29 SHARE-BASED PAYMENTS
Lemminkäinen had a share-based incentive plan comprising three one-year earning periods: the calendar years 2010, 2011 and 2012. The Board of Directors decided on the earning criteria for each period as well as on the targets to be established at the beginning of each earning period. In 2012, the earning criteria for long-term incentives were the targets set for the Group’s equity ratio and return on investment. The reward was paid partly in company shares and partly in cash. The proportion paid in cash covered the taxes and tax-related costs arising from the reward. The shares may not be transferred during the commitment period which ends two years after the earning period ends.
At the end of 2012, the Board of Directors of Lemminkäinen Corporation decided on a new share-based incentive plan for the Group’s key personnel. The plan includes three one-year earning periods, calendar years 2013, 2014 and 2015. The company’s Board of Directors will decide on the earning criteria and the targets to be set at the beginning of each earning period. The potential performance-based reward for an earning period will be paid out in company shares and cash. The proportion to be paid in cash will cover the taxes and tax-related costs arising from the reward. The shares may not be transferred during the commitment period of approximately two years. If a key person’s employment or service contract ends during the commitment period, they will generally have to return any reward shares to the company without compensation.
As part of the plan the above mentioned key personnel has the opportunity to receive conditional reward, ie matching shares, on the basis of their share ownership and continued employment or service contract. In order to receive the conditional reward, a key person must already own or acquire a specified number of company shares, or a percentage thereof, by 30.6.2013. The number and date are set by the Board of Directors. In this case, the key person will be granted, as a reward, one share for each share acquired, as long as their employment or service contract remains valid and they retain ownership of these shares until the conditional reward is paid. The earning period for the conditional reward is the calendar years 2013–2015. The conditional reward will be paid by the end of April 2016, partly in shares and partly in cash.
Information concerning share-based incentive plan is presented below:
|Conditional reward||Earning period 2013||Earning period 2012||Earning period 2011|
|Grant date||6 Feb 2013||7 Feb 2013||9 Feb 2012||10 Jan 2011|
|Earning period start date||1 Jan 2013||1 Jan 2013||1 Jan 2012||1 Jan 2011|
|Earning period end date||31 Dec 2015||31 Dec 2013||31 Dec 2012||31 Dec 2011|
|Commitment period end date||30 Apr 2016||31 Dec 2015||31 Dec 2014||31 Dec 2013|
|Remaining contractual life, years||2.3||2.0||1.0||0.0|
|Vesting conditions||share ownership requirement||EBIT, ROI||equity ratio, ROI||equity ratio, ROI|
|Payment method||cash & equity||cash & equity||cash & equity||cash & equity|
|Share price at grant date, EUR||15.80||15.85||20.20||25.35|
|Fair value of share at grant date, EUR *||15.03||15.26||19.70||24.65|
|Amount of granted shares during period, maximum||205,591||75,076||53,176|
|Changes in number of granted shares, maximum||-3,449||2,433||6,244|
|Number of granted shares at the end of period, maximum||202,142||77,509||59,420|
|Number of shares earned at the end of period **||16,036||0||42,630||15,709|
|Number of plan participants at end of period||15||43||40||29|
|Assumed fulfilment of earning criteria, %||0.0||60.0||15.0|
|Estimated number of shares returned prior to the end of commitment period, %||10.0||10.0||10.0||10.0|
* The fair value of share at grant date is the share’s grant date value less estimated dividend payments during the earning period.
** Number of shares earned in 2013 is an estimate.
According to management estimates no shares were earned, and therefore no expenses were recognised in earning period 2013. The accured expenses from the share based incentive plans recognised in the income statement in 2013 were a total of EUR 1.0 million (EUR 0.5 million). The liability recognised in the balance sheet in respect of share-based incentive plan at the end of 2013 was EUR 0.9 million (EUR 0.8 mill.). The company estimates that expenses to be recognised in 2014 from incentive plans realised before 2014 will be approximately EUR 0.5 million. Actual amount may differ from the estimated amount.