209
As at 31 December 2013 the options were all fully vested and
exercised. The last window for exercising the options closed
early in 2013.
Long-term incentive plan 2011-2013
On 14 April 2011, the Ordinary Shareholders’ Meeting of
Prysmian S.p.A. had 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 was to incentivise the process of integration
following Prysmian’s acquisition of the Draka Group, and was
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 divided them into three categories,
to whom the shares would be granted in the following
proportions:
• CEO: to whom 7.70% of the total rights to receive Prysmian
S.p.A. shares were allotted.
• Senior Management: this category initially had 44
participants who held key positions within the Group
(including the Directors of Prysmian S.p.A. who held
the positions of Chief Financial Officer, Energy Business
Executive Vice President and Chief Strategy Officer), to
whom 41.64% of the total rights to receive Prysmian
shares were allotted.
• Executives: this category initially had 245 participants
from the various operating units and businesses around
the world, to whom 50.66% of the total rights to receive
Prysmian shares were allotted.
The plan established that the number of options granted
would depend on the achievement of common business and
financial performance objectives for all the participants.
The plan established that the participants’ right to exercise
the allotted options depended 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 established an
upper limit for Adj. EBITDA as the Target plus 20% (ie. Euro
2.1 billion), assuming the same group perimeter, that would
determine the exercisability of the maximum number of
options granted to each participant.
Access to the plan was conditional upon each participant’s
acceptance that part of their annual bonus would be co-
invested, if achieved and payable in relation to financial years
2011 and 2012.
The allotted options will 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 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.
In accordance with IFRS 2, for both new and treasury shares,
the options granted have been measured at grant date
fair value. In detail, the fair value of the options has been
determined using the Cox-Ross-Rubinstein binomial pricing
model, based on the following assumptions:
Options for consideration Options for no consideration
Grant date
2 September 2011
2 September 2011
Residual life at grant date (in years)
2.33
2.33
Exercise price (Euro)
0.10
-
Expected volatility
45.17%
45.17%
Risk-free interest rate
3.96%
3.96%
Expected dividend %
1.56%
1.56%
Option fair value at grant date (Euro)
10.53
10.63
As at 31 December 2013 the options are all fully vested, while the total cost recognised through the income statement, under
“Personnel costs”, for the fair value of the options granted, is equal to Euro 13 million.
(*) Following movements since the plan’s issue, the number of plan participants amounted to 268 at 31 December 2013.
