Overall Management Board compensation comprises a fixed salary, a performance-based bonus, the normal fringe benefits and pension benefits. Two members of the Management Board additionally participate in the Company’s Matching Stock Program (MSP).

The appropriate level of compensation to be received by members of the Management Board overall is determined by the full Supervisory Board at the proposal of the General Committee based on a performance review. Criteria for the appropriateness of compensation are, in particular, the responsibilities of the respective member, his personal performance, the economic situation, the success of the Company and its future prospects, as well as the normal level of compensation taking into account the competitive environment and the compensation structure that otherwise applies in the Company. The compensation includes activities for Group companies.

The compensation arrangements for the Management Board members Rainer Beaujean and Thomas H. Hagen were revised with effect from the beginning of financial year 2009/2010 upon the extension of their contracts to 30 September 2014. Mr. Rauen’s contract as member of the Management Board, concluded with effect from 1 May 2009, remained unchanged.

• Non-Performance-Related Compensation and Pension Benefits
  The non-performance-related component of compensation comprises basic compensation and fringe benefits. For the Management Board members Rainer Beaujean and Thomas H. Hagen, it also includes a contribution towards an external pension plan and, for the CEO Aloysius Rauen, vested pension benefits from his 65th birthday. The amount of this pension is determined on the basis of the length of Mr. Rauen’s service at Demag Cranes AG and amounts to up to 40 percent of his final gross fixed salary. The basic compensation is paid out on a monthly basis. In addition, the members of the Management Board receive fringe benefits in the form of non-cash compensation, primarily comprising insurance premiums (e.g. contributions to private health and long-term care insurance to the extent prescribed by social security legislation, group accident insurance) and use of a company car. There is also a directors’ and officers’ liability insurance (D&O) policy for members of the Management Board, which provides for a suitable deductible. For each claim, the members of the Management Board being claimed for personally bear ten percent of the loss up to a maximum amount for all claims made within one year of 150 percent of the Management Board member’s fixed annual compensation (deductible).
  
  All fringe benefits granted to members of the Management Board must be taxed as compensation components.
• Performance-Related Compensation and Long-Term Incentive Components
  The performance-related compensation partly consists of a bonus. Irrespective of this bonus, the Management Board members Rainer Beaujean and Thomas H. Hagen additionally participate in the Matching Stock Program (MSP).
  
  The MSP entitles participants to subscribe for phantom shares if they have acquired Demag Cranes AG shares (MSP share). For each MSP share acquired in the MSP, participants received five tranches – one tranche a year issued in June of each year from 2006 to 2010 – of six phantom shares each. The allocated phantom shares are subject to a two-year lock-up period from allocation of each tranche and are exercised automatically thereafter at the base price if a specific performance threshold is attained. The base price of phantom shares in the first tranche is 110 percent of the issue price. The base price of the second to fifth tranche is the average closing price of Demag Cranes AG shares on the Frankfurt Stock Exchange Xetra trading platform in the last 60 trading days before allocation of the phantom shares, plus a ten percent mark-up. The base price is EUR 24.20 for the first tranche, EUR 52.73 for the second, EUR 37.98 for the third, EUR 17.70 for the fourth and EUR 28.40 for the fifth. The performance threshold is attained if the exercise price of the allocated phantom shares, being the average unweighted closing price on the Xetra trading platform in the last 60 trading days before exercise of the phantom shares, is above the base price. On attainment of the performance threshold, for each phantom share, an amount equal to the difference between the base price and the exercise price, less payroll tax and social insurance contributions, is disbursed in shares in Demag Cranes AG, which can be freely disposed of after a two-year lock-up period. If the gain to all participants, computed as the difference between the base price and the exercise price when all phantom shares in a tranche of the MSP are exercised, exceeds EUR 4,000,000, the gain to all participants is subjected to a pro rata MSP cap such that the gross MSP gain to all participants after application of the cap does not exceed EUR 4,000,000. Phantom shares expire if they are not exercised within seven years of the MSP’s inception. MSP participants who leave the Group before the end of the MSP forfeit all entitlements to phantom shares not yet allocated. Phantom shares that have already been allocated but not yet exercised are then settled at an appropriate price. The number of rights granted to the Management Board members Rainer Beaujean and Thomas H. Hagen and the fair value of these rights as at the date they were granted are stated below under “Management Board Remuneration for 2009/2010”.
  
