25. Related party disclosures

Business transactions between the Group and non-consolidated subsidiaries and associates or their subsidiaries as well as joint ventures are carried out at arm’s length and are included in the following items of the consolidated financial statements:

Receivables and liabilities with associates and joint ventures as well as with non-consolidated subsidiaries comprise both direct and indirect relationships.

In addition, there are business transactions with core shareholders that have a significant influence due to consolidation of the voestalpine shares using the equity method. Business transactions are carried out at arm’s length and can be depicted as follows:

The non-inclusion of non-consolidated entities in the consolidated financial statements has no significant impact on the Group’s net assets, financial position, or results of operations.

Management Board

The fixed compensation of the Management Board is determined by the General Committee of the Supervisory Board pursuant to the Austrian legal situation and is reviewed periodically.

The award of a bonus is subject to a target agreement to be concluded with the General Committee of the Supervisory Board that consists of quantitative and qualitative targets. The maximum bonus is limited to 200% of the annual gross salary for members of the Management Board and to 250% of the annual gross salary for the Chairman of the Management Board. If the agreed target values for quantitative targets are achieved exactly, 60% of the maximum bonus applies; if the agreed target values for qualitative targets are achieved, 20% of the maximum bonus applies. The over-achievement of the targets is taken into consideration proportionately until the maximum bonus is reached. The target amounts for the quantitative targets are EBIT and the return on capital employed (ROCE). Specific target amounts are determined periodically (for a period of three years) by the General Committee of the Supervisory Board in consultation with the Management Board. Its basis of calculation is independent of the respective budget and the medium-term business plan, i.e., budget compliance does not mean achieving a bonus. The qualitative targets agreed for the business year 2016/17 were firstly the presentation of a long-term NAFTA strategy for the voestalpine Group and, secondly, the development of basic technology options for CO₂-reduced steel production.

The amount of the contractually approved company pension depends on the length of service for members of the Management Board Dr. Eder, Mag. Dipl.-Ing. Ottel, and Dipl.-Ing. Eibensteiner. The amount of the annual pension equals 1.2% of the last annual gross salary for each year of service. The pension benefit cannot exceed 40% of the last annual gross salary (without variable compensation). A defined contribution arrangement was made with the members of the Management Board Dipl.-Ing. Rotter, Dipl.-Ing. Dr. Kainersdorfer, and Dipl.-Ing. Dr. Schwab; whereby 15% of their annual gross salary (without bonuses) is paid by the Company into the pension fund.

The members of the Management Board receive severance benefits at the time of termination of their employment by way of analogous application of the Salaried Employees Act (Angestelltengesetz).

D&O insurance has been taken out for the members of the Management Board (as well as for executives) and for the members of the Supervisory Board, the costs of which amounting to EUR 0.1 million (2015/16: EUR 0.1 million) are borne by the entity.

The compensation paid to the members of the Management Board of voestalpine AG is comprised as follows for the business year 2016/17:

In addition to the remuneration in accordance with the above table, the following service costs (personnel expenses) are recognized in the consolidated financial statements for members of the Management Board with defined benefit pension agreements: Dr. Eder EUR 0.00 million (2015/16: EUR 0.00 million), Mag. Dipl.-Ing. Ottel EUR 0.30 million (2015/16: EUR 0.35 million), and Dipl.-Ing. Eibensteiner EUR 0.27 million (2015/16: EUR 0.31 million); the following pension costs are recognized in the consolidated financial statements for members of the Management Board with defined contribution pension agreements: Dipl.-Ing. Rotter EUR 0.12 million (2015/16: EUR 0.11 million), Dipl.-Ing. Dr. Kainersdorfer EUR 0.12 million (2015/16: EUR 0.11 million), and Dipl.-Ing. Dr. Schwab EUR 0.12 million (2015/16: EUR 0.09 million). Pension payments amounting to EUR 0.96 million (2015/16: EUR 0.93 million) were paid by the pension fund for former members of the Management Board with defined benefit pension agreements.

At the reporting date, the outstanding balance of the variable compensation was EUR 6.64 million (2015/16: EUR 4.92 million). No advances or loans were granted to the members of the Management Board of voestalpine AG.

Until July 3, 2016, directors’ dealings notices of the members of the Management Board were published on the website of the Austrian Financial Market Authority at www.fma.gv.at; after July 3, 2016, notices are published on the Company’s website (www.voestalpine.com).

Supervisory Board

Under Section 15 of the Articles of Incorporation, the members of the Supervisory Board of voestalpine AG receive 0.1% of the profit after tax reported in the approved consolidated financial statements as compensation. The total amount is distributed in accordance with an allocation key as follows: 100% for the Chairman, 75% for the Deputy Chairman, and 50% for all other members, according to the change to Section 15 of the Articles of Incorporation resolved by the 2016 Annual General Meeting with a minimum compensation of EUR 27,000 for the Chairman, EUR 20,000 for the Deputy Chairman, and EUR 13,000 for all other members of the Supervisory Board. Compensation is limited to a multiple of four times the stated amounts. Additionally, members of the Supervisory Board receive an attendance fee amounting to EUR 500 per Supervisory Board meeting. There is no separate compensation for meetings of the committees of the Supervisory Board, but they receive an attendance fee of EUR 500 per meeting.

According to this regulation, the shareholders’ representatives on the Supervisory Board received the following compensation for the business year 2016/17: Dr. Joachim Lemppenau (Chairman): EUR 108,000 (2015/16: EUR 108,000)¹; Dr. Heinrich Schaller (Deputy Chairman): EUR 80,000 (2015/16: EUR 80,000)¹; all other shareholders’ representatives: EUR 52,000 (2015/16: EUR 52,000)¹. The members of the Supervisory Board nominated by the Works Council do not receive any compensation.

The annual compensation of members of the Supervisory Board and the mode of calculation have been definitively regulated by the Articles of Incorporation since the 2006 Annual General Meeting and do not require a separate resolution by the Annual General Meeting every year.

The compensation of the Supervisory Board (including attendance fee) totaled EUR 0.55 million (2015/16: EUR 0.55 million)¹ in the business year 2016/17. The compensation of the Supervisory Board for the business year 2016/17 is paid out at the latest 14 days after the Annual General Meeting on July 5, 2017. No advances or loans were granted to members of the Supervisory Board of voestalpine AG.

Until July 3, 2016, directors’ dealings notices of the members of the Supervisory Board were published on the website of the Austrian Financial Market Authority at www.fma.gv.at; after July 3, 2016, notices are published on the Company’s website (www.voestalpine.com).

As legal counsel to voestalpine AG and its subsidiaries, the law firm Binder Grösswang Rechtsanwälte GmbH, of which Dr. Michael Kutschera (member of the Supervisory Board) is a partner, provided legal advisory services relating in particular to corporate and capital market law issues in the business year 2016/17. Fees for these matters were invoiced at the general hourly rates of the law firm of Binder Grösswang Rechtsanwälte GmbH applicable at the time. For the business year 2016/17, total net fees of EUR 32,098.00 (2015/16: EUR 36,994.00) were incurred for services provided by the law firm of Binder Grösswang Rechtsanwälte GmbH.