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Incentive Systems
To ensure management's motivation and commitment, Alma Media has share-based incentive systems LTI 2019 and LTI 2015.
Share-based incentive plan (LTI 2019)
The revised structure of the top management matching share plan
The matching share plan, aimed at the top management of Alma Media Corporation, consists of annually commencing individual plans, each subject to separate Board approval. Each of the individual plans consists of the following main elements: the individual’s own investment in Alma Media’s shares as a precondition for the individual’s participation in the plan, delivery of matching shares to the participant based on a fixed matching ratio to the participant’s share investment after a three-year holding period, the possibility to earn performance-based matching shares based on a three-year performance period and a two-year transfer restriction applicable to half of the matching shares received as a reward. The share rewards will be paid in shares of Alma Media Corporation.
In the first plan within the revised plan structure, MSP 2019, the participant will receive two matching shares for each invested share free of charge after a three-year holding period. If all the eligible individuals participate in MSP 2019 by making the required share investment, the maximum aggregate amount of matching shares to be delivered based on the fixed matching ratio is 125,000 shares (representing a gross reward from which the applicable payroll tax is withheld and the remaining net value is paid to the participants in shares). The fixed matching shares will be delivered in the spring 2022.
In MSP 2019 the potential performance-based share rewards will be delivered to the participants after the three-year performance period in the spring 2022 provided that the performance targets set by the Board of Directors for the plan are achieved.
The performance targets applied to MSP 2019 are the absolute total shareholder return of Alma Media’s share (TSR) and the growth of Alma Media’s digital business operations. If the performance targets set by the Board of Directors are achieved in full, the participant will receive in total four performance-based matching shares for each invested share free of charge. In that case, if all the eligible individuals participate in MSP 2019 by making the required share investment, the maximum aggregate amount of performance-based matching shares delivered based on MSP 2019 is 250,000 shares (representing a gross reward from which the applicable payroll tax is withheld and the remaining net value is paid to the participants in shares).
Eligible to participate in MSP 2019 are the members of Alma Media’s Group Executive Team.
Performance Share Plan for the middle management and selected key employees
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 individual performance share plan is subject to a separate Board approval.
The first performance share plan, PSP 2019, commences effective as of the beginning of 2019 and the potential share rewards thereunder will be paid in the spring 2022 provided that the performance targets set by the Board of Directors for the plan are achieved. The potential rewards will be paid in shares of Alma Media Corporation.
The performance targets applied to PSP 2019 are the absolute total shareholder return of Alma Media’s share (TSR), the growth of Alma Media’s digital business operations and EBIT of the participant’s relevant business area.
Eligible to participate in PSP 2019 will be approximately 55 individuals.
If all the performance targets set for PSP 2019 are fully achieved, the aggregate maximum number of shares to be paid based on this first plan within the performance share structure is approximately 310,000 shares (representing a gross reward from which the applicable payroll tax is withheld and the remaining net value is paid to the participants in shares).
Other terms
Based on the employment precondition applied to both of the above plan structures the individual participant is not, as a main rule, entitled to any share reward based on the plan if the individual’s employment with Alma Media Group terminates before the payment date of the reward.
Alma Media applies a share ownership recommendation to the members of the its Group Executive Team. According to this recommendation each member of the Group Executive Team is expected to retain in his/her ownership at least half of the net shares received under the share-based incentive plans of the company until the value of his/her share ownership in Alma Media 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 above share-based incentive schemes and that the schemes will, therefore, have no dilutive effect on the registered number of the Company's shares.
Share-based incentive plan (LTI 2015)
In 2015, the Board of Directors of Alma Media Corporation approved the establishment of a long-term share-based incentive scheme for the key management of Alma Media (hereinafter referred to as “LTI 2015”).
The objective of LTI 2015 is to align the interests of the participants with those of Alma Media’s shareholders by creating a long-term equity interest for the participants and, thus, to increase the company value in the long term as well as to drive performance culture, to retain participants and to offer them with competitive compensation for excellent performance in the company.
LTI 2015 consists of annually commencing individual plans, each subject to separate Board approval. Each of the individual plans consists of three main elements: an investment in Alma Media shares as a precondition for participation in the scheme, matching shares based on the above share investment and the possibility of earning performance-based matching shares.
The Board of Directors of Alma Media Corporation has decided on four individual plans based on the LTI 2015 share-based incentive scheme: LTI 2015 I, LTI 2015 II, LTI 2015 III and LTI 2015 IV. The main terms of the incentive schemes correspond to those of the LTI 2015 share-based incentive scheme that was launched in 2015.
The matching share plan
In the matching share plan, the participant receives a fixed amount of matching shares against an investment in Alma Media shares.
In the LTI 2015 I matching share plan, the participant receives two matching shares for each invested share free of charge after a two-year vesting period, provided that the other conditions stipulated for the receipt of the share-based incentive by the terms of the plan are still satisfied at the time.
The performance matching plan
The performance matching plan comprises a five-year performance period in total. The potential share rewards will be delivered in tranches after three and five years if the performance targets set by the Board of Directors are attained.
The performance measures used in the performance matching plan are based on the company’s profitable growth and share value. If the performance targets set by the Board of Directors are attained in full, the participant will receive in total four matching shares for each invested share free of charge, provided that the other conditions stipulated for the receipt of the share-based incentive by the terms of the plan are still satisfied at the time.
Payment of the incentive is contingent on the participant holding on to the shares invested in the plan and remaining employed by the Group for the five-year duration of the plans. The incentives are paid partly in cash and partly in shares. The cash component is intended to cover taxes incurred by the participant from the incentive.
The fair value of the reward is expensed until the matching shares are paid. The fair value of the share component is determined on the date on which the target group has agreed to the conditions of the plan. The financing cost arising from the obligation to hold shares and dividends expected during the vesting period have been deducted from the value of the share. The fair value of the plan based on the total shareholder return of the share also takes the market-based earning criteria into consideration. The cash component of the incentive is remeasured on each reporting date during the vesting period based on the price of the share on the date in question.
| Share-based incentive scheme LTI 2015 | Based on share investment (shares max) Gross amount from which taxes are deducted | Performance matching (shares max) Gross amount from which taxes are deducted | Maximum number of people entitled to participate |
|---|---|---|---|
| Launched in 2015 LTI 2015 I | 159.000 | 318.000 | 35 |
| Launched in 2016 LTI 2015 II | 195.000 | 390.000 | 43 |
| Launched in 2017 LTI 2015 III | 195.000 | 390.000 | 44 |
| Launched in 2018 LTI 2015 IV | 203.000 | 406.000 | 54 |
The Board of Directors has estimated that no new shares will be issued in connection with LTI 2015. Therefore, the plan will have no dilutive effect on the number of the company’s registered shares.
The AGM of 14 March 2018 authorised the Board of Directors to decide on a share issue by transferring shares in possession of the company. A maximum of 824.000 shares may be issued on the basis of this authorisation. The proposed maximum authorised quantity represents approximately one (1) per cent of the company's entire share capital. The authorisation entitles the Board to decide on a directed share issue, which entails deviating from the pre-emption rights of shareholders. The Board can use the authorisation in one or more parts. The Board of Directors can use the authorisation to implement incentive programmes for the management or key employees of the company.
It is proposed for the authorisation to be valid until the following Annual General Meeting. but no later than 30 June 2019.
The allocation of the share-based incentive scheme for the President and CEO and the group Executive Team is available on Remuneration page.
Old incentive systems
Information about the old incentive systems can be found here.