The Board of Management and the Supervisory Board of Daimler AG declare that the recommendations of the German Corporate Governance Code Commission in the Code version dated May 15, 2012, published by the Federal Ministry of Justice in the official section of the Federal Gazette, have been and are being applied since the last declaration of compliance issued in December 2012, with the exception of Clause 3.8 Paragraph 3 (D & O insurance deductible for the Supervisory Board) and one deviation from Clause 5.4.1 Paragraph 2 (concrete objectives for the composition of the Supervisory Board), which was declared as a precautionary measure. The recommendations of the German Corporate Governance Code in the version dated May 13, 2013 have continued to be observed by Daimler AG since the time of their publication in the official section of the Federal Gazette, with the aforementioned exceptions and the deviation from Clause 4.2.3 Paragraph 2 sentence 6 (upper limits for the remuneration of the members of the Board of Management and its variable remuneration components) declared as a precautionary measure. Daimler AG will continue to observe these recommendations in the future, with the declared and elaborated deviations.
D & O insurance deductible for the Supervisory Board (Clause 3.8, Paragraph 3): As in previous years, the Directors‘ & Officers‘ liability insurance (D & O insurance) also contains a provision for a deductible for the members of the Supervisory Board, which is appropriate in the view of Daimler AG. However, this deductible does not correspond to the legally required deductible for members of the Board of Management in the amount of at least 10% of the damage up to at least one and a half of the fixed annual remuneration. Since the remuneration structure of the Supervisory Board is limited to fixed remuneration without performance bonus components, setting a deductible for Supervisory Board members in the amount of 1.5 times the fixed annual remuneration would have a disproportionate economic impact when compared with the members of the Board of Management, whose compensation consists of fixed and performance bonus components.
Specific objectives for the composition of the Supervisory Board (Clause 5.4.1 Paragraph 2). The Supervisory Board in the absence of any influence on the appointments for the employees’ side, the Supervisory Board has limited its target objectives for the number of independent members of the Supervisory Board and consideration of potential conflicts of interest in its composition to the shareholders’ side.
Upper limits for the total monetary remuneration of the members of the Board of Management and its variable remuneration components (Clause 4.2.3 Paragraph 2 sentence 6): This recommendation was newly included in the Code of May 13, 2013. The remuneration agreements with the members of the Board of Management already specified upper limits for remuneration components at the time, which however did not yet fully satisfy the requirements of the new recommendation. With effect from January 01, 2014, the members of the Board of Management consented to the inclusion of the upper limits recommended in Clause 4.2.3 Paragraph 2 sentence 6 of the Code in their current agreements. The modification agreements also contained provisions for upper limits for the annual bonuses for the financial years 2012 and 2013 that had not yet come due for payment, as a percentage of basic remuneration. The percentage limit relative to the assignment value for the remuneration from the long-term and share-based remuneration component, referred to as Performance Phantom Share Plan, was also extended to include dividend equivalents due to be paid in the future on the tranches that were issued and are still running as of January 1, 2014. Any further intervention in the remuneration for previous financial years would no more be appropriate under the principle of contractual fidelity and in our understanding of Clause 4.2.3 Paragraph 2 sentence 6 are also not required.
Stuttgart, December 2013
For the Supervisory Board
Dr. Manfred Bischoff
For the Board of Management
Dr. Dieter Zetsche