Consolidated Financial Statements >
CONSOLIDATED FINANCIAL STATEMENTS AND EXPLANATORY NOTES
238
| 2012 annual report prysmian group
Long-term incentive plan 2011-2013
On 14 April 2011, the Ordinary Shareholders’ Meeting of
Prysmian S.p.A. approved, pursuant to art. 114-bis of
Legislative Decree 58/98, a long-term incentive plan for
the period 2011-2013 for employees of the Prysmian Group,
including certain members of the Board of Directors of
Prysmian S.p.A., and granted the Board of Directors the
necessary authority to establish and execute the plan. The
plan’s purpose is to incentivise the process of integration
following Prysmian’s acquisition of the Draka Group, and is
conditional upon the achievement of performance targets, as
detailed in the specific information memorandum.
The plan originally involved the participation of 290 (*)
employees of group companies in Italy and abroad viewed
as key resources, and divides them into three categories, to
whom the shares will be granted in the following proportions:
• CEO: to whom 7.70% of the rights to receive Prysmian S.p.A.
shares have been allotted.
• Senior Management: this category has 44 participants who
hold key positions within the Group (including the Directors
of Prysmian S.p.A. who hold the positions of Chief Financial
Officer, Energy Business Senior Vice President and Chief
Strategic Officer), to whom 41.64% of the total rights to
receive Prysmian shares have been allotted.
• Executives: this category has 245 participants who belong
to the various operating units and businesses around
the world, to whom 50.66% of the total rights to receive
Prysmian shares have been allotted.
The plan establishes that the number of options granted
will depend on the achievement of common business and
financial performance objectives for all the participants.
The plan establishes that the participants’ right to exercise
the allotted options depends on achievement of the Target
(being a minimum performance objective of at least Euro
1.75 billion in cumulative Adj. EBITDA for the Group in the
period 2011-2013, assuming the same group perimeter) as
well as continuation of a professional relationship with the
Group up until 31 December 2013. The plan also establishes
an upper limit for Adj. EBITDA as the Target plus 20% (ie.
Euro 2.1 billion), assuming the same group perimeter, that
will determine the exercisability of the maximum number of
options granted to and exercisable by each participant.
Access to the plan has been made conditional upon each
participant’s acceptance that part of their annual bonus will
be co-invested, if achieved and payable in relation to financial
years 2011 and 2012.
The allotted options carry the right to receive or subscribe to
ordinary shares in Prysmian S.p.A., the Parent Company. These
shares may partly comprise treasury shares and partly new
issue shares, obtained through a capital increase that excludes
pre-emptive rights under art. 2441, par. 8 of the Italian Civil
Code. Such a capital increase, involving the issue of up to
2,131,500 new ordinary shares of nominal value Euro 0.10 each,
for a maximum amount of Euro 213,150, was approved by the
shareholders in the extraordinary session of their meeting on
14 April 2011. The shares obtained from the Company’s holding
of treasury shares will be allotted for zero consideration, while
the shares obtained from the above capital increase will be
allotted to participants upon payment of an exercise price
corresponding to the nominal value of the Company’s shares.
(*) Following movements since the plan’s issue, the number of plan participants amounted to 276 at 31 December 2012.
Average life of options (years)
3.63
Expected volatility
40%
Average risk-free interest rate
3.78%
Expected dividend yield
0%
As at 31 December 2012 the options are all fully vested.
Following an amendment of the original plan, approved by
the Shareholders’ Meeting on 15 April 2010, the options can
be exercised in just one remaining 30-day period, running
from the date of approving the proposed annual financial
statements for 2012.
The incentive plan’s amendment has been accompanied by
an extension of the term for the capital increase by Prysmian
S.p.A. in relation to this plan, with a consequent revision of
art. 6 of the Company’s by-laws.
The new terms of exercise have not resulted in substantial
changes in the fair value of unexercised options and so have
not had any impact on the income statement.
The fair value of the original stock option plan was measured
using the Black-Scholes method. Under this model, the
options had a grant date weighted average fair value of Euro
5.78, determined on the basis of the following assumptions:
As at 31 December 2012, the options have an average remaining life of approximately 3 months.
