Our world is currently facing unprecedented challenges, such as wars, global inflation, or high energy prices. Yet we must not lose sight of the long-term developments like climate change. The chemical and plastics industry is one of the biggest emitters of greenhouse gases, but we are also part of the solution, with innovative products to foster a truly sustainable world and cope with global challenges. Take urbanization. By 2050, more than two-thirds of the world's population will live in cities. This increases the need for constructing new energy-efficient buildings and refitting old ones. They need to be best insulated against heat and cold. Also, sustainable mobility. Electric vehicles need to be as light as possible, and a dense network of charging systems must be installed. To keep the materials produced and used in the loop, we need circular economy to be the global guiding principle.
We need plastics, but we need them to be utmost sustainable, climate-neutral, and circular. Covestro is committed to becoming fully circular and climate-neutral for its Scope 1, 2, and 3 emissions. We need to work together and drive the transformation forward if we want to remain successful in the future. In 2023, Covestro made further progress along this path.
Ladies and gentlemen, as chairman of the Supervisory Board at Covestro AG, and as a result chairman of this annual general meeting, I call the ninth regular annual general meeting of our company to order. Welcome on behalf of the Board of Management and the Supervisory Board. Unfortunately, given the global situation, we are again having to meet under less than encouraging circumstances. A year ago, I had referred to it here as a global polycrisis. The situation has meanwhile become more widespread and entrenched. Alongside the war in Ukraine, we now also have a spiral of violence in the Middle East. Polarization, divisions, and extremism are on the rise, while democracies worldwide are coming under ever-increasing pressure. The environment is also permanently under stress with an unending string of new extreme events, and the global economic situation remains tense.
I don't want to stand before you as a prophet of doom but sketch a realistic picture of the conditions in which our company operates. What makes me confident despite these circumstances is that Covestro is very well equipped to master the many challenges. We have an excellent Board of Management team, excellent employees, as well as a forward-looking strategy that is trained on the circular economy and an ultimately better and sustainable future that promises great economic opportunities. In a moment, the Board of Management will speak in greater detail about the situation of the company, including its opportunities and risks in the current environment. But now, I would like to begin by giving you a few housekeeping details for today's annual general meeting.
The Board of Management, in accordance with Section 13, Paragraph 2 of the Articles of Corporation, has decided that today's annual general meeting will be virtual. Shareholders on site and their representatives are not allowed to be here physically. The virtual format of today's AGM is basically the same as it was last year in 2023. And ladies and gentlemen, you are familiar with this format from a number of other companies as well. We will be broadcasting the AGM from Covestro's premises. To be more specific, from Building Q24 in the Chempark here in Leverkusen. The attendance area is Room G165. This is where the podium is, as well as neighboring rooms G167 and G163. I would like to welcome our notary public, Dr. Mark Hermanns, based in Cologne, who, as in the past years, was responsible for keeping the record of today's AGM.
The entire Board of Management is here on site at the podium. I would like to welcome the CEO, Dr. Markus Steilemann; the CFO, Christian Baier; Ms. Sucheta Govil, chair, member of the Board of Management for sales and marketing; and also Dr. Klaus Schäfer, Board of Management responsible for technology and our labor director. A vast majority of the Supervisory Board is here on site in Leverkusen, although according to our Articles of Incorporation, at a virtual AGM, it's also possible for members of the Supervisory Board to attend virtually. In person, we have the following members of the Supervisory Board: Dr. Christoph Gürtler, the deputy chair of the Supervisory Board, Petra Kronen; Frank Löllgen; Petra Reinbold-Knape; and Dr. Sven Schneider. Joining us virtually, we have the following members of the Supervisory Board: Dr. Christina Bortenlänger; Lisa Kingo; Irena Küstner; Regine Stachelhaus; Marc Strotmann; and Patrick Thomas.
They are at other locations or even abroad. The members of the Supervisory Board who are here in person are not up on the podium with me and the rest of the Board of Management for lack of space, but they are in the attendance area and can contact us at any time. The Supervisory Board members who are here and those who are joining us online will be shown every now and again during the AGM so that you, our shareholders, can see them. We also see the proxies, Ina Moritz and Dr. Martin Böhler. Both of them were appointed by the company. The entire AGM will be transmitted for our shareholders who have registered, as well as for their representatives, by audio and video through our investor portal. Shareholders and the public at large can also follow the entire AGM on our website.
A number of social media channels will also be transmitting our AGM, but this will be only until and including the speeches by the Board of Management. The technical requirements for this live transmission were carefully checked together with our external service providers. We have also taken into account experiences from last year with some unexpected technical obstacles, and that is why we assume that today's virtual AGM will run smoothly from a technical point of view. The notary public has also been explained all the technical details of this transmission, and he has familiarized himself with all these measures. Ladies and gentlemen, the invitation to today's virtual AGM was published in the Federal Gazette on the 6th of March, 2024, together with the agenda and the draft resolutions from the Board of Management and Supervisory Board in due form and in due time.
The documents are with the notary public, who will include them in the record. Prior to the AGM, we did not receive any motions to add items to the agenda, nor did we receive any counterproposals or election proposals. The company has received three statements which were published in due time in the investor portal and on our website. Since the invitation was sent out or published on the 6th of March, 2024, all of the required documents and information were available on Covestro AG's website. The documents will remain there for the duration of our virtual AGM. A copy of all of these requirements are here in this meeting room with the notary public, Dr. Hermanns.
Ladies and gentlemen, so that you can ask your questions based on current and comprehensive information, we decided to publish the speeches by the CEO and the CFO, as well as my own speech, one week prior to the AGM. These were published on the company's website. For the virtual AGM, we are also keeping a list of participants as required by law. Here you will see the company's proxies, as well as the shareholders who are represented with their share portfolios. These are all listed on the list of participants, and we have also included the shareholders who are following us virtually via the investor portfolio. The list of participants is available here in the meeting room and can also be viewed in our investor portal. It will be updated whenever necessary. I will announce the attendance figures later on during the course of our AGM.
Ladies and gentlemen, shareholders who registered in due time and due form were able to exercise their voting rights prior to the AGM, either by means of absentee ballot or by instructing and authorizing the company's proxies. During the virtual AGM, it is also possible to use our investor portal in the internet to cast an electronic vote or to give instructions. The possibility to authorize the company's proxies and to give them instructions will be available until the beginning of the vote. You will have the possibility to vote electronically via the investor portal will continue somewhat longer, in other words, until I, the chair of the AGM, have concluded the vote. Let's now turn to the votes. When we come to the vote, I will explain this to you once again in detail.
At this point, I would like to call upon you to cast your votes at an early point in time, and information on how to cast your vote can be found in the invitation and also on Covestro's website. Ladies and gentlemen, you will have the possibility to use our investor portal. You have a button in the main menu to ask for the floor. I will explain this to you later on, as well as the most important information as to the content of your contributions and the formal process we will be using for our discussion today. First of all, on the content, please structure your contribution as if you were at an on-site annual general meeting. Only refer to agenda items and, optionally, to the bylaws, and please do not digress to unrelated items.
I would also like to ask you to be brief in the interest of all of the shareholders who also would like to take the floor. As a guideline, I would say 10 minutes should suffice. I would like to make it clear that this is not a formal restriction in your speaking time. It's just a non-binding request. I would be very grateful, however, if in the interest of all participants you could stick to the guideline of 9 minutes. To help you out here, we will have a clock showing you how long everyone has been speaking.
As chair of the AGM, I have to see to it that our AGM is carried out in accordance with the legal requirements, and this means that the speaking time can be officially restricted if during the course of our AGM this appears to be necessary, especially with regard to the number of requests for the floor that have not been dealt with yet. Today's discussion will be a type of general discussion, as you're familiar with from in-person AGMs. You will also have the possibility to discuss all agenda items, and you don't have to ask for the floor separately for different agenda items. As chairman of the AGM, I am also called upon to decide how your questions should be directed to us today. In the invitation, this was indicated, and now I have decided that questions can only be made via video transmission.
If you would like to ask any questions, please register using our investor portal and then make use of this to either speak or to ask questions, or both. In the same way, you will have to ask for the floor if you wish to submit a motion during the AGM, either at the item in hand or with regard to the bylaws or if you want to submit an election proposal. When asking for the floor in the investor portal, you can also indicate that you would like to submit a motion. I would be grateful if you did so so that I can then check and decide if your motion should be given priority when giving you the floor. Requesting the floor is possible at all times. This has been possible since 9:30 A.M. this morning, as indicated in the invitation to the AGM.
I would like to say one more thing with regard to today's AGM. We know that you have a great deal of interest in the discussions between Covestro and Abu Dhabi National Oil Company. Rest assured, the Board of Management will deal with this in line with the requirements of the stock corporation law. This will be done constructively and openly, also in the interest of our company and in your interest, as well as in the interest of all other shareholders. The Board of Management has kept the Supervisory Board informed at all times and coordinates closely with them, as usual. Of course, the progress and the results of such discussions will depend on the capability of both parties to come to an agreement on issues where they are of different opinion.
Now, the company here will also report on the results of the discussions, also in line with our obligations with regard to the European Market Abuse Directive. I would also like to mention that we, in the interest of the company and all shareholders, will also have to say that we cannot give you any further information on the status of these discussions and the content of these discussions. I hope that you can understand that. Now I'd like to give you a few more details on the technical procedure for requesting the floor and on our general discussion. When asking for the floor, you will be put on our list of speakers. The speakers on the list will then be divided up into groups of a maximum of five individuals.
The first individuals will then be called out, and we will mention their name, and I will ask you then to be ready for a technical test for your audio and visual transmission. We will then interrupt the AGM for about five minutes before we begin the general discussion, and during this period, our technical team will then carry out the technical test with the speakers who have been called up. And then I will call up the speakers one after the other. They will be given the floor, and then they will then be transmitted live by video, and they will also be visible to the shareholders and to the public at large in the AGM. They will hear and see you. We will collect questions from you and prepare the answers. And at the end of the last contribution, we will then begin with a round of answers.
After that, the next speakers will be called up, and we will repeat the same procedure until all of the speakers have been able to take the floor and until all of the questions have been asked and all of the answers have been given. Please be patient. If perhaps not all of the questions are answered directly with your contribution, some of the questions might be answered at a later point in time. Ladies and gentlemen, I would like to mention one more thing, and that is that from the beginning until the end of this event, that means until the AGM is concluded by myself as the chairman, you can submit objections with regard to the resolutions taken at the AGM. There's an appropriate button for this in the main menu of the investor portal.
The notary public will take down any objections received, and these will be included in the record of the AGM. So that should suffice on formalities. Ladies and gentlemen, before we get to today's agenda, I'd like to take a brief look back at the past year from the Supervisory Board's perspective. As mentioned, the polycrisis has, much to our regret, turned into what feels like a permanent crisis. Hatred, hostility, and violence reached new heights around the world in 2023. There's a growing sense of helplessness. Trust is being lost, a situation in which the economy is all the more expected to maintain a solid stance and to give direction. At the same time, the economy itself, and in particular the chemical industry, is under pressure. 2023 was one of the most difficult years for our industry in recent decades.
This is because geopolitical tensions, combined with an ailing global economy and high energy prices, especially in Europe at Covestro, the continuing difficult external environment again had a negative impact. Business performance in 2023 was affected by weak overall demand in our main customer industries and by lower sales volumes. Unlike in the year before, average selling prices also trended lower this time, and this combined effect led to a significant decline in sales and EBITDA. Although the group's net income improved on the bottom line, it remained in negative territory, as did the result reported in the annual financial statements under the German Commercial Code. This prompted the Board of Management to resolve not to distribute a dividend for fiscal 2023. We very much regret this and hope you will understand.
But I am confident that the economic and financial situation will turn for the better, as the Board of Management has clear goals to return the company to a growth path in what is expected to remain a weak and challenging market environment. Without giving away too much detail, I would like to mention the four key levers. We will continue to save costs. We will invest selectively. We will optimize capacity utilization in our plants, and we will leverage efficiencies in a number of places. Ladies and gentlemen, this approach for the operating business does inspire me to be confident, but what spurs my optimism to an even greater extent is the way in which our company systematically realizes its long-term strategic goals, which coincide with the world's drive toward sustainability.
As you know, Covestro has committed itself wholeheartedly to the circular economy for our own company, but also as a blueprint for the world. We see circularity as a key to climate neutrality, resource conservation, and environmental protection, the three main imperatives of our time. To get there, we need a fundamental system in society and in the economy. We at Covestro contribute to this change with our own transformation by getting production and, therefore, the product range ready for alternative raw materials, renewable energy, and innovative recycling. The Board of Management will report on other successes and milestones in just a moment. Closely related to this, however, there are other things to report on because, for us, the circular economy has a twin sister, as it were, and that is climate neutrality. Here, Covestro has now set itself another strategic goal that complements our climate strategy.
We also want to become climate neutral in terms of indirect emissions from purchased raw materials and other upstream and downstream processes in the value chain, with a staged plan that will culminate in climate neutrality for the entire company by the year 2050. The CEO, Dr. Markus Steilemann, and the CFO, Christian Baier, are standing by to give you further details in their speeches and to talk about the performance of the business and the expectations for the current year. Ladies and gentlemen, we now come to the agenda as listed in the invitation. We'll begin with agenda item one, and this relates to the financial statements and reports. Ladies and gentlemen, I would now like to hand over to the CEO at Covestro AG, Dr. Markus Steilemann.
Thank you. Thank you, Mr. Pott. And I too would like to bid you a very warm welcome. I'm very pleased to see so many of our dear shareholders again today, and I hope that you've had a good year since our last annual general meeting a year ago. The period between then and now has once again been very challenging. The difficult global situation and the many problems on our own doorstep are weighing on all of us. And, of course, our own company is no exception. In a moment, my colleague Christian Baier and I would like to take you through Covestro's performance in 2023. Just one thing up front, though.
We are persuaded and confident that Covestro will again master all difficulties in 2024 and will report on our strategic path, on the many successes on it, on our strategic path toward a circular and climate-neutral economy. Covestro is one of the pioneers in the transformation to a circular economy, and it's therefore understandable that we're also attractive to many investors. And this brings me to a topic that will be of particular interest to you, I expect. The discussions with the Abu Dhabi National Oil Company, or ADNOC for short, were conducted in a constructive, open manner in accordance with our obligations under German stock corporation law, in the interest of our company, our shareholders, and, of course, all other stakeholders as well.
As is normal, the progress and outcome of such discussions depend on the ability of both parties to achieve a consensus on issues on which they have different views. We will continue to report on the outcomes of our discussions, of course, in accordance with our obligations under the European Market Abuse Regulation. Speaking of reporting, I'd now like to present an outline of how our company performed in the past fiscal year. As mentioned by Dr. Pott in his introduction, 2023 was, unfortunately, one of those difficult years that weighed on Covestro as well as the chemical and plastics industry as a whole. We again had to deal with a very challenging market environment in the past year.
In 2023, we saw geopolitical tensions, structural challenges, and a weak global economy. The latest addition to this list is the military escalation in the Middle East. Just two observations at this point. The world is drifting further apart, a development that is often fueled by increasing extremism and fanaticism. And this is a disturbing trend that must be countered with determination. I want to assure you that we at Covestro reject political extremism and xenophobia in the strongest terms.
Our employees from more than 60 countries see themselves as a large team that represents fairness, tolerance, and diversity. We also support this conviction in society at large. This brings me to my second observation. Let's not capitulate in the face of all these large and small problems. Let's look ahead with a healthy dose of optimism. That, of course, does not mean that the acute challenges will simply go away. After all, we at Covestro cannot influence the global economy. For this reason, the company again had to deal with weak global demand in its key customer industries in the past year, with one exception. Our biggest sales driver, the global automotive industry, saw growth of 10%. The market for electric mobility, for which we are developing many innovative products, expanded by as much as 30%.
But the market environment will remain challenging for Covestro in 2024. Against this backdrop, we did, above all, one thing: focus on the things over which we do have control and that we can influence. We have, therefore, consistently advanced our sustainable future strategy, for instance. To make Covestro even more dynamic and future-oriented, we addressed four action areas in particular. Area number one: efficiency. This is predominantly about the energy that our company consumes, which is, as you know, a major cost and environmental factor. We continue to work on using energy in an even more rational and environmentally compatible manner, with success. Let me give you an example. At our Dormagen site in Germany, we've modernized a plant for the production of the foam component TDI.
As a result, we consume up to 80% less energy compared to conventional processes, and we're also reducing annual greenhouse gas emissions by 22,000 metric tons. By applying such measures, we were able to save EUR 20 million in total. Speaking of savings, this brings me to the next action area: cutting fixed costs. We successfully reduced them by a mid-range nine-digit figure. On the other hand, we also spent money as well, investments to make future growth possible, the third action area under our strategy. We invested around EUR 800 million in 2023 in research and development projects and in expanding our production, among other initiatives. Here's one example from China to illustrate this. There's great demand in China for reused polycarbonate for car electronics products and many other applications. We responded to this by opening a plant at the Shanghai site for refining these kinds of recyclates.
This is because we are increasingly focusing our portfolio on circular products, which will ideally be manufactured with zero impact on the climate. And this is, in turn, related to shifting our production toward non-fossil raw materials and renewable energy. We're systematically driving their expansion, and that has brought me to action area number 4: our quest for climate neutrality. And I'll come back to this in more detail later on. All I want to mention at this stage is that we've further increased the proportion of green energy in our energy mix last year from 12%-16%. Our intention is not only to become climate neutral but also to make ourselves less dependent on price fluctuations in the energy market. This is because high energy costs, especially in Europe, weighed considerably on our business last year.
And now, ladies and gentlemen, I want to give you a brief summary of our financial performance. As I mentioned, Covestro continued to face a weak market environment and weak demand in all regions in 2023. Lower sales volumes and a decline in average selling prices led to a 20% reduction in group sales. This also impacted EBITDA, which was down by a third from the previous year. We did, however, meet the targets we had set for the year 2023. But Covestro was, again, unable to cover its cost of capital. Some positive news is that free operating cash flow, that is, our readily available funds, increased by 68%, largely thanks to the optimization of inventories and of receivables and liabilities.
Greenhouse gas emissions rose slightly, and this is partially due to a more emission-intensive energy mix for purchased power and steam in the U.S. and Germany last year. Shareholders, ladies and gentlemen, conditions will remain difficult for us this year, and we're responding by continuing to drive forward the internal optimization of the company. This process focuses on four areas. Number 1: production. We are further increasing the safety and reliability of our facilities and working even more energy efficiently. 2: increase in sales volumes. We are getting even more out of our facilities in order to improve earnings. With better capacity utilization, we want to generate significant contributions to our EBITDA. Focus area number 3: higher margins. We're paying even greater attention to the needs of our customers and are concentrating on particularly lucrative solutions during this process.
Last but not least, we're continuing to work on costs in all areas. We will watch expenses even more closely in all of these areas while continuing to cut back on fixed costs. All of these measures, ladies and gentlemen, are also benefiting from the advancing digitalization of our company, a process that involves the large-scale introduction of artificial intelligence. We expect this to have considerable advantages in all parts of the company. We already use AI for innovation, development, production, and administration. In administration, we are optimizing, for example, our liquidity planning with the help of AI, which helps us analyze huge data volumes. Through better foresight and planning, this allows our colleagues to save on interest costs, for example. In production, we already use artificial intelligence to increase production capacities.
With AI, we can successfully reduce variance in polyester manufacture, thus cutting throughput times and increasing our production capacity by 5%. In addition, all employees will now receive an AI-based wizard. This personal virtual assistant helps them deal with many day-to-day tasks, from composing emails to summarizing huge data volumes. We are thus taking a further step towards aligning our employees' day-to-day work with the future. Shareholders. It is the people who make our company, our 17,500 employees around the world, a great, diverse team that works in solidarity and to which everyone makes their own special contribution. In persistently difficult times, they have all worked tirelessly and achieved excellent results. So for this, a big, heartfelt thank you from all of us on the Board of Management.
We are confident that with this strong team and our powerful strategy, Covestro will continue to weather all headwinds and stay on course for a bright future. For more details on our expectations for the present year and business performance in 2023, I will now hand over to my colleague Christian Baier. Over to you, Christian.
Thank you, Markus. Shareholders, I'd like to join my colleagues and welcome you to this year's annual general meeting. This is my first time, and it's a great pleasure for me to guide you through the results for fiscal 2023. After that, I will also talk about our expectations for the current year. Markus Steilemann has already said it: 2023 was another difficult year for the chemical industry. The global market environment continued to be impacted by weak demand and declining sales prices as a result. This is reflected in our results for 2023.
