System of Compensation for the Board of Directors

The Supervisory Board of Wincor Nixdorf AG, acting on the recommendations of its Personnel Committee, which deals with the employment contracts of members of the Board of Directors, determines the overall level of compensation for each member of the Board of Directors. Additionally, it regularly reviews and makes decisions relating to the compensation system for the Board of Directors, as well as the appropriateness of total compensation payable to each member of the Board of Directors, including all significant elements within the contract.

The compensation of members of the Board of Directors of Wincor Nixdorf AG is determined on the basis of the Company’s size and global presence, its economic and financial situation as well as the level and structure of management board compensation offered by similar companies based in Germany and abroad. In addition, the duties and the contribution of the respective members of the Board of Directors are taken into account. The level of compensation is designed to be competitive within the market for highly qualified executives and to provide incentives for successful work for the sustainable enterprise development within a high-performance environment. Wincor Nixdorf AG regularly takes part in remuneration reviews relating to both its own industry and other MDAX enterprises, with the express purpose of ensuring horizontal comparison of Board of Director compensation. Furthermore, when determining compensation levels for its Board of Directors, the pay scale and remuneration system within the Wincor Nixdorf Group are taken into account (verticality).

The remuneration of the Board of Directors is focused on performance and comprises the four components described below:

1. Fixed basic salary plus fringe benefits

2. Variable compensation dependent on the attainment of specific targets (bonus / performance-based component)

3. Share-based compensation (long-term incentive component) and

4. Pension commitment.

Within this context, the fixed basic salary, the fringe benefits and the pension commitment represent non-performance-based components. The fixed basic salary is payable in monthly installments of equal amounts. The fringe benefits mainly comprise contributions made to accident and liability insurance policies as well as the provision of a company car. Additionally, all members of the Board of Directors of Wincor Nixdorf AG are entitled to retirement benefits, as described in detail in the section entitled “Pension Commitments.”

Variable, performance-based compensation payable in the form of a bonus is dependent on the attainment of specific targets defined within the respective employment contracts. These targets are set on the basis of EBITDA (Glossary)  (earnings before interest, taxes, depreciation (Glossary)  and amortization) and Group net profit. Each target receives the same weighting and is settled separately. If the agreed budget per target is met in full (100%), the member of the Board of Directors receives 100% of his/her annual fixed basic salary as a bonus. If he/she falls short of the agreed budget by a maximum of 20%, the bonus is reduced on a straight-line basis. If the specified targets are met to an extent equivalent to 80%, the member of the Board of Directors receives 25% of the agreed bonus. If the level of target attainment remains below 80% with regard to one of the two targets, the entitlement to a bonus payment is no longer applicable; in this case, the Supervisory Board must decide, as in duty bound, on the granting of a bonus and the possible extent of such a bonus. If the level of target attainment reaches 120%, the associated bonus rises to 175% of the applicable fixed basic salary of the Board member in question. In accordance with contractual requirements, variable compensation may be equivalent to a maximum of 200% of the respective fixed annual basic salary. All targets are focused on increasing enterprise value. The targets to be applied as a basis for calculating the bonus amounts payable for fiscal 2008/2009 were defined at the Supervisory Board meeting of September 23, 2008. The bonus is payable in December following adoption of the Group financial statements by the Supervisory Board.

Members of the Board of Directors receive share options as a form of compensation with a long-term incentive effect. The number of share options to be issued to each member of the Board of Directors is specified as part of an individual contractual agreement. The conditions of exercise for share options granted to the Board of Directors are identical to the conditions of exercise specified for other entitled persons. For a detailed description of the Company’s share-based payment programs, please refer to 16 in the notes to the Group financial statements.

We plan to submit a new share option program for members of the Board of Directors and others with a subscription entitlement for approval by the AGM in 2010. The changes in the new program, which is based on the existing one, are intended, in part, to ensure compliance with the requirements of the Act on the Appropriateness of Management Board Compensation (Gesetz zur Angemessenheit der Vorstandsvergütung – VorstAG). The new requirements imposed by this law with regard to compensation for Wincor Nixdorf’s Board of Directors will also be observed when new contracts of service are signed, and when existing service contracts are extended.

The fixed basic salary and the variable compensation are used as the basis for determining so-called annual target remuneration. Annual target remuneration is specified for the entire term of the contract.

The non-performance-based and performance-based components of compensation are itemized below and relate to all duties performed by the members of the Board of Directors within the Group:

The performance-related payments for the fiscal years shown in the table take into account differences between the accrued amounts at the corresponding reporting dates and the amounts actually granted in the subsequent periods. In fiscal 2007/2008, with regard to the performance-related payment for Karl-Heinz Stiller, the amount of €14,146.25 accrued in respect of 2006/2007 was too high and is not shown in the above table.

At his own request and for health reasons, Jürgen Wilde stepped down as a member of the Board of Directors of Wincor Nixdorf AG, with effect from the close of the Annual General Meeting of Shareholders on January 28, 2008. No provision was made for a settlement as consideration for the early termination of his contract of service on the Board of Directors.