Executive Board remuneration system as of
fiscal 2021

Executive Board remuneration is composed of non-performance-based and performance-based components. The former consists of the fixed salary, fringe benefits and the pension instalment. The performance-based components include the bonus and the share-based payment under the Long-Term Incentive Plan (LTIP). The performance-based remuneration components are determined by the target achievement in relation to predefined targets. The following chart shows an example of the composition of total remuneration (excluding fringe benefits) with a target achievement of 100%.

Maximum remuneration
The maximum remuneration is determined by the Supervisory Board and amounts to €9,300,000 for the Chairman of the Executive Board. The remaining members of the Executive Board receive a maximum of €4,800,000.

The fixed remuneration, which is not linked to performance, is made up of the base salary, the fringe benefits, and the pension instalment.

Base salary
Executive Board members receive an annual fixed salary, which is paid in monthly instalments.

Fringe benefits
The fringe benefits primarily consist of private use of a company car, expenses incurred for security services, and accident insurance premiums.

Pension instalment
The members of the Executive Board receive an annual pension instalment, which is paid in cash or converted to a pension commitment of equal value. 

Performance-based, variable remuneration consists of a short-term component and a long-term component: the bonus and the Long-Term Incentive Plan. The level of variable remuneration is determined based on the achievement of quantitative targets and the measurable achievement of qualitative targets. The following chart provides an overview of the performance targets.

Executive Board members receive an individual bonus. It is calculated by multiplying the company bonus by the individual performance factor of an Executive Board member. The following chart shows the composition of the bonus.

Company bonus
The company bonus depends on adjusted earnings before interest and taxes (adjusted EBIT). At the beginning of a fiscal year, the Supervisory Board determines a target for adjusted EBIT; after the fiscal year, actual adjusted EBIT is compared to the target.

Individual performance factor
The individual performance factor depends on the three following components: individual performance, the collective performance of the Executive Board as a whole, and performance in the areas of corporate responsibility and employee motivation. Targets are established for each of the three components at the beginning of a fiscal year. The degree to which the targets are achieved is determined by the Supervisory Board after the fiscal year.

The Long-Term Incentive Plan rewards the achievement of long-term goals. It is based on virtual shares. First the number of preliminary virtual shares is determined. This is calculated based on an individual budget for every Executive Board member and the price of the RWE share. The final number of virtual shares is determined after three years. This depends on the development of the three following figures during the three-year period: the relative total shareholder return, adjusted net income, and the carbon intensity. Each of these factors counts for one third. The final number of virtual shares has to be held for an additional year. After the holding period, the payment is determined based on the price of the RWE share. This amount is paid in cash. The following chart provides an overview of the LTIP.

Relative total shareholder return
The relative total shareholder return is determined by comparing the total return of the RWE share with the European STOXX® Europe 600 Utilities over a three-year period. 

Adjusted net income
Adjusted net income is the result of subtracting exceptional effects from net income pursuant to IFRS. Before the start of the term, the Supervisory Board determines the target average adjusted net income for the coming three-year period. After the three fiscal years, the actual average is compared to the target.

Carbon intensity
This key figure measures the carbon dioxide emissions per megawatt hour of power generated under normal utilisation of our plants. The Supervisory Board also establishes an average target for the three-year period for this key figure. After the three-year term, the actual figure is compared to the target.

Executive Board members receive their fixed salary in monthly instalments. The pension instalment is paid out at the end of the year, unless it is converted into a pension commitment, and the bonus is paid in April of the following year. The long-term share-based payment under the Long-Term Incentive Plan (LTIP) is made after the four-year term, in the first quarter of the following fiscal year. The following chart shows when each remuneration component is paid.

Malus & clawback rules
Variable remuneration is subject to malus and clawback rules. The Supervisory Board can demand repayment of variable remuneration in part or in full if the consolidated financial statements prove to contain errors (clawback). If an Executive Board member commits an act of intentional misconduct, unpaid variable remuneration for the fiscal year with which the breach of duty is associated can be reduced or withheld (malus). If variable remuneration for the fiscal year in question has already been paid, the Supervisory Board can reclaim it in part or in full. 

Share Ownership Guidelines
The Share Ownership Guidelines oblige Executive Board members to invest in RWE shares. Every year, they must invest at least 25% of the gross variable remuneration they receive until a target amount has been reached. The target amount is 100% of the gross base salary for ordinary Executive Board members and 200% for the Chairman of the Executive Board.

Compensation for other offices held 
If an Executive Board member receives compensation for offices held on Supervisory Boards of affiliated Group companies, these shall fully count towards fixed remuneration.

Contractual provisions
Employment contracts do not contain a commitment to make severance payments in the event of early contract termination. If benefits are granted, they may not exceed the value of the entitlements for the remaining term of the contract. Such payments are limited to a maximum of two total annual remunerations including fringe benefits.

In the event of a change of control, Executive Board members do not have a special right of termination or an entitlement to receive severance pay.