For example, in the past fiscal year, lower sales volumes led to an overall decline in volume of 6.8% at the group level. The EMLA region performed the weakest in fiscal 2023, affected above all by the recessionary trends in Europe. Volume in the region was down around 10%. The main reason was the significant contraction of the electronics industry, which could not be offset by the slight rise in the automotive sector. The automotive industry also did well in North America. But as the construction sector shrank at the same time, our volumes declined by 5% in total in this region. The construction sector is a key factor in the performance of the APAC region. Here too, the automotive sector performed well, however. Combined with the positive development in the furniture sector, it went some way toward offsetting the decline in the construction industry.
Volume in the APAC region, therefore, decreased by only 3% in 2023. Overall, sales amounted to EUR 14.4 billion in fiscal 2023, down 20% compared with the previous year. The downturn in volume sold was also reflected in EBITDA, which amounted to around EUR 1.1 billion in fiscal 2023 compared with EUR 1.6 billion in the previous year. As you can see in the chart, the demand-based change in volume is a key factor driving this decline. Another relevant aspect here is the pricing gap, which is the difference between the sales and raw material price trends. Although the cost of raw materials, especially energy, dropped significantly in fiscal 2023, this was unable to offset the pressure on sales prices exerted by persistently weak global demand. But the critical question is: what are the things over which we do have control ourselves?
They also include the management of our production and fixed costs, both aspects which have been combined here in the other category propped up our EBITDA significantly. This shows that our actions are having an effect, and our systematic focus on efficiency is paying off. Moreover, toward the end of the last year, we saw the first modestly positive signs, such as a slight improvement in demand. Our sales volumes have picked up recently in all our main customer industries, and we generated positive earnings of EUR 132 million in the fourth quarter of 2023. This put the quarter substantially ahead of the prior year quarter. Most importantly, after six negative quarters in succession, we saw volume development turn positive again for the first time. Let's now take a closer look at our two segments: performance materials and solutions and specialties.
Due to their distinct business models, their performance was quite disparate in the past fiscal year. Let's first turn to performance materials. Performance materials is our commodity business, which is our business with standard polycarbonates, standard urethane components, and the requisite base chemicals. Our focus here is above all on reliably delivering standard products at competitive cost. This segment is strongly influenced by economic cycles. Continued weak demand has therefore impacted this segment in particular compared to the group as a whole. This is why we are seeing how the global market environment caused a decline in sales and EBITDA here for the past fiscal year. In total, the segment generated EBITDA of EUR 576 million, translating into a margin of 8.6%. But there are positive signs here as well. Volumes, for example, displayed positive development in the fourth quarter of 2023.
Encouragingly, this trend continued into the first quarter of the current year. Nevertheless, given our high dependence on economic developments, we are still cautious when it comes to projected price and margin trends in the first half of 2024. For the full year, we are anticipating EBITDA of between EUR 400 million and EUR 800 million for the performance materials segment. In this context, we focus above all on key factors that we are able to shape ourselves. This includes, among other things, further improvements to the availability of our plants. This gives us control over a critical lever for meeting our targets. Let us now take a look at our solutions and specialties segment, where, in very close collaboration with our customers, we develop highly specialized products and come up with tailor-made innovations. Despite numerous challenges, the segment proved to be very stable in the past fiscal year.
Although a drop in sales prices and volumes meant that sales were lower, we generated stable EBITDA of EUR 817 million. This stability is proof of the resilience of this segment. We manage our product portfolio in conjunction with our customers in such a way that it performs well, even in challenging economic situations. Our highly attractive products, as well as rigorous efficiency and cost measures, helped us raise the segment's margin to as much as 11.2%. For 2024, we forecast that the solutions and specialties segment's EBITDA will range considerably above the 2023 figure. This segment will therefore remain a central pillar of Covestro's future success. Let me make this point again. Especially in a challenging global environment, our focus is above all on areas that we can influence ourselves. Firstly, systematic investment in the sustainability of our progressive production facilities.
Secondly, the strengthening of the future viability of our company. Thirdly, ensuring an efficient capital structure. For us, this means that in a difficult fiscal year with low profitability, our focus is on free operating cash flow. Despite the significant drop in EBITDA, we successfully generated a positive figure of EUR 232 million in 2023. We thus exceeded our own forecast, even though profitability was under particularly intense pressure in the year 2023. An important aspect here was above all the focused measures we took on the working capital side, and it was achieved without impacting on goods availability for our customers on the other side. To manage that balance is a challenging task, which the team mastered very well working together. Nevertheless, due to the numerous global challenges, we generated negative net income of EUR 198 million for fiscal 2023 overall.
In light of this result, we, the Board of Management, decided not to propose any dividend for fiscal 2023. This is in accordance with our dividend policy. Since 2020, we have linked our dividend more closely to the financial situation of the company. In principle, the intention is to distribute a dividend of 35%-55% of net income at the group level if this figure is positive. In fiscal 2023, our net income was again negative despite a slight improvement compared to the previous year. Shareholders, let's now look ahead and consider our forecast for the current fiscal year. 2024 will remain challenging, especially during the first half of the year. We expect that the conditions will remain challenging and volatile, and the pressure on margins will ease off only in the second half of the year.
Let me remind you that our company will focus on those levers over which we have control. We will reduce costs, leverage efficiency, and make sure our plants are reliable. In addition, we continue to invest systematically in a successful, sustainable future for Covestro. In terms of financials, we expect EBITDA of between EUR 1.0 billion and EUR 1.6 billion in 2024. We also anticipate that free operating cash flow will remain positive at between EUR 0 and EUR 300 million. This will result in ROCE above WACC of -7 to -2 percentage points. We are also working to further reduce our greenhouse gas emissions, which we project to range between 4.4 and 5.0 million metric tons of carbon dioxide equivalent in 2024. Sustainability is particularly key to our future.
We are thus making significant investments both in our vision of becoming fully circular and in the climate neutrality of our company. For more about our plans in this area, I now hand the floor back to Markus Steilemann. In the next few minutes, he will give you further details on the progress we have made on the way to a circular economy and on our climate neutrality targets. Thank you.
Thanks, Christian. I'm happy to carry on from here. As you know, shareholders, the circular economy is our major goal, the vision to which we have committed the company. We aim to comprehensively entrench it within our company, and we want to contribute to making circularity the guiding principle in the economy and society at large around the world.
We're doing this in two ways: by switching production from non-fossil raw materials, renewable energy, and innovative recycling, and by developing and manufacturing circular, climate-neutral products for the key issues of our time - for clean mobility, for the energy transition, for sustainable building and living, and many others. We reached other important milestones in this regard in 2023. I touched on this previously. Our company buys an increasing amount of energy from renewable sources. Its share is now 16%, and we're progressing with great strides. Our aim is to get to at least 25% by 2025. A proven method for this is long-term agreements with energy suppliers. In 2023, we also entered into the first major agreement of this kind in the United States. This is to buy solar power for our Baytown site in Texas, Covestro's third largest worldwide.
Together with Europe and Asia, this brings us to 5 large-volume supply agreements for renewable energy, and 4 more are in the planning. Recycling is another building block of our circular economy and climate strategy. According to a study from 2024, the global circular economy is only at 7%, and only 9% of global plastic waste is fully recycled. This will have to change, and we want to contribute by promoting innovative technologies, especially for chemical recycling, which is very promising but is still in its infancy. In this process, polymers are broken down into their chemical components and subsequently reconstituted. Sounds simple, but it is, in fact, technologically demanding. We are working on several projects of this type at Covestro. Our latest successes include a new deal with Encina. Are more than just a supplier relationship.
Our two companies have formed a strategic alliance for pooling knowledge and promoting transformation in the construction sector, which will have to become carbon neutral in the European Union by 2050. We pursue these kinds of partnerships under our circular economy strategy at all levels and at all stages of the value cycle. In this, we are driven by the conviction that this is the best way to get to innovative technologies, products, and business models. Cooperation was and still is the key to success in a groundbreaking new process, ladies and gentlemen. I reported on this in the past. Together with academic partners, we managed for the first time to produce the important chemical aniline exclusively from plant biomass. That is, without any crude oil at all. An all-new complex process in which biotechnology also plays a key role.
After a lot of success in the laboratory, we've now arrived at a point where we want to test it on a larger scale. To this end, we recently opened a pilot plant at the company's headquarters in Leverkusen, the first of its kind in the world. Compared to conventional technology, the new process achieved a significantly improved carbon footprint for aniline. So, as you can see, shareholders, we want to manufacture our products increasingly without fossil raw materials. And this, of course, has a tremendous impact on the emission of greenhouse gases because raw materials make up by far the largest part of the emissions included in our climate footprint.
These kinds of emissions are part of Scope 3, as it's called, one of three internationally recognized categories which comprises greenhouse gases affecting companies indirectly in upstream and downstream processes, for example, through transportation, business travel, waste travel, and, as I've just mentioned, in purchased raw materials, which already come with a carbon footprint. We now aim to become climate neutral in this Scope 3 as well. To this end, we've set ourselves an ambitious target which completes our climate neutrality strategy. Now let me introduce this to you. You may remember, shareholders, ladies and gentlemen, in a first step in 2022, we announced targets and actions to make Covestro climate neutral at the operational level. This target, which we aim to achieve by 2035, applies to what we call Scope 1 and Scope 2. Scope 1 covers all direct emissions coming from our own production facilities.
Scope 2 is for the energy that we purchase. This covers the indirect emissions that arise in the production of these sources of energy and are allocated to us. And now we will also have Scope 3, which contributes the lion's share of emissions. All in all, our company is going to become. It's intended to become completely climate neutral by 2050. We have carefully planned the long road up to the middle of the century and set ourselves clear targets. One major milestone is scheduled for 2035, which is just 11 years from now. By then, we aim to reduce Scope 3 greenhouse gas emissions by 10 million metric tons net compared to our base year of 2021. And this corresponds to a reduction by 30% and includes some of the growth-related emissions projected up to 2035.
Ladies and gentlemen, we have not only clear targets for Scope 3, though, we also have clear ideas of how we intend to meet them. Let's take a look at four levers that will contribute to our meeting these ambitious targets. The first lever we use is applied at the level of suppliers. If they reduce their Scope 1 and Scope 2 emissions, that will benefit our Scope 3 numbers. And secondly, we are investing in new processes for alternative and recycled raw materials, our MAKE projects. And this includes platform technology for innovative recycling and of foam precursors. The first step we want to take is to chemically recover the components of flexible foam in mattresses. We're also planning to drive profitable sales of products based on alternative raw materials.
And this is complemented by a large number of supporting measures to reach the Scope 3 targets. They include recycling more of our own waste so that less of it is incinerated and emissions are lowered accordingly. Step by step, we are, therefore, implementing our master plan for climate neutrality and the circular economy. And we've made further progress on this path so far this year in terms of raw materials, energy products, and collaboration. Let me tell you now about just a couple of highlights. We made an early start in January when we announced an important agreement with the raw material producer Encina. From 2027 on, this company, which is based in the U.S., will supply us with raw materials recovered from recycled used plastics on a long-term basis.
We will then use them to make TDI and MDI, the components of flexible and rigid polyurethane foam. Another strategic agreement followed in February, this time with the German energy company RWE. It will supply power and guarantees of origin from offshore wind turbines in the North Sea to our Belgian site in Antwerp from 2026 onward. This will allow us to cover as much as 60% of the plant's energy demand from renewables. So that's brand new news in terms of shifting our production to circular economy and climate neutrality. But we've also got news about corresponding products. For example, for our customer Henkel, we provide specific components for adhesives made from raw materials containing a certain percentage of biomass. In turn, Henkel uses these components to manufacture adhesives for wooden components in buildings.
In this way, we are jointly driving the transformation of the construction industry toward sustainability. I'd like to close off now, if I may, with another current example from our expanding range of sustainable products. Different sector, different customer. I'm now talking about the technology group ABB. The area of application is electrical engineering, where we supply the company with polycarbonate made from recycled mass-balanced organic waste. This is now being used for the first time in the manufacture of switches, connectors, and multimedia outlets. Ladies and gentlemen, this brings me to the end of my presentation. I hope Christian Baier and I have been able to give you some idea of where our company stands, what challenge it has to overcome, and what opportunities lie ahead.
Here's a brief summary, if I may. In my opinion, Covestro's position is absolutely fit for the future in terms of both strategy and operations. Strategically, we are staying on course for the circular economy, the major worldwide project for the 21st century. This goes hand in hand with orienting the entire company toward climate neutrality. This helps not only us but also our customers in many key sectors. I'm sure it will ultimately also find its way into products that will make your life better and more sustainable, dear shareholders. From an operational point of view, we are continuing to work on improving our performance and competitive position. I'm sure you have an idea by now of the many levers and controls at our disposal in this context.
In summary, this means that we are continuing systematically to implement our corporate strategy, the right mix to navigate Covestro safely through choppy waters and to reach the promising goals on the horizon. Ladies and gentlemen, I hope you will support our company on this journey. This journey is definitely worthwhile. Covestro is already among the shapers and winners of the world as a brighter place. On behalf of the entire Board of Management, I'd like to say thank you for your attention. And now I will hand the floor back to the chairman of our Supervisory Board, Dr. Richard Pott.
Thank you, Mr. Steilemann. Mr. Baier, thank you very much for your presentations. On behalf of the Supervisory Board and certainly on your behalf as well, I would like to thank the Board of Management and the employees very much. We cannot stress this often enough. These have been long-lasting, difficult circumstances. And all 17,500 people in our company have achieved great things. This is something we can't take for granted. And I'd like to pay tribute to that here. With the help of the entire team, Covestro navigated relatively unscathed through choppy waters. At the same time, we never lost sight of our compass focused on circularity and also focusing on a sustainable, better future, which offers us excellent economic opportunities.
Ladies and gentlemen, before we turn to the report from the Supervisory Board, I would like to give you the current attendance figures as they now stand with regard to the list of participants. Of the registered capital stock amounting to EUR 189 million broken down into 189 individual shares, we have a total of 115,978,640 individual shares with the same number of votes. This is 61.36% of the registered capital stock. In addition, we also have absentee ballots for 377,159 individual shares. So altogether, we have a total of 116,355,799 individual shares, which corresponds to 61.56% of the registered capital stock. Ladies and gentlemen, I would now like to come to the report from the Supervisory Board. This can be found in the annual report on pages 17 through 26. I'd like to refer to the report.
Since we've reported in detail there, I will be a bit shorter here at this point. As I said, 2023 was, once again, challenging for Covestro. Ongoing geopolitical uncertainties, for example, due to Russia's war against Ukraine or the conflicts in the Middle East, these have shaped global economic development. In addition, high inflation and low demand from Covestro's main customer industries impacted the company's 2023 fiscal year. The Board of Management has intensively analyzed this extremely complex and difficult overall global situation and reflected it in its strategy in order to secure the business and the long-term future of Covestro. In addition to the further implementation of the strategic goals, the focus of its work was on improving operational performance. As the Supervisory Board, we closely monitored the Board of Management and supported it in its deliberations and decisions.
Strategically, Covestro continues to be positioned in the right and forward-looking way with a focus on establishing the circular economy and on innovations for greater sustainability in general. Important topics in fiscal 2023 included the setting of Scope 3 targets for the company, the development of a sustainability component from the social issues area for the compensation of the Board of Management, and the intensive consideration of strategic options for the company, including consultations on the expression of interest of the Abu Dhabi National Oil Company, ADNOC for short, from the United Arab Emirates with regard to Covestro AG. As part of its supervisory duties, the Supervisory Board, in particular, closely monitored the process regarding the expression of interest in the interest of our company, its shareholders, and all other stakeholders. For details, please refer to the explanations in the annual report.
Equally important, however, was the fact that we set the course for the continuity of the company's management. For the position of Chief Financial Officer, which had to be filled due to the departure of Dr. Thomas Toepfer, we have recruited Christian Baier, who took up his new position on October 1st, 2023. Mr. Baier previously held the same position at the Metro Retail Group, where he held various management positions since 2011. His previous positions include the international investment company Permira. And at this point, once again, a warm welcome and all the very best wishes to you, dear Mr. Baier. However, there was another change in the Board of Management. On July 1st, Dr. Thorsten Dreier succeeded Dr. Klaus Schäfer as Chief Technology Officer. In addition, Dr. Dreier has been working as Labor Director since September 1st.
He began his career in 2002 as a laboratory manager in the Bayer Group and subsequently held various management positions at Bayer, Bayer Material Science, and Bayer Technology Services. Prior to his appointment to the Board of Management, he was head of the coatings and adhesives business entity at Covestro. On behalf of the entire Supervisory Board, I would also like to take this opportunity to wish you all the very best of success, Mr. Dreier. Ladies and gentlemen, there have been no personal changes to the Supervisory Board in the past year. I would like to inform you of the fact that, as of today, Petra Reinbold-Knape, as a representative for the IGBCE, will be stepping down as this is the end of her active professional life. This is something that is hard for us to accept, I must say. It's hard for her to accept.
But I would like to thank you very much on behalf of the entire Supervisory Board. Thank you, Ms. Reinbold-Knape, for many years of excellent and trustworthy cooperation as well as many very good discussions. I would like to wish you all the very best for your upcoming retirement. Together with IGBCE, we have made a request for a successor. We've submitted this to the court. Due to the process, which is still ongoing, I would ask you to understand, ask for your understanding that we cannot mention any names right now. The entire Supervisory Board was in regular contact with the Board of Management in 2023. In doing so, we have convinced ourselves of the effectiveness of the decisions and measures taken by the company's management. In addition, we continuously monitored and advised the management of the Board of Management in the past year.
This was particularly the case at the six ordinary meetings of the Supervisory Board, which were generally attended by all members. Only in one case was one member unable to attend a single meeting of the Supervisory Board due to illness. The current challenging economic situation in connection with the acute crises and their impact on the company was discussed at every Supervisory Board meeting last year. In the Supervisory Board, we received very detailed reports on these topics from the Board of Management and dealt in detail with the existing challenges and the measures adopted by the Board of Management. For details here and also for the individual meetings and their contents, I would like to refer you to the written report from the Supervisory Board, which is available to all of you. Ladies and gentlemen, that should suffice for the report from the Supervisory Board.
At this point, I would like to say, in agreement with the Board of Management, I'd like to say something about agenda item 7. This is the approval of the Domination and Profit and Loss Transfer Agreement between Covestro AG and Covestro First Real Estate GmbH. In order to increase the efficiency here, we would like to also talk about a consolidation of the results of the Covestro Real Estate Company. That is why that on the 27th of February, 2024, an agreement was concluded between Covestro AG, the controlling company, and its wholly owned subsidiary, Covestro First Real Estate GmbH, as the controlled company. This is when the Domination and Profit and Loss Transfer Agreement, effective as of fiscal 2024, was concluded.
The Domination and Profit and Loss Transfer Agreement requires the approval both of the annual general meeting at Covestro AG as well as the general meeting of the Covestro First Real Estate GmbH. Approval from the general meeting at Covestro First Real Estate GmbH has already been granted. Further details on this agenda item and on the Domination and Profit and Loss Transfer Agreement can be found in the invitation to today's AGM. Both the Board of Management and the Supervisory Board propose approving this Domination and Profit and Loss Transfer Agreement. Ladies and gentlemen, that now brings us to our general discussion. I have already explained the formalities to you. I'll be brief and explain them once again. Please, if you want to take the floor, use the appropriate button in the main menu of our investor portal.
After registering your request for the floor, you will be put on our list of speakers. The speakers will then be divided up into groups of probably 5 individuals. After I call out your name, we will interrupt the meeting for about 5 minutes, and those 5 speakers will then carry out a technical test. After that, the first 5 individuals will be called up one after another so that they can be transmitted live by video and audio to us. Then they will speak to us, and they can ask their questions or submit any motions they may have. Please make all of your statements and ask your questions in one go. The questions will be noted down, and we will collect them before answering them.
After each group, we will then have an answer round where the members of the Board of Management will answer your questions and deal with your concerns. Questions which fall within the responsibility of the Supervisory Board will, in agreement with the Board of Management, be answered by myself. If there are any open questions or no requests for the floor, then we will have another round of questions, and that will be followed by another round of answers until all of your questions have been answered. Once again, I'd like to ask you to be brief, and you should use our guideline of 10 minutes. This is not an official restriction of your speaking time, but I do reserve the right, in the course of our meeting, to introduce such a restriction if that seems necessary. I would also make the following points.
