28.Related Companies and Persons

28.1 Related companies

Related entities as defined in IAS 24 (Related Party Disclosures) are those legal entities that are able to exert at least significant influence on Covestro AG and its subsidiaries or over which Covestro AG or its subsidiaries exercise control or have at least a significant influence. They include nonconsolidated subsidiaries, joint ventures, associated companies and post-employment benefit plans.

The goods and services provided by associated companies mainly result from the ongoing operating business with PO JV, LP, Wilmington (United States). Covestro benefits from fixed long-term supply quotas/volumes of propylene oxide (PO) from this company’s production. Further details on these business relationships are given in note 15 “Investments Accounted for Using the Equity Method.”

Receivables from and payables to related parties mainly comprise leasing and financing matters, trade in goods and services and other transactions. No impairment losses were recorded on receivables from related parties either in the reporting period or in the reference period.

28.2 Related persons

Related persons as defined in IAS 24 are those natural persons who, on account of their function in the Covestro Group, are responsible for Covestro’s global business operations. These persons include the corporate officers of Covestro AG, who are the members of the Board of Management and Supervisory Board.

Compensation of the corporate officers

Total compensation of €9,486 thousand (previous year: €15,790 thousand) was paid to the corporate officers in fiscal 2019, including the compensation of the Supervisory Board amounting to €1,747 thousand (previous year: €1,742 thousand).

This compensation is shown below:

Aggregate compensation (German Commercial Code) amounted to €6,274 thousand and is stated in the “Compensation Report” of the combined management report. The fair value of the long-term stock-based compensation (Prisma) granted to the Board of Management in fiscal 2019 was €2,724 thousand (previous year: €3,560 thousand).

Provisions of €5,103 thousand (previous year: €12,011 thousand) were recognized for the short-term variable cash compensation and long-term stock-based cash compensation for the members of the Board of Management serving during the 2019 reporting period. At the end of the year, the present value of the defined benefit pension obligations for the current members of the Board of Management was €9,818 thousand (previous year: €6,825 thousand). Provisions of €6,027 thousand were recognized for long-term stock-based cash compensation for former members of the Board of Management. The present value of the defined benefit pension obligations for former members of the Board of Management was €7,818 thousand (previous year: €6,856 thousand).

Since 2016, the members of the Board of Management have been entitled to participate in the Prisma long-term stock-based compensation program, as long as they are employed by the Covestro Group, and acquire for their own account and hold an individually defined number of Covestro shares as specified by the guidelines.

The compensation of the Supervisory Board is exclusively non-performance-related. In addition to their compensation as members of the Supervisory Board, those employee representatives who are employees of Covestro Group companies receive compensation unrelated to their service on the Supervisory Board. The total amount of such compensation was €883 thousand (previous year: €925 thousand). Pension obligations for employee representatives on the Supervisory Board amounted to €3,346 thousand (previous year: €2,672 thousand).

There were no advances or loans to members of the Board of Management or the Supervisory Board outstanding as of December 31, 2019, or at any time during fiscal 2019 or the previous year.