The Annual General Meeting held in 2003 passed a resolution on a stock option program for management. Stock options are part of the Group's incentive and commitment-building system for key employees, and the objective is to encourage recipients to work in the long term to increase shareholder value. The reward system is based on both Group earnings and relative performance, with rewards geared to accomplishments.
The total amount of share options that may have been issued was 5 100 000, entitling holders of stock options to subscribe for 5 100 000 new shares in the Company in the period 2006–2011. Stock options have been marked 2003A, 2003B and 2003C and have been distributed by decision of the Board of Directors, without additional consideration, in 2004, 2005 and 2006, in deviation from shareholders' pre-emptive rights, to the key persons employed by the Outokumpu Group. In deciding on the number of stock options to be distributed annually in total and to each individual, the Board of Directors assessed the Group's earnings trend and performance by comparing, for example, the trend in earnings per share with the trend for the same key ratio in peer companies. In accordance with the share ownership plan of the program members of the Group Executive Committee are obligated to purchase Outokumpu shares with 10% of the income they obtain from stock options.
The subscription price for shares through the exercise of stock option 2003A is the trading volume-weighted average price of the Outokumpu Oyj share on the Helsinki Stock Exchange from December 1, 2003 to February 29, 2004, with stock option2003B it is the trading volume-weighted average price of the Outokumpu Oyj share on the Helsinki Stock Exchange from December 1, 2004 to February 28, 2005 and with stock options 2003C it is the trading volume-weighted average price of the Outokumpu Oyj share on the Helsinki Stock Exchange from December 1, 2005 to February 28, 2006. On each dividend record date, the share subscription price of stock options will be reduced by the amount of dividends to be decided after the close of the period for determining the subscription price and prior to share subscription.
The subscription period for shares with stock option 2003A is from September 1, 2006 to March 1, 2009, with stock option 2003B it is from September 1, 2007 to March 1, 2010 and with stock option 2003C it is from September 1, 2008 to March 1, 2011.
In February 2004, the Board of Directors confirmed that a total of 742 988 stock options 2003A be distributed to 116 persons in management positions of Outokumpu. The maximum number of 2003A stock options was 1 700 000. Members of the Group Executive Committee received 62% and other key persons received 45.25% of the maximum number of 2003A stock options. The number of 2003A stock options distributed was decided on the basis of the earnings criteria established in June 2003, and which were the Group's earnings per share and share price performance outperforming the share price trend of peer companies.
The additional earnings criterion for Group Executive Committee members was the Group's gearing. Trading with Outokumpu Oyj's stock options 2003A commenced on the main list of the Helsinki Stock Exchange as of September 1, 2006. The unallocated 1 040 698 stock options have been annulled and removed from the Finnish book-entry system. By the end of year 2007, a total of 56 862 Outokumpu Oyj shares had been subscribed for on the basis of 2003A stock options. An aggregate maximum of 602 440 Outokumpu Oyj shares can be subscribed for with the remaining 2003A stock options. In accordance with the terms and conditions of the option program, the dividend adjusted share subscription price for a stock option was EUR 8.45 at the end of 2007.
In February 2005, the Board of Directors confirmed that a total of 1 148 820 stock options 2003B be distributed to 130 persons in management positions of Outokumpu. The maximum number of 2003B stock options was 1 700 000. Members of the Group Executive Committee received 55.2% and other key persons received 75% of the maximum number of 2003B stock options. The number of 2003B stock options distributed was decided on the basis of the earnings criteria established in February 2004, and which were the Group's earnings per share and share price performance outperforming the share price trend of peer companies. The additional earnings criterion for Group Executive Committee members was the Group's gearing. Trading with Outokumpu Oyj's stock options 2003B commenced on the main list of the Helsinki Stock Exchange as of September 3, 2007. The unallocated 671 180 stock options have been annulled and removed from the Finnish book-entry system. By the end of year 2007, a total of 14 379 Outokumpu Oyj shares had been subscribed for on the basis of 2003B stock options. An aggregate maximum of 1 014 441 Outokumpu Oyj shares can be subscribed for with the remaining 2003B stock options. In accordance with the terms and conditions of the option program, the dividend adjustedshare subscription price for a stock option was EUR 11.51 at the end of 2007.
In February 2006, the Board of Directors decided that a total of 97 500 stock options 2003C be distributed to 7 members of the Group Executive Committee. The maximum number of 2003C stock options was 1 160 000. Members of the Group Executive Committee received 25% of the maximum number of 2003C stock options. No stock options were distributed to other key persons, because the earnings criteria established in March 2005, the Group's operating profit in 2005 and relative development of total shareholder return, were not achieved. The additional earnings criterion for the Group Executive Committee members was the Group's gearing and the established gearing target was achieved. At the end of 2007 an aggregate maximum of 102 500 Outokumpu Oyj shares could be subscribed for with 2003C stock options. In accordance with the terms and conditions of the option program, the original subscription price for a stock was EUR 13.69 per share, from which subsequent annual dividends will be deducted. Following the subscriptions with 2003 stock options, Outokumpu Oyj's share capital may be increased by a maximum of EUR 2 922 947.70 and the number of shares by a maximum of 1 719 381. The number of shares that can be subscribed for on the basis of the stock options corresponds to 1.0% of Company's shares and voting rights.
2003 stock options - terms and conditions ENG / FIN