Annual Report 2022

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Comparative Presentation of Annual Changes in Compensation and Earnings

The following is the presentation of the annual changes in compensation awarded and due to current and former Board of Management and Supervisory Board members compared with the company’s earnings performance and the average compensation of employees (FTEs) from fiscal years 2018 to 2022 as required by Section 162, Paragraph 1, Sentence 2, No. 2 AktG.

Five-year comparison of compensation awarded and due to Board of Management members (AktG)1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2018

 

2019

 

2020

 

2021

 

2022

 

 

€ thousand

 

€ thousand

 

%

 

€ thousand

 

%

 

€ thousand

 

%

 

€ thousand

 

%

Board of Management members as of December 31, 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dr. Markus Steilemann (Chair)

 

3,458

 

3,168

 

–8.4

 

1,643

 

–48.1

 

4,285

 

160.8

 

1,691

 

–60.5

Sucheta Govil (since August 1, 2019)

 

 

320

 

 

 

693

 

 

 

2,108

 

204.2

 

746

 

–64.6

Dr. Klaus Schäfer

 

1,724

 

2,462

 

42.8

 

985

 

–60.0

 

2,236

 

127.0

 

864

 

–61.4

Dr. Thomas Toepfer (since April 1, 2018)

 

3,329

 

1,014

 

–69.5

 

849

 

–16.3

 

2,719

 

220.3

 

1,044

 

–61.6

Former Board of Management members

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Patrick Thomas (until May 31, 2018)

 

2,266

 

3,260

 

43.9

 

597

 

–81.7

 

202

 

–66.2

 

23

 

–88.6

Frank H. Lutz (until June 2, 2017)

 

 

2,111

 

.

 

148

 

–93.0

 

 

 

 

 

 

 

 

Total

 

10,777

 

12,335

 

14.5

 

4,915

 

–60.2

 

11,550

 

135.0

 

4,368

 

–62.2

1

Percentage changes always refer to the change from the respective previous year.

Five-year comparison of compensation awarded and due to Supervisory Board members (AktG)1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2018

 

2019

 

2020

 

2021

 

2022

 

 

€ thousand

 

€ thousand

 

%

 

€ thousand

 

%

 

€ thousand

 

%

 

€ thousand

 

%

Supervisory Board members as of December 31, 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dr. Christine Bortenlänger

 

105

 

106

 

1.0

 

111

 

4.7

 

126

 

13.5

 

174

 

38.1

Dr. Christoph Gürtler (since April 2022)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lise Kingo (since April 2021)

 

 

 

 

 

 

 

 

 

 

 

84

 

 

 

189

 

125.0

Petra Kronen (Vice Chair)

 

160

 

160

 

0.0

 

152

 

–5.0

 

152

 

0.0

 

251

 

65.1

Irena Küstner

 

134

 

134

 

0.0

 

127

 

–5.2

 

127

 

0.0

 

174

 

37.0

Frank Löllgen (since April 2022)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dr. Richard Pott (Chair)

 

310

 

309

 

–0.3

 

302

 

–2.3

 

302

 

0.0

 

368

 

21.9

Petra Reinbold-Knape (since January 2020)

 

 

 

 

 

 

 

141

 

 

 

147

 

4.3

 

190

 

29.3

Dr. Sven Schneider (since April 2022)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Regine Stachelhaus

 

125

 

126

 

0.8

 

129

 

2.4

 

142

 

10.1

 

188

 

32.4

Marc Stothfang

 

105

 

106

 

1.0

 

101

 

–4.7

 

107

 

5.9

 

156

 

45.8

Patrick Thomas (since July 2020)

 

 

 

 

 

 

 

53

 

 

 

132

 

149.1

 

225

 

70.5

Former Supervisory Board members

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dr. Ulrich Liman (until April 2022)

 

127

 

128

 

0.0

 

121

 

–5.5

 

129

 

6.6

 

59

 

–54.5

Prof. Dr. Rolf Nonnenmacher (until April 2022)

 

159

 

159

 

0.0

 

153

 

–3.8

 

153

 

0.0

 

67

 

–56.3

Frank Werth (until April 2022)

 

105

 

106

 

1.0

 

101

 

–4.7

 

102

 

1.0

 

38

 

–62.3

Ferdinando Falco Beccalli (until April 2021)

 

104

 

106

 

1.9

 

102

 

–3.8

 

29

 

–71.6

 

 

 

 

Johannes Dietsch (until July 2020)

 

155

 

154

 

–0.6

 

86

 

–44.2

 

 

 

 

 

 

 

 

Peter Hausmann (until December 2019)

 

153

 

153

 

0.0

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

1,742

 

1,747

 

0.3

 

1,679

 

–3.9

 

1,732

 

3.2

 

2,454

 

41.7

1

Percentage changes always refer to the change from the respective previous year.

Five-year comparison of relevant performance indicators (AktG)1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2018

 

2019

 

2020

 

2021

 

2022

Net income/(loss) Covestro AG

 

€496 million

 

€623 million

 

25.6%

 

(€45 million)

 

.

 

€648 million

 

.

 

(€316 million)

 

.