After the discussion and after your questions have been answered, we will begin with the vote. You can vote via the investor portal until the beginning of the vote. You can give authorizations and instructions. You can exercise your voting right, and you can also grant authorization, change your instructions, or cancel them. You can also use the investor portal until the closing of the vote to cast your ballot by absentee ballot, or you can change or cancel your vote. I will tell you once again before we close these possibilities, and then we will determine the results of the vote. Ladies and gentlemen, we will now begin with our general discussion. I have a number of requests for the floor. The first speakers will be Frederik Beckendorff, Andreas Masek, Arne Rautenberg, Andreas von Angerer, and Hermann Matthias Geldendorff.
Our technical team has asked you to those 5 individuals I've just mentioned should then go to the investor portal and go to the technical test. This will take a total of about only 5 minutes. I would like to introduce the AGM for about 5 minutes, and then we will begin with the first speakers.
Ladies and gentlemen, the annual general meeting is resumed. As you can see on screen, the Supervisory Board is still here. The first speaker I'd like to call is Frederik Beckendorff. You have the floor.
Thank you. Chairman Dr. Pott, ladies and gentlemen, I'm Frederik Beckendorff. I'm speaking to you as a representative of the DSW, who is representing shareholders to whom voting rights have been transferred.
Ladies and gentlemen, I'd like to start by expressing my regret and surprise at the fact that this year's AGM of Covestro, despite the very negative experience made last year, is being held as a virtual event once again. We deeply regret that the Supervisory Board of the Board of Management did not take into account or react to the technical difficulties experienced last year, making the entire event last about 9.5 years. We do hope that the situation is much improved this year. We deeply regret that direct exchange between the shareholders and company management is being kept so difficult, although personal dialogue from where we stand, given the current situation in which the company is operating, would have been so important. Dr. Pott, it is not true that we are actually convening today, as you mentioned in your introductory statement.
This may apply to the Board of Management and parts of the Supervisory Board, but it doesn't apply to anyone attending virtually. So my question is, why are you holding this event as a virtual one despite the experiences made last year? What conclusions did you draw as the Board of Management and Supervisory Board from the events that occurred last year? How many shareholders are participating this year? And how does that compare to last year's virtual AGM? In the last week, I, Deutsche Telekom, I went to the Deutsche Telekom's in-person AGM in Bonn. So it is possible to do this. I would like to kind of request that the events of the AGM of Covestro be considered once again. I think the conclusion is that our right to be heard is significantly curtailed.
2023 was a very difficult year for Covestro and one of the most challenging ones that I've ever experienced in the past decade. The reasons are manifold, ranging from sustained geopolitical tension through to high energy prices, especially in Europe, the global weak economy through to structural problems, especially in Germany. Sales dropped by 20%. EBITDA increased by 33% to EUR 1.1 billion. That was disproportionate. This equated to a decline in the EBITDA margin from 9%- 7.5%. With respect to sales, negative price effects of 11% came to play, and a negative volume effect of 6.8% came to play. What was the influence of the sustained weakness of demand and the availability problems with respect to raw materials always compared to the previous year? As you reported, Mr. Steilemann, today, in the past fiscal year, fixed costs were reduced by a mid-ranged double-digit million euro amount.
What costs concretely were you able to reduce, and to what extent? Do you plan to implement further cost-cutting this year, and if so, to what extent? You had another net loss of EUR 198 million following EUR 272 million in the preceding year. This corresponds into a negative earnings per share. According to the dividend policy, 35%-55% of the net income is supposed to be paid out as a dividend. Now, there should be a profit-oriented payout of the dividend of 50%. We therefore understand the conclusion that you have drawn. Nevertheless, the question is whether the article that you have selected for determining the dividend is actually correct. And this is against the backdrop of the surprising resumption of your share buyback program. There has been an encouraging increase of Free Operating Cash Flow of 68%. We mustn't forget that.
Has the Board of Management considered and consulted about the expediency of the dividend policy? Given the fast-changing, cyclical nature of your industry, may you not reconsider this policy? Ladies and gentlemen, Covestro is resolutely focusing on the circular economy and climate neutrality. Your sustainability targets include short-term targets with respect to the sustainability of the energy supply chain and sustainability of your innovation portfolio. Starting or based on the status achieved in 2023, you seem to have quite a long road ahead of you. What is your assessment of the status quo with respect to your sustainability targets? Do you believe that the progress made will be sufficient to achieve your goals by 2025? Finally, you stated your plans to reduce both direct and indirect greenhouse gas emissions, including Scope 1 and Scope 2. You have extended that to include Scope 3 for downstream processes.
From your perspective, what are the biggest risks that would hamper the achievement of the Scope 3 emissions goals by 2035 and the climate neutrality goal by 2050? Based on your statement, the new net-zero goal by 2050 is in line with the Science-Based Targets Initiative, SBTi for short. The objective is to limit global warming to 1.5 degrees centigrade. So far, however, Covestro has not made a commitment to the SBTi. When do you plan to have your goals validated by the SBTi? Covestro, so far, has been a real pioneer with respect to sustainability. The DAX Group, this year, for the first time, has held a consultative poll on ESG and climate, and placed that on their agenda as a chemical company. Is this a topic that the Board of Management and Supervisory Board are taking into account?
As we've found today, high energy costs, especially in Europe, weigh on the business of Covestro. In addition, in Germany, there are deep structural problems that have not been tackled successfully by the politicians in the country. What are your conclusions? How do you assess the competitiveness of the European locations of Covestro in light of all of the burdens? What is the capacity utilization of your plants in your different segments and in your different regions? Must we fear closures or shifts of production to other regions given the rifts? Ladies and gentlemen, this brings me to the agenda. Despite the dubious events of the past AGM, we plan to ratify the acts of the Board of Management and the Supervisory Board today.
This is connected with a clear expectation that this year's AGM, which is also virtual, will proceed seamlessly, and also that we will have an in-person AGM next year. With respect to the compensation report for fiscal 2023, it is suggested under item 4 that short-term variable compensation, the PSP, consider the thresholds for the three KPIs. By consequence, the Supervisory Board, again, exercised its discretion and reduced the payout ratio to 50% for a payment of 75% because a payment of 70% did not seem proper given the commercial situation of Covestro. The bonus payments were also considered. In the preceding year, the payment of the bonuses had been reduced to zero. Please give us a timeline for the achievement of the goals of the PSP. There's also been a decision of the Board of Management with respect to the payout for the employees.
There should be a link to the payments of the Board of Management. Do you believe that the way in which the PSP functions is still proper? It seems that you must regulate this in order to make sure that compensation is appropriate from the perspective of the Supervisory Board and the Board of Management. Given the target set in 2021 for 2022- 2024, before the fiscal year, it is clear that the threshold values for EBITDA, ROCE over WACC, and free operating cash flow will probably not be achieved for the current fiscal year. The long-term compensation Prisma introduced two more KPIs. That's employee engagement and missed days. What is the weighting of the two tranches of the Prisma? We have the sustainability factor and employee engagement based on the rate of participation in the employee opinion poll. And that reflects on employee satisfaction. Is that considered?
There is also an item on the agenda for the authorization to conduct share buybacks. Why are these two authorizations, contrary to the practice on the market, combined in one draft resolution put up for a vote? Are there concrete plans to exercise the authorization to conduct share buybacks? And what is an anti-cyclical share buyback, which you reserve the right to conduct? The purchase of treasury shares, in our view, is only the third best solution after profitable investments in the business or a payout to the shareholders in the form of a dividend. Now, we want to make sure that you're moving within the threshold values of the DSW before we actually approve this item on the agenda. Ladies and gentlemen, this brings me back to the current fiscal year.
For 2024, you expect EBITDA of between EUR 1 billion and EUR 1.6 billion and free operating cash flow of EUR 0 billion-EUR 3 billion. In 2024, again, your capital costs will not be earned. That's quite probable. Under these conditions, it seems that a well-balanced net income is on the cards. You spoke about four areas today in which, in 2024, you will react and take measures in order to continue optimizing the company production, sales, margins, and costs. Please tell us, for each of these focus areas, at least one concrete example or one specific measure. In the analyst presentation that was held within the scope of the presentation of the results of 2023 for the forecast for the mid-cycle EBITDA, you no longer explicitly mention the KPI. Does that mean that the EBITDA KPI is intact as a matter of principle?
Why do you no longer aggressively communicate this figure any longer? Now, I've come close to the end of my submission without addressing the elephant in the room, and this is the state of the talks with ADNOC. From the takeover talks that you resumed in September 2023, which have lasted unusually long, is one thing. And on top of that, you have announced that you do not wish to disclose any information on the progress of the talks. That's quite surprising. You say that the outcome of the discussions will depend on the capability of each party to actually reach an agreement. The fact that you don't want to make any further disclosures on this today only allows us to speculate on the topics that are on the table right now, maybe pricing, perhaps investment commitments, or employment guarantees. But allow me to ask this question.
In view of the binding of management resources, wouldn't it be desirable to reach a decision or an agreement soon? By when will the interlocutors finally show their color? The share price of Covestro, which seems not to be coupled to this, does not seem to indicate that the market participants believe that an agreement is very probable. Last but not least, I would like to express my sincere gratitude to the Board of Management and the Supervisory Board, as well as to the entire workforce of the group, for their dedication and their achievements for 2023. We wish you all the best for 2024. Thank you for your attention.
Thank you, Mr. Beckendorff. Thank you for those questions. Thank you for that contribution. The next speaker will be Mr. Andreas Masek. Mr. Masek, the floor is yours.
Hi. Hello, ladies and gentlemen. My name is Andreas Masek from SdK, the Small Investors Association. You're familiar with SdK, probably 8,000 members, and we represent our shareholders at about 450 AGMs in Germany. We represent the shares that we've been authorized to do so. Now, let's talk about the agenda and how SdK is going to vote. There are certain things going on, such as the conflict in Ukraine, for which the Board of Management has no responsibility. This has, of course, led to supply chain problems and cyclical risk. This, once again, led to a negative annual result.
The fact that no dividend will be paid to the shareholders, SdK believes that the cautious crisis management has kept the company on course and has given us possibilities for future success for the transformation and the circular economy. A more specific forecast for the current business year, of course, is desirable. The forecast for 2024 has a wide range, EUR 1 billion-EUR 1.6 billion for operating profit. This really doesn't tell us much at all. So we would like to have a more detailed portrayal of why the target corridor is so wide. Then, approval of the actions of the Board of Management. Well, from the point of view of SdK, we cannot ratify or prove this actions.
The AGM is the only possibility for shareholders to have a direct exchange of opinions with management and other shareholders, and thus to have an influence on the business policies of the company. But for us, SdK, this is something that is extremely important. And therefore, SdK prefers to have a different format for AGMs, which is live in attendance and maybe hybrid at best because this would take best account of the different interests of the shareholders, and it would be the best possibility for doing so. The carrying out just a virtual AGM should only be considered in a crisis. We can only approve of it then, and you only have a crisis like that if there are any government rules that would mandate this.
Therefore, every year that a virtual AGM is held, the SdK will decide whether or not they would like to ratify the actions of the Board of Management or Supervisory Board. We would only then approve of that in a crisis situation. I have some questions for the Board of Management. The production site of Germany has different factors affecting it: energy supply and bureaucracy and so on. Dr. Steilemann is the president of VCI, and he signed the Antwerp Agreement, and he expressed this situation clearly. Therefore, my question is this: on the Board of Management, are there any thoughts or maybe even any plans as to when Germany or there would be a stop of investment in Germany, or maybe whether even production would be shifted to other countries as a necessity?
In this context, it would also be interesting to hear which of our production sites around the world are the most profitable ones. Then, the sustainability report, according to CSRD, that is supposed to make it possible for all third parties to see and understand the sustainability NGOs and so on can understand this. So what is the estimation of the Board of Management with regard to this type of risk? ESG, that, of course, is important in the framework of non-financial reporting. It's hugely important. Now, how much is the administrative and financial expense and effort for meeting the obligations of these sustainability rules? The Green DIP Bond 28 has an effective interest rate of 4.9%. The interest on the DIP Bond 24, 26, and 30 is between 0.9% and 4% and 1.78%. So why is there a much higher interest rate for the Green Bond?
How can that be explained? Ladies and gentlemen, one thing is quite noticeable. In the brief statements from the Board of Management and in the Annual Report, we heard the word "sustainability" 15 times. That's a sign of the times, but not once was there a word of regret today or in the Annual Report that we shareholders are not going to be getting a dividend for the second year in a row. We must realize that it's important to ask whether shareholder return is going to be in the focus of the Board of Management, or are they already in a takeover mode, and are they pursuing different targets? Your shareholders don't know this because we still do not have any specific information about the negotiations with ADNOC. Apart from that, I believe that another year without any dividends for shareholders would not be acceptable.
Dr. Steilemann, you stated that this year you believe the company will overcome all difficulties, and I hope that this also refers to your dividend policy with regard to the interests of the shareholders. The Supervisory Board met 10 times in the reporting period, including the meetings of the committees, and almost all of the members were always present. The Supervisory Board met and approved of the financial statements according to German Stock Corporation Act. Ratification of their actions, however, cannot be granted because the Supervisory Board has approved of the holding of a purely virtual AGM. Not ratifying the actions of the boards of management and Supervisory Board is going to be based in the future, or the Supervisory Board will not be granted for the same reasons as we mentioned for item two.
Then, in 2023, were there any heated discussions between Board of Management and Supervisory Board, and what decisions were made on the basis of those discussions? Now, I will talk about the remuneration report. The remuneration report was formally approved by the auditor according to the German Stock Corporation Act and was approved by the auditor, and therefore, SdK can also support that. But I have a question, ladies and gentlemen, about remuneration. The remuneration of the members of the boards changed from EUR 8.4 million in 2022 to EUR 13.9 million in 2023, even though the group is in the red once again. On the basis of what contractual stipulations have these levels of remuneration been established? I'd now like to move on to the selection of the auditor. SdK would like to approve this too.
KPMG, since 2018, has been the auditor of the company without any interruption during the reporting period. They provided services for the financial services, and they did not provide any other services, so there are no conflicts of interest there. So SDK would like to support appointing KPMG as auditor. Then, resolution on a new authorization to acquire and use own shares. SDK is going to vote no here. SDK prefers that a dividend be paid out rather than having shares bought back. We think this is a good shareholder return for our members. In addition to that, we believe that this is a speculative element, own share purchases, and we reject it. Then item 7, approval of the domination and profit and loss transfer agreement with Covestro First Real Estate GmbH. Here too, we agree with that.
It's an advantage, in particular in years in which there's been a loss. And then finally, two questions about the annual report. In the management statement, there is a report on a donation concept. Please tell us what organizations got the five biggest donations. And then an evergreen subject, what is your risk assessment with regard to the class action suits in the United States that are still pending? Ladies and gentlemen, those were my statements. I hope that these shareholders can support our opinions, and I'd like to thank you for your attention.
Mr. Masek, thank you very much for your contribution. The next speaker is Arne Rautenberg.
Thank you very much. My name is Arne Rautenberg. I am fund manager at Union Investment for the Volksbanken and Raiffeisen Banks. We are one of the largest investors in Covestro, and we represent a 5.8 million investors. In the last 12 months, Covestro had a very good development of 36%. This is better than the European chemistry sector in 11% and better than the DAX, which had 45%. So the reason for these good values is not due to the operational development at Covestro, but it is due to the acquisition speculations. Mr. Steilemann, ADNOC is there, and you didn't give us any information at all, basically. You go at a distance to your shareholders rather than to answer their questions directly.
Now, since the virtual AGM at Covestro last year was overshadowed with massive technical problems, a lot of the companies have gone back to in-person AGMs. Why don't you have in-person AGMs, or why don't you offer the shareholders a hybrid format where they have the possibility to participate in person? And you saw this at your financial press conference with journalists. The shareholders would welcome this, and you would then be a pioneer here. Now, to ADNOC, Mr. Steilemann, have you come to a standstill with ADNOC in your negotiations? Why, if that is the case? What do we have to agree on? What subject matters? How many discussions have you had with ADNOC up to now? And when was the first discussion with ADNOC, and when was the last discussion with ADNOC? Who is in charge of the discussions with ADNOC?
How does Covestro ensure that the shareholders' interests are taken into account? If we are not successful there, this will put pressure on the share price. What is Covestro doing in order to prevent this? What about competitiveness with regard to the European facilities? What does Covestro need to boost? Should these discussions fail, what can they do in order to have a flourishing future? Are there any other requirements to reduce costs, and if yes, by how much? What's important here is what ADNOC does. If there is an acquisition agreement, what does Covestro have in mind? This is something which would affect all shareholders. If investments are made, German economy, if jobs are guaranteed, then the employees are included. If we have an attractive price, then, of course, the owners, the shareholders, would go along with this.
Ladies and gentlemen, as a sustainable investor, we are concerned with ecological and social and governance criteria. Without reducing Scope 1, 2, and 3 emissions, then climate change cannot be stopped. Covestro bears major responsibility for the emissions of their clients, and that is why Scope 3 emissions have to be included in their own climate targets. We welcome that. Covestro is a pioneer in the chemical sector. In addition to the publications and targets with regard to climate, all we need now is the publication of the water data. Mr. Steilemann, do you want to meet up with this responsibility? That's something that we would welcome. This brings me, finally, to the agenda, ladies and gentlemen. I will vote against the share buyback option in agenda item 6 because the duration is 5 years, and our regulations only allow a maximum period of 2 years.
Before we think about share buybacks, Covestro first has to be able to pay out dividends. After two loss-making years, this is not the case. Another agenda item is one that we can agree on, and all of the others we will vote in favor of. Thank you very much for your attention.
Thank you very much, Mr. Rautenberg, for your questions and for your submissions. The next speaker on my list is Andreas von Angerer. So please go ahead, Mr. von Angerer. Unfortunately, the audio transmission from Mr. von Angerer isn't working right now. Audio has been restored.
I'm Andreas von Angerer. I'm head of impact at Inyova AG, but on behalf of ShareAction, an NGO, I would like to ask your question with respect to financial issues. As we've heard today, the climate crisis is accelerating. We have a new heat record every month, and in the last 12 months, we have transgressed the 1.5-degree threshold. Climate-intensive companies therefore have to act quickly and with resolve in order to slow down global warming. We greatly welcome it that Covestro is placing its chips on the circular economy and that you intend to switch to environmentally friendly fuels at a degree of 100%, and that that will be reflected in Covestro's products. This places Covestro among the leaders in the chemical sector.
However, Covestro hasn't established any short-term goals unlike LyondellBasell or others, who are their direct competitors. Short-term goals show us investors that Covestro is taking steps in order to achieve its long-term goals. We need details with respect to investment and research and development. These are also important signals for suppliers to make the transition to non-fossil fuels. Therefore, I'm asking you whether Covestro is willing to show its colors as one of the leaders in the European chemical sector by establishing a goal of not increasing its share of fossil fuels. Thank you.
Mr. von Angerer, thank you very much for your questions and for your submission. The next speaker I have on my list is Mr. Matthias Gebler. Mr. Gebler, go ahead, please.
I can't see Mr. Gebler, and I can't hear him either. Mr. Gebler, what we'll do is this: we will try to reach you, or you could please actually report back in during the further course of the AGM. Now that we've heard four questions, we will actually then just begin with the round of answers. And now, for the answers, I would like to first give the floor to the Chairman of the Board of Management, Mr. Steilemann.
Thank you, Mr. Pott. First of all, I will deal with a question by Mr. Beckendorff. Mr. Beckendorff, you asked about the current status of our sustainability targets, sustainability in the supply chain, sustainability in research and inclusive business, and how we assess this and whether or not our progress in these areas is sufficient so that we can meet our goals by 2025.
Sustainability is a key aspect of our corporate strategy. We have very ambitious targets, and we are working systematically to achieve these ambitious targets in all of the three areas you mentioned. In the field of sustainability in the supply chain, by the end of 2025, it is our objective to only be working with suppliers who meet our sustainability requirements. We have monthly status reports to follow the progress here. Against that backdrop, and on the basis of our efforts and experience in the past few years, we're very confident that we'll be able to achieve these targets. Our R&D-based innovation product portfolio is going to be oriented toward the sustainability targets of the UN. Orienting the innovation portfolio toward this is measured using the costs for the projects that are considered to be sustainable as a ratio of overall project costs.
