Annual report 2008 - Advanced Inflight Alliance AG

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Fairdeal Multimedia Pvt. Ltd., Mumbai, India (hereinafter „Fairdeal“)
The core business of Fairdeal involves selling airline film licenses worldwide, mainly for Indian films, commonly
known as Bollywood movies. Fairdeal also provides its 10 customers with Indian TV programs, service
fees, audio programs, and additional inflight entertainment services.
2. Explanation of the basic features of the compensation systems
Management Board
The compensation of the Management Board is determined by the Supervisory Board. It comprises different
components. The performance-independent component consists of an annual fixed salary and benefits. The
fixed salary is oriented on the economic situation and future prospects of the company, as well as on the
compensation systems of comparable companies. The variable components of the compensation comprise
a performance-based bonus contingent on a percentage of consolidated income.
A total of EUR 1,110 thousand – divided into fixed compensation of EUR 410 thousand and variable compensation
of EUR 700 thousand – were paid to the Management Board in the 2008 financial year. The
Management Board was also paid other compensation of EUR 173 thousand for direct life, retirement,
disability and accident insurance as well as in connection with the stock option plan, as well as monetary
benefits of EUR 32 thousand for health insurance and the use of a company car. Variable compensation for
the 2007 financial year of EUR 40 thousand was also paid in 2008.
Altogether 100,000 stock options were granted to the Management Board under the stock option plan
adopted by the Annual General Meeting on July 02, 2007; of these, 65,000 stock options were issued to the
chief executive officer, Mr. Otto Dauer, and 35,000 stock options were issued to the chief financial officer,
Mr. Peter Biewald. The options‘ exercise price of EUR 2.03 corresponded to the average of the opening and
closing prices of the shares of Advanced Inflight Alliance AG in XETRA trading on the last five trading days
before the relevant stock option was issued. The stock options may be exercised only if the average of the
opening and closing prices of the shares of Advanced Inflight Alliance AG in XETRA trading (or a successor
system that has taken its place) on the last five trading days prior to the onset of the given exercise period
have risen by at least 20% over the exercise price for the first third (option terms and conditions, item 5.1
sentence 2) of the options granted in a tranche, by at least 30% over the exercise price for the second third
(option terms and conditions, item 5.1 sentence 3) of the options granted in a tranche, and by at least 40%
over the exercise price for the final third (option terms and conditions, item 5.1 sentence 4) of the options
granted in a tranche.
The fair value of the stock options is measured at the time they are granted using a binomial model and
taking the conditions at which the options were granted into account.
The term of the options granted is governed by § 5.4 of the option terms and conditions. The term of a
stock option shall begin on the date it is granted and end upon expiration of five years for the first third of
the options granted in a tranche, upon expiration of six years for the second third of the options granted
in a tranche, and upon expiration of seven years for the final third of the options granted in a tranche.
There shall be no cash settlements. The Group has not executed any share-based payments entailing cash
settlements in the past.
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