Establishment of a share-based long-term incentive scheme for the management and key employees of Neles Corporation
Neles Corporation, stock exchange release, July 1, 2020 at 18:05 EEST
On July 1, 2020, the Board of Directors of Neles Corporation decided on the establishment of a new share-based long-term incentive scheme for the company’s management and selected key employees. The decision includes a Performance Share Plan (also “PSP”) for the top management, a deferred share unit plan (also “DSUP”) for other 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 scheme are to align the interests of Neles’ management and key employees with those of the company’s shareholders and, thus, to promote shareholder value creation in the long term, to commit management and key employees to achieving Neles’ strategic targets and to promote the retention of Neles’ key resources.
Performance Share Plan
The Performance Share Plan consists of annually commencing individual performance share plans, each with a three-year performance period, followed by the payment of the potential share reward. The commencement of each new individual plan is subject to a separate Board approval.
The first plan, PSP 2020–2022, commences as of the beginning of 2020 and the potential share reward thereunder will be paid in spring 2023, provided that the performance targets set by the Board of Directors are achieved. The potential reward will be paid in listed shares of Neles.
The potential share reward under PSP 2020–2022 will be paid based on the performance targets of relative total shareholder return of Neles’ share and earnings per share (EPS).
The members of the Neles Executive Team are eligible to participate in PSP 2020–2022.
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 280,000 shares (referring to gross earnings before the withholding of the applicable payroll tax).
Deferred Share Unit Plan
The Deferred Share Unit Plan (DSUP) consists of annually commencing individual three-year plans. The commencement of each new individual plan is subject to a separate Board approval.
The DSUP rewards its participants for individual and company and/or business unit level performance during a one-year performance period. The reward potentially earned during the one-year performance period is converted to synthetic share units for an approximately two-year share price performance period, after which the reward is paid in cash based on the value of the share of Neles at the time of payment. Notwithstanding this, the company is entitled to decide whether the reward is paid in cash or in shares of Neles.
The Board of Directors will decide on the launch of the first individual plan within this structure separately at a later date.
Restricted Share Plan
The Restricted Share Plan 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 in listed shares of Neles. 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 Neles in specific situations.
The first plan, RSP 2020–2022, commences as of the beginning of 2020 and the share rewards potentially granted thereunder will be paid in spring 2023.
The aggregate maximum number of shares to be paid based on RSP 2020–2022 is approximately 46,000 shares (referring to gross earnings before the withholding of the applicable payroll tax).
The value of the reward payable to each participant based on each of the aforedescribed plans is limited by a maximum cap linked to Neles’ share price development.
If the individual’s employment with Neles terminates before the payment of the reward, the individual is not, as a main rule, entitled to any reward based on the respective plan.
Neles applies a share ownership policy to the members of the Neles Executive Team. According to this policy, each member of the Neles 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 Neles corresponds to at least his/her annual gross base salary.
The Board of Directors anticipates attaining own shares via direct share purchases and therefore, the schemes will not have a dilutive effect on the registered number of the Company’s shares.
For further information, please contact:
Rita Uotila, Vice President, Investor Relations, Neles Corporation, tel. +358 400 954141
Neles is one of the leading providers of mission-critical flow control solutions and services for process industries. With our global team of experts and innovative solutions, we help our customers to improve their process performance and ensure the safe flow of materials. Neles is listed on the Nasdaq Helsinki in Finland and had sales of about EUR 660 million in 2019. Neles employs about 2,900 people in approximately 40 countries. Neles was created in the partial demerger of Metso Corporation, and trading in Neles stock started on July 1, 2020.