Arrangements for managers to invest in the Company have been in place since 2007. These arrangements are governed by the 'Shareholders' and co-investment agreement on the implementation of the management partnership plan for the KION Group' (the co-invest agreement) dated 14 June 2007, entered into by Superlift Holding S.à r.l., KION Holding 1 GmbH and KION Management Beteiligungs GmbH & Co. KG. The managers who have joined the management partnership plan are also parties to the co-invest agreement.
KION Management Beteiligungs GmbH & Co. KG holds an equity interest of 14.61 per cent in KION Holding 1 GmbH. In total, the Executive Board holds an interest of €3,400 thousand in the limited partner capital of KION Management Beteiligungs GmbH & Co. KG, which equates to an indirect interest of 3.31 per cent in the share capital of KION Holding 1 GmbH. In addition to the KION Group's Executive Board, around 300 executives around the world have purchased shares in KION Management Beteiligungs GmbH & Co. KG. The shares are sold at their fair value and shareholdings are divided into virtual 'A', 'B', and 'C' shares. Different terms and conditions concerning payment of the purchase price and rights to purchase attach to these virtual shares. The purchase price for 'A' shares became payable when participants joined the programme, while KION Management Beteiligungs GmbH granted participants interest-bearing loans for the purchase price of the 'B' and 'C' shares. The vesting conditions and resulting purchase rights for 'B' shares accrue to participants in equal, annual tranches over a period of five years. By contrast, managers become eligible to purchase 'C' shares if the targets for revenue, EBITA and operating cash flow set in the business plan are achieved over a five-year period or predefined target returns are achieved if the Group is sold or there is a change of control.
In 2010, the performance-related vesting conditions for the 'C' shares relating to the 2009–2012 bonus period were adjusted to take into account the revised long-term KION business plan, which is in turn based on the amended loan terms in the supplementary agreement to the SFA dated 23 September 2009. The change in vesting conditions affects a total of 1,034 shares with an expected exercise price of €16 thousand each. The agreement had one year remaining as at 31 December 2011. The total fair value of this adjustment was €1,044 thousand. The fair value of the individual purchase rights amounted to €1 thousand. The number of purchase options outstanding as at the reporting date remained unchanged at 1,034, of which 584 (31 December 2010: 292) were exercisable.
The fair value of the new vesting conditions was calculated using the Black-Scholes model based on a share price of €11 thousand. The risk-free interest rate on the reference date for the calculation was 1.6 per cent. The expected holding period for the options is three years. The expected volatility is 32 per cent and it was calculated by taking the implied volatility of a peer group. Expected dividends were not taken into account.
Expenses of €295 thousand were incurred by the management partnership plan in 2011 (2010: €590 thousand).