We are seeing there's an increasing number of medium and long-term technology projects that meet these requirements. Now, since the KPI is based on the project costs, these projects in the early phase don't really have as much of an impact. With regard to inclusive business, I can say that by 2025, 10 million people will be helped to have them get more quality of life in undersupplied markets up until the end of fiscal 2023. In our inclusive business solutions, we were already able to reach 6.7 million people, and we're therefore confident that we'll be able to meet our target in 2025. Mr. Beckendorff, you asked about the three biggest risks for achieving the Scope 3 emission target and for climate neutrality by 2050. We believe that our targets are ambitious but that they are doable.
We regularly check our target achievement forecast with different scenarios and backup measures, and therefore, we would recognize at an early point in time whether there is a risk for achieving a target and whether any adjustments are necessary. And of course, we would communicate this. There are three key aspects in achieving our Scope 3 targets that play a critical role. This includes changes in regulatory framework, technological developments, and a lasting demand from customers with a change in their willingness to pay certain prices. Mr. Beckendorff, you asked when we're planning to have our climate targets validated by SBTI. The Science-Based Targets Initiative has published a cross-industry guideline for the development of climate targets in line with the 1.5-degree CO2 budget. A sector-specific guideline for the development of climate targets in the chemical industry is expected at the very earliest in mid-2024.
As soon as SBTi has come up with a sector-specific guideline for the development of climate targets, in particular for the chemical industry, and published it, we will have a close look at it and then decide whether or not we want to have SBTi validate our climate targets. Mr. Beckendorff, you asked whether we are looking at a voluntary consultation decision at the AGM on the climate plan. That is, the say-on-climate decision. It was just recently that Covestro published its Scope 3 targets, and we are in intensive discussions with investors and other interest groups. This includes ShareAction and the Net Zero Initiative. The feedback has been very positive across the board. And in the overall package, I can say we have one of the most ambitious targets, some of the most ambitious targets in the chemical sector.
For many years, we've been reporting transparently on our climate targets, measures, and success. So in terms of climate protection, we're on the right path. But this is a very dynamic subject, and it means that the Board of Management has to constantly observe this and adjust things. This is one of the main reasons why, from the point of view of today, we are against a decision being made at the AGM with regard to a climate plan. Mr. Beckendorff, you asked about the discussions with ADNOC and the subject that Covestro is discussing with ADNOC. In my speech, I mentioned this. We are conducting discussions with ADNOC, and we are doing this in a constructive and open fashion. The guideline for us is the interest of our company, our shareholders, and all other stakeholders.
Progress and the final result of such discussions, as is always the case with discussions, will depend on the possibility and the ability of both companies to agree on things where they have different points of view. We will, of course, report on the results of discussions and relevant changes, of course, in line with our capital market obligations. But I'd like to ask for your understanding that, as of now, we cannot give you any details about our discussions. Of course, these are confidential discussions, and therefore, I can't say anything today about different price ideas, possible investment agreements, or employment guarantees. Mr. Beckendorff, you asked about the duration of discussions with ADNOC and the aspect of binding management capacities. We have decided to have these discussions with ADNOC with an open end, and we want to do this in line with our stock market obligations.
We will have to first see whether we have certain options for transaction with ADNOC, and then we'll decide about what would be the best solution for our company, our shareholders, and all other relevant stakeholders. Our discussions in this regard serve to give us a more precise understanding of the points of view and the positions of both parties, and then we will be able to take a better decision with regard to how the two parties are going to proceed. These discussions have to be carefully prepared and conducted. That takes time, and preparing these and conducting these is a job for management and management as a whole and Board of Management. But you can rest assured that the Board of Management is always going to be taking care of its obligations with no restrictions.
Mr. Beckendorff, you asked about the point in time at which time the partners to the discussions would have to have a decision. Well, in the current situation, there are no specific legal frameworks for deadlines. However, of course, we and all other participants are interested in not wasting time. Discussions of this type, however, have to be carefully prepared and conducted, and this does take time. Therefore, we will take the necessary time in order to come up with the best possible solution for Covestro, its shareholders, and other stakeholders. On that note, I'd like to hand over to Christian Baier, who's going to ask the next set of questions.
Thank you very much. You asked why we decided to have a virtual AGM. Legal requirements have allowed us to have virtual AGMs as a permanent alternative to in-person AGMs. The Board of Management at Covestro authorized us at the AGM in 2023 to have a virtual AGM. For today's AGM, the Board of Management decided for a virtual meeting. Today's agenda, the shareholder structure, sustainability, and other cost considerations were taken into account. The experience from last year with unexpected technical obstacles were also included in our decision-making process. We have taken the necessary technical steps in order to have a live transmission and a virtual format have been taken very carefully. And that's why we assume that today's virtual AGM will also run smoothly in technical terms. You also asked about the amount of fixed costs in our business in 2023, how much this affects our earnings.
In 2023, we had a reduction of fixed costs of EUR 338 million. This amount is close to nearly EUR 200 million in terms of lower production costs, EUR 50 million in lower sales and administrative costs, as well as research costs, and EUR 20 million lower for maintenance costs. The cost development was favorably impacted by the decline of special items by EUR 130 million and the normalization of the inventories. At the end of the year, the absorption of fixed costs in inventories by EUR 90 million. In the other direction, we saw that the provisions for variable compensation increased by EUR 150 million. You also asked to what extent that we would plan cost savings in the current year. For 2024, we plan cost savings in the order of magnitude of compensating for the cost increase caused by inflation.
You then asked about the possibility of or the purpose of our dividend policy, and maybe there might be a different way to do this as opposed to the earnings per share. Since 2020, our dividend policy provides for us to have the dividend based on the earnings after taxes. Between 35%-55% of net income is what is the basis for our dividend. Unlike the dividend policy in the past, we see that the current process gives us the following advantage. Our balance sheet is not going to be burdened too much in weak periods. If we were to decide on a cash amount, then the free operating cash flow at Covestro would be one of our four core performance indicators. But we see this as a primary parameter, and this is something that fluctuates too much in the short term.
You asked why the authorization to acquire our own shares, as well as the authorization for the use of derivatives, is something that is to be taken in one resolution under agenda item six. The authorization to purchase own shares is something that allows us to have the best benefit for the shareholders. This includes the possibility to make use of derivative instruments. The new resolution is based on resolutions that have been taken in 2015 and 2019, with these received high approval rates. Before the AGM in 2024, we had discussions with investors, and a combined resolution is something that was not seen as being critical by the majority of the investors. In order to have an efficient AGM, we decided to have a combined resolution to be voted on.
We take your comment on board, and we can take a look at this again in our discussions with our investors. Mr. Beckendorff, you asked about whether we have specific plans for agenda item six and the share buyback program. What are the specific plans for this? We don't have any specific plans right now. The resolution is to give the Board of Management the flexibility it needs to decide on a share buyback program. If we have an attractive investment for our shareholders, and then we would have the necessary capital at hand, that is why we would also like to take this opportunity for the use of capital. Mr. Beckendorff, you asked what we meant by countercyclical share buyback programs.
What we mean is that we would have a share buyback program if, in accordance with the share price, this would be seen as an alternative use of capital and an attractive investment for our shareholders. You asked if we have a balanced result for 2024. The focus of our guidance for EBITDA is EUR 1.3 billion. With regard to different depreciation, we assume it will be EUR 850. The interest will be EUR 120-EUR 160, and the tax will be EUR 250-EUR 250 million. If you talk about the medium amount, then we can assume that this would mean that we would have a balanced result. You then asked about specific examples or measures for our four focal areas. In other words, improving the areas of production, sales, margin, and fixed costs.
At the end of 2023, we were able to return our production in chlorine supply for isocyanate production. This means that we have considerably improved availability and facility utilization. This means an increase in the volume sold. This also contributed to the fact that we achieved our ambitious goals for volume growth in the first quarter of 2024. More than 40% of the volume increase in our core business in the performance materials segment is due to the improved chlorine supply after eliminating the force majeure in our plants in Dormagen and Krefeld-Uerdingen. In 2023, the initiative's price excellence and product portfolio optimization in the segment solutions and specialties had a positive impact. For the business unit coatings and adhesives, the share of specialties compared to standard products was increased, and this meant a low double-digit EUR million amount compared to 2022.
In accordance with this, Engineering Plastics was able to achieve a mid double-digit EUR million amount. For 2024, we plan cost savings in the order of compensating for inflation-related cost increases. Mr. Beckendorff, you asked about our mid-cycle EBITDA forecast and whether this continues to be valid. We are convinced of this and continue to be so. This is something that shows us the EBITDA that we would have with a balanced supply and demand for each year. This is something which takes into account our capacities, our fixed costs, as well as our synergies when it comes to the acquisition of resin and functional materials in 2021 from DSM. So this means that for fiscal 2024, we would have a mid-cycle EBITDA of EUR 2.8 billion. In 2023, we would then have if we have the normal facility utilization and demand, we have 20% that could be sold.
In addition, when it comes to lower product margins in 2023, every percentage point in volume growth means growth in EBITDA of at least EUR 50 million per year. Starting with the EBITDA in 2023 of EUR 1.1 billion, this means that a normal capacity utilization would have meant an increase in the EBITDA of more than EUR 1 billion. Normalization of the low product margins due to economic recovery will then close the gap to the EUR 2.8 billion as a mid-cycle EBITDA for 2024. In addition, you also mentioned that the mid-cycle EBITDA is something that is not being communicated as offensively as in the past. I understand you to say that you were talking about our investor presentation as part of our overall publication. This is something that shows the amount of the mid-cycle EBITDA as a rising line without any figures.
We decided on this type of presentation to avoid confusion with the EBITDA guidance for 2024. This was to avoid confusion. So now I'd like to hand over to Sucheta Govil.
Thank you, Christian. Mr. Beckendorff, you also asked about the breakdown of the volume-related sales decline into the effects of weak demand versus lack of availability of raw materials. Due to lower sales volumes, our revenue in 2023 decreased by 6.8% year over year compared to 2022 on a price and currency-adjusted basis. Two-thirds of this decline is attributable to our core business and primarily reflects weak demand in the market, with only limited availability of raw materials playing only a secondary role. One-third of the decline is due to lower sales volumes outside of this core business, and this includes decreases in the sales of byproducts and side products. Mr. Beckendorff, you also inquired about the capacity utilization of our plants in the performance materials and solutions and specialty segments and in the regions EMLA, North America, and APAC.
In fiscal 2023, capacity utilization in the performance materials segment remained unchanged over the previous year at just under 70%. This could be significantly increased by 8 percentage points in the first quarter of 2024. In fiscal 2023, capacity utilization in the solutions and specialty segment was slightly below the previous year's level of 42% by 2 percentage points. This could also be significantly increased by 5 percentage points in the first quarter of 2024. In this segment, lower capacity utilization rates generally arise due to batch production compared to the continuous production processes at performance materials. In fiscal 2023, capacity utilization in the APAC region remained the highest. It was 2 percentage points lower than the previous year's level of 77%. Capacity utilization could be further increased by 10 percentage points in the first quarter of 2024.
The North America region performed +8 percentage points above the previous year's 62%. Once again, we were able to slightly increase this level by 1 percentage point in the first quarter of 2024. The EMEA region performed -4 percentage points below the previous year's level of 52%. However, this development could be more than fully reversed in the first quarter of 2024 with an increase of 8 percentage points. With that, I hand over to my colleague, Thorsten Dreier.
Mr. Beckendorff, you asked about the competitiveness of Covestro's European sites. In view of current energy prices, the high energy prices in Europe have a negative impact on the competitiveness of Covestro sites to a substantial extent because of the higher production costs compared to competitors in regions with lower cost energy. However, European factories also benefit from their vicinity to the customer industries and good logistics infrastructure. Covestro is always working on increasing efficiency and expanding renewable energies in order to enhance its competitive position in Europe and globally. All in all, the situation for our European sites is still challenging because of the energy prices. Mr. Beckendorff, you also asked about closing of plants or shifting of production abroad due to structural disadvantages in Europe. As a global company, Covestro, of course, is always looking at different options in order to maintain and even improve its competitiveness.
This can lead to investments in existing sites, the search for new sites, or other measures as well. With regard to site decisions, I can say that many factors play a role, and these include energy costs and bureaucratic obstacles, also things such as raw materials costs, new construction costs, logistics thoughts, and the availability of experts, and the long-term demand situation in each region. Our production facilities involve investments of EUR billions, and they have long use periods. Decisions on closing and investments, therefore, are long-term decisions. Now, in view of the current high energy costs in Europe, the economic growth in the future will probably focus more on the Asia-Pacific region and the U.S. Gulf area, where Covestro already has facilities for all of its products in order to accompany this growth. On that note, I'd like to hand over to Mr. Pott.
Thank you very much, Mr. Dreier. Now we will answer the questions which relate to the Supervisory Board. Mr. Beckendorff, you asked about the conclusions the Supervisory Board and the Board of Management can draw from the critical analysis of the virtual AGM in 2023. At our AGM last year, there was a technical problem in connecting up the shareholders for their contributions. Our analysis following the AGM showed that this technical disturbance was due to a link that was not working at this point in time, and this was due to human error. In preparing for this year's AGM for 2024, that is, that's why we worked together with our service provider and worked even more intensely with the technical processes so that any technical risks or disturbances could be minimized for today's AGM.
The Board of Management and the Supervisory Board are convinced that the virtual AGM is practicable and at the same time shareholder-friendly as an alternative to in-person AGMs. And that is why we hope that this year as well, that we will be able to convince you with our virtual AGM. Mr. Beckendorff, you then asked about the number of participants compared to last year. Right now, we have 134 shareholders in the investor portal or their representatives. Last year, the peak of those logged in shareholders and their representatives was 132. And you and all of the other registered shareholders have access to the current list of participants in the investor portal. How many of these people are following our AGM on the public stream is something that we have not determined this year either.
Mr. Beckendorff, you then asked about the time when it comes to achievement of targets with our profit-sharing plan, the PSP, and then you talked about the Supervisory Board and the Board of Management and whether or not there would be any link between the two. The results or the forecasts for target achievement are available to the boards at about the same time. When it comes to an amount or a deviation from the payout period is where the personnel committee and the Supervisory Board dealt with this at their December meeting in 2023. This was on the basis of the forecast. A final decision on this, however, cannot be taken until the end of the fiscal year.
And that is why the Supervisory Board, on the basis of a recommendation from the personnel council on the 12th of February, 2024, decided on the 50% payout amount. The Board of Management then saw the bonus payments for those employees was decided on the 15th of January, 2024, and this was defined at 50%. Taking into account the transparency of the payment and for the workers, the Board of Management agreed on the Supervisory Board's decisions of 50% for the workforce. This was taken into account, which is an implied link, but this was neither in one way or the other. Another question you asked, Mr. Beckendorff, you were interested in whether the way the Covestro profit-sharing plan works, PSP, is this do we consider this appropriate?
PSP has been in place since 2015, and the discretionary intervention on the part of the Supervisory Board was only taken into account in the last two fiscal years. This was due to the challenging economic situation, in particular. In all of the other fiscal years, the bonus payments were based purely mathematically on the appropriate categories and paid out. The Supervisory Board, in two consecutive years, did not apply or that it made use of its discretionary power is not satisfactory, but it is not a deficiency. We are working on the future structure of the bonus-related figures, and this is something that takes into account not only the economic situation, but also the question of discretionary intervention on behalf of the part of the Supervisory Board.
Mr. Beckendorff, you then asked about the incentive of profit-sharing plan, and this is important for the threshold values for the financial key performance indicators would also apply in 2024 if these are not achieved in 2024. In 2021, these were the thresholds, which are maximum values for 2022- 2024, and this was then on the basis of the financial plans at that point in time. Now, at that point in time, it was not something that could be predicted with the war in Ukraine, and this had a major increase in energy costs and a decline in demand. Since 2022 now, this meant that Covestro is in a very difficult economic and financial situation. This is also reflected in the payout rate of the short-term variable pay, in particular when the capital costs have not been earned.
But as I said before, we are now discussing the future organization of the bonus-related indicators, which will also take into account the economic situation. Mr. Beckendorff, you then asked about the relevant weighting of the components outperformance and sustainability in the long-term compensation program Prisma for the performance period 2024- 2027. The outperformance factor has a weighting for the performance period 2023- 2026, which amounts to 75%. As an addition to two additional KPIs for the sustainability component, we also adapted the weighting. As of performance period 2024 and lasting up until 2027, the outperformance factor will be weighted at 70%, and for the three KPIs from sustainability, we will see a weighting of 10% each, thus a total amount of 30%.
Mr. Beckendorff, you also asked why, as an additional sustainability criterion as of Prisma 2024-2027, the participation rate of the regular employee questionnaire and the satisfaction of the employees is taken into account. As I said before, compensation systems for the Board of Management and the workforce are continuous at Covestro. The vast majority of the employees where the long-term compensation component is applied is responsible for personnel. Measuring the participants' quota is an incentive for the superiors to be concerned with this survey and to discuss the results with their teams and to also identify possibilities for improvement and to follow up on them. The responder rate is also influenced by the perception of the employees showing how seriously their superiors take the results and react to them. The way of dealing with the survey, the employee surveys, will strengthen our culture of dialogue.
When making use of employee satisfaction as a key performance indicator, this gives us the risk that the long-term compensation, the employees entitled to that, may have an impact on their own pay in terms of how they answer the questions in the survey. This could also have an impact or damaging to the credibility and reliability of the people working on the survey. I'm going to continue now with my I think I've continued all my questions, and I'm now going to continue with questions for Mr. Masek. Mr. Masek, you asked why or what were the major reasons in 2023 there were controversial discussions between the Supervisory Board and the Board of Management and what decisions were taken. The exchange between the Supervisory Board and the Board of Management is good. We have a good discussion culture. This also applies to discussions within the different bodies.
Especially intense discussions were held in 2023 together with the Board of Management when we dealt with strategic questions and options, Scope 3 targets for our company, as well as the inclusion of a sustainability component from the social area in our long-term variable compensation for the Board of Management. We considered the opportunities and risks, took things from different points of view. And when we came up with a resolution on a certain topic, the Supervisory Board then came to a resolution as in normal way of business. I'd be happy to explain this to you on the basis of the addition of the sustainability component from the social area in the long-term compensation of the Board of Management.
As you know, and I reported on this in the report from the Supervisory Board, we see that the Supervisory Board has decided on a sustainability component from the social area, and this consists of two aspects. These focus on occupational health and safety and employee commitment. These two factors were dealt with by the Board of Management. We also include the different departments of the company. A uniform way ahead based on this question of the compensation system for the Board of Management and employees was what our goal was. With a number of potential criteria, we took these two factors. These were selected, and we weighed the pros and cons, including transparency and the ability to audit them. We agreed on the recordable incident rate for occupational health and safety, the RIR, the number of reportable incidents. We agreed on this very quickly.
The second factor from the employees' engagement was something that was discussed intensely at a number of meetings. As far as the Supervisory Board is concerned, we asked again and again whether simply participating in these surveys is sufficiently ambitious. Is it more the results of such questionnaires that count? The preferred alternative for some members of the Supervisory Board would have been a diversity criterion. After discussions, intense discussions on the meaning of the participation in these surveys, also in conjunction with CSRD, we dealt with this intensely. The Supervisory Board then decided that the recordable incident rate and the RIR and the rate of participation in the regular employee surveys would be included in the long-term variable pay for the Board of Management. The Board of Management then included this in their considerations and adopted this resolution for the compensation for the workforce.
Mr. Masek, you then asked why there was an increase in the compensation for the board members in 2023 compared to 2022 and the contractual basis for this. I'd like to focus my answer on the compensation for the members of the Board of Management because the members of the Supervisory Board receive a fixed compensation, which has remained unchanged. The total compensation for the Supervisory Board went up because of a higher number of meetings last year, so there was more pay that needed to be made. But the main reason for the higher payment for the Board of Management members is due to the payout of tranche 2020 to 2023 in our long-term compensation payment. The payout is based on the absolute and relative share price development for the Covestro share over this four-year period.
