Performance and share value based long-term incentive program 2017-2020
On February 14, 2017, the Board of Directors of Raute Corporation has decided on the establishment of a new performance and share value based long-term incentive program for Raute Group's top management. The aim of the plan is to align the objectives of the company's management with the shareholders in developing the company value and to commit the management to achieving the strategic targets of the company through offering them a competitive long-term incentive scheme.
The program consists of annually commencing individual three-year plans. The individual plan may either comprise a three-year performance period or a one-year performance period followed by a two-year restriction period. The potential reward attained under the individual plan will be paid after the three-year plan period. The potential reward will either be paid in listed series A shares of Raute or in cash.
The commencement of each individual plan, the length of the performance period within the plan, the performance criteria, the eligible participants thereof and the earning opportunity is subject to a separate decision of the company's Board of Directors in each case.
The first plan commences from the beginning of the year 2017. It comprises a one-year performance period, followed by a two-year restriction period. The potential rewards thereunder will be paid in the spring 2020 provided that the performance targets set by the Board of Directors are achieved.
Eligible to participate in the first plan are 12 persons belonging to the Group's top management, including the members of Raute Group's Executive Board. The performance criteria applied to the plan which commences from the beginning of the year 2017 are earnings per share (EPS) and net sales growth.
The earning opportunity within the program is capped. The value of the reward paid to the participant based on an individual three-year plan may not amount to more than twice the value which the maximum earning opportunity allocated to him/her had at the time the individual plan was launched.
If the performance targets set for the plan commencing from the beginning of the year 2017 are fully achieved, the aggregate amount of rewards to be paid under this individual plan, estimated based on the average share price of the last trading day preceding the date hereof, is approximately EUR 0.5 million (gross before the withholding of the applicable payroll tax).
According to a share ownership recommendation applied by the company each participant of the program is expected to accumulate and, once achieved, maintain a share ownership in the company corresponding to the value which is twice the value of the maximum gross earning opportunity allocated to him/her within the latest ongoing plan. Each participant is expected to use fifty per cent of the net reward received under the program for accumulating his/her share ownership until the above recommendation is fulfilled. The accumulation of the share ownership is carried out either by keeping share rewards received or by acquiring shares with the cash reward received under the program.
Share-based incentive program 2014-2018
On February 12, 2014, the Board of Directors of Raute Corporation decided on the establishment of a new long-term performance based share incentive program (Performance Share Plan) for Raute Group's top management. The aim of the plan is to align the objectives of the Company's owners and the management in order to i.a. develop the company value and to commit the management to the Company through offering them a competitive incentive system based on ownership of the Company's shares.
The plan includes three individual share plans, commencing in 2014, 2015 and 2016.
The length of each share plan is three years consisting of
a one-year performance and
a two-year restriction period following the performance period.
During the restriction period the development of the value of the reward is based on the development of the value of the Company's share. The participant of the program may not sell or otherwise transfer the shares received as a reward during the restriction period.
The Board of Directors of the Company decides separately on the participants of each commencing share plan and on the performance criteria applicable to the performance period of each share plan, the target setting thereof and the target and maximum levels of the payable reward.
Terms and conditions of the Share-based incentive program 2014-2018
Share plan 2014
The share plan 2014 included 11 members of the Group's top management as participants, including the members of the Executive Board. The performance criteria of the share plan 2014 were earnings per share (EPS) and revenue growth. No share reward was paid for the earning period 2014.
Share plan 2015
The share plan 2015 included 11 members of the Group's top management as participants, including the members of the Executive Board. The performance criteria of the share plan 2015 were earnings per share (EPS) and revenue growth. The Board of Directors has confirmed the amounts of the personal bonuses to be paid for the 2015 earnings period on March 2, 2016, of which the portion to be paid in shares is altogether 14,523 series A shares. No shares or cash were issued under the plan in 2015. The vesting period ends at the beginning of 2018.
Share plan 2016
The share plan 2016 includes 12 members of the Group's top management as participants, including the members of the Executive Board. The performance criteria of the share plan 2016 were earnings per share (EPS) and revenue growth.