  The bonus for the CEO Aloysius Rauen consists of a target bonus and an additional bonus. The gross target bonus, which is capped at 100 percent of the annual fixed salary, is linked to the attainment of targets defined by the Supervisory Board relating to operating EBIT (50 percent weighting) and operating net income after tax (50 percent weighting). If the targets are attained in full, 100 percent of the target bonus is paid out. If the targets fail to be met by 20 percent or less, the bonus paid out is reduced accordingly on a straight-line basis, whereby if 80 percent of the target is met, the final amount of the target bonus is 25 percent. If one of the targets fails to be met by more than 20 percent, there is no entitlement to the bonus; in which event, the Supervisory Board decides whether to grant a bonus and the amount of the bonus at its own discretion. In such cases, the bonus must not exceed 30 percent of the maximum target bonus. Mr. Rauen can also receive an additional bonus, the granting and amount of which depend on attainment of highly demanding targets set by the Supervisory Board for the key performance indicators of operating EBIT and operating net income after tax. The additional bonus amounts to up to 80 percent of the annual fixed compensation. The Management Board member Aloysius Rauen will be paid a target bonus of EUR 550,000 and an additional bonus of EUR 309,000 in the current financial year.
  
  The target bonus for Management Board members Rainer Beaujean and Thomas H. Hagen is capped at EUR 585,000 a year and is linked to the attainment of targets defined by the Supervisory Board relating to operating EBIT (50 percent weighting) and operating net income after tax (50 percent weighting). Contrary to the arrangements for Mr. Rauen, only two thirds of the target and additional bonuses for the first of three financial years will be paid out for the Management Board members Rainer Beaujean and Thomas H. Hagen after the first financial year. The remaining third will only be paid out after the third financial year if and to the extent that the relevant targets for the second and third financial years are attained. For the target bonus, the amount of the remaining third to be paid out is calculated on the basis of the average target attainment for the second and third financial years. This must be at least 80 percent; it may not exceed 100 percent for either of the two financial years. The average figure calculated in this way is multiplied by the as yet unpaid portion of the target bonus (one third) from the first financial year to determine the amount to be paid for the first financial year.
  
  In addition, the Management Board members Rainer Beaujean and Thomas H. Hagen can receive an additional bonus amounting to a maximum EUR 320,000 a year each, the granting and amount of which depend on attainment of highly demanding targets defined by the Supervisory Board for operating EBIT (50 percent weighting) and operating net income after tax (50 percent weighting). Just as for the target bonus, only two thirds of the additional bonus is paid out after the first financial year. The remaining third is paid out after the third financial year if and to the extent that the special targets for the additional bonus for the second and third financial years are attained, based on the average attainment of targets for the additional bonus.
  
  The target bonus for the Management Board members Rainer Beaujean and Thomas H. Hagen amounted to EUR 585,000 each in the reporting period, the additional bonus EUR 225,000 each. Under the arrangements in the employment contracts of Management Board members Rainer Beaujean and Thomas H. Hagen as described above, only two thirds of the target and additional bonuses for the first of three financial years will be paid out after the first financial year. The remaining third will be paid out after the third financial year subject to the conditions described above. The members of the Management Board Rainer Beaujean and Thomas H. Hagen will therefore each be paid a target bonus of EUR 390,000 and an additional bonus of EUR 150,000 in the current financial year for their work in the reporting period.
• Surviving Dependants’ Pensions
  The contracts for Management Board members also provide for surviving dependants’ pensions. In the event of the death of a member of the Management Board, his surviving dependants receive a life-long widow’s pension and, in the cases of Management Board members Rainer Beaujean and Thomas H. Hagen, an orphan’s pension. In the case of CEO Aloysius Rauen, the widow’s pension amounts to 60 percent of the last paid retirement pension or 60 percent of the pension that would have been due to Mr. Rauen if the contract had ended on the date of his death. For Rainer Beaujean und Thomas H. Hagen, the widow’s pension amounts to 20 percent of the basic compensation of the deceased member of the Management Board. An orphan’s pension is only paid until the child turns 18 or completes his or her education (but not beyond the age of 27) and amounts to ten percent of the deceased Management Board member’s basic compensation.
• Management Board Compensation for 2009/2010
  In total, members of the Management Board received compensation of EUR 4,357,000 in financial year 2009/2010, including non-cash compensation. EUR 1,350,000 of this relates to fixed compensation, EUR 2,478,000 to variable compensation and EUR 529,000 to other compensation.
  
