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. Outokumpu's share-based programs consist of the Performance Share Plan (PSP) and Restricted Share Pool (RSP). In addition, Outokumpu has an ongoing Matching Share Plan for the management.
Outokumpu has currently no active stock option programs.
Performance Share Plan and Restricted Share Pool
The earning criteria of the Performance Share Plans measures Outokumpu's profitability and the efficiency with which its capital is employed compared to a peer group. The maximum number of participants for each plan are 150 key employees. The Restricted Share Plan does not have any specific earning criteria and it is used for a limited number of employees, i.e. key recruitments, exceptional performance, high potential, retention need and other individual specific situations.
Current plan periods
The Board of Directors has approved the commencement of Outokumpu’s share-based programs for the periods 2018–2020, 2019–2021 and 2020–2022, Performance Share Plan and Restricted Share Pool. The plans have three years' vesting period. 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 Board of Directors approved on December 14, 2020 the commencement of Outokumpu’s share-based programs for the period 2021–2023, Performance Share Plan and Restricted Share Pool. The plans commence at the beginning of 2021. The earning criterion of the Performance Share Plan for this period measures Outokumpu's profitability and the efficiency with which its capital is employed. The maximum number of participants in the plan period 2021–2023 is 150 key employees. The maximum number of gross shares (taxes included) that can be allocated is 3,700,000. Restricted Share Plan is used for a limited number of employees, i.e. key recruitments, exceptional performance, high potential, retention need, and other individual specific situations. The maximum number of gross shares (taxes included) that can be allocated is 250,000 shares for the plan period 2021–2023.
The share rewards will be distributed in spring after the vesting periods, if the employment conditions and performance criterion are met. Applicable taxes will be deducted from gross shares, and the remaining net value will be delivered to the participants in Outokumpu shares.
The tables below include the status of the share plans at the end of 2019.
|Performance share plans, status on Dec 31, 2019||2017–2019||2018–2020||2019–2021||CEO PSP
|Number of participants||119||129||134||1|
|Maximum number of gross shares to be paid||1,473,600||1,261,200||2,461,890||120,000|
|Earning criteria||Return on operating capital compared to a peer group in 2019||Return on operating capital compared to a peer group in 2020||Return on operating capital compared to a peer group in 2021||Return on operating capital compared to a peer group in 2021|
|Share delivery year||2020||2021||2022||2021|
|Restricted Share Pool, status on Dec 31, 2019||Period 2017–2019||2018–2020||2019–2021|
|Number of participants||54||45||68|
|Maximum number of gross shares to be paid||82,600||102,500||207,900|
|Share delivery year||2020||2021||2022|
Matching Share Plans
The Board of Directors of Outokumpu established in 2016 a Matching Share Plan program for key management for the years 2016–2020 to emphasize shareholder value creation, enforce an ownership culture and to incentivize the achievement of the 2020 vision. In addition, there have been two CEO plans, for 2015–2019 and 2019–2020.
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 are delivered in four instalments at the end of 2017, 2018, 2019 and the final being delivered in 2020. 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. Outokumpu uses its treasury shares for the reward payments, so the total number of shares of the company will not change.
On December 10, 2020 the Board of Directors approved the delivery of the fourth and final reward from the Matching Share Plan for the Management by the end of December 2020. After deduction for applicable taxes, the total net number of shares delivered will be 178,350.
The table below describes the status of the Matching Share Plans at the end of 2019.
|Matching share plans, status on Dec 31, 2019||ceo plan 2019–2020||CEO PLAN 2015–2019||management plan|
|Number of participants||1||1||25|
|Total number of gross shares (taxes included)||168,888||1,157,156||1,420,746|
|Shares delivered (net of taxes)*||-||289,289||495,638|
|Gross shares to be paid||168,888||0||355,181|
|Share delivery years||2020||2016, 2017, 2018, 2019||2017, 2018, 2019, 2020|
*) For the CEO, the same net amount was delivered in 2016, 2017 and 2018.
For more information on the previous and ongoing share plans, please check our Remuneration statements.