The share between 2020 and 2023 developed considerably better than it did between 2019 and 2022, which was relevant for the previous year's payout. The percentage of payout went from 27% in the previous year to 119.9% for 2023. For further details on this, including the relevant share developments, you can see all of this in the compensation report where this is all presented very transparently. So in addition to the long-term compensation, we also see the short-term variable compensation, which increased compared to 2022 because for 2022, the Supervisory Board had decided that the variable compensation would be reduced to zero. Unlike that, the payment for fiscal 2023, which here we have a percentage of 75%, and this was then reduced to 50%.
This also, to a lesser extent, contributes to the long-term component, is a contributing factor to the increase in the overall compensation. The basis for these payments would be the employment contracts for the Board of Management members as well as Covestro's compensation system, which was approved last year at last year's AGM with a vast majority. Mr. Steilemann, I'd like to ask you to take over.
Gladly, Mr. Pott. Mr. Masek, you asked about the halt to investments in Germany and shifts of production facilities to other countries. One of your predecessor speakers, Mr. Beckendorff, asked a similar question. Leaning on the response I gave to that, I would like to mention that the energy costs that you mentioned and the associated energy supply for our chemical production processes play an important role, and the electricity prices in Germany remain not competitive on an international basis.
Bureaucracy in Germany and Europe also takes a lot of time and money. Government decisions have to be weighed, provide legal certainty, be practicable, resolute, and appropriate when they are implemented by companies. And of course, there are a number of different factors that play a role: raw material costs, new build costs, logistical considerations, skilled labor, the long-term demand in each of the regions. A temporary production shift in order to optimize capacity utilization in a region is conceivable. Mr. Masek, you asked about the five biggest donations. The five biggest donations in fiscal 2023 were made to organizations in India, Germany, and the USA.
They were in this order: United Way of Mumbai in India, an organization for the improvement of living conditions in India, in the amount of EUR 340,000. Deepstambh Foundation in India, an organization for the promotion of educational opportunities, in particular for disadvantaged segments of the population in India, in the amount of EUR 280,000. Betterplace.org in Germany, a donation platform, in the amount of EUR 86,000, with a doubling action of the employee donations in the occasion of the severe earthquakes in Turkey and Syria. United Way of Allegheny County in the USA, an organization with diverse projects to balance out social imbalances and support health and educational programs, in the amount of EUR 61,000. And United Way of Greater Baytown Area, with the same goals, also in the USA, in the amount of EUR 60,000.
Mr. Rautenberg, you asked a number of different questions with respect to the talks with ADNOC. You asked whether the talks came to a halt, and if so, why, and what issues ADNOC and Covestro still have to agree on. How many talks have been conducted between Covestro and ADNOC? When did the first talk take place with ADNOC? And when will the last one take place? Who is conducting the talks on behalf of Covestro and on behalf of ADNOC? How is Covestro ensuring that in these talks, the shareholders' interests will be protected? And last but not least, if the talks with ADNOC fail, will the share price of Covestro come under pressure, and what is Covestro doing in order to prevent that? As I mentioned earlier, we're in ongoing talks with ADNOC in agreement with the stock corporation laws' obligations in a constructive and open manner.
The guideline of our action is the interests of our company, our shareholders, and all relevant stakeholders. We decided to enter into talks in line with our fiduciary obligations according to German stock corporation law in order to understand everything correctly with respect to the space for options and a possible transaction with ADNOC in order to have a well-founded basis of information to reach the best possible decision for our shareholders and all other relevant stakeholders. These talks must be prepared and conducted. That is the task of the Board of Management, and it's supported in doing this by select executives of the company and renowned financial and legal advisors. As I mentioned before, we're not interested in wasting time unnecessarily.
However, given the degree of complexity, this type of talk or these types of talks have to be prepared very carefully, and they require a lot of time by both interlocutors. The results of the talks and any relevant changes will, of course, be communicated in line with our obligations under capital market law. But at this juncture, I ask of your understanding that I cannot make any disclosures on details of the issues that are being negotiated or the conduct of the negotiations because, of course, these talks are being held confidentially. A report on confidential details would also weaken our negotiating position, which would not be in the interest of the company, the shareholder, or any other stakeholder. Therefore, we are not making any comments on any individual aspects that may have been addressed by the press.
At present, there is no certainty on the part of any of the parties that would have a ramification on the results of the talks. It may therefore be that at the end, we may have an agreement with ADNOC that cannot be reached because it doesn't safeguard the interests of our company, the shareholders, and all of the relevant stakeholders. You also spoke of the fact that the failure of these talks may weigh on our share price, and you asked what we're doing to avoid this. Here, I'd like to reiterate what I mentioned during my speech earlier on. The entire chemical sector is currently in a cyclical downturn. Covestro, however, has substantial independent potential for creating value. Our company, from a current point of view, is well set up for the future, both in strategic and operating terms.
We believe that the strategic course for the circular economy, and I've already mentioned all of the numerous measures that we are taking and working on in order to improve our performance, competitive position, and so on. Therefore, we are firmly convinced that Covestro in 2024 will again master all of the difficulties in front of it and that we will stay our strategic course towards the circular economy and climate neutrality, scoring many successes along the way. Mr. Rautenberg, you asked what Covestro has to do for an independent, prosperous future. In order to secure its future, Covestro has to continuously invest in innovations and sustainable products. Diversification in new growth areas is just as important as our operating excellence, cost efficiency, and global presence with local production and key markets. Highly qualified staff must be recruited. Partnerships must be forged with industrial partners.
Startups and research organizations must also be collaborated with. This may provide further impetus for Covestro to become fit for the future. A well-balanced mix of innovating prowess, sustainability, efficiency, and strategic orientation forms the basis for long-term success. Mr. Rautenberg, you asked about the publication of the water data within the scope of the Carbon Disclosure Project. According to our vision to reach a circular economy within the scope of the CDP, which used to be the Carbon Disclosure Project, since 2021, we've been reporting on climate protection. In this context, it is important to focus important resources in a value-generating manner. We report in detail on water, and we have also undertaken a voluntary obligation at Covestro on how we deal with water. Against this backdrop, this year, we do not plan to participate in CDP Water.
A future participation, however, will be considered anew in the future. Mr. von Angerer, you asked whether Covestro was ready to prove that it is a leader within the European chemical sector by setting itself a timed short-term target of increasing its share of non-fossil fuels. We pursue the vision of becoming fully aligned for a circular economy, and we have set ourselves ambitious targets. In February, we published our Scope 3 climate targets with a milestone of -10 million metric tons of CO2 equivalent by 2035. That translates into -30% compared to the base year 2021, with partial compensation of growth-driven emissions. An important component of our Scope 3 implementation plan, which pays into this short-term goal, is the purchase of alternative fuels that are based on, and the sales of products based on alternative fuels.
Irrespective of this, the conversion of production facilities and technical processes takes some time. Nevertheless, we're investing constantly in the development of our own technologies to promote the circular economy and the use of alternative fuels. In this connection, for instance, in 2023, we commissioned a bio-aniline pilot plant in Leverkusen, and in February 2024, we opened it officially. By doing this again, we want to replace fossil fuels prospectively. Having said that, I would like to hand over to Christian Baier.
Mr. Masek, you also asked about the range of EBITDA forecast for 2024, and you asked about further explanation of this. Last year, due to the challenging and uncertain economic and geopolitical circumstances, we said that our guideline for 2023 would be comparative and would be quantified at the beginning of the year, and we only did that at the beginning of the year, and we went back to the normal bandwidth, the EUR 500 million. The specific EBITDA forecast for 2024 of EUR 1.0-EUR 1.6 billion also takes into account the overall large geopolitical and macroeconomic uncertainties, which will have a particular impact and can have a particular impact on our volume growth and our margins. In 2024, we believe there will be volume growth at upper-digit, single-digit percentage, and we have calculated EBITDA contribution to be EUR 50 million.
On the other hand, in terms of margins, we believe there will be a negative nine-digit low to medium range nine-digit euro figure. This is due to the lower margins at the beginning of the year and a much better beginning situation this year compared to 2023. For margins, we look at the difference between purchasing and sales prices, and since for our sales prices, our purchasing prices are always taken into account, this overall way of looking at things has paid off for us. Mr. Masek, you asked about the administrative and financial expenditure in fulfilling the sustainability obligations of the company. Currently, we are in the midst of meeting regulations for our upcoming report. Today already, Covestro reports on sustainability. Key subjects and non-financial KPIs are reported according to paragraph 315, section 3 of the German Act, and we add further content to this as we can.
Beyond that, there is another option for changing sustainability standards based on GRI. In addition to that, we are in constant discussions with NGOs with regard to sustainability at Covestro. We therefore don't believe that in implementing CSRD, there is going to be an increased risk to a demand for more sustainability by third parties. Mr. Masek, you were asking about the administrative and financial expenditures caused by the meeting of sustainability demands. Sustainability is a fixed part of our group strategy. In 2016, we set our sustainability targets, and we are constantly adapting them to our strategy and visions based on accepted standards. We also report on the scope and sustainability. All in all, the meeting of ESG rules do lead to major administrative and financial expenditures, but Covestro cannot state specifically what they are.
The expenditures have to do with many different areas of the company, and this is the case because it's of strategic importance for Covestro. For implementation of the Corporate Sustainability Reporting Directive, we have established an internal project in which numerous internal resources are being used. We have internal expenditures, but also we have outside counselors, and auditing costs involved currently. We expected it to be external additional costs of EUR medium-range three-digit thousands or six-digit figure. Mr. Masek, you asked about how high the effective interest rate at the beginning. At the point in time when we issued our bond in 2022 compared to the bonds from 2016- 2020, the main difference in the different bonds you mentioned is the risk-free interest rate. In 2023, when we issued our bond that will come due in 2028, it was 3.05%.
In issuing our bond in 2016 that comes due in 2024, that interest rate was just 0.4%. In issuing our bonds that come due in 2026 and 2030, and that was in 2020, that was at about 0.2% or 0.0% for the other. In addition to that, the terms that you mentioned and the bonds in particular had different conditions for them. For Covestro, issuing a green bond had two main advantages. First of all, the potential investors for a green bond is greater than for a conventional bond. This means that there's more demand for the bond, and this helps us optimize the interest rate too, of course. In addition to that, the green bond supports projects within the framework of our strategy for sustainability and a circular economy. Mr. Masek, you asked whether or not shareholder return is still at the focus.
Prioritization of cash and profit has not changed. The further development of the company still has a priority. Investments in the future, the second priority, is still changing and offering an attractive dividend. Of course, we regret that for 2022 and 2023, this was not possible. Mr. Masek, you asked about the civil law isocyanate class action suit in the U.S. Background to this class action suit from July 20th, 2018, which was filed against Covestro and other isocyanate producers, is the claim that different U.S. MDI and TDI customers violated U.S. laws because they artificially reduced the amount of available MDI and TDI and thus ensured higher prices in the market.
In view of the six-month investigation by the U.S. Department of Justice on possible anti-competitive practices for MDI, Covestro therefore still does not see any basis for these allegations and will continue to use whatever means are at its disposal to defend itself. Currently, the proceedings are in the so-called discovery phase. Mr. Rautenberg, you asked why we are not moving back to a hybrid format or a face-to-face AGM as we did for our annual financial press conference. Well, as one of the previous speakers mentioned, the Board of Management opted for the virtual format for the AGM. This year, the German lawmakers said that virtual AGMs are a long-term alternative for AGMs, and the AGM in 2023 gave the Board of Management of Covestro the authority to decide on the AGM for two years.
For this year's decision, we looked in particular at the items on the agenda, our shareholder structure, sustainability aspects, and costs in making this decision. With regard to our annual financial press conference, there we have normally 10-20 guests, but at an AGM, we have normally several hundred guests. And therefore, the format and implementation of the two different events are hard to compare, and decisions in each case depend on different factors. The Board of Management and Supervisory Board therefore still believe that the virtual format is a practical and alternative that can be good for shareholders too. Therefore, we hope that this year we are going to be able to convince you that a virtual AGM is a good alternative.
Mr. Rautenberg, you asked about how many fixed costs have to be cut. We plan to continue to successfully cut our costs, which are going to compensate for the inflation-based cost increase. The identified measures this year are, for instance, the fact that people not paid according to the normal collective agreement pay scale won't have an increase, and others. And Mr. Beckendorff, I'd like to get back to EBITDA, and I have to correct one statement. The correct statement is, in 2023, if there were the appropriate demand and capacity utilization, we could have produced and sold 20% more. I said margin rather than amount previously, and I apologize for that. For that, I will hand over to my colleague, Sucheta.
Thank you, Christian. I take another question. Mr. Masek, you asked about our most successful production sites worldwide. For us, a successful production site is characterized by high plant availability, and in recent years, our Asian production sites in particular have been very reliable. Example, our integrated site in Shanghai, China, and our polycarbonate plant in Thailand. With that, I hand back to Richard.
Thank you very much for answering those questions. That brings us to the next round of questions, and the next speakers, I think they're all male speakers this time: Jörg Ulrich Giebel, Felix Jahn, Dr. Gottfried Arnold, Andreas Grundbichler.
I would like to request that the technical team is asking you to go to the investor portal for the technical test, and I would then interrupt the AGM for about five minutes. After that, we will continue with those speakers. Mr. Gabler, we haven't heard any more from him yet, and it's now the last possibility for him to request the floor. For the time being, we're going to break right now, and we will return once these technical tests have been completed. Thank you very much.
Ladies and gentlemen, the AGM is resumed. The Supervisory Board remains here on site. The next speaker I would like to call is Mr. Giebel. Mr. Giebel, the floor is yours.
Chairman, ladies and gentlemen, my name is Mr. Giebel, and I'm representing my own shares. My first question relates to the independence test. Mr. Mark Hermanns from Cologne is the person in question here. Here, I'd like to know the share of income of this gentleman due to his activities for Covestro relative to his total income as a notary public and attorney at law. In other words, in order to assess the person's independence, we need to know the share of income they procure from you relative to their overall income, and there's a ruling of the regional court of Hanover that becomes pertinent in this context. My second question relates to the fact that a member of the Board of Management apparently is not in a position or capable to present answers to the questions that we have posed in Germany.
So I want to know what language you speak during the meetings of the Board of Management, what language the preparatory documents are written in, whether you speak German from start to finish. The backdrop to this is that a non-native of course is always at a disadvantage if they cannot present in their own mother tongue. This is why I have a follow-on question. Are qualified applicants for seats on the Board of Management rejected because their English skills are not that good? May it perhaps be sensible to request from members of the Board of Management, at least after a certain period of time, that they gain a basic command of German, and if you don't agree with me, why? The next question relates to Mr. Baier, the CFO. I noticed that Mr. Baier does not hold any shares in Covestro.
No, you may respond by saying that he hasn't been with the company for that long and he can still procure some, but of course he can use his private funds to do that. If he's confident about the Covestro share, or for legal reasons, I should reformulate that. If I were confident about the Covestro share, as there is reason to be, as Mr. Baier said, then privately I would have bought shares in Covestro. So why did Mr. Baier not do that? Does Mr. Baier have information or assessments that have not been communicated with us which relate to the future of the share and may not be that rosy and therefore have motivated him not to buy any shares? My last question relates to non-pecuniary proceeds and other compensation in kind on the Board of Management. Mr. Steilemann procured EUR 24,000, Mrs. Govil EUR 36,000.
Please, could you let us know for each of these individuals separately the five biggest items, and please explain why a simple member of the Board of Management has greater compensation in kind and other emoluments than the chairman of the Board of Management? If this relates to the use of a company car, I would like to know the amount and the carbon footprint of the corresponding business car relative to the carbon footprint of the company fleet of the company in Germany. My next question relates to the members of the Supervisory Board. Excuse me, the works council. The employee representatives receive EUR 550,000 in additional compensation that is not associated to their offices on the Supervisory Board. This links up to the pointer that activity on a works council is voluntary and is not remunerated. I know that some people see this differently.
The CEO of a major automotive firm believed that that was not correct and demanded that he receive EUR millions in income. This was rejected by the courts, and it was deemed that that was not debatable. Therefore, I would like to know how many works council members have been absolved from performing their normal tasks? How is the earnings trend calculated for these works council members who are absolved from performing normal tasks? And please let me know the biggest and smallest sum that is received by a works council member who no longer has to fulfill their normal tasks.
If you counter by saying that this cannot be disclosed for reasons of data privacy, then I would say that just disclosing the biggest and smallest sum, I cannot draw any conclusions to the individual in question because the limits of the compensation of the works council members are not linked to years of service or hierarchy, for instance, of the chairman, and therefore I don't think there should be a problem providing this information. The next question relates to the Board of Management, and it's directed to the variable compensation and the performance-linked compensation. I would like to know about all of the elements of the performance-linked compensation. It's difficult to understand why.
In a situation where the company is earning losses, the shareholders, who at the end of the day bear the risks due to their investment in the company, do not receive any compensation for this willingness to take on the risks, but the Board of Management, despite these substantial losses, receives variable performance-based compensation. Is this compensation or can this compensation be broken down for each member of the Board of Management? And could you also tell us why the Board of Management is receiving this type of compensation, although the shareholders are not receiving any remuneration for their assumption of these risks? In your responses, you've already spoken about the PSP and the discretionary right of the Supervisory Board to intervene. You have a system that allows such discretionary rights of the Supervisory Board, but you really don't need it here. Compensation is paid. Performance-based compensation is made arbitrarily.
You could just say, "Well, Mr. Pott is going to look at the candidates, and then he will decide based on his own discretionary opinion what the compensation is supposed to be on a performance-based basis." So why do you need this agreement? In response to the question posed by Mr. Beckendorff with respect to performance-linked compensation, you responded or you reasoned why the participation rate is more important than the satisfaction of the employees. Did I understand you correctly that a superior whose entire staff participates in the survey and all of his or her employees gives them a bad rating, nevertheless, is considered to have been successful? So if a superior's employees are all completely dissatisfied with him or her, does the superior still receive performance-based compensation because of the turnout of his or her staff? I would find that hard to believe.
With respect to the technical proceedings of the AGM, I had a technical outage that was not due to my internet connection or my device, and therefore, just for a couple of minutes, I was unable to follow the AGM. During the technical test, the technician, very early on, switched off the feed from the AGM so he could talk to me, and as a result, I was unable to follow the submissions on ad hoc. However, since that's important, and you referred to that later on, I kindly request that you repeat that portion of the speech because only in this way will I be able to reach a well-informed decision. My next point picks up on where Mr. Masek left off with respect to donations. You said that donations were made for certain purposes, for the benefit of people in India, Turkey, and the United States of America.
Why are the biggest donations being made to countries outside of Germany? Why did you not make major donations in Germany as well? Or at least, why is Germany not featured among the big five? So my question is, what donations benefit for people who live and work in Germany? Follow-on question. For what reason do you make donations? What do you expect from them? Why do you make donations? What's your motivation for that? And my last question in this connection is whether you made donations to political parties, and if so, in what amount? And if so, please mention the party name and the amount of the donation. My next item is the talks with ADNOC. You say justifiably that they are confidential and therefore you cannot comment on them, and therefore I will leave that be. But I would like to ask you this question.
Are there change-of-control clauses in the contracts of the members of the Board of Management, and if so, what do these clauses look like? If they are different from one board member to the next, please explain to us all of the clauses, and please let me know how high the maximum financial advantage is for each of the members of the Board of Management in the event of a change of control. I'd like to remind you in this connection of Mr. Klaus Esser, the former CEO of Mannesmann. He was vehemently opposed to a takeover by Vodafone, but at the end of the day, he endorsed the takeover, and then it transpired that Vodafone paid him EUR 17.9 million in recognition of his contribution. In sum, he received a bonus of EUR 30 million for selling Mannesmann to Vodafone.
Now, of course, I'm not going to ask you whether ADNOC has committed to paying a success bonus to you or whether the talks are so difficult because you're trying to drive up the bonuses. Of course, you'd decline rightly to disclose that. But the members of the Board of Management and the members of the Supervisory Board and I ask you this, is it acceptable whether it would be acceptable for any of these members to receive success bonuses in the event of a takeover? My last question relates to the costs associated with the AGM. Here, you have been quite vague and intransparent. You've just said that they have been considered. Please let us know the costs of an in-person AGM, a virtual AGM, and maybe a hybrid AGM, which you could perhaps estimate.
Perhaps you could mention the five biggest cost items for each type of event. Please let us know the total cost of an AGM per shareholder, be it in person or virtual. Thank you.
Thank you, Mr. Giebel, for your questions. As a result, we'll move on to the next speaker, Mr. Jahn. The floor is yours.
