Since the German Corporate Governance Code was introduced in 2002, Deutsche Börse Group has disclosed the remuneration of the members of its Executive Board on an individualized basis. The VorstOG (Gesetz über die Offenlegung der Vorstandsvergütungen, the German Act on Disclosure of Executive Board Remuneration) came into force on 11 August 2005. The provisions of the VorstOG were required to be initially applied to annual and consolidated financial statements for the financial year beginning 1 January 2006. The Institut Deutscher Wirtschaftsprüfer (IDW, the Institute of Public Auditors in Germany) published a commentary on these provisions in 2006 and, in IDW ERS HFA 20, promulgated a purely expense-based approach to the presentation of total remuneration for executive board members including, in particular, long-term incentive components (“timing of expense recognition approach”). Consequently, in its 2006 annual report, Deutsche Börse Group departed from the approach it had taken in the past (the accrual principle) and presented the long-term incentive components on an expense basis in line with the IDW’s commentary.

In 2007, the Deutsche Rechnungslegungs Standards Committee e.V. (DRSC, the Accounting Standards Committee of Germany) published German Accounting Standard (GAS) 17 “Reporting on Executive Body Remuneration” on the implementation of the VorstOG (near final standard dated 7 December 2007). GAS 17 must be initially applied for financial years beginning after 31 December 2007 and requires companies to adopt a different approach from that of the IDW: the “definitive increase in net worth” approach.

To increase transparency and ensure better comparability of the different presentations of executive board remuneration that still persist at listed companies, Deutsche Börse Group decided that it would adopt in full the provisions requiring to be adopted in 2008 prematurely for the 2007 reporting year. Comparatives were restated in accordance with the “definitive increase in net worth” approach. The main differences are in total remuneration, as a result of the change in the disclosure of long-term incentive components. Presentation in conformity with GAS 17 shows the financial year in which the activity for which the longterm incentive components were granted was performed.

Performance-related remuneration for the Executive Board

The guideline for the appropriate remuneration of Executive Board members is their individual performance and that of the Executive Board as a whole, together with the performance, financial position and prospects of Deutsche Börse AG. Members of the Executive Board of Deutsche Börse AG are paid annual remuneration comprising a fixed and a variable component. The fixed, non-performance-related component consists of a fixed monthly salary and other taxable salary components, such as taxable contributions towards private pensions, taxable lump-sum telephone allowances and/or the use of company cars, while the variable component consists of performance-related remuneration and long-term incentive elements (Stock Bonus Plan, SBP). The SBP enables the Company to grant company shares as part of variable, performance-related remuneration in addition to cash. The SBP replaces the previous phantom stock option plan. Members of the Executive Board have also received pension commitments. The Personnel Committee of the Supervisory Board sets the level of the fixed basic remuneration. It is reviewed on a regular basis, at least once every two years. The performance-related variable remuneration component is determined annually by the Personnel Committee. Its amount depends, among other things, on company-specific goals being achieved such as the implementation of company-wide projects or specific targets being reached (e. g. specific cost targets, the overall situation of the Company) as well as on the Executive Board members meeting their individual goals. In addition, the achievements of the Executive Board members in various categories such as analytical skills, social skills, productivity, or leadership quality are taken into account. Two thirds of the performance-related remuneration is paid in cash and one third is transferred to the Stock Bonus Plan.

The table presented below shows the amount of expenses for the fixed and variable remuneration, and entitlements under share-based payment arrangements granted in the year under review. Prior-year figures are given in brackets. The figures relating to long-term incentive components in 2007 relate to shares from the SBP, while the figures for 2006 relate to phantom stock options from the stock option plan in place until then.

Deutsche Börse AG has also taken out a D&O (directors’ and officers’ liability insurance) policy for its Executive and Supervisory Board members.

There is a temporary severance commitment for the Chief Executive Officer until 2008 in the event that his appointment is revoked without good cause. The amount of the severance payment depends on the remuneration for the remainder of the agreed period of service until 31 October 2008 and amounts to at least 1.5 times the total annual remuneration (comprising fixed salary, performance-related remuneration and part of the phantom stock options or shares) received in the last full calendar year.

Retirement benefit agreements (“direct commitments”) have been entered into individually with all members of the Executive Board of Deutsche Börse AG. These commitments are primarily based on the following arrangements:

The pension expense comprises the current service cost and the past service cost. The following amounts were added to provisions and recognized as pension expense in the year under review:

Change-of-control arrangements

On the basis of their contracts of service, the members of the Executive Board are entitled to severance payments if, in the event of a change of control, the contract of service is terminated within six months or if the member of the Executive Board, provided that no incident has been caused by his fault justifying the termination of his service agreement for cause, resigns his position because, as a result of the change of control, his position as a member of the Executive Board is subject to significant limitations.

