Establishment of share-based long-term incentive programs for the management and key employees of Metso Outotec Corporation
Metso Outotec Corporation, Stock Exchange Release, July 1, 2020 at 8:05 a.m. EEST
The Board of Directors of Metso Outotec Corporation has decided on the establishment of new share-based long-term incentive programs for the Company’s management and selected key employees. The programs include a Performance Share Plan (also “PSP”) for the top management, a Deferred Share Plan (also “DSP”) for other senior management and selected key employees and a Restricted Share Plan (also “RSP”) as a complementary structure for specific situations.
The objectives of the share-based long-term incentive programs are to align the interests of Metso Outotec’s management and key employees with those of the Company’s shareholders and, thus, to promote shareholder value creation in the long term, to motivate the management and key employees to achieving Metso Outotec’s strategic targets and to commit key employees to the company.
Performance Share Plan
The Performance Share Plan consists of annually commencing individual performance share plans, each comprising a three-year performance period, followed by the payment of the potential share reward in listed shares of Metso Outotec Corporation. The commencement of each new individual Plan is subject to a separate Board approval.
The first Plan in this structure is PSP 2020–2022. The potential share rewards thereunder will be paid in the spring 2023 provided that the performance targets set by the Board of Directors for the Plan are achieved.
The performance measures based on which the potential reward under PSP 2020–2022 will be paid are the absolute total shareholder return of Metso Outotec’s share and the achievement of the synergy targets set in connection with the combination of the businesses.
Eligible to participate in PSP 2020–2022 are the members of Metso Outotec Executive Team.
If all the performance targets set for the first plan, PSP 2020–2022, are fully achieved, the aggregate maximum number of shares to be paid based on this Plan is approximately one million shares (referring to gross earning before the withholding of the applicable payroll tax).
Deferred Share Plan
The Deferred Share Plan consists of annually commencing share-based incentive plans, which comprise a performance period and approximately two-year retention period after the confirmation of the potential share reward, followed by the payment of the share reward in listed shares of Metso Outotec Corporation. The commencement of each new individual Plan is subject to a separate Board approval.
The first Plan in this structure is DSP 2020–2022. The potential rewards thereunder will be paid in the spring 2023 provided that the performance targets set by the Board of Directors for the Plan are achieved.
The performance measures based on which the potential reward under the Deferred Share Plan is paid are based on the performance measures applied to the annual bonus plan.
Eligible to participate in DSP 2020–2022 are 180 individuals at the maximum.
If all the performance targets set for the first plan, DSP 2020–2022, are fully achieved, the aggregate maximum value of share rewards to be paid based on this Plan is approximately EUR 11 million, corresponding to approximately 2.2 million shares based on the current share value (referring to gross earning before the withholding of the applicable payroll tax).
Restricted Share Plan
The Restricted Share Plan consists of annually commencing individual restricted share plans, each comprising a retention period with a length of the individual Plan and followed by the payment of the share rewards granted within the Plan in listed shares of Metso Outotec Corporation. The commencement of each new individual Plan is subject to a separate Board approval.
The purpose of the Restricted Share Plan is to serve as a complementary long-term retention tool for individually selected key employees of Metso Outotec in specific situations.
The first plan in this structure is RSP 2020–2022 and the share rewards potentially granted thereunder will be paid in the spring 2023.
The aggregate maximum number of shares to be paid based on RSP 2020–2022 is approximately 320,000 shares (referring to gross earning before the withholding of the applicable payroll tax).
The value of the reward payable to the participants based on each of the plans is limited by a maximum cap linked to the individual participant’s annual fixed salary in a proportion determined by the company.
If the individual’s employment with Metso Outotec terminates before the payment of the reward, the individual is not, as a main rule, entitled to any reward based on the respective plan.
Metso Outotec applies a share ownership policy to the members of the company’s Executive Team. According to this policy each member of the Executive Team is expected to retain in his/her ownership at least half of the shares received under the share-based incentive programs of the company until the value of his/her share ownership in Metso Outotec corresponds to at least his/her annual gross base salary.
The Board of Directors anticipates that no new shares will be issued based on the share-based incentive plan periods now established and that the scheme will, therefore, have no dilutive effect on the registered number of the Company's shares.
The final materialized value of each of the above mentioned plans may deviate significantly from the above estimate both based on the degree to which the performance targets set by the Board of Directors are achieved (with regard to the PSP and DSP plan) and as a result of the development of the share value.
Prior to the completion of the partial demerger of Metso Corporation and the combination of Outotec Oyj and Metso Corporation’s Minerals business, Metso has resolved on the performance measurement of its ongoing share-based long-term incentive plans directed to top management and key personnel who will transfer to Metso Outotec upon execution of said transaction. According to the demerger plan, such share-based long-term incentive plans will transfer to Metso Outotec. Metso Outotec will pay the share-based rewards in accordance with the accelerated performance measurement of the Performance Share Plan 2019–2021 announced with Metso’s stock exchange release of June 10, 2020 as well as in accordance with the Deferred Share Unit Plans (DSUP 2018–2020 and DSUP 2019–2021), the Restricted Share Plans (RSP 2018–2020 and RSP 2019–2021) and the Matching Share plan directed to the President and CEO (MSP 2018–2021) referred to in the afore-mentioned stock exchange release and the resolution of Metso Outotec’s Board of Directors of June 30, 2020. The share rewards will be paid in Metso Outotec’s shares the amount of which will be determined on the basis of the ratio between the share of Metso and Outotec agreed in the demerger plan as well as based on the relative valuation of Neles Corporation and Metso Outotec. The rewards payable based on the Deferred Share Unit Plans to be transferred to Metso Outotec will be paid in cash based on the value of Metso Outotec’s share and determined in accordance with the principles described above.
With respect to Outotec’s share-based incentive program 2019–2021, the rewards for the earning period 2019, i.e. 326.432 shares at the maximum and a cash payment, are paid in January 2022.
METSO OUTOTEC CORPORATION
Board of Directors
Nina Kiviranta, General Counsel, tel. +358 20 529 2017
Juha Rouhiainen, Vice President, Investor Relations, tel. +358 20 484 3253
Nasdaq Helsinki Ltd
Metso Outotec is a frontrunner in sustainable technologies, end-to-end solutions and services for the aggregates, minerals processing, metals refining and recycling industries globally. By improving our customers’ energy and water efficiency, increasing their productivity, and reducing environmental risks with our product and process expertise, we are the partner for positive change.
Headquartered in Helsinki, Finland, Metso Outotec employs over 15,000 people in more than 50 countries and its illustrative combined sales for 2019 were about EUR 4.2 billion. The company is listed on the Nasdaq Helsinki. mogroup.com, twitter.com/metsooutotec