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EXPLANATORY NOTES
290
| 2013 ANNUAL REPORT | PRYSMIAN GROUP
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. 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 Strategic 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% (i.e.
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 their 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:
(*) Following movements since the plan’s issue, the number of plan participants amounted to 268 at 31 December 2013. The number of employees of Prysmian
S.p.A. participating in the above plan is 45.
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 interest rate
1.56%
1.56%
Option fair value at grant date (Euro)
10.53
10.63
