Tue February 8 03:25 pm 2022 in category Stock exchange releases
Share-based long-term incentive scheme 2022–2024 for the management and selected key employees of Nokian Tyres plc, and payments for share-based plans that ended in 2021
Nokian Tyres plc Stock Exchange Release February 8, 2022 at 3:25 p.m.
The Board of Directors of Nokian Tyres plc has decided on a share-based long-term incentive scheme for the Company’s management and selected key employees for years 2022–2024 as a continuation to the earlier plans decided in 2019, 2020 and 2021. The decision includes Performance Share Plan 2022 (“PSP 2022”) as the main structure and Restricted Share Plan 2022 (“RSP 2022”) as a complementary structure.
The purpose of the share-based incentive scheme is to align 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 2022
The Performance Share Plan consists of annually commencing individual three-year Performance Periods, followed by the payment of the potential share reward. The commencement of each individual Performance Period is subject to a separate approval by the Board of Directors.
The Performance Period (PSP 2022–2024) commences effective as of the beginning of 2022 and the potential share reward thereunder will be paid in the first half of 2025 provided that the performance targets 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 2022–2024 are approximately 235 individuals, including the members of Nokian Tyres Management Team.
The potential share reward payable under the PSP 2022–2024 are based on the Earnings Per Share (EPS) and Return on Capital Employed (ROCE). The possible rewards paid based on the Performance Period of 2022–2024 will be a maximum of 513,742 gross shares.
If an employee’s employment with Nokian Tyres terminates before the payment date of the share reward, said employee is not, as a main rule, entitled to any reward based on the plan.
Restricted Share Plan 2022
The purpose of the Restricted Share Plan is to serve as a complementary long-term incentive tool, used selectively for retention of Nokian Tyres key employees. 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 in shares of Nokian Tyres plc and partly in cash.
The commencement of each individual plan is subject to a separate approval by the Board of Directors.
A precondition for the payment of the share reward based on the Restricted Share Plan is that the employment relationship of a participant with Nokian Tyres continues until the payment date of the reward. In addition to this precondition, a financial performance criteria is applied to Nokian Tyres Management Team. The criteria is a threshold value for Return on Capital Employed (ROCE), which must be exceeded for a potential payment of a share reward based on the Restricted Share Plan 2022–2024.
The next plan (RSP 2022–2024) within the Restricted Share Plan structure commences effective as of the beginning of 2022 and the potential share reward thereunder will be paid in the first half of 2025. The possible rewards paid based on RSP 2022–2024 correspond approximately to a maximum of 120,000 gross shares.
Other terms
Nokian Tyres applies a share ownership policy to the members of Nokian Tyres Management Team. According to said 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.
Payments for share-based plans that ended in 2021
The Board of Directors of Nokian Tyres plc has approved the share awards from the Restricted Share Plan 2019–2021.
The three-year restriction period of the Restricted Share Plan 2019–2021 ended after financial year 2021. 17 key employees participate in the share-based incentive plan, including members of the Management Team. The financial threshold value for Return on Capital Employed (ROCE) applied for the Management Team members was achieved. The rewards to be paid correspond to a total of 46,600 Nokian Tyres plc gross shares. The rewards will be paid by the end of March 2022. The total number of shares of the Company will not change. A precondition for the payment of the share reward based on the Restricted Share Plan is that the employment relationship of a participant with Nokian Tyres continues until the payment date of the reward.
The targets for the Performance Period 2019–2021 (PSP 2019–2021) were not achieved and no share rewards will be paid to participants.
Sustainability as part of Nokian Tyres management remuneration
Nokian Tyres plc's Board of Directors has decided to include a climate related goal as part of the short-term incentive targets of the Group Management Team. Nokian Tyres develops and manufactures premium tires for consumers and customers who value safety, sustainability and innovative products. Sustainability is at the heart of Nokian Tyres business and one of the five cornerstones of the company's strategy. According to the Company's Board of Directors, it is important that the Group Management Team targets include not only financial criteria, but also sustainability.
Nokian Tyres plc
Päivi Antola, SVP, Corporate Communications and Investor Relations
Further information:
Päivi Leskinen, SVP, Human Resources, tel. +358 10 401 7776
Distribution: Nasdaq Helsinki, media and www.nokiantyres.com