members of the Supervisory Board. Committee member- ship is not taken into account when determin- ing the remuneration of the Supervisory Board. Moreover, the remuneration does not contain any performance-related elements. The remu- neration is determined on the basis of the busi- ness model and size of the Company as well as the responsibility associated with the role. The Company’s business and financial position is also taken into consideration. If any member of the Supervisory Board should leave the Su- pervisory Board during the financial year, they shall receive their remuneration pro rata. In ac- cordance with section 8 (5) of the Articles of Association, expenses are also reimbursed. Remuneration of the Supervisory Board 2014 The remuneration of the members of the Su- pervisory Board totalled €312 thousand in the period under review, which breaks down as follows: € thousand 2014 2013 Manfred Zaß 59.50 59.50 Dr. Michael Gellen 20.66 44.62 Reiner Strecker 37.74 29.75 Thomas Armbrust 29.75 29.75 Beate Bell 15.98 0 Manuela Better 15.98 0 Karin Dohm 29.75 29.75 Dr. Henning Kreke 29.75 15.81 Dr. Jörn Kreke 0 13.94 Alexander Otto 29.75 29.75 Klaus Striebich 29.75 29.75 Dr. Bernd Thiemann 13.77 29.75 Including 19% value added tax 312.37 312.37 No advances or loans were granted to the mem- bers of the Supervisory Board. Miscellaneous No agreements have been concluded with members of the Executive Board that provide for a severance payment on expiry of their cur- rent employment contract. No pensions are paid to former members of the Executive or Supervisory Boards or to their de- pendants. Acquisition reporting Deutsche EuroShop shares are traded on the Frankfurt Stock Exchange and other exchang- es. As of 31 December 2014, 9.73% of shares were owned by Alexander Otto (2013: 9.73 %). The share capital is €53,945,536, com- prised of 53,945,536 no-par-value registered shares. The notional value of each share is €1.00. According to Article 5 of the Articles of Association, the Executive Board is author- ised, with the Supervisory Board’s approval, to increase the share capital by up to a total of €26,972,768 through one or several issues of new no-par value registered shares against cash or non-cash contributions before 19 June 2018 (“Authorised capital 2013”). Declaration on corporate gov- ernance (section 289a HGB) A change-of-control arrangement has been agreed with two employees. Under this ar- rangement, if and insofar as the Compa- ny informs them that they will no longer be employed in their current positions, these employees will have a special right of termi- nation with a notice period of one month up to the end of the quarter, which will be valid for twelve months from the date the change of control takes effect. A change of control arises if Deutsche Eu- roShop AG merges with another company, if a public takeover bid has been made under the Deutsches Wertpapiererwerbs- und Übernah- megesetz (WpÜG – German Securities Ac- quisition and Takeover Act) and accepted by a majority of shareholders, if the Company is integrated into a new group of companies or if the Company goes private and is delisted. In the event of such termination of the employment relationship, these employees The Executive Board is authorised, with the Su- pervisory Board’s approval, to issue, until 15 June 2016, convertible bonds with a total nom- inal value of up to €200,000,000 and a maxi- mum term of 10 years and to grant the hold- ers of the respective, equally privileged, bonds conversion rights to new no-par value shares in the Company up to a total of 10,000,000 shares (€10.0 million), as detailed in the terms and conditions for convertible bonds (“Bond condi- tions”; “Conditional capital 2011”). The con- vertible bonds may also pay a variable rate of interest, in which case, as with a participating bond, the interest may be dependent in full or in part on the level of the Company’s dividend. In November 2012, Deutsche EuroShop issued a convertible bond with a five-year term and a nominal value of €100,000,000, for which some 3.1 million no-par shares are currently reserved in conditional capital. The declaration on corporate governance, in conformity with section 3.10 of the Deutscher Corporate Governance Kodex (German Cor- porate Governance Code) and section 289a of the Handelsgesetzbuch (German Commer- cial Code – HGB) has been published on the Deutsche EuroShop website: www.deutsche-euroshop.de/ezu Hamburg, 16 April 2015 will receive a one-time payment amounting to three months’ gross salary multiplied by the number of years that they have worked for the Company, but limited to a maximum of 24 months’ gross salary. Deutsche EuroShop Group does not cur- rently have any other compensation agree- ments with members of the Executive Board or other employees for the event of a change of control. The material provisions governing Deutsche EuroShop AG, which include a change of control clause, primarily relate to bi- lateral credit facilities and various loan agree- ments. In the event of a takeover, the relevant lenders are entitled to terminate the facility and where applicable demand immediate re- payment. A takeover is defined as a third party taking control of Deutsche EuroShop AG; the takeover may also be made by a group acting jointly. Forward-looking statements This Management Report contains forward- looking statements based on estimates of future developments by the Executive Board. The statements and forecasts rep- resent estimates based on all of the infor- mation available at the current time. If the assumptions on which these statements and forecasts are based do not materialise, the actual results may differ from those currently being forecast. Rounding and rates of change Percentages and figures stated in this report may be subject to rounding differences. The rates of change are based on economic con- siderations: improvements are indicated by a plus (+); deterioration by a minus (-). Claus-Matthias Böge 30045069819827 Olaf Borkers 16823911418410 468689811,2371,237 € thousand 20142013 Manfred Zaß 59.5059.50 Dr. Michael Gellen 20.6644.62 Reiner Strecker 37.7429.75 Thomas Armbrust 29.7529.75 Beate Bell 15.980 Manuela Better 15.980 Karin Dohm 29.7529.75 Dr. Henning Kreke 29.7515.81 Dr. Jörn Kreke 013.94 Alexander Otto 29.7529.75 Klaus Striebich 29.7529.75 Dr. Bernd Thiemann 13.7729.75 added tax 312.37312.37