Fortum amended the structure of its long-term incentive, for key employees and executives, in order to better support enforcement of strategy
FORTUM CORPORATION STOCK EXCHANGE RELEASE 21 DECEMBER 2016 at 9.00 EET
The Board of Directors of Fortum Corporation has decided to continue the long-term incentive (LTI) programme for selected key employees and executives and amend the programme in order for the objectives of the programme to better support the enforcement of the company’s strategy, delivery of sustainable, long-term value enhancing performance, and to align the interests of the executive management and key employees with its shareholders. In addition, the LTI programme assists in committing and retaining key individuals.
The LTI programme consists of annually commencing individual three-year share plans during which the participants have the opportunity to earn shares of Fortum as a long-term incentive reward if the performance targets set by the Board of Directors are achieved. The potential share rewards will be delivered after the three-year period. The commencement of each individual plan, its performance targets, eligible participants and their earning opportunities are subject to a separate decision of the Board of Directors.
It is expected that there will be approximately 100 participants, including the members of Fortum Executive Management (FEM), in the annually commencing individual plans.
The performance measures applied to the LTI programme for the earnings period 2017-2019 will be based on cumulative Earnings Per Share (EPS) over 3 years, and the relative Total Shareholder Return (TSR) measured relative to the European Utilities Group, both with an equal weight of 50%. The potential rewards from the 2017-2019 LTI plan will be paid in the spring 2020, if the performance targets set by the Board of Directors are achieved.
The Fortum Executive Management will be required to retain 50% of the shares until they have achieved their required shareholding level of 100% of annual salary. For other participants no lock-up requirement will be applied. As a rule, no reward will be paid, if a person's employment or service ends before the reward payment.
The programme follows the Finnish government ownership guidelines for management remuneration. The combined value of all variable compensation paid to an individual participant under the long-term and short-term incentive plans may not exceed 120 per cent of the person's gross annual fixed salary in any year.
The maximum number of shares that may potentially be delivered as a reward under the individual plans, based on the currently prevailing price of Fortum’s share, is expected not to exceed 700,000 shares per plan.
Fortum Corporation
Board of Directors
Further information:
Sophie Jolly, Vice President, Investor Relations and Financial Communications,
tel. +358 10 45 32552
Jari Laitinen, Vice President, Compensation and Benefits
tel. +358 40 660 2506
Distribution:
Nasdaq Helsinki
Key media
www.fortum.com
Fortum
Fortum is a leading clean energy company which provides its customers with electricity, heating and cooling as well as smart solutions to improve resource efficiency. We want to engage our customers and society to join the change for a cleaner world. We employ some 8,000 professionals in the Nordic and the Baltic countries, Russia, Poland and India, and already 64% of our electricity generation is CO2 free. In 2015, our sales were EUR 3.5 billion.