KION Performance Share Plan

In May 2013, the Company entered into new service agreements with Executive Board members which were contingent on the Company’s IPO going ahead. The provisions of these service agreements specify that long-term, variable compensation (the KION GROUP AG Performance Share Plan) is to be introduced so that the compensation structure is based on the sustainable performance of the Company.

As part of the KION GROUP AG Performance Share Plan, the Executive Board members will be allocated virtual shares over a fixed period (two-and-a-half years for the 2013 tranche and three years for all subsequent tranches). The long-term compensation component is equally based on the total shareholder return (TSR) of KION GROUP AG shares compared with the STOXX® Europe TMI Industrial Engineering index as a measure of market performance, and with return on capital employed (ROCE) as an internal measure. It also depends on the performance of KION GROUP AG shares during the relevant period.

The first performance period for the 2013 tranche ends on 31 December 2015. At the beginning of the performance period, the Executive Board members were granted a total of 0.3 million virtual shares for this tranche with a specific fair value based on an individually defined target in euros as detailed in the respective Executive Board member’s service agreement. At the end of the performance period, the number of the virtual shares is amended depending on the degree to which the relevant targets are achieved.

The resulting final number of virtual shares multiplied by the smoothed price of KION GROUP AG shares at the end of the performance period determines the amount of cash actually paid. The Supervisory Board can also use a discretionary personal performance factor to adjust the final payment at the end of the performance period by +/– 20 per cent. The final payment is limited for each member of the Executive Board to an amount equal to 200 per cent of its individual target amount.

The pro-rata expense calculation based on the fair value of the virtual shares on each valuation date is carried out using Monte-Carlo simulation. The following valuation parameters were used to value the virtual shares on the reporting date.

The historic volatility of shares in similar companies (peer group) was used to determine the volatility of KION shares on which the valuation is based. As at 30 September 2013, the fair value of one virtual share was € 19.19 and the total fair value based on 0.3 million virtual shares was € 5.0 million on that date. Because the performance period for the 2013 tranche has been set at 30 months, a pro-rata expense of € 0.5 million for three months was recognised in the third quarter of 2013.