Praktiker Bau- und Heimwerkmärkte Holding AG, Kirkel

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The bonus bank serves the purpose of spreading the bonuses evenly and aims to foster value-
enhancing decision-making behaviour in the long term. As such, this remuneration system takes account
of the development in the company’s enterprise value not only in the short term but in the medium-
and long term too.
Furthermore, when setting bonus levels, the personnel committee of the supervisory board has the
option of taking account of the personal performance of the individual management board members as
is not directly reflected via the EVA remuneration system, such as in respect of mergers and acquisitions.
• As far as the component with long-term incentive impact is concerned, this relates to bonuses
based on share price development and the ensuing increase in value. In the 2006 financial
year, a five-year share bonus scheme was introduced, the first tranche of which was awarded
in 2006. This scheme guides the allocation of cash bonuses, the level of which depends on
the development of Praktiker shares seen against that of appropriate indices. The entire share
bonus scheme is divided up into tranches allocated annually, the target parameters being calculated
separately for each tranche. The term to maturity of each tranche runs for three years
with the last tranche being allocated in 2010.
Payment of the individual annual share bonuses occurs in the month following the end of the term to
maturity of the given tranche, provided the conditions of payment have been met.
The level of the given bonus is initially determined via the ratio of the base price against the target
price of the shares. The base price per tranche equates to the arithmetical average of the closing price
of the Praktiker share on the last 20 consecutive trading days prior to the cut-off date (four weeks after
the given annual general meeting). The target share price, qualifying for allocation of the full bonus
payment, is worked out on the basis of the base price plus an increase of 15 percent over a period of
three years. The bonus is increased or reduced on a pro-rata basis in the event that the movement of
the share price exceeds or falls short of the 15 percent mark.
The level of the given bonus also depends on the performance of Praktiker shares as compared with
the relevant indices, MDAX and Dow Jones Euro Stoxx “General Retailers”. In the case of Praktiker
shares outperforming the market, the share bonus is increased to 120 percent, if they underperform,
the bonus is cut to 80 percent. Outperformance / Underperformance is considered to be the case
when the price development of Praktiker shares exceeds / falls short of the above-mentioned mean
value by more than 10 percent on average.
Payment of the share bonus is limited to the current, individually agreed basic annual salary (gross).
The share bonus is only awarded if, at the point in time of it becoming due, the contract of employment
at Praktiker Group has neither been terminated nor has a mutually agreed cancellation of the contractual
relationship occurred. In case the share price at the end of term to maturity is below the base
price, a bonus multiplier of zero applies. In this case no payout will take place.