Chairman Pott, members of the Supervisory Board and Board of Management, I have a couple of additional questions because many of my questions have already been asked by the previous speaker. First of all, I would like to ask about this. Let me hold this up to the camera. This is the current annual report for BASF, and my question for you, Dr. Pott, is this: do you think that this annual report would you prefer to read it as a PDF or as an actual printout with 300 pages that you can actually hold in your hands? Now, my questions. Question number one. This was a question that Mr. Beckendorff and Mr. Masek already asked about production costs. And I think Ms. Govil and Mr. D reier already said something about this subject too.
But those questions were about a different aspect. So let me ask again. Your competitor, Peter Huntsman, said about the polyurethane market. Well, it was a telephone conference on the fourth quarter, and he said, "If you have a look around the world, the low-cost producers are now in China." And he also said, "In Europe, we are perhaps not the lowest cost, but I would bet that we are very close to the lowest cost producers." So what competitive advantages and this is my question does Covestro have with regard to production costs? Or to ask it differently, why should I invest in Covestro and not invest in Huntsman and Dow Chemical, for example? The next question was about just a minute, please. Here we are. The subject of ad hoc, but a different question.
In your annual reports, 16th August, 8th of September, 26th of September, 2nd of October, at those meetings, the Supervisory Board dealt with takeover subjects. That's page 29 of the annual report, 15th of August, 25th of August, 22nd of September, 18th of October, 31st of October. There, the presidium committee of the Supervisory Board looked at takeover subjects, page 23 of your annual report. Now, how much time of your overall meeting time for the Supervisory Board was taken up by these takeover subjects? I'm worried a little bit that perhaps your operational business is being neglected, and you're only looking at subjects such as these, such as possible takeovers. Am I worried about this for no reason? And then another question that was also asked by Mr. Beckendorff. It's about the mid-cycle EBITDA.
It was supposed to be going from EUR 2.2 billion EBITDA in 2021 to EUR 2.8 billion EBITDA in 2024. It was supposed to go up to that level. We heard that at your virtual investor conference, 2021. It's chart 51. Then reasons mentioned there were Resins and Functional Materials profit contribution, synergies. This year, it was supposed to be EUR 80 million. That is 2023. Is that true? 2025, EUR 120 million. Is that also still going to be true? And then stable fixed costs were mentioned. Now, the RFM profit contribution, why will that possibly be a disappointment, and why will the synergy costs possibly not be targeted or not be reached? This warning is to be found in your Covestro EUR 5 billion debt issuance program, base prospectus, 15th of March, 2024. Then I have another question that also Mr.
Beckendorff asked about fixed costs, and the answer we got from Mr. Baier was that the administrative costs went down. Now, I figured out something else. Based on the year 2020, fixed costs up until 2023 were supposed to remain the same. That was at the virtual investor conference, chart 49. Compared to 2020, however, the general administrative costs were up by EUR 50 million to EUR 360 million. Mr. Baier also just said that administrative costs or costs of sales were down by EUR 50 million. You can read this if you wish: EUR 360 million, annual report, page 339, and EUR 310 million. That was 2020 annual report, page 187 of the 2020 annual report. Then research development costs, 2023 compared to 2020, they were up by EUR 112 million, EUR 374 million instead of EUR 262 million. Now, why did they go up?
You were talking about reducing fixed costs and at least keeping them at the level of 2020 as you announced back then. Why did that fail, or were there certain fixed costs that were forgotten? Because costs of sales, that's variable, right? Then investments and write-offs. 2022, the investments were supposed to stay at the level of the write-offs. That was announced in 2021, chart 54 there. 2023, the depreciation was EUR 894 million, annual report 23, page 266, and investments EUR 755 million, annual report 23, page 242. Now, please explain to us why there's a discrepancy of EUR 129 million there. That's significant. The investments were significantly lower compared to the depreciation. Are you doing that to just make your free cash flow look better? Okay.
Then, employees end of 2021, according to the virtual investor conference, page 248, you had a specific number of full-time equivalents there, 16,100 employees plus 800 taken over from Resins & Functional Materials from DSM. So total 70,900 with a LEAP program. Further reductions were expected by 2023. 17,000 FTEs, 17,500 FTEs were reached. That was the 2023 annual report, page 176. In what areas? Administration, marketing, sales, R&D, or production? Do you think that AI can be used or other measures too to reduce headcount even further starting in fiscal 2024? Then next question, coatings and adhesives. In your annual report, page 285, you write that the essential planning assumption is that the current difficult macroeconomic situation will continue or will normalize to a great extent by 2025. Then revenues, 2025, EUR 2.897 billion. Or do you still hold to your forecast from 2021?
Look for that at the virtual investor conference, chart 10, revenue there for 2020, EUR 2.7 billion, and average annual growth, CAGR, of 5%. Then I'll be done in a minute. Oh, yes. Then planned or unplanned interruptions in production. What was that about? Probably Uerdingen and Dormagen, although we didn't have any specific explanation of that in the 2023 annual report. In the 2023 annual report, there's page 273. It says the general other income included refund from insurance company due to shutdowns in these segments of performance materials. Look at annex 8, other operational expenses. So please explain to us how that came about. I'm not that good at accounting. Please explain it to us. Then there was a question that Mr. Beckendorff and Mr. Giebel also asked. It was about Board of Management remuneration and the leeway, page 223.
Am I right in assuming that the more sustainable and the more environmentally friendlier production is? It is not at all. In other words, the higher your remuneration or compensation is or you have those KPIs. And how do they correlate negatively to each other? If you're economically successful, then you'll pollute the environment, and if you're less economically successful, then you benefit the environment. So that means basically your remuneration could be flattened out. Does that even make sense, or shouldn't that somehow be thought through again? And then the last two questions. Yes. According to the virtual investor conference, chart 27, that was in 2021, it said there that the demand for methylene diphenyl diisocyanate, MDI, were going to go from 2020- 2025 up by 6% per year. The offer of MDI in the same time period would go up by 5% in 2023.
That was an excess amount. Was there an excess amount of MDI in the market greater than the amount that you forecasted? And then 2025, you're saying that there would be an excess of 1,093 kilotons in excess. Does that remain the same? And then about TDI, according to the 2021 virtual investor conference, the demand for toluene diisocyanate was going to go up by 6% per year from 2020 to 2025. The demand for TDI in the same time period was going to go up by 2%. In the 2023 annual report, was the excess offering higher than the 700 kilotons you forecast? And for 2025, you said there would be an excess demand of 505 kilotons. Does that forecast still apply? Okay. Thank you for your patience and your answers. That was it.
Thank you very much, Mr. Jahn, for your questions. The next speaker is Dr. Arnold.
Good afternoon. First of all, I would like to pick up on what the previous speaker said with regard to the deficiencies in digital transmission. With my browser, I have dissociation or no synchronization between the sound and the image, and you have not. Well, I'd like to request that this be improved, and I would also like to request an in-person AGM. Ladies and gentlemen, members of the Board of Management, members of or the shareholders, my name is Gottfried Arnold. I am a pediatrician. I'm retired, and I got my Ph.D. many years ago, and I wrote on carbon monoxide and how toxic carbon monoxide is to the nerves. And now I'd like to talk about the carbon monoxide pipeline, which you have from one site to another manufacturing site.
In other words, this was something you acquired from Bayer. In doing so, the inhabitants in the district of Mettmann and many people from Düsseldorf and Duisburg are very upset, and I have 460 signatures from physicians who are against this highly toxic carbon monoxide pipeline. A lot of people can understand the fact that you need to have a plan B for production downturn because you need this on a permanent basis, but we do not understand the fact that this pipeline is alarming and this does not function properly. We do not understand the fact that the project is being continued, although the fire departments have said that a break in the pipeline would not allow for any possibility for rescuing people. The toxicity of carbon monoxide. You need to realize that inhaling 30 milliliters of carbon monoxide, that's just a very tiny glass.
For adults, this would lead to a loss of consciousness, so they cannot escape. And if you take in or inhale 100 milliliters, a glass of wine would kill you. And for children, of course, the doses are lower. Now, before I trigger off an alarm with this process, before this happened, 105,000 liters of carbon monoxide have escaped. That is, if you compare this to the 30 and 100 milliliters that I just mentioned, this is a huge amount, and nobody can accept this. And my question is, has the Board of Management considered the worst-case scenario that was developed by the company Bayer should the pipeline break? Are you aware of this? In this worst-case scenario, if the break is complete and if you're within 600 meters, it would mean about 470 deaths. This is calculated on the basis of our area in Hilden.
In a radius of 1,500 meters, based on your worst-case scenario, there would be 3,000 seriously injured individuals, and this would be long-lasting injuries. Up until now, in the 17 years since we've been discussing this pipeline, not a single day has there been a serious deficiency of carbon monoxide. Your CO pipeline was seen as CO storage because at a plant facility, such a large amount of carbon monoxide would never have been approved. That is why my question is as follows. Number one, why are you extending the length of the carbon monoxide pipeline so that it has to go under the Rhine River twice? And secondly, are you aware of the worst-case scenario from Bayer? And thirdly, why, if Bayer, before they set the pipeline, why didn't you search for bombs beforehand? Why haven't you made up for that afterwards?
My final question is a request, actually, to the shareholders, and that is that you should not ratify the actions of the Board of Management until this horrific project on the pipeline is stopped. Thank you very much.
Dr. Arnold, thank you very much for your questions. The next speaker is Mr. Grundbichler. You have the floor.
Ladies and gentlemen, shareholders, members of the Board of Management and Supervisory Board, I'm Andreas Grundbichler. I'm Austrian, and later on, it'll be a very big role in one of my questions. First of all, I would like to express my sincere gratitude to all of the committed employees of Covestro AG. I would also like to thank my predecessor speakers for the wonderful preparation. Congratulations on your questions. They were very on point. Unfortunately, I have to now deviate from this comfortable environment at the AGM because I'm really upset. Two years of losses, two years of no dividend, and will we turn a profit this year? No, a dividend for 2024. Is that on the cards? I don't think so. And if the Board of Management is so euphoric as it's claiming to be, then I have a question to you.
Are you willing to renounce half of your compensation? Now, I must add that I asked my questions upfront because it's easier to prepare on prepare. Therefore, this is a new question. Is the Board of Management willing to renounce half of its salary? Receiving this amount of money for earning a loss is something that I simply fail to fathom. If there's no dividend for the shareholders for 2024, could the Board of Management then perhaps renounce half of its astronomical salary and maybe donate it for social purposes? Now, why am I really upset? Well, Covestro, even if you look at the dividend in kind, the buffet, the food, well, that's not being provided either. That's another advantage of a virtual AGM, isn't it? So if you will, I think we've been robbed.
At present, it appears to me as if Covestro wasn't acting like a listed company, like a stock corporation, but rather like an NGO or an association for the promotion of its members. At times, it appears to me that you're working like the department of an environmental ministry. This transformation process in which we are right now, and I accept and I think is not all so bad, is one thing, but it appears to me as if the owners, the shareholders, that is, are the ones left out in the cold. Or as we say in Austria, we are the idiots here in this situation, and I must add that I don't like being considered an idiot.
Now, many points raised by my predecessor speakers mean that they've already anticipated a lot of what I had to say, but with respect to operational concerns, I have another question. Are the costs, especially the staff costs, expected to continue to increase? Because let's be honest, your staff is doing quite well, and we see raises of above 10% across the board in Germany. I don't want to talk about the compensation of the Board of Management because that really upsets me. So keeping that in mind, we really are being left behind. So will the personnel costs rise this year? Furthermore, this is something you may not be aware of. And if someone has a completely different approach, please let me know because I'd be interested. The share at present is on a good trajectory to increase by oh, excuse me.
It has been overvalued by 10% or 20%. So we have a loss potential of 20%. Now, and this is not based on the current scenario, but on an improvement of the business model. And this is why my questions in relation to ADNOC, and this is the reason why the share is where it is right now, and this is why it's so relevant. Let me point this out. My questions about ADNOC will be answered by you, and if you do not answer them, I will contest the legality of the AGM because there's no regulation, there's no law. I understand that there will be some confidentiality agreements, but you'll be able to answer my general questions. And I don't know why one of my predecessor speakers asked how often you've negotiated. Why should that be confidential, the number of times you've met?
You can say we never negotiated because we've never met. It may be the case that you're not even interested in negotiating. Is that conceivable? So if you don't answer my questions that are not of confidential nature because I've tried to avoid them, if you don't, then I will contest the legality of the AGM. Now, has the data room already been opened with ADNOC? How big are the overlaps of the operating business between Covestro, Borouge, and Borealis? And how many talks have you held at the Board of Management level with ADNOC and at the Supervisory Board level as well? Can you perhaps explain to us, without divulging any secrets, how this catalog of requests works? You don't have to go into detail, but it would be interesting for me to know how this works. Who are you negotiating with at ADNOC? I would like names.
Why can't you mention any names? I don't see any reason for that. Now I have a question. Does ADNOC make a professional impression on you? Are they really interested in a deal, or are these dilettantes who are not well prepared and don't even know what they want? Furthermore, how probable do you believe it is that the deal will close by the end of 2024 or might fail by then? Please don't talk about discussions that are open-ended. It's up to you to reach a decision as well. With respect to advisors of Covestro, I'd like to know names. Who is this? What's very important is how high are the costs associated with the negotiations thus far? Okay, I can skip that.
Furthermore, there are different aspects or are there different aspects and concerns and visions between the Board of Management and the Supervisory Board with respect to ADNOC? What is ADNOC's take on shareholder value? Are shareholders important to them, or is just the business site important to them? What about stockholders percentage-wise? Is the state a stockholder from your point of view? Okay, we can skip over that. And now we're getting to it, and this is why I pointed out that I'm Austrian. We in Austria have an advantage, a benefit, or oh, we have several of them, actually, but this is a key one. We, Austrians, have made experience with investors from Abu Dhabi, the OMV company. That's an Austrian listed company, and they are involved in petroleum, gas, and chemicals since 1994. For 30 years now, they have had a major shareholder from Abu Dhabi.
They hold 24.9% in the company. This was a state fund. It used to be called IPIC and Mubadala, and now it's also called ADNOC. From an Austrian perspective, as I've said, we have 30 years of experience. This major shareholder proved to be a very comfortable strategic partner. Now, this is not an actionistic shareholder or a cost cutter or a locust. No, this is a long-term strategic investor we're talking about here. And I believe if I were on the Board of Management of Covestro and if I were interested in a deal with ADNOC, that I would have spoken with OMV. The Austrians have a similar mentality to the Germans. We almost share a language, so it would be easy to communicate, and I'm sure it would be easy to meet at various events.
So the question I have for you is, and there's no reason why you can't answer this, has the Board of Management or Supervisory Board spoken with OMV with respect to ADNOC? And what's at least equally important, and this is a question for the members of the works council on the Supervisory Board, have there been talks with the representative of the works council of OMV? And it's already been alluded to. In the articles of incorporation, are there any pitfalls or traps in the contracts of the members of the Board of Management? Are there any clauses with respect to independence or takeover clauses? Okay, you're not going to say anything about the state of the negotiations. That's fine. What do you believe? Why is ADNOC accepting your delay tactics? Or are they delaying their negotiations? Or is it normal for negotiations to last so long?
And are you looking for a white knight? My very last question, and that has nothing to do with ADNOC, how many one-on-ones have you had with Qube Research & Technologies? Thank you very much. And I wait with bated breath on the answers.
Ladies and gentlemen, well, in that case, just gentlemen, thank you for your questions. We will now move on to the next round of answers, during which we can answer all the questions you've asked so far. And we will begin in the same order. That is, first, we'll hear from the Chairman of the Board of Management, Mr. Steilemann, answering his questions.
Thank you, Mr. Pott. Mr. Giebel, you asked about the language in which our Board of Management meetings are held and in what language the materials for the meetings are drawn up.
We only speak English at Board of Management meetings, and all of the materials are written in English. Mr. Giebel, you asked whether Covestro makes donations to political parties, and if so, which parties and what amounts. On a global level, Covestro has committed not to make any donations to political parties, political institutions, or institutions close to parties or people who have a political office. This is a voluntary commitment that we made and published on our website. The associations we are members of do make donations, always taking into account legal stipulations. Also, our employees can make private donations at their own responsibility without any influence from us. Mr. Giebel, you asked me to repeat what I had said about ADNOC. In my speech and in my answers to questions from different shareholders, I dealt in detail with the discussions with ADNOC.
I'm sure you will understand that I cannot repeat this detailed information once again because this would substantially delay the AGM, and this is not something that would be reasonable to ask of other shareholders. In the transmission of my statement, there were no technical problems that the company had. But you can rest assured that in our discussions with ADNOC, we are conducting them in a constructive and open fashion and taking into account well-representing the interests of our company, the shareholders, and all relevant stakeholders. We are doing so with great dedication. On that note, I'd hand over to Christian Baier.
Mr. Jahn, you asked about the costs for an in-person and a virtual AGM and the five largest line items at today's AGM. You also want to know what the costs were or are per virtual or shareholder present on the site. The costs for the virtual AGM amount to about EUR 700,000. The most recent in-person AGM in 2019. It amounted to EUR 1.5 million. For a hybrid event, I cannot put an exact figure to that because we've never had such an event. But I'm sure you will understand that these would be more expensive than an in-person AGM. For the five largest items, it would be interaction with our shareholders, the setup for the virtual green screen studio, the costs for technology, cancellation costs for a possible location for an in-person meeting, as well as the costs for external service providers.
The costs for today's AGM per share for each shareholder present are zero because none are here. We now have 120 shareholders who are viewing us. The overall costs are EUR 700,000. That means EUR 5,833 per participant. I would then like to hand over to Thorsten Dreier.
Mr. Giebel, you asked how many works council members of the Covestro group exist in Germany who no longer have to fulfill the normal tasks. The Covestro group currently has 32 works council members who fulfill that criterion. Mr. Giebel, you also asked about the biggest and smallest sum of total remuneration of a member of the works council who no longer has to fulfill their normal tasks. The maximum total gross compensation of such a works council member in Germany amounts to EUR 143,352.97. The lowest total gross compensation for such a works council member in Germany is EUR 55,581.08. Having said that, I would like to hand the floor back to Mr. Pott.
Mr. Dreier, thank you for answering those questions. There are a number of questions for the Supervisory Board, and I would be pleased to answer these. I'll begin with Mr. Giebel. Mr. Giebel, you asked about the independence of the notary, Dr. Hermanns, who is officiating at these proceedings. After discussing with Mr. Hermanns, the company sees no reasons to call his independence into doubt. The notary costs paid by Covestro, looking at all of the other mandates Dr. Hermanns has, are insubstantial. I hope you understand that we cannot give you any specific information about the information regarding the income of the notary. We don't know that, and we can't give that to you. Mr. Giebel, you asked whether or not all of the Supervisory Board meetings are all in German. The answer is yes. We speak German all the time.
For the international members, Lisa Kingo and Patrick Thomas, we have simultaneous interpretation into English. Mr. Giebel, you asked whether any qualified applicants for Board of Management positions are rejected because they don't speak English well enough. Covestro is a global company, and therefore, English is by far the most common language used among management in their daily activities. The Board of Management members have to be able to communicate around the world. Materials for Board of Management meetings are prepared in English, and the Board of Management members, as Mr. Steilemann just said, speak English in these meetings. Therefore, good English skills are a prerequisite to being a member of the Board of Management in Germany. That's not true for German skills. Mr. Giebel, you also asked why Mr.
Baier hasn't purchased any Covestro shares and whether he has any information or understanding that would prevent him from buying any shares of the company. As is the case for all members of the Board of Management, Mr. Baier, due to his contract with the company, is called upon to purchase Covestro shares at the amount of his fixed income and to hold them. The time for purchasing and so on is determined. I have to say that there are general capital market rules that apply to everyone. Mr. Giebel, you had another question. You asked whether it would make sense whether or not Board of Management members, at least after a certain amount of time, should speak at least some basic German. You also said if Covestro doesn't agree with this statement, why is that the case?
Covestro is a global company in which mostly English is spoken. When non-German Board of Management members want to learn the German language or basics of it, that's desirable but not necessary. The Board of Management, as a team and with the international management of the company, communicates in English, and therefore, a knowledge of German is not mandatory. Mr. Jahn, you asked whether or not I would prefer to have the annual report as a PDF or as a printout. In my opinion, there are many advantages to a PDF file of the annual report. A PDF is more sustainable and lower costs because no paper has to be consumed to be printed out. In addition to that, you can search very easily for keywords anywhere in the file, and you can read this on various different devices.
