The Annual General Meetings, with the beginning in 2005, have established stock-based incentive programmes for senior executives and key personnel.
2009 programme
The 2009 programme is performance based and directed towards 50 senior executives and other key employees. Individual investments in MTG shares are required to participate. These shares can be shares already held or shares purchased on the market in connection with the notification to participate in the programme. The shares must be held during the three year vesting period. Thereafter, the participants are granted retention rights and performance shares depending on the fulfilment of certain stipulated goals. The rights to retention and performance shares were granted by the company free of charge around 1 June 2009, and may be exercised after the release of the interim report for Q1 2012. The programme is estimated to comprise 43,225 retention rights and 217,900 performance shares.
For further information, please refer to the Incentive Plan 2009 and the full proposal to the Annual General Meeting 2009 in the Corporate Governance section of the website.
2008 programme
The 2008 programme is performance based and directed towards 50 senior executives and other key employees. Individual investments in MTG shares are required to participate. These shares can be shares already held or shares purchased on the market in connection with the notification to participate in the programme. The shares must be held during the three year vesting period. Thereafter, the participants are granted retention shares and performance shares and options depending on the fulfilment of certain stipulated goals. The rights to retention and performance shares were granted by the company free of charge at the end of May 2008, and may be exercised after the release of the interim report for Q1 2011. The programme is estimated to comprise 12,500 retention shares, 131,000 performance shares and 262,000 performance options.
For further information, please refer to the Incentive Plan 2008 and the full proposal to the Annual General Meeting 2008 in the Corporate Governance section of the website.
2005-2007 programmes – conditions in general
The 2005-2007 incentive programmes have comprised a combination of warrants and stock options, which entitle senior executives to a combined maximum of 399,994 MTG Class B shares under the 2007 programme and 399,999 MTG Class B shares under the 2006 and 2005 programme. The participants have the opportunity to buy warrants at the prevailing market price, and, for each warrant purchased, a maximum of six stock options under the 2007 programme and two stock options under the 2006 and 2005 programmes are issued, each carrying the right to purchase one Class B share. The exercise price for both the 2005 and 2006 programmes was set at 115% and for the 2007 programme at 110% of the average share price of the Class B share over the ten days following the Annual General Meeting.
To encourage participation in the incentive programme, the AGMs also approved the payment of a cash bonus three years after the acquisition of the warrants by the participant. The cash bonus will be paid if the stock options and the Class B shares acquired by exercising the warrants are still held by the participant, and if the participant is still employed by the MTG Group, after three years. The bonus may amount to a maximum of the difference between the total price paid by the participant and 2% of the total value of the underlying Class B shares at the time of acquisition of the warrants and stock options.
The 2007 programme
The 2007 programme was directed towards a group of 41 senior executives. The exercise price for the allotted options was set at SEK 432.50 per MTG Class B share, which was the average share price of the Class B share over the ten days following the Annual General Meeting. Under the 2007 programme, the subscription price per warrant and stock option has been changed from 115 per cent of the average market price of the company’s Class B shares to 110 per cent. The stock options may be exercised on, or after, 15 May 2010 until 10 October 2011 provided that the holder is still employed by the Group.
The 2006 programme
The 2006 programme was directed towards targeted a group of 25 senior executives. The exercise price for the allotted options was set at SEK 450.30 per MTG Class B share, which was the average share price of the Class B share over the ten days following the Annual General Meeting. The stock options may be exercised on, or after, 15 May 2009 until 10 October 2010 provided that the holder is still employed by the Group. Following the distribution of the majority of MTG’s shareholding in Metro International S.A. to MTG shareholders in July 2006, the exercise price for the warrants was recalculated as SEK 417.70 and the exercise price for the stock options as SEK 413.30.
The 2005 programme
The 2005 programme was directed towards a group of 20 senior executives. The exercise price for the allotted options was set at SEK 261.70 per MTG Class B share which was the average share price of the Class B share over the ten days following the Annual General Meeting. The stock options may be exercised on, or after, 15 May 2008 until 10 October 2009 provided that the holder is still employed by the Group. Following the distribution of the majority of MTG’s shareholding in Metro International S.A. to MTG shareholders in July 2006, the exercise price for the warrants was recalculated as SEK 239.30 and the exercise price for the stock options as SEK 235.80.
Financial reporting
IFRS 2 stipulates that stock options should be expensed as personnel costs (excluding social security fees) over the vesting period and be reported directly against Equity. Social security fees are allocated in accordance with the same principle.
Dilution
If all options granted to senior executives and key employees as at 30 June 2009 were exercised, the issued share capital of the Company would increase by 1,503,956 Class B shares, and be equivalent to a dilution of 2.3% of the issued capital and 0.7% of the related voting rights at the end of the first half year in 2009. In 2008, 335,835 options from the 2005 programme were exercised. The remaining 44,832 options have a strike price of SEK 235.80, and are exercisable up until 10 October 2009. The 281,769 outstanding options from the 2006 programme have an exercise price of SEK 413.30 for the stock options and SEK 417.70 for the warrants, and are exercisable from 15 May 2009 until 10 October 2010. The remaining 327,355 options granted under the 2007 programme have an exercise price of SEK 432.50 for the stock options and the warrants and are exercisable from 15 May 2010 until 10 October 2011. The 256,275 performance options granted in the 2008 programme have an exercise price of SEK 498.10 and the 139,577 retention and performance rights entitle the holders to one Class B share free of charge. The 261,125 retention and performance rights granted in the 2009 programme entitle the holders to one Class B share free of charge.