[46] Variable remuneration

KION performance share plan (PSP) for managers

The 2023 tranche of the long-term, variable remuneration component for the managers in the KION Group (LTI 2023) was granted with effect from January 1, 2023 and has a term of three years. For the 2023 tranche, 50 percent of the remuneration component (2021 and 2022 tranches: also 50 percent) measured over the long term is based on the total shareholder return (TSR) of KION GROUP AG shares compared with the performance of the MDAX index (market-oriented measure of performance) and 30 percent (2021 tranche: 50 percent; 2022 tranche: 30 percent) is based on return on capital employed (ROCE) (internal measure of performance). For the 2022 and 2023 tranches, 20 percent of the performance share plan is linked to the achievement of ESG targets.

The performance period for the 2023 tranche ends on December 31, 2025 (2022 tranche: December 31, 2024). The 2021 tranche expired on December 31, 2023 and will be paid out in the first quarter of 2024.

At the beginning of the performance period on January 1, 2023 (2022 tranche: January 1, 2022; 2021 tranche: January 1, 2021), the managers were allocated a total of 1,074,813 phantom shares for this tranche (2022 tranche: 266,172 phantom shares; 2021 tranche: 191,733 phantom shares). The allocation was based on a particular percentage of each manager’s individual gross annual remuneration at the time of grant. At the end of the performance period, the number of the phantom shares is amended depending on the degree to which the relevant targets are achieved. The resulting final number of phantom 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 KION Group has the right to adjust the amount payable at the end of the performance period in the event of exceptional occurrences or developments. For the 2022 and 2023 tranches, the maximum amount payable is limited to 250 percent of the value of the shares allotted to an individual at the grant date.

The pro rata expense calculation based on the fair value of the phantom shares on each valuation date is carried out using Monte Carlo simulation. The measurement parameters used to value the phantom shares on the reporting date were as follows:

Taking account of the remaining term of two years (2023 tranche) and one year (2022 tranche), the historic volatility of KION shares was used to determine the volatility on which the valuation is based. The provision as at December 31 and the income or expense in the financial year resulting from each tranche of the performance share plans break down as follows:

KION performance share plan (PSP) for the Executive Board

The members of the Executive Board have been promised a multiple-year variable remuneration component during their term of office. This component takes the form of a performance share plan with a three-year term in each case. The financial performance targets for the 2023 tranche are the relative total shareholder return (TSR) for the shares of KION GROUP AG compared with the MDAX (market-oriented measure of financial performance), with a weighting of 40 percent (2021 and 2022 tranches: also 40 percent), and return on capital employed (ROCE) (internal measure of financial performance), with a weighting of 40 percent (2021 and 2022 tranches: also 40 percent). For all tranches, 20 percent of the performance share plan is linked to the achievement of ESG targets.

The performance period for the 2023 tranche ends on December 31, 2025 (2022 tranche: December 31, 2024).

At the beginning of the performance period on January 1, 2023 (2022 tranche: January 1, 2022; 2021 tranche: January 1, 2021), the Executive Board members were allocated a total of 245,373 phantom shares for this tranche (2022 tranche: 61,222 phantom shares; 2021 tranche: 96,785 phantom shares) on the basis of the starting price of KION shares (60-day average). The shares were allocated on the basis of an allocation value in euros specified in each Executive Board member’s service contract. At the end of the performance period, the number of the phantom shares is amended depending on the degree to which the relevant targets are achieved. The resulting final number of phantom 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 individual performance multiple to adjust the final payment at the end of the performance period by +/– 30 percent. The maximum amount payable is limited to 200 percent of the value of the shares allotted to an individual at the grant date.

The pro rata expense calculation based on the fair value of the phantom shares on each valuation date is carried out using Monte Carlo simulation. The measurement parameters used to value the phantom shares on the reporting date are shown in the > table ‘Significant measurement parameters of the KION Performance Share Plans’.

Taking account of the remaining term of two years (2023 tranche) and one year (2022 tranche), the historic volatility of KION shares was used to determine the volatility on which the valuation is based. The provision as at December 31 and the income or expense in the financial year resulting from each tranche of the performance share plans break down as follows:

The total carrying amount for liabilities in connection with share-based remuneration was €24.1 million as at December 31, 2023 (December 31, 2022: €4.9 million). For 2023, a total expense of €20.4 million for twelve months was recognized for share-based remuneration (2022: total income of €22.1 million).