For this reason, I would like to say that I much appreciate these advantages of a PDF document. Ladies and gentlemen, at the moment, those are the answers to the questions that we have received so far in that second round. You asked some very specific questions, and of course, we have taken them very seriously and are answering them very truthfully, in particular with regard to numbers. This means that now we're going to have a brief break. I will therefore now declare a break in the proceedings. I'd like to ask you to bear with us, but I do believe that it will take us about 20 minutes before we're able to continue.
So please have a look at the clock, and you can assume that we'll be starting at about 2:15 P.M. or 2:20 P.M., and then we'll be prepared to answer any of your questions. Thank you, and we will see you soon. Ladies and gentlemen, we are now going to continue our annual general meeting, and that means that Mr. Steilemann will begin answering additional questions. Go ahead, Mr. Steilemann, you have the floor.
Thank you very much, Mr. Pott. Mr. Giebel, you asked about the mechanisms for linking our employee survey with the variable pay for the Board of Management. Here we see that and you asked if the superiors with a poor assessment get success payment for this. We have the Prisma system, and we do not break this down according to different teams or superiors.
What we use is the overall amount, so the rate of people responding to the survey worldwide. As I said before, we want to avoid a damaging influence of linking the results of the survey to remuneration, so the return rate is seen as a good indicator. If, despite clear lack of satisfaction, then, of course, this is something that we see as proof of an open and transparent culture when it comes to feedback and employee feedback. Mr. Giebel, you asked about the donations we made. As a global company, we are involved in making donations around the world, and this is also in the interest of our company and all of our shareholders, showing our social responsibility. When it comes to our social commitment, we have clear guidelines, responsibilities, and processes which we implement.
This includes the selection of organizations and approving donations in line with our compliance guidelines and our strategic focus on our main areas. 16% of the donations in all went to organizations in Germany. For local donations in Germany, we focus on promoting digital educational initiatives. We do not benefit only here to be accepted as a good neighbor, but also we see to it that we have better trained beginners in their profession. Mr. , you asked in which areas Covestro makes use of artificial intelligence and other measures in order to save employees as of fiscal 2024. Considering the use of AI and other factors, we are ongoing looking at what areas we can increase efficiency. We take a look at all areas of the group, and this, of course, is carried out on an ongoing basis, and a decision has not yet been taken here.
I would like to ask for your understanding that we cannot give you any further details on ongoing processes. Mr. Grundbichler, you had a number of additional questions on our discussions with ADNOC, so I'd like to refer to my earlier comments and will answer as follows. You asked a number of questions on the status, the type, the number, and the content of the discussions and any of the requirements and other discussions in conjunction with a potential transaction with third parties or companies or ministries. What I said before still applies. Our results of our discussions will be reported to you, or any relevant changes will be in line with our announcement requirements on the capital market. At this point in time, we cannot give you any details on our confidential discussions, and we cannot comment on any individual aspects.
This relates to questions concerning a possible price and possible discussions with third parties such as ministries, government agencies, or other companies. In addition, you also asked about any overlaps in operating business between Covestro, Borouge, and Borealis. Overlaps in our operational business with these two companies are very low. Borouge and Borealis are primarily manufacturers of the raw materials ethylene and propylene, and the polymer is polyethylene and polypropylene. With these polymers, we're talking here primarily of standard plastics, which Covestro does not have in its portfolio. We have slight business relationships in terms of supply of phenol and acetone with Borealis. With phenol, this is a cooperation between Neste, Borealis, and Covestro in order to manufacture sustainable phenol for the production of polycarbonate. You also asked about who participated in the negotiations on the side of ADNOC.
As I said before, discussions are being prepared, and carrying out these discussions is something which is the responsibility of the Board of Management. We also have selected managers from our company as well as well-known financial and legal experts. The same, I assume, applies to our business partner, ADNOC. We have representatives at management level from ADNOC, and they are also supported by financial and legal advisors. You also asked about the course of the discussions. You see, that you consider they've taken too long. Is this a delaying tactic on the part of one of the two parties, or is this something that means that there's a lack of professionalism at ADNOC, or is this something that is perfectly normal, the duration that is?
I can understand that you see the time that has gone by so far as being long, but as I said before, we're talking here about a very complex issue which relates to a number of different areas, and that, as a result, this is something that cannot be considered as a standard negotiation. This, of course, takes time. Now, a delay is something that I cannot see as something that we want nor with our partners. We see these discussions as very professional. So your next question, Mr. Grundbichler, that is whether there will be a closing or a failure of the discussions in 2024. This is a question that I cannot give you any further information on. We cannot say now if or when we will come to an agreement. You asked about Covestro's advisors. The Board of Management is advised by financial advisors.
That's Goldman Sachs and Perella Weinberg, and legal consultation is given to us by Linklaters. The Supervisory Board is also given financial and legal advice. The advisors are SZA Schilling, Zutt & Anschütz on the legal side, and Rothschild & Co and Macquarie for financial questions. You also asked about the costs incurred so far. As we said, both the Board of Management and the Supervisory Board are supported by various advisors in order to come up with the best possible result, and this is something that is good for our company and our shareholders. So that is why we assume that the costs so far for external advisors for both bodies would be a low single-digit millions EUR, but this is something that we cannot give you a separate breakdown on. You also asked about different points of view between the Board of Management and the Supervisory Board. Mr.
Pott has already said that we, as the Board of Management, have coordinated this very closely with the Supervisory Board. We've informed the Supervisory Board, and with regard to the confidentiality here, I cannot give you any more information on the details of individual aspects of our negotiations. You also asked how the Board of Management, the Supervisory Board, see shareholder value, and if the shareholders or the German sites are considered more important, or if we see the state as a stakeholder? As the Board of Management, we are subject to our obligations, and this is the focus for our discussions with ADNOC. When talking about an agreement, we will see to it that the interests of our company and our shareholders and all of the other relevant stakeholders will be taken into account.
All of the other stakeholders would include the interests of our customers, our suppliers, and also the interests of the public in general and the public well-being. You referred to the German site. This, of course, is relevant not only for our employees here in Germany. All of these aspects need to be taken into appropriate consideration. That means that not one aspect will be given sole relevance. You also asked about the poison pills in our articles of incorporation. Now, if you're talking about majority requirements beyond legal requirements, this is something that we do not have. And here too, I would like to say that in our articles of incorporation, we have nothing that would be seen as a corresponding deterrence, and we can see that the articles of incorporation are available for anyone to view online.
You also asked about specific incentivization in the Board of Management's contract employments with regard to independence or acquisition of Covestro. With regard to the current status, I'd like to refer to our compensation report and the annual report of 2023, and this gives us our current compensation parameters in detail. Here, we've also listed that should there be a change of control which would change the position of an individual member of the Board of Management, then the right of the Board of Management would have the possibility to terminate the employment contract within 12 months after the change of control. Within 12 months after the change in control, the Board of Management, when exercising this termination right or with mutual termination of the contract, would mean that they would have right to payment of 2.5 times their annual fixed compensation.
The amount of this compensation, including fringe benefits, would be based on the remaining compensation up until the end of their contract employment and would be subject to the severance cap. I would also like to refer to the report from the Board of Management available online in accordance with Section 176, Paragraph 1 of the Stock Corporation Act with regard to acquisition-related information in Paragraphs 289A and 315A of the Commercial Code on the closing date, which is the 31st of December, 2023. Mr. Grundbichler, you also asked about a white knight. Are we looking for a white knight? I have already explained our strategy in these negotiations as far as I can, and I cannot give you any further details for reasons of confidentiality, so I will not be able to comment on this individual point.
And finally, you asked how many one-to-one meetings you had with or we had with Qube Research & Technologies. I'd like to note that there were no such meetings with Qube Research & Technologies. So I would now like to hand over to Christian Baier.
Mr. Jahn, you asked about our competitive advantages with respect to production costs. Covestro generally produces in regions for regions. And given the current energy costs in Germany and Europe, all of our European production sites are competitive relative to imports from other regions. In all regions, we are the or one of the cost leaders. Our cost leadership is characterized by leading process technologies, strong reverse integration, and economies of scale. We are therefore competitive vis-à-vis the peer group. Mr. Jahn, you asked about why investments in fiscal 2023 were EUR 129 million below depreciation and amortization.
Depreciation and amortization of EUR 894 million contain EUR 72 million that relate to intangible assets. These are, for the most part, in connection with the acquisition of the RFM business in 2021 that doesn't require regular reinvestments. Depreciation and amortization contains EUR 45 million in impairments. Without these influences, depreciation and amortization would be EUR 777 million. This means that investments of EUR 765 million were the total. Mr. Jahn, you asked whether we wanted to keep our fixed costs stable. In 2023, we wanted to maintain stable costs. Despite the unforeseen high inflation, our fixed costs during this period remained essentially constant. In the statement that I made earlier, I referred to the comparison of fiscal 2023 to fiscal 2022. Mr. Jahn, you asked about the planned or unplanned business interruptions, and you thought that they may have occurred in Uerdingen and Dormagen.
You also asked about the other operating result and the other operating expenses and how they came to pass. On the 6th of August, 2022, at 1:15 A.M., there was damage in Dormagen in the chlorine-alkaline electrolysis production. Based on the expert, the damage was characterized as an explosion damage that was insured. The expert is still continuing to assess the level of damage. After deducting the deductible, there was a partial reimbursement of EUR 75 million, which is stated in the other operating income. Part of the industrial strategy of investment is to use the services of Covestro International Re Inc. The purpose is to insure selected plants. This company made the partial reimbursement to the initial insurer, and this is classified under other operating expenses. Mr. Jahn, you asked about the target achievement of synergies of RFM.
Covestro so far has realized the synergies from the RFM acquisition as planned and overachieved their goals in certain aspects. As of the acquisition in 2020, we planned to have synergies of EUR 80 million by 2023. We've implemented synergies of EUR 85 million. We remain confident of being able to realize all of the synergies of EUR 120 million in 2025. Having said that, I would like to hand the floor to Thorsten Dreier.
Mr. Giebel. Other duties, sometimes for years. For these people, we base their remuneration on legal establishment according to the German law. The members of the Supervisory Board have this position as an honorary office for this office. Therefore, Supervisory Board members who are works council members don't receive separate compensation. But in particular, neither advantages nor disadvantages should occur to them.
According to this German act, it is also stipulated that the members of the Supervisory Board who are works council members should not receive remuneration that is lower than the average of people with similar backgrounds. These prerequisites are taken into account at Covestro. The works council members receive the remuneration they receive prior to them being released from their other activities, and they receive the same compensation as other people with similar developments in the company. Any development of remuneration is based on a detailed internal and external legal check, and it also takes into account the current legal situation. Dr. Arnold, you asked whether the Board of Management is aware of the worst-case scenario of Bayer for the CO2 pipeline. The company and the Board of Management are aware of the discussion.
The scenario that you've described for a complete break in the pipeline was mentioned in the framework of the litigation, and it is not from Bayer itself. The scenario you mentioned yourself with regard to the carbon monoxide is outdated, and it is based on the most improbable case. What is crucial in legal and in practical terms is the most reasonable assumption. In a very improbable case, if there were a big leak, this would be registered and countermeasures would be taken. This means that the pipeline would be shut off in that section, and all the pressure would be taken out, and the gas in that pipeline would be completely removed from there in 30 seconds maximum. Dr. Arnold, you also asked about why Covestro has not checked for bombs along the CO pipeline and why they added afterward.
What's correct is that the entire line was checked by the local government and shown to be free of any bombs. They had experts to check the entire line prior to laying the geogrid. The new areas are also checked. Security and safety are important for us as a chemical company in everything that we do. Dr. Arnold, you had doubts about the safety concept and the economic necessity of our CO pipeline. The claims that you made, I can decisively reject. The pipeline is up to the newest technical standards. We've developed a comprehensive safety concept which ensures safe transportation of carbon monoxide. The protection concept has several different layers, each independent of the other, in order to allow us to achieve maximum safety. With this concept, we deliberately decided to go far beyond legal requirements.
In the past few years, courts and independent experts have confirmed again and again that the pipeline is safe and legal. At the same time, the project is still very important in economic terms for Covestro with regard to the significance of the which underscores the significance of the pipeline for our sites in this state. Covestro is continuing to work on preparing the commissioning of this pipeline, therefore. Other industries in the state benefit too. Dr. Arnold, you asked why the line would be going under the Rhine River twice. The route was the subject matter of a plan that was developed by a zoning plan developed by the local state and the subject of intense discussions. One crucial factor was the clustering of existing infrastructure. On the right-hand side of the Rhine, there are many lines and pipelines and connections and many rail connections and roads.
In addition to that, we were looking for synergy, and we noticed that there's a natural gas pipeline along half of that stretch. Now, by building these things at the same time, we reduce the impact on the environment and reduce pollution and the need for space. And I'll hand over now to Mr. Pott.
Thank you very much, Mr. Dreier. Let me continue then. Mr. Giebel, first of all, questions on remuneration and other payments to the Board of Management. And as you can see from the annual report, we had other payments primarily for drivers and also questions of security facilities. And for 2023, we had this was prior to 2023. In other words, those before 2023 get a mobility lump sum, which is EUR 24,000. That's the largest line item there. And this mobility lump sum is made available to Mr. Steilemann and Ms.
The other payments amount, both for Mr. Steilemann and for Ms. Govil, EUR 30,000 in 2023, as indicated in the compensation report on page 229. You also asked about the CO2 footprint, and this is the use of business vehicles, as I said before. That is to say that those who were appointed to the Board of Management before 2024 get a mobility lump sum and no business vehicle. With the mobility lump sum, then we see that the Board of Management and entitled employments can finance their individual mobility. This is in a form which they can choose themselves. This means that the company can contribute or that we cannot give any information on the carbon footprint, nor can we compare this with the fleet of vehicles at Covestro. Mr.
Giebel, your next question related to the amount and the reason for the performance-related payment for the Board of Management. The amount, when it comes to fiscal 2023, they have the following amounts. Dr. Steilemann, EUR 654,000 short-term and EUR 1.886 million the long-term compensation. Mr. Baier, EUR 107,000 short-term and no long-term compensation. Dr. Dreier, EUR 212,000 short-term and EUR 52,000 long-term compensation. Ms. Govil, EUR 325,000 short-term and EUR 949,000 long-term compensation. Why does that come about like that? The long-term variable compensation is based on multi-year development of the share price during the years 2020 to 2023. The short-term variable compensation is based on the following key indicators: EBITDA, ROCE over WACC, cash flow, and sustainability. To be more precise, a reduction of the greenhouse gas emissions.
On the basis of the values achieved for these KPIs for fiscal 2023, this would have meant a payout of 74%, but the threshold values for the three financial KPIs were not met. For the reduction of the greenhouse gas emissions, the target value set in 2021 was overexceeded. This reduction then is also due to measures that were taken, for example, optimizing the production processes or energy efficiency measures. Compared to the plan for climate strategy from 2020 and 2021, this was the assumed volume growth rates. We see that these were somewhat negative, and that meant overall that there was a lower increase in the emissions as a whole, and this was less than was originally expected.
That is why the Supervisory Board made use of its discretion because a payment of 75%, which is something that would not be appropriate considering the financial situation at Covestro. That's why a payout of 50% was defined. This 50% was a decision also taken for calculating the bonus for the employees. Mr. Giebel, you also asked about the discretionary right to intervene when it comes to variable pay. The variable pay should be transparent and on the basis of predefined targets, thresholds, and maximal values. That's how it is to be calculated. However, certain circumstances can be considered where this mathematical result would not be considered or be reflected appropriately. That's why our compensation system for the Board of Management, and this also applies in many other listed companies, if you have certain scenarios, the Supervisory Board has the right to make adjustments.
But as I said already, when I answered Mr. Beckendorff, this is something that is to be an exception to the rule. It is not to be made the rule. Mr. Giebel, then you asked about the change of control clause in the Board of Management's contracts and also the possible advantages and also how you would have fairness if there is a change of control. What I can say on this is that the rules and regulations that have been adopted are the same in all of the employment contracts for the Board of Management. And that's why, when it comes to the current status, I'd like to refer you to our compensation report in the annual report 2023. These describe our compensation parameters in detail.
As I said, if there is a change of control, then if the position of an individual member of the Board of Management is significantly changed, then the Board of Management member has the possibility to terminate his employment contract within 12 months after the change in control. Within 12 months after the change of control, the Board of Management can also terminate his employment contract by mutual agreement and would have the right to a payment of a severance pay of 2.5% of their annual fixed pay. The amount of this payment, including any other benefits, is also something which would be limited to the remaining pay up until the end of the employment contract and would be subject to the severance pay cap.
This is something that would mean the payments to the Board of Management would be the value of two years' pay, which must not be exceeded. Mr. Giebel, now let's turn to ADNOC. Now, if there is an acceptance of a success premium for an acquisition of Covestro by ADNOC, here, the board members would be exclusively by Covestro and not by third parties such as ADNOC. Then there would be premiums. No premiums from ADNOC would be taken into account. Supervisory Board members would only receive fixed compensation. Our compensation system for the Board of Management members only provides for the variable payments defined therein on the basis of the short-term and long-term indicators. Special payments to the Board of Management are not provided for in our compensation system.
Mr. Jahn, you asked about how much time was spent on ADNOC in Supervisory Board meetings and presidial meetings and whether we neglected operational business. Mr. Steilemann has already answered this question, at least in part. First of all, the operational business at Covestro is not being neglected at all as a result of our discussions with ADNOC. For the Supervisory Board, I can say that in these meetings of the Supervisory Board and the presidial committee, we spent between 60 and 90 minutes on this topic. Let's say 60-90 minutes on this topic. I'm sure you will see from this that, of course, we discussed this topic intensely, and this is, of course, in line with our monitoring responsibilities.
In addition, with our regular meetings of the Supervisory Board, we also carry out our responsibilities when it comes to monitoring operating business of the Board of Management. This has not changed. In other words, there's no reason for concern here. Dr. Arnold, you said that you had problems with a browser during the transmission and that you would like to have an in-person AGM in the future. We have taken note of your feedback on the technical problems, and we will keep this in mind for the future. But the reasons for having a virtual AGM have already been explained to you. The Board of Management and the Supervisory Board believe that the virtual format is practical and at the same time, it's shareholder-friendly as an alternative to in-person AGMs. Mr.
Grundbichler, you asked whether the representatives on the Supervisory Board had discussions with representatives from the OMV. I'd like to pick up on what Mr. Steilemann has already said. He and the remaining members of the Board of Management are preparing discussions with ADNOC, are conducting discussions with ADNOC, and the Supervisory Board has been kept informed on a regular basis on this. At this point, I cannot give you any details from confidential discussions, and I cannot go into any individual aspects, for example, questions on possible discussions with third parties. Mr. Jahn, you asked if the Board of Management pay is higher if Covestro produces more sustainably and environmentally.
I would also like to say that in accordance with our corporate culture, variable pay for the Board of Management and all of the participating employees are based on a uniform system with the same and identical criteria. Variable compensation is not only dependent on sustainable and environmental production, but is also based on corporate success at Covestro, which is determined on the basis of financial criteria and sustainability targets and share performance. We can say that higher sustainability in production can, of course, have an impact on the variable part of pay as one of several success factors. This is all done as something that has been published in the annual report in our compensation system. So that's what I have to say on these points for the time being. Now, let me have a look, and I think that Mr. Steilemann, you still have some questions to answer.
Thank you, Mr. Pott. Mr. Grundbichler, you asked whether the Board of Management was willing to renounce half of its compensation for charitable purposes since shareholders of Covestro are not receiving a dividend. We would like to remind you that the compensation of the Board of Management cannot be equated to a dividend payment. The dividend orients itself to the net income of the group and therefore the overall economic situation of Covestro. The fact that donating compensation or a salary is something that is up to every individual member of the Board of Management. Having said that, I'd like to hand the floor to Christian Baier. Mr. Jahn, you asked whether normalized sales of EUR 2.9 billion are no longer applicable to the business unit coatings and adhesives for the forecast from 2021.
The statement made on page 285 relates to a financial plan from the perspective of a normal market participant that was used for valuation models according to IFRS requirements for impairments. What is decisive here in this connection is not primarily a normalization of the sales level, but earnings power, which is negatively influenced by the currently difficult economic framework conditions. As a matter of principle, we haven't issued a forecast for sales development. Since 2020, the design of our segments has changed, and so you can't compare them to each other anymore. Mr. Grundbichler, you asked whether staff costs would increase this year. We can confirm that the staff costs globally will rise in 2024. This involves, in Germany, the implementation of the last collective wage bargaining agreement in January 2024 that stipulated a rise in wages of 3.25%.
