IX. Share-based payment
As part of the negotiations concerning the new Executive Board contracts in 2007, a share-based payment component was agreed for the Executive Board. According to this, one third of the Executive Board’s bonus payments is settled in the form of virtual shares rather than in cash. 50% of the claim to virtual shares becomes valid at the time the bonus payments are due, another 30% after the end of the year and another 20% after two years. In the event of the death of an Executive Board member, his departure from the company on the grounds of disability or the sale of a large part or all of the company to an institutional investor, the claim shall come into force at this point. The claim is conditional on the continuation of the employment contract without termination at the time the claim comes into force. Bonus payments are due after the consolidated financial statement has been approved by the Supervisory Board and/or the annual shareholders’ meeting.
At the time of the bonus payment settlement in virtual shares, the value of the virtual shares allotted is measured in accordance with the fair value of shares at this time. This means that at the time the bonus payment claim is settled, the value of the entitlement to virtual shares granted to the Executive Board corresponds to one third of the (computed) bonus payment amount for the business year just expired.
Insofar as the company is listed on the stock exchange, the fair value of the shares is determined in accordance with the stock market price of the last 20 trading days following approval of the respective consolidated financial statement. If the company is not listed on the stock exchange, the value is determined from earnings after taxes (less minorities) per share using a multiple, or with the aid of a company evaluation should this be requested by the Executive and/or Supervisory Board.
The holding period for the virtual shares is one year, or at the longest until the complete or partial sale of the company to an institutional investor. Dividends on virtual shares are paid out in accordance with the value of the shares at this time; in this context, the fair value is determined in connection with any stock market listing in compliance with the principles described above.
During the business year, expenses from share-based compensation amounted to € 553k. A liability was disclosed to this amount. Based on earnings after taxes (after deduction of the earnings devolving on minorities) amounting to € 15.9 million, the value of the shares to be granted for settling the bonus payment claims amounts to € 0.90 per share, which corresponds to the strike price.