The payments in the event of a change of control for the Executive Board members active at the end of the year are calculated on the basis of the capitalized remuneration (fixed salary and performance-related remuneration) for the remainder of the agreed contract term and a severance payment of up to two times the annual remuneration in the amount of the remuneration for the most recent calendar year (fixed salary and performance-related remuneration). The resulting total may not exceed five times the annual remuneration. The phantom stock options are settled on the date the member leaves the Executive Board. If a member of the Executive Board resigns, only 50 percent of the phantom stock options are paid out. The entitlement to shares from the Stock Bonus Plan remains in force and is settled in accordance with the provisions of the Stock Bonus Plan after the end of the waiting period.

Phantom stock option plan

Deutsche Börse AG established a phantom stock option plan following its IPO on 5 February 2001 that ran until the end of 2006 and also applied to Executive Board members. The options issued have a maximum term of five years and a vesting period of three years. After the end of the vesting period, the options can be exercised in 14-day exercise windows until the end of each quarter in each case. The options are designed to be notional. They do not confer the right to purchase Deutsche Börse AG shares at a set price, but rather confer the right to a cash payout. The amount of the cash payout depends on the relative performance of Deutsche Börse AG shares (adjusted for dividend payments) against the Dow Jones STOXX® 600 Technology Index (EUR) (Return) as the benchmark index (€1.00 per 1 percent outperformance). Outperformance is calculated by determining the opening and closing prices of Deutsche Börse’s shares and of the benchmark index on the basis of the mean closing prices in Xetra® trading on FWB® Frankfurter Wertpapierbörse (the Frankfurt Stock Exchange) and the mean closing prices of the index: the opening price for the 60 trading days prior to the grant of the stock options and the closing price for the 60 trading days prior to the cut-off dates on which the exercise windows begin (1 February, 1 May, 1 August and 1 November).

Phantom stock options were issued annually on 1 February. The Supervisory Board’s Personnel Committee determined the number of options to be granted to each Executive Board member based on the individual performance of the respective Board member. See note 47 in the notes to the consolidated financial statements for details of the measurement of the stock option plan for the Executive Board.

The total expense for the options recognized in the year under review and the carrying amount of the provisions recognized for the options at the balance sheet date are shown in the table below. As in the previous year, there were no exercisable options on the balance sheet date.

Stock Bonus Plan

The Stock Bonus Plan (SBP) replaces the phantom stock option plan of recent years. The Stock Bonus Plan makes it possible to grant not just cash but also shares of Deutsche Börse AG as a variable remuneration component, thus giving beneficiaries a greater share in the Company’s success and strengthening their ties with the Company.

For the year under review, for the first time, the members of the Executive Board will receive one third of their variable remuneration converted into shares of Deutsche Börse AG as a long-term incentive component (“number of SBP shares”). The number of SBP shares is calculated by dividing the amount of the individual and performance based bonus (one third of the variable remuneration) of each Executive Board member by the market price of the Company (closing auction price of Deutsche Börse shares in electronic trading on the Frankfurt Stock Exchange) on the date the bonus is determined. Neither the converted bonus nor the number of shares will be paid at the time the bonus is determined; this is not done before the end of a two-year waiting period. On expiry of the waiting period, the original number of SBP shares is first converted into a payment claim. This is done by multiplying the current market price on that day (closing auction price of Deutsche Börse shares in electronic trading on the Frankfurt Stock Exchange) by the number of SBP shares. The Company then has the option to settle the payment claim for the Executive Board member in cash or shares.

For the year under review it is assumed that all Executive Board members active at the balance sheet date with the exception of Thomas Eichelmann will receive SBP shares. In accordance with IFRS 2, the total number of SBP shares is measured at fair value on the grant date. As the grant date is in 2008, the number of SBP shares was measured at fair value at the 2007 balance sheet date and it was assumed that all Executive Board members had received 100 percent of their bonus as variable remuneration. A modified Black-Scholes option pricing model (Merton model) was used to measure the number of SBP shares from the 2007 tranche. The model does not take exercise hurdles into account. It is based on the following valuation parameters:

The expense from the 2007 Stock Bonus Plan incurred in the year under review is presented together with the carrying amount at the balance sheet date in the table below. It is calculated by spreading the value at the grant date (or balance sheet date) in the table “Executive Board remuneration for 2007” (see page 52 of the Annual Report 2007) over three years (from February 2007).

The following table shows the changes in the number of SBP shares assumed for the year under review.

Former members of the Executive Board or their surviving dependents

Former members of the Executive Board or their surviving dependents received remuneration of €922 thousand in 2007 (2006: €661 thousand) in the year under review. The actuarial present value of the pension obligations (DBO) at the balance sheet date was €30,251 thousand in the year under review (2006: €26,031 thousand). The increase is due to the fact that two members of the Executive Board left the Company during the year under review and their pensions were immediately added to the pension obligations.

For the two Executive Board members who left the Company in 2007, the basis of assessment used is 35 percent of the most recent fixed salary paid.