Globally, the wages of our employees were raised on the basis of statutory regulations and also considering the market. Additionally, in Germany, there are no current wage agreements underway that may lead to an increase in personnel costs. Due to the ongoing negotiations with the trade unions, we cannot quantify these conclusively. The employees who are not covered by these agreements will not receive a salary increase. Having said that, I'd like to hand over to Mrs. Govil.
Thank you, Christian. Mr. Jahn, I have two questions to answer for you. The first one, you asked whether the global oversupply of TDI was higher than 711 KT in 2023. And you also asked whether Covestro still forecasts a global oversupply of 505 KT TDI for the year 2025. For 2023, we estimate the industrial capacity utilization to be very high at over 90%.
In terms of quantity, this means an overcapacity of approximately 200-300 KT, which is well below the quoted 711 KT. A key driver for the positive development was the increased demand for TDI in Asia and the closure of a TDI unit of a competitor in Germany. For the year 2025, we still expect a global industrial overcapacity of approximately 500 KT. Mr. Jahn, you also asked for MDI, whether the oversupply of MDI in 2023 was higher than 1,340 KT. Furthermore, you asked whether we still forecast a global oversupply of 1,293 KT MDI for the year 2025. For 2023, we estimate the industrial capacity utilization to be very high at over 90%. In terms of quantity, therefore, the resulting overcapacity was only about 300-400 KT. A main driver of this was an increased number of planned and unplanned shutdowns in the industry.
That means a relatively low availability of production capacity. For the year 2025, we still expect a global industrial overcapacity of about 1,300 KT. This assumption depends on numerous factors such as demand developments, actual plant availability, and new investments in the industry. Thank you. With that, I hand over back to Richard.
Thank you, Sue, for those statements. I see now that Mr. Giebel has another question he'd like to ask. Mr. Giebel, you have the floor. Mr. Giebel, can you hear us? Mr. Giebel? Normally, we would do a technical check, but since you were already connected up, we don't really think we need a technical check. But I am starting to hear something. Mr. Giebel, the floor is yours. Can you hear me now? Yes, we hear you. We hear you, but we can't see you.
But if you have a follow-up question or a new question, go ahead. The floor is yours. Yes, now we see you. But you're very blurry. But you were blurry before already.
Okay. Then I would like to file a motion about section 125, paragraph 4 of the German Stock Corporation Act with regard to the announcement of the resolutions made. And then I would like to file a motion with regard to paragraph section 130 of the German Stock Corporation Act. I have a question about this. In the six months prior to the AGM, were any individual shareholders or shareholder representatives met by you? And if so, did you provide them with any information which was not announced in a similar scope at today's AGM? If that is the case, I would ask you to give us this information too.
But first of all, who did you meet, and what were the subjects of those discussions? And then I would like to say, please put in the minutes that I would like to contradict something. There is a contradiction that I see, and I don't understand it. So I would like to make sure that it's put in the minutes by the notary that during the presentation, well, let me put it this way. While
The technician or what while the presentation was being made, the technicians switched off my connection to check the sound, and this is a technical problem on your part. So I would request that a protocol be drawn up to prove that your technician actually was the one who cut off my connection, which meant that I couldn't hear the ADNOC statements you made, and for this reason there is not a sound basis for me for making good, good decisions. In addition to that, I would like to state that the ratification of the actions of the Board of Management members and Supervisory Board members should not be granted, and then I would request that you tell me about the top five biggest items for remuneration for Mr. Baier and Mr. Dreier, for each of them separately.
For each item for these in-kind benefits, tell us the amounts. The numbers here are 200,000 for these in-kind benefits. Then I asked about ADNOC, and I asked about the maximum financial advantage if there were a change of control. Now, you were very flowery in your answer, but it wasn't easy to understand. You said maximum 2.5 times fixed remuneration, but there is a cap for 2-year remuneration. Why are you talking about fixed remuneration? What is the annual remuneration compared to fixed remuneration? This is all just serving to avoid answering confused people. So my specific question is this: what is the maximum financial advantage for each member of the Board of Management if today there were a change of control, and what is the financial advantage in euros? So please name for me 4 numbers.
Those are the points I wanted to ask about, and I would suggest that if you don't agree with me with regard to the technical problems, you explain to me the technical reasons for that. Thank you.
Thank you, Mr. Giebel. With regard to ADNOC, Mr. Steilemann, would you like to answer? Just in case there was a problem, maybe you could briefly present it.
Mr. Giebel, with regard to the technical issues you raised, you asked me to repeat what I had said today from the CEO statement on ADNOC, which you couldn't follow for technical reasons. All of the key statements on this issue have been repeated a number of times. Just a few minutes ago for the last time, this was a question from Mr. Grundbichler. Nonetheless, at this point, just once again for you, I would like to say the following: one thing that we are especially interested in is discussions with the Abu Dhabi National Oil Company, ADNOC. We are having these discussions in line with our obligations under stock corporation law. They're open and transparent. And as I would say, we're carrying out these discussions in the interest of our company, our shareholders, and all of the other stakeholders.
As normal, the progress and outcome of such discussions depend on the ability of both parties to find consensus on issues of which they have different views. We will continue to report on the outcomes of our discussions, of course, in accordance with our obligations under the requirements on the stock market corporation. That's what I have to say on this point of view. Mr. Giebel, thank you very much. The manuscript for the CEO statement can be found on our website under the annual general meetings. So I'd like to hand over again to Mr. Pott.
Thank you very much, Mr. Steilemann. Mr. Giebel, you have asked a few more specific questions, which we would like to answer in a careful way. We want to do some research on these, and I would like to interrupt the AGM, and we will be back in approximately 30 minutes. That means at about 10:04 P.M. That's when we resume the AGM. We interrupt proceedings and will now have a break.
Ladies and gentlemen, the AGM is resumed. Before we start to answer the questions of Mr. Giebel, I must say that Mr. Giebel requested that the acts of the members of the Board of Management and Supervisory Board be ratified individually. I'm going to make a statement on this request first. We're going to vote on that. Before then, we go into the vote on the items on the agenda proposed by management. Anyone who would like to maintain the procedure envisaged in the invitation to the AGM, which envisages a general approval of the acts of the members of the Board of Management and Supervisory Board, must vote against the request made by Mr. Giebel. In the alternative, you need to vote in favor of Mr. Giebel's request. Once again, there has been a motion filed by Mr.
Giebel to have the acts of the members of the Supervisory Board and Board of Management approved individually. With this respect, you have the opportunity to authorize the proxies appointed by the company to cast your vote accordingly on this item on the agenda until the beginning of the vote. Alternatively, you can cast an electronic ballot via the investor portal on this item on the agenda. This option will remain available to you until I close the investor portal as the chairman of the AGM. If you wish to make use of this option, I request you to do so immediately, and I repeat, immediately. It is now 3:42 P.M. You have until 3:47 P.M., approximately, to make use of the functions I mentioned in our investor portal.
The authorization and instruction function will then be deactivated after this time, and the voting proxies appointed by the company will then vote according to their authorization and instructions. After that, after the end of the vote, the mail-in vote function will be deactivated, and the absentee ballots will then be considered in the total tally of the votes. Subsequent to all of the votes having been received, we will use the addition procedure to determine what the final votes are. So all yay and nay votes will be counted. Abstentions will not be considered. This will be done electronically and may take some time. We shall now interrupt the AGM. Yeah, my ladies and gentlemen, it's now 3:48 P.M. I assume that all shareholders, as well as shareholder representatives, have had ample time to exercise their voting rights.
The function for issuing instructions and authorizations to proxies appointed by the company in the voting rights portal has now been deactivated. The voting proxies nominated by the company shall now vote by instruction by the system. Now, this is not an artificial break. I just want to make sure that everyone has actually cast their vote. I would like to continue now. I now close the vote, and I find that no more absentee ballots may be cast now, and I interrupt the AGM so that the results of the vote can be determined. The notary public, Dr. Hermanns, will monitor the count, and I kindly request that you be on the ready. After a brief interruption, we will resume the AGM. We assume that the break, just to give you an idea, will last 3-5 minutes, so we'll interrupt the AGM for that period of time.
Ladies and gentlemen, it's 4:05 P.M. I now have the results of the vote, and I resume the AGM, therefore. I will announce the results of the votes in a couple of minutes, but before I get there, I would like to let you know what the total attendance is of the registered capital stock of the company in the amount of EUR 189 million divided into 189 million shares. 115,997,154 shares are represented with an equal number of votes. This corresponds to 61.38% of the registered share capital. On top of that, absentee ballots for 443,538 shares have been received. Together, therefore, we have 116,440,692 shares represented, corresponding to 61.61% of the registered capital stock.
I now would like to announce the result of the vote on the motion of the shareholder Jörg Ulrich Giebel, with respect to the approval of the acts of the members of the Board of Management and Supervisory Board individually. I find and announce that the vote, on the basis of 116,037 shares for which valid votes were cast, corresponding to 0.06% of the capital stock, 11,191 yay votes were cast, representing a share of 9.64%, and 104,846 nay votes were cast, corresponding to a share of 90.36%. The annual general meeting has thus refused the motion of the shareholder Jörg Ulrich Giebel to have the acts of the members of the Board of Management and Supervisory Board ratified individually. I would now like to continue with the proceedings of the annual general meeting and answer the outstanding questions posed by Mr. Giebel. I think Mr.
Steilemann will have at least one question to answer, but let's hand the floor over to Mr. Steilemann first.
Thank you, Mr. Pott. Mr. Giebel, you wanted to know about our talks during the last six months with shareholders or their representatives and the information that we communicated with them. During this period, we conducted talks with approximately 400 investors. As a matter of principle, it's up to every investor to contact us and to speak with the company. Within the scope of these talks, no information was shared that was not communicated via our publications and notices or at this AGM with all other shareholders. Having said that, I would like to hand the floor back to you, Mr. Pott.
Thank you, Mr. Steilemann. Mr. Giebel, you asked about the payment in kind and other emoluments of the two gentlemen. You spoke about EUR 200,000 for Dr.
Dreier and Dr. Baier, and in the table of total target remuneration, you can find the information on page 217 of the compensation report. This target value, it's a target value, which does not correspond to the amount actually paid. Rather, it's an assessment for the installation of safety measures and is based on experience made with former members of the Board of Management. At the point in time of preparation of the annual report, however, no safety or security measures had been installed for Mr. Baier or Mr. Dreier, so far, no such expenses have been incurred. The payments made for 2023 in kind and other emoluments amount to EUR 0 for Mr. Baier and EUR 2,000 for Mr. Dreier. These figures can be found in the table granted and owed compensation of current members of the Board of Management on page 229.
With respect to ADNOC, you had a further question, a financial advantage in the event of a change of control. You said that I was a little poetic in responding to that. You criticized the use of different terms in terms of remuneration, and on top of that, Mr. Giebel, you asked about the maximum financial benefit for every individual member of the Board of Management if there was a change of control today. The terms, such as annual compensation, fixed compensation, etc., have directly been taken from the sets of rules and legislations, in particular from the German Corporate Governance Code. Annual compensation includes not only fixed remuneration, which is the annual salary, but also the individual target figures for short-term and long-term variable compensation.
So if a change of control were to take place today and the Board of Management member were to make use of the rule, the following figures would result in terms of severance payments: Dr. Steilemann, EUR 3.115 million; Mr. Baier, EUR 2.125 million; Mr. Dreier, EUR 1.633 million; and Mrs. Govil, EUR 1.633 million. In none of these cases, would the requisite limit to double the annual compensation or the remaining term of the contract be applied? So that's what I had to say in answering the questions. Thank you very much. I'm just looking to the left to the Board of Management. So I think we've answered the far-reaching questions, and most importantly, would like to thank you, our shareholders, but I've just realized that Mr. Grundbichler has requested the floor. Mr.
Grundbichler, perhaps you can go ahead and ask your question, and you can do that right away. Please go ahead.
Yes. Hi, shareholders. Unfortunately, I've got to speak again. Just a minute, please. As I said in my previous statement, we the idiots, that's us, the owners. The Board of Management members are living in luxury, and as we've heard, the works council members aren't doing bad either. I have nothing against works council members. They're necessary. But do we, the shareholders, have to be the idiots? Let me mention one more point in this context because my question about ADNOC wasn't answered. Not answering a question also provides information. There will be forces that are not interested in a deal with ADNOC, interested in a deal with ADNOC, probably political forces. So sometimes nationalists put on a green cloak. I've got to refer to Siltronic here, the Green Environment Minister, prevented a merger. I think it was about EUR 140, and now the share price is just EUR 80.
So the behavior of the Board of Management has to be interpreted this way. Well, I presume there are regular conferences with government representatives because the Board of Management isn't answering questions like this because they would probably have to lie. So anyone can do whatever they want as far as I'm concerned. But now ratifying the actions of the Board of Management members, once again, that's not an advantage for us, the game being played here. Well, you can say this guy is a conspiracy theory guy, but I don't think that the games being played here are in our interest. So I would really request all of you to agree with me. I'm not sure what game the Supervisory Board is playing here either. So I hope that ADNOC doesn't misunderstand this, but I think nationalist interests have been put before the interests of shareholders. Thank you.
Mr. Grundbichler, thank you for your statement. I didn't hear a question there. I think it was just a statement, and I do not want to comment on that. Once again, I would like to thank the Board of Management for their comprehensive answers. And above all, I'd like to thank the shareholders here for their questions and their interest in our company. I see that there are no more requests to take the floor and that all questions have been answered. Thus, I would now like to officially end the debate on all items on the agenda.
Ladies and gentlemen, in a minute, we will begin voting on the proposals of management with regard to items 2- 7 on the agenda. The proposals from management can be voted on. They were published in the German Federal Gazette on the 6th of March, 2024. I'd like to point out that with regard to item 2 on the agenda, the members of the Board of Management whose actions are going to be ratified and the members of the Supervisory Board who left the Supervisory Board in 2023 must abstain for their own shares and for other shares they represent. This applies to anyone representing the shares of members of the Board of Management. The same applies to members of the Supervisory Board and for those people representing shares held by Supervisory Board members with regard to item 3 on the agenda.
Ladies and gentlemen, as I said initially, you now have one last opportunity to go to the investor portal and submit your vote electronically. Or as an alternative, you can instruct the company proxy representatives as to what votes you would like to submit. And if you wish, you can change your instructions or your vote now. Let me look at the clock. It is now 4:17 P.M. You have up until 4:25 P.M. No, 4:22 P.M. You have up until 4:22 P.M. the opportunity to use the feature on our investor portal. The feature of instructions and proxies will then be shut down, and the proxy holders of the company will then vote as per your instructions. After that, after the end of the voting, the absentee votes voting possibility will be shut down, and those votes will also be included in the votes counted.
All yes votes and all no votes will be taken into account. Any abstentions will not be taken into account. All of this is done electronically and presumably won't take too much time. About 4:21 P.M. and 4:22 P.M. or 4:22 P.M., that's when we'll be coming back from the break. Until then, we will have a break.
Meine Damen und Herren. Ladies and gentlemen, it is now 4:22 P.M., and I assume that all shareholders and their representatives have had sufficient time to exercise their voting rights. The possibility to vote by absentee ballot, in other words, you can no longer give your authorization. You can still vote by absentee ballot until the vote is concluded. Just a few more minutes. That feature will remain active. The proxy representatives will now vote in the system according to the instructions they have received.
Now I would like to conclude the vote, and I note that it is no longer possible to vote by absentee ballot, and I would like to interrupt the AGM so that we can determine the results of the vote. This will, as I said, probably only take a very short time. The notary public will be monitoring the counting of the results, and I will announce the results of the vote as soon as I have them. And until then, we'll take another break, a brief break. Thank you. Ladies and gentlemen, I now have the results of the vote in front of me, and I would like to continue with our annual general meeting. I will first announce the results of the vote, and I will give them to the notary public for his records.
As usual, we'll find these results after today's AGM on the company's website. First of all, I'd like to give you the updated attendance figures. Once again, of the registered shares amounting to EUR 189 million divided up into 189 million shares, a total of 115,997,579 shares are represented with the same number of votes. This corresponds to 61.38% of the registered share capital. We also have a total of absentee ballots, 444,138 shares. Altogether, this comes to 116,441,717 shares, which corresponds to 61.61% of the registered share capital. That brings me to the result of the vote. Agenda item 2: I note and announce that the vote resulted in 108,688,276 valid votes that were cast. This corresponds to 57.51% of the share capital. 107,855,853 votes in favor, that's 99.23%, and 832,423 votes against, which is 0.77%. Abstentions: 7,753,441.
The AGM, when it comes to agenda item 2, ratification of the actions of the members of the Board of Management, has approved the resolution as published in the Federal Gazette on 6 March 2024. This resolution has received the required majority, and the actions are ratified. The results of the vote with regard to agenda item 3: I note and announce that the vote was 106,898,881 shares for which we had valid votes. This is a total of 56.56% of the share capital. 104,859,925 votes in favor, that's 98.09%, and 2,038,956 votes against, that is 1.91%. Abstentions: 9,542,836. Agenda item 3, which is ratification of the actions of the members of the Supervisory Board, the AGM has adopted the resolution from the Board of Management and the Supervisory Board as published in the Federal Gazette on 6 March. It was approved with the required majority, and ratification is given.
The result of the vote for agenda item 4: I note and announce that the vote had 108,143,870 shares, which we had valid votes for. This corresponds to 57.22% of the share capital. 100,076,616 votes in favor, which is 92.54%, that is 8,067,254 votes against, which is 7.46%, and there were 8,297,847 abstentions. The AGM has adopted agenda item 4, approval of the compensation report. This is the proposal from the Board of Management and the Supervisory Board published in the Federal Gazette on March 6th 2024. The required majority was received. The result of the vote on agenda item 5: I note and announce that there were 116,096,544 shares for which we had a valid vote. This is 61.43% of the share capital. We had 116,085,197 votes in favor, which is 99.99%, and there were 11,347 votes against, which is 0.01%. There were 345,173 abstentions.
Agenda item 5, the election of the auditor for the audit of the annual financial statements and for the audit review of the interim financial statements has adopted the proposal from the Supervisory Board as published in the Federal Gazette on 6 March 2024. The required majority was achieved. The voting results for agenda item 6: I note and announce that there were 116,092,929 shares for which we received valid votes. This corresponds to 61.42% of the share capital. There were 108,519,395 votes in favor, that's 93.48%. There were 7,574,534 votes against. This is 6.52%, and there were 348,788 abstentions.
Agenda item 6, resolution on issuing a new authorization to acquire and use owned shares with a possible exclusion of subscription rights and any tender rights, as well as the possibility of canceling owned shares and authorization to use derivatives in the context of the purchase of owned shares with possible exclusion of subscription rights and any other tender rights. This was adopted by the Board of Management and the Supervisory Board as published in the Federal Gazette on 6 March 2024, and this received the required majority. The voting results for agenda item 7: I note and announce that the vote gave us 150,624,304 shares for which we received valid votes. This corresponds to 61.18% of the share capital. There were 115,613,866 votes in favor, that is 99.99%, and 10,438 votes against, or 0.01%, and there were 817,413 abstentions.
The AGM has adopted agenda item 7, approval of the Domination and Profit and Loss Transfer Agreement between Covestro AG and Covestro First Real Estate GmbH. It has been adopted, and this is as published in the Federal Gazette on 6 March 2024. The required majority was received. Ladies and gentlemen, that brings us to the end of our agenda. You now have two minutes if you wish to enter an objection with regard to the AGM, if you see any reason to do so. This is a possibility that you will have. It's now 4:48 P.M. You have until 4:51 P.M. to do so. So we'll have a quick break.
Ladies and gentlemen, it's 4:41 P.M. Objections can no longer be filed for the record. This brings us to the end of this year's virtual annual general meeting.
I would like to express my sincere gratitude to you for showing so much keen interest in our company. Likewise, I would like to thank all employees who contributed to preparing and implementing this event for their dedication. The next annual general meeting of Covestro is scheduled to take place exactly one year from now on April 17th 2025. Stay safe, stay healthy. See you next time. I hereby close today's annual general meeting of Covestro AG. It is 4:52 P.M. Thank you so much.