People

The People Running This Company

Grade: B. Auto1 is a founder-led, founder-owned business with extraordinary skin in the game — Christian Bertermann (CEO) and Hakan Koç (Supervisory Board Chair) together own roughly 21.5% of the company, worth about €1.0 billion at the current quote, against modest cash salaries and disciplined share-based pay. The flip side is that the same two co-founders sit on both sides of the oversight relationship: the CEO is supervised by a board his co-founder chairs, and CFO turnover (two CFOs in eighteen months) has just removed the most experienced public-company finance voice. ISS rates the audit and shareholder-rights pillars at low risk but flags compensation at 8/10 — the one structural weakness we agree with.

1. The People Running This Company

The slate is unusually thin for a €5B company — a two-member Management Board and a five-member Supervisory Board. That works when the founder-CEO is genuinely operating the business (which Bertermann is), but it leaves Wallentin as the only public-facing executive other than the CEO. His credibility on the next four earnings calls is the single biggest near-term people risk.

2. What They Get Paid

The Remuneration Report 2024 is gated behind the JavaScript-rendered IR site, so granular pay-mix is not retrievable. The strongest disclosed pay datapoint is from the company's FY2022 filing, surfaced by Yahoo Finance: Bertermann's cash compensation that year was €510,000. Against a €6.3B-revenue business and a personal stake worth ~€600M, that is a strikingly low cash salary — closer to a startup-founder posture than a typical European CEO package.

Across five fiscal years since the IPO, share-based compensation has averaged about €15M per year — under 0.3% of revenue. By post-IPO European tech standards, this is restrained. Headline tech listings of similar vintage routinely run SBC at 3-8% of revenue. Auto1 grants stock sparingly, which is consistent with founders who already own enormous economic interests and have no need to dilute themselves further.

Verdict on pay: the disclosed cash component is modest; the equity-comp drain on shareholders is small; and the ISS Compensation pillar score of 8/10 (high concern) is therefore the one piece of external scoring we partially disagree with — likely driven by limited disclosure of LTI targets and EU-style abstention items rather than excess. The headline numbers look shareholder-friendly.

3. Are They Aligned?

This is the strongest section of the case. Founders, anchor investor, and an activist hedge fund all hold meaningful stakes, dilution is contained, and the founders have not used the IPO as an exit.

Ownership and control

Founder insiders hold 21.5% combined. SoftBank Vision Fund 1 still holds 14.8% — material, but down from the ~20% it bought at the 2018 round and well below the level at which it could force a sale. Two activist-style US funds (Cadian, Sachem Head) together hold ~12%, which is constructive: they wouldn't tolerate value destruction quietly, and Cadian's 9.87% is the kind of position that gets management's attention without dictating strategy.

Insider buying and selling

The directors'-dealings page on Auto1's IR site is JavaScript-rendered and the structured transaction history was not retrievable. The behavioral signal that is available is unambiguous: at IPO (February 2021) the stock priced at €38; today it trades at €22.44. The IPO drawdown is roughly 40%. Across that period, Bertermann's disclosed stake has held around the 12% line and Koç's around 9% — the founders have not used the post-IPO window to monetize at scale. As a German foreign private issuer there is no SEC Form 4 footprint, so the absence of disclosed selling is not as definitive as in a US filer, but voting-rights notifications under WpHG §§33-39 would have surfaced any material reduction, and none has.

Dilution

Share count rose 21% at the IPO (2020→2021) and has crept up roughly 1% per year since. That is genuinely modest — none of the secondary placements or convertible-note conversions that typically follow a European IPO. Combined with the SBC discipline above, dilution is a non-issue.

Related-party behavior

The pre-IPO capital structure involved meaningful related-party complexity — convertible notes from Farallon, Baupost and Sequoia in 2020, plus the SoftBank anchor — but those are now resolved. The post-IPO disclosures we can read do not flag any material RPT. ISS's Audit pillar score of 2 (low risk) is consistent with that read. We classify related-party concerns as minor.

Capital allocation

Cumulative free cash flow since the IPO is roughly –€1.7B, financed by IPO proceeds and ongoing financing activity. FY2024 was the first net-income-positive year (€21M) and FY2025 stepped up to €78M — but operating cash flow turned more negative in FY2025 (–€463M) as inventory and receivables grew with retail. There have been no buybacks (treasury stock is only 0.21% of shares), no dividends, and no large acquisitions. Capital allocation is "fund the build" — defensible while the unit economics scale, but the runway question is real and Stan's verdict and Forensic's read should be checked against it.

Skin-in-the-game score

4. Board Quality

The Audit and Shareholder Rights pillars are well-rated — one-tier free-float dominance, no dual-class shares, no anti-takeover defenses worth fighting. The Board pillar is mid (5/10) because of the founder/chairman setup and the small size of the supervisory body (5 members for a multinational of 6,300 staff is light). The voluntary ESG Committee at Supervisory Board level exceeds the German Corporate Governance Code requirement — a positive signal of intent.

Expertise that's actually present: e-commerce ops (Frese), auto finance (Santelmann), VC/fintech (Miele), broad finance (Pietzner). Missing: a senior independent automotive-industry operator (someone who has actually run a multi-country used-car retail business), and a deeper bench on technology and data — both are operational risks for a company whose moat depends on inspection, logistics and pricing engineering at scale. The Audit Committee gained a second voice when Miele joined in 2024, which addresses the previous single-point-of-failure on financial oversight.

5. The Verdict

Grade: B.

What pulls the grade up: Founder skin-in-the-game on this scale is rare among European listings. Bertermann and Koç hold a combined €1.0B in Auto1 stock and have not used the post-IPO window to sell — even through a 40% drawdown from the IPO price. Cash compensation is modest, share-based compensation is under 0.3% of revenue, and dilution is ~1% per year. Two US activist holders (Cadian, Sachem Head) sit at the table, which keeps strategic discipline honest. ISS rates audit and shareholder rights at the favourable end of the scale.

What pulls the grade down: The co-founder Chairman of the Supervisory Board supervises his co-founder CEO. That is a structural alignment win but an independence loss, and it means investors are betting on the founders' integrity, not on a hard governance check. The Management Board has just gone through CFO turnover (Boser → Wallentin) at exactly the point where retail unit economics need their most credible public-company finance voice. ISS flags the Compensation pillar at 8/10 — we partially disagree, but the underlying point that LTI structure is under-disclosed is fair. Cash burn since IPO has been heavy (-€1.7B cumulative FCF) and the board has not yet had to prove it would force a strategic pivot if the retail build did not work.

What would most likely upgrade us to A-: A successful first year for Wallentin combined with FY2026 FCF turning positive while founder stakes remain intact — proof that the founder-led model delivers without further calls on capital.

What would most likely downgrade us to C: Founder selling pressure (a voting-rights notification taking Bertermann or Koç below 10%), a strategic acquisition that benefits SoftBank's exit rather than minority holders, or a Remuneration Report 2025 disclosure showing LTI mechanics that disconnect pay from per-share value creation.