EBITDA2

 

€3,200 million

 

€1,604 million

 

–49.9%

 

€1,472 million

 

–8.2%

 

€3,085 million

 

109.6%

 

€1,617 million

 

–47.6%

Free operating cash flow3

 

€1,669 million

 

€473 million

 

–71.7%

 

€530 million

 

12.1%

 

€1,429 million

 

169.6%

 

€138 million

 

–90.3%

ROCE above WACC4, 5

 

22.8% points

 

1.6% points

 

 

 

–0.3% points

 

 

 

12.9% points

 

 

 

–5.0% points

 

 

Greenhouse gas emissions6 (CO2 equivalents)

 

 

 

 

 

 

 

 

5.2 million metric tons

 

 

 

4.7 million metric tons

 

–9.6%

Core volume growth7

 

1.5%

 

2.0%

 

 

 

– 5.6%

 

 

 

10.0%

 

 

 

 

 

 

1

Percentage changes always refer to the change from the respective previous year.

2

Earnings before interest, taxes, depreciation and amortization (EBITDA): EBIT plus depreciation, amortization, and impairment losses; less impairment loss reversals on intangible assets and property, plant and equipment.

3

Free operating cash flow (FOCF): cash flows from operating activities less cash outflows for additions to property, plant, equipment and intangible assets.

4

Return on capital employed (ROCE): ratio of EBIT after imputed income taxes to capital employed. An imputed tax rate of 25% has been used, e.g., for calculating ROCE, since the year 2022 (previous year: effective tax rate). If the effective tax rate of 316.2% had been used, imputed income taxes would have amounted to €844 million for the year 2022, resulting in net operating profit (NOPAT) of €–577 million. ROCE would consequently have amounted to –5.9%, and ROCE above WACC would have been –12.9% points. Since the criterion for the Board of Management and Supervisory Board to exercise discretion (ROCE above WACC < 0) for fiscal 2022 has been met for both tax rates, the change in the calculation of ROCE described here does not affect the decision on the payout of short-term variable compensation. Otherwise, as in previous years, the effective tax rate would have been used to calculate ROCE for variable compensation. The expected tax rate (applied since the year 2022) and the effective tax rate (applied to the previous year) are presented in note 11 “Taxes” in the Notes to the Consolidated Financial Statements in the Annual Report 2022.

5

Weighted average cost of capital (WACC): weighted average cost of capital reflecting the expected return on the company’s equity and debt capital. A figure of 7.0% has been taken into account for the year 2022 (2021: 6.6%). ROCE above WACC has been a key management indicator since the year 2022.

6

GHG emissions (Scope 1 and 2, GHG Protocol) at main production sites (responsible for more than 95% of our energy usage).

7

Until the year 2021, core volume growth, which refers to the core products in the operational reporting segments, was a key management indicator. It is calculated as the percentage change in externally sold volumes compared with the prior year. Covestro also takes advantage of business opportunities outside its core business, for example the sale of precursors and by-products such as hydrochloric acid, sodium hydroxide solution, and styrene. These transactions are not included in core volume growth. Retroactive calculation based on the definition of the core business as of March 31 of each subsequent year.

In addition to the net income/net loss of Covestro AG (which is legally required to be reported), earnings performance also includes the key figures of the Covestro Group underlying short-term variable compensation (EBITDA, free operating cash flow, ROCE above WACC, absolute annual direct and indirect Scope 1 and Scope 2 GHG emissions (CO2 equivalents), and core volume growth). Since the year 2022, core volume growth has been replaced by EBITDA as a key management indicator.

Employee compensation was calculated by dividing personnel expenses (wages and salaries plus social expenses and expenses for pensions and other benefits) disclosed in the Consolidated Financial Statements for the relevant period by the number of employees expressed as full-time equivalents (FTEs) as of the reporting date.

Five-year comparison of employee compensation (AktG)1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2018

 

2019

 

2020

 

2021

 

2022

Personnel expenses

 

€1,958 million

 

€1,762 million

 

–10.0%

 

€1,723 million

 

–2.2%

 

€2,298 million

 

33.4%

 

€1,995 million

 

–13.2%

Employees2

 

16,770 FTE

 

17,201 FTE

 

2.6%

 

16,501 FTE

 

–4.1%

 

17,909 FTE

 

8.5%

 

17,985 FTE

 

0.4%

Personnel expenses per FTE

 

€117 thousand

 

€102 thousand

 

–12.3%

 

€104 thousand

 

1.9%

 

€128 thousand

 

22.9%

 

€111 thousand

 

–13.6%

1

Percentage changes always refer to the change from the respective previous year.

2

The number of permanent or temporary employees is stated in full-time equivalents (FTEs). Part-time employees are included on a pro-rated basis in line with their contractual working hours. The figures do not include employees in vocational training.

AktG / German Stock Corporation Act
Stipulates the legal provisions pertaining to German stock corporations.
EBITDA / Earnings Before Interest, Taxes, Depreciation, and Amortization
EBIT plus depreciation and amortization of property, plant, equipment, and intangible assets.
FOCF / Free Operating Cash Flow
Operating cash flows (pursuant to IAS 7) less cash outflows for additions to property, plant, equipment and intangible assets.
ROCE / Return on Capital Employed
Ratio of EBIT after imputed income taxes to capital employed.
WACC / Weighted Average Cost of Capital
Weighted average cost of capital reflecting the expected return on the company’s equity and debt capital. Used for the internal measurement of the absolute value contribution.

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