III. Remuneration Report

The Remuneration Report explains the structure and amount of the remuneration paid to the members of the Executive Board and the Supervisory Board. It takes into account the recommendations of the German Corporate Governance Code and the commercial law requirements as amended by the Gesetz über die Offenlegung der Vorstandsvergütungen (German Act on Disclosure of Executive Board Remuneration). The Remuneration Report forms part of the consolidated financial statements and the group management report.

1. Remuneration of the Executive Board

The Executive Committee of the Supervisory Board discusses and reviews the remuneration system for the Executive Board at regular intervals and resolves any necessary adjustments; in addition, it regularly presents the remuneration system, including the key contractual elements, to the Supervisory Board for review and resolution. For example, the remuneration system for the Executive Board, including the key contractual elements, was reviewed and approved by the Supervisory Board in November 2008.

The remuneration system focuses primarily on the tasks and performance of the individual members of the Executive Board, as well as on the entire Executive Board's performance and the Company's economic and financial situation, performance, and future prospects, including in comparison with its peer group.

The remuneration of the Executive Board comprises the following key non-performance-related and performance-related components:

a fixed basic remuneration component and

a variable remuneration component linked to the achievement of certain targets, which in turn comprises the following two elements:

• an annually payable short-term remuneration element (short-term incentive, STI), and
• a long-term, risk-oriented remuneration element covering a five-year period (long-term incentive, LTI).

Where the target bonus for the variable remuneration specified by the Executive Committee for each Executive Board member is reached, the ratio of fixed to variable remuneration is generally 1:2.

The fixed basic annual remuneration is paid in twelve equal monthly installments. It is reviewed regularly for appropriateness by the Executive Committee every two years.

To provide additional support for Beiersdorf’s Consumer Business Strategy, “Passion for Success”, the variable component of the Executive Board’s remuneration was linked more closely to the Executive Board’s performance, the development of the Company, and the rise in its sustained enterprise value. The variable remuneration – STI and LTI – depends on the extent to which predefined corporate targets and specific personal targets for individual Executive Board members are met; in line with the Company’s strategic focus, these targets relate primarily to the Consumer business. The corporate targets relate to sales growth (adjusted for currency translation effects) and EVA^® (Economic Value Added); these can be adjusted by the Executive Committee to take account of extraordinary factors. The Executive Committee lays down the corporate and personal targets before the fiscal year begins. After the end of the fiscal year, the Executive Committee establishes the basic variable remuneration for each Executive Board member depending on the extent to which the corporate targets have been reached, using consolidated profit as a basis; this basic amount is then increased or reduced within predefined limits depending on the extent to which the Executive Board member’s personal targets have been reached.

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