Outokumpu’s Board of Directors has confirmed that share-based incentive programs are part of the incentive and commitment scheme for the company’s key personnel. The objectives are to reward key personnel for good performance and thereby support Outokumpu’s strategy, and to direct management attention towards increasing Outokumpu’s profitability and shareholder value. The programs offer the possibility of receiving Outokumpu shares as an incentive, provided that the criteria set by the Board for each earnings period are fulfilled.
Share-based incentive programs
Long Term Incentive programs
Outokumpu’s Long Term Incentive programs offer key personnel the possibility of receiving Outokumpu shares as an incentive, provided that the criteria set by the Board for each earnings period are met.
On top of the short-term incentives for key personnel, the company's regular long-term incentives consist of the Performance Share Plan (PSP) and Restricted Share Pool (RSP). The objective of the programs is to reward selected employees for good performance which supports Outokumpu's strategy, to engage them and to form part of a competitive compensation package. The purpose of the programs is also to direct the employees' attention to achieving Outokumpu's financial targets and increasing shareholder value over a longer period of time. Outokumpu has currently no active stock option programs.
Performance Share Plan (PSP)
The earning criterion for the Performance Share Plan (PSP) 2019–2021 measures Outokumpu's profitability and the efficiency with which its capital is employed compared to a peer group. The maximum number of participants in the plan period 2019–2021 is 150 key employees. The maximum number of gross shares (taxes included) that can be allocated is 2,900,000. The share rewards will be distributed in spring 2022 if the performance criterion is met. Applicable taxes will be deducted from gross shares, and the remaining net value will be delivered to the participants in Outokumpu shares.
Restricted Share Pool (RSP)
The Board of Directors established in 2012 a Restricted Share Pool program (RSP), which is part of the remuneration and commitment program for selected key resources of Outokumpu. It consists of annually commencing plans with a three-year vesting period, after which the allocated share rewards will be delivered to the participants provided that their employment with Outokumpu continues uninterrupted throughout the duration of the plan and until the shares are delivered. Restricted share grants are approved annually by the CEO, with the exception of any allocations to Leadership Team members, which will be approved by the Board of Directors.
Matching Share Plans
Outokumpu has two Matching Share Plans, one for the CEO and one for a limited number of other key management. The plans were introduced to emphasize shareholder value creation, enforce an ownership culture and to incentivize the achievement of the 2020 vision.
Matching Share Plan for the CEO
The CEO is part of a Matching Share Plan according to which he is entitled to receive in total 1,157,156 gross shares including taxes on the condition that he personally invested EUR 1 million into Outokumpu shares by February 20, 2016. The matching shares are delivered in four equal instalments at the end of 2016, 2017, 2018 and 2019, respectively.
The third vesting portion, in total 185,077 shares after deduction of the applicable taxes, was delivered to the CEO at the end of December 2018. Under the Matching Share Plan, the CEO is required to keep at least all the shares he has acquired, and the first vesting portion paid at the end of December 2016 throughout his service with Outokumpu. If the CEO’s service contract is terminated without any fault or negligence attributable to him, all the unvested matching shares (i.e. shares not yet delivered) will vest at the expiry of the CEO agreement, provided that the ownership requirement for the CEO is fulfilled.
Matching Share Plan for management
The Board of Directors of Outokumpu established in 2016 a Matching Share Plan program for key management for the years 2016–2020 in order to emphasize shareholder value creation, enforce an ownership culture and to incentivize the achievement of the 2020 vision.
According to the plan, the participants have invested an amount corresponding to 30–120% of their annual gross base salary into Outokumpu shares. Outokumpu will match each share acquired by the participant with two gross shares from which the applicable taxes will be deducted and the remaining net number of shares will be delivered to the participant. The matching shares will be delivered in four equal installments at the end of 2017, 2018, 2019 and 2020, respectively. In order to receive the matching shares, the participants are required to keep all of the shares they have acquired until the vesting of each matching share tranche.
The Board of Directors has in December 2018 approved the delivery of the second reward from the Matching Share Plan for Management at the end of December 2018. After deduction for applicable taxes, the total net number of shares delivered was 466,135, of which 185,077 were delivered to the CEO. Outokumpu uses its treasury shares for the reward payments, so the total number of shares of the company will not change.
Outokumpu announces all manager's transactions, including the CEO's, made with its financial instruments as stock exchange releases per MAR regulation.