Finnair's Board of Directors decided on new periods to the employee share savings plan and on long-term incentive scheme for key personnel
Finnair Plc Stock Exchange Release 18 December 2019 at 9.30 am EET
Employee share plan
The Board of Directors of Finnair Plc has decided to launch a new 12-month savings period under the Employee Share Savings Plan. The purpose of the plan introduced in 2013 is to encourage the employees to become shareholders in the company, to provide long-term rewards through potential share price appreciation and thereby strengthen the employees’ interest in the development of Finnair’s shareholder value.
Participation in the share savings plan is voluntary. The decided 12-month savings period will commence on 1 July 2020. Potential future savings periods are subject to separate Board decisions.
The eligible Finnair employees are offered the opportunity to invest part of their base salary in Finnair shares through the plan. Finnair awards each participant one Matching Share for each two purchased shares after a holding period of approximately two years. The awarded shares are taxable income for the recipient.
To increase the attractiveness of the plan, each employee participating in the plan for the first time in this savings period will additionally be awarded 20 bonus shares in October 2020, provided that employee participates at least in the first three months of the plan. The plan will be offered to approximately 6 100 Finnair employees in Finland. The maximum monthly savings are eight per cent and the minimum are two per cent of each participant's gross base salary during one month. The total amount of all savings in 2020–2021 may not exceed 7.5 million euros, which equals to approximately 1.29 million shares, using the 17 December 2019 closing share price of 5.83 euros.
Shares will be purchased with the accumulated savings at the market price quarterly, after the publication dates of the Finnair's interim results. Any dividends paid on purchased shares during the commencing savings period will be reinvested into additional shares on the following purchase date. These shares will have equal rights to Matching Shares.
Performance-based long-term incentive plan for key personnel
The Board of Directors of Finnair has approved a new individual performance share plan for the years 2020–2022. Within the plan, the participants have the opportunity to earn Finnair shares as a long-term incentive reward, if the performance targets set by the Board of Directors for the plan are achieved. The purpose of the arrangement is to motivate the management to work for increasing the shareholder value in the long-term and to commit the management to the company.
The annually commencing performance share plans include a three-year performance period. The potential share rewards will be delivered to the participants in one tranche after the performance period and they are at the participants’ free disposal after delivery. The potential share rewards will be delivered to the participants in the spring 2023. The performance criteria applied to the plan 2020–2022 are unit cost CASK (using constant currencies and fuel price) and earnings per share. The targets are based on the strategic targets approved by the Board for the period.
If the targets set for the plan for years 2020–2022 are fully achieved, the maximum number of shares to be delivered based on this plan is approximately 650,000 shares. This number of shares represents a gross earning, from which the payroll tax is deducted and the remaining net-value is delivered to the participants in shares.
The members of Finnair’s Executive Board are expected to retain at least fifty per cent of the net shares received based on the arrangement until their share ownership in Finnair corresponds to at least their annual gross base salary.
The maximum combined value of all variable compensation paid to an individual participant in any given year may not exceed hundred and twenty per cent of the participant’s annual gross base salary.
The number of employees eligible to participate in the plan 2020–2022 is approximately 70 persons.
The Board of Directors anticipates that no new shares will be issued in connection with the share-based incentive plans and that, therefore, the arrangement will have no dilutive effect on the registered number of the company’s shares.
At the same time, the Board of Directors has decided to change the performance criteria for the ongoing 2019–2021 plan so that the revenue growth target is replaced with unit cost CASK (using constant currencies and fuel price) for the remaining years 2020–2021.
Finnair communications, tel. +358 9 818 4020, comms(a)finnair.com
Finnair is a network airline specialising in passenger and cargo traffic between Asia and Europe. Helsinki’s geographical location gives Finnair a competitive advantage, since the fastest connections between many European destinations and Asian megacities fly over Finland. Finnair’s vision is to offer its passengers a unique Nordic experience, and its mission is to offer the smoothest, fastest connections in the northern hemisphere via Helsinki and the best network to the world from its home markets. Finnair is the only Nordic network carrier with a 4-star Skytrax ranking and a member of the oneworld alliance. In 2018, Finnair’s revenues amounted to EUR 2,835 million and it carried 13.3 million passengers. Finnair Plc’s shares are quoted on Nasdaq Helsinki.