New share-based long-term incentive scheme for the management and selected key employees of Nokian Tyres Plc and realization of Performance Period 2018
Nokian Tyres plc Stock Exchange Release February 5, 2019 at 5:15 pm
The Board of Directors of Nokian Tyres Plc has decided on a new share-based long-term incentive scheme for the Company’s management and selected key employees. The decision includes a Performance Share Plan (later also PSP 2019) as the main structure and a Restricted Share Plan (later also RSP 2019) as a complementary structure for specific situations.
The purpose of the share-based incentive scheme is to harmonize the goals of the Company’s shareholders and key personnel in order to increase the value of the Company in the long term and to commit key personnel to the Company and its strategic targets.
Performance Share Plan 2019
The Performance Share Plan consists of annually commencing individual three-year Performance Periods, followed by the payment of the potential share reward to the participants. The commencement of each individual Performance Period is subject to a separate Board approval.
The first Performance Period (PSP 2019–2021) commences effective as of the beginning of 2019 and the potential share rewards thereunder will be paid in the first half of 2022 provided that the performance criteria set by the Board of Directors are achieved. The potential reward will be paid partly in shares of Nokian Tyres Plc and partly in cash. Cash portion of the reward is intended to cover the taxes arising from the paid reward. Eligible to participate in PSP 2019–2021 are approximately 200 individuals, including the members of Nokian Tyres Management Team. The possible rewards paid based on the Performance Period of 2019–2021 correspond approximately to a maximum of 535,000 gross shares.
In addition to the 3 year performance period (PSP 2019–2021), a separate one-time two-year performance period (PSP 2019–2020) commences in 2019 in order to bridge the previous two-year PSP 2018 and the three-year PSP 2019–2021. Potential share rewards thereunder will be paid in the first half of 2021 provided that the performance criteria set by the Board of Directors are achieved. Eligible to participate in PSP 2019–2020 are approximately 210 individuals, including the members of Nokian Tyres Management Team. The possible rewards paid based on the Performance Period of 2019–2020 correspond approximately to a maximum of 580,000 gross shares.
The potential share rewards payable under the PSP 2019–2020 and PSP 2019–2021 are based on the Company’s Earnings Per Share (EPS) growth % and Return on Capital Employed (ROCE).
Restricted Share Plan 2019
The purpose of the Restricted Share Plan (RSP 2019–2021) is to serve as a complementary tool for individually selected key employees of Nokian Tyres in specific situations. It consists of annually commencing individual Restricted Share Plans, each with a three-year retention period after which the share rewards granted within the plan will be paid to the participants.
The commencement of each individual plan is subject to a separate Board approval.
A precondition for the payment of the share reward based on the Restricted Share Plan is that the employment relationship of the individual participant with Nokian Tyres continues until the payment date of the reward. The potential reward will be paid partly in shares of Nokian Tyres Plc and partly in cash. Cash portion of the reward is intended to cover the taxes arising from the paid reward.
The first plan (RSP 2019–2021) within the Restricted Share Plan structure commences effective as of the beginning of 2019 and the potential share reward thereunder will be paid in the first half of 2022. The possible rewards paid based on RSP 2019–2021 correspond approximately to a maximum of 70,000 gross shares.
Nokian Tyres applies a share ownership policy to the members of Nokian Tyres Management Team. According to this policy each member of the Management Team is expected to retain in his/her ownership at least 25% of the shares received under the share-based incentive programs of the Company until the value of his/her share ownership in the Company 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 scheme and that the scheme will, therefore, have no dilutive effect on the registered number of the Company's shares.
Realization of Performance Period 2018
The rewards to be paid in 2019, on the basis of the achievement of the previous share-incentive plan performance period 2018, correspond to a total of 146,000 Nokian Tyres plc shares including also the proportion to be paid in cash. The rewards will be paid by the end of March 2019. For the key employees, who have joined the Plan during the performance period 2018, including 5 members of the Group’s Management Team, the rewards will be paid by the end of August 2019.
The plan was directed to 233 key employees, including the members of the Group’s Management Team. The shares paid as reward may not be transferred during an approximately one-year restriction period established for the shares.
For shares paid on the basis of the performance period 2018, the restriction period will end on 31 March 2020.
Nokian Tyres plc
Päivi Antola, Senior Vice President, Investor Relations and Corporate Communications
Tytti Bergman, Senior Vice President, People and Culture, tel. +358 10 401 7517
Distribution: Nasdaq Helsinki, media and www.nokiantyres.com
Nokian Tyres is the world’s northernmost tire manufacturer and one of the most sustainable companies in the industry. We offer peace of mind in all conditions by developing high-quality, safe and eco-friendly tires for passenger cars, trucks and heavy machinery. We are especially well known for our innovative winter tires. Our group also includes the Vianor chain, specializing in vehicle maintenance and tire services. In 2018, the company’s turnover was approximately EUR 1.6 billion and it employed some 4,800 people. Nokian Tyres is listed on Nasdaq Helsinki. Further information: www.nokiantyres.com