Every day counts - Deutsche Beteiligungs AG

68
Management team shares in
investment performance
VIII. People
Deutsche Beteiligungs AG needs a qualified, highly-motivated team to realize its
objectives. In financial year 2001/2002, the Board of Management and a selected group
of investment team staff were asked, for the first time, to co-invest in direct investments.
The managerial team of Deutsche Beteiligungs AG thus shares in both the upside and
downside of the portfolio investments, while this policy also ensures that the interests
of the management team and those of Deutsche Beteiligungs AG coincide.
This co-investment activity is realized within the scope of a partnership participation.
This can result in a superior profit share, if outstanding returns are realized on these
investments within a defined holding period. The profit share is only paid if Deutsche
Beteiligungs AG or the investors in the respective co-investment fund have received a
minimum return on their invested capital. This minimum return currently amounts to
8.0 percent annually. The structure of the profit share, its implementation and set points
are in conformity with common practice in the private equity industry and constitute a
prerequisite for the placement of co-investment funds. The profit share of members of
the Board of Management is not expensed in the profit-and-loss account of Deutsche
Beteiligungs AG. For Board members, the profit share is income from an investment.
To create an additional incentive to enhance share performance on a sustained basis,
stockholders at the 2001 Annual Meeting resolved to install a stock option program for
700,000 stock options. Since then, 70,000 stock options for one share each of Deutsche
Beteiligungs AG have been granted in every financial year after the Annual Meeting to
a selected group of employees who have contributed positively toward the stock’s performance.
70,000 further stock options are granted to the members of the Board of
Management. An appreciation is achieved, if the performance of the shares of Deutsche
Beteiligungs AG exceeds that of the S-Dax. The options are exercisable not earlier than
three years after the date of grant. At the balance sheet date, an intrinsic value was only
attached to the stock options granted in 2003; at October 31, 2003, the option value
amounted to 3.20 euros per share.
Beyond that, we offer a motivating work environment characterized by lean reporting
lines, teamwork-based project organization and early distribution of responsibility and
authority.
The factors described are conducive to retaining key staff. The Company’s management
team of 15 people currently boasts an average of 9 years of service.
At the balance sheet date, the number of staff had declined from 51 to 50; of these
37 serve full-time, seven work part-time. Three employees are on parent leave. Three
apprentices are currently receiving their training for their future professions.