  Furthermore, the total compensation includes the fair value of the share-based compensation from the Matching Stock Program (MSP) in the amount of EUR 269,000.
  
  The table below provides a breakdown of the compensation received by each member of the Management Board:

At 30 September 2010, the Consolidated Statement of Financial Position included pension provisions in accordance with IFRS of EUR 152,000 for a former member of the Management Board.

In addition, the members of the Management Board received the following share-based compensation under the Matching Stock Program (MSP):

• Arrangements for the Event of Termination of Office
  If the appointment of a member of the Management Board is prematurely revoked without cause for termination of the employment contract, the departing member of the Management Board receives the fixed salary for the originally planned contract term and a target bonus pro rata temporis to the end of the contract term, assuming 100 percent target attainment, but no more than two times the total annual compensation or, for Aloysius Rauen, taking into account other earnings, for a period of no longer than 24 months (severance cap). If the Company has good cause to terminate the employment contract without notice within the meaning of Section 626 of the German Civil Code (BGB), claims for compensation are excluded and the Management Board member also does not receive any bonus payments, pro rata temporis or otherwise, for the respective current financial year.
  
  If a Management Board member terminates his employment contract without notice for cause, he receives a target bonus pro rata temporis up to the planned end of the contract term, assuming 100 percent target attainment, and for the past, a target bonus pro rata temporis from the start of the respective current financial year up to the end of the month in which the termination is announced, assuming the relevant targets are attained. The above mentioned severance cap of two times the total annual compensation applies; for Aloysius Rauen, the future-related target bonus is paid for a period of no longer than 12 months.
  
  In the event of a change in control, the members of the Management Board have the right to terminate the Management Board contract within six months, giving three months’ notice to the end of the month. A change of control exists when (i) a shareholder has acquired control of the Company within the meaning of Section 29 of the German Securities Acquisition and Takeover Act (WpÜG) by holding at least 30 percent of the voting rights in the Company, including the voting rights attributable to that shareholder pursuant to Section 30 WpÜG, or (ii) an intercompany agreement within the meaning of Section 291 of the German Stock Corporations Act (AktG) under which the Company is a dependent company has been concluded and taken effect or (iii) the Company has been merged with another legal entity pursuant to Section 2 of the German Transformation Act (UmwG), unless the value of the other legal entity according to the agreed exchange ratio is less than 50 percent of the value of the Company.
  
  If the special termination right is exercised, the Management Board members receive their fixed salary up to the planned end of the contract term as well as a target bonus pro rata temporis up to the end of contract term, assuming 100 percent target attainment, but no more than two times the total annual compensation or, for Aloysius Rauen, taking into account other earnings, for a period of no longer than 24 months.

Supervisory Board compensation is governed by the Articles of Association of Demag Cranes AG. Contrary to Clause 5.4.6 of the German Corporate Governance Code as amended on 26 May 2010, members of the Supervisory Board of Demag Cranes AG only receive basic annual compensation of EUR 25,000; the Chairman of the Supervisory Board receives 2.5 times this amount, each vice chairman receives 1.5 times this amount. Members of committees – except for the Mediation Committee required under Section 27 (3) MitbestG and the Nominations Committee – additionally receive 0.1 times their basic compensation for each committee on which they sit.

Chairmen of committees additionally receive 0.25 times their basic compensation; this does not apply to the Chairman of the Supervisory Board, the chairman of the Mediation Committee required under Section 27 (3) MitbestG or the chairman of the Nominations Committee. In addition to their basic annual compensation, members of the Supervisory Board receive an attendance fee of EUR 1,500 for each Supervisory Board and committee meeting they attend, but no more than EUR 1,500 per calendar day. Reasonable out-of-pocket expenses are refunded if evidenced.

For financial year 2009/2010, members of the Supervisory Board received compensation totalling EUR 525,000 for their activities on the Supervisory Board of Demag Cranes AG.

Fixed compensation is stipulated for the Supervisory Board in view of the independence it must have to be able to carry out its monitoring function. The performance of this function should not be tied to any monetary incentives.

The compensation for each individual member of the Supervisory Board breaks down as follows:

In financial year 2009/2010, expenses of EUR 20,000 (2008/2009: EUR 14,000) were reimbursed. No compensation or benefits were granted for services rendered by Supervisory Board members, notably advisory and intermediation services.