The Board’s main objective in proposing LTIP 2010 is to strengthen Billerud’s ability to retain the best talent for key leadership positions. The purpose is also to encourage senior management and other key individuals whose efforts have a direct impact on Billerud’s earnings, profitability and growth in value, by aligning their interests and perspectives with those of the shareholders.
LTIP 2010 will include in total a maximum of 90 senior managers and other key individuals within the Billerud Group, who are deemed to have a significant impact on the future development of the Group. To participate in LTIP 2010, a person must own Billerud shares referred to as “saving shares”. Following a three-year vesting period that begins on the date the agreement for LTIP 2010 takes effect and ends when Billerud releases its interim report for the first quarter of 2013, the participants will be allocated at no charge one right to matching shares and three rights to performance shares for each saving share. These rights entitle holders to Billerud shares provided certain criteria are met. For both types of rights, throughout the vesting period the participant must remain an employee of the Billerud Group and must not divest the saving shares. For the rights to performance shares, additional financial performance targets must be achieved. These targets are related to Billerud’s average operating margin for the period 2010–2012 in absolute terms and in comparison with a benchmark group consisting of specially designated companies, as well as Billerud’s total return for the period 2010–2012 in comparison with the total return for the same period for a benchmark group consisting of specially designated listed companies in the Nordic region.
LTIP 2010 consisted per 31 December 2010 of 65 729 saving shares, which entail the allocation of in total a maximum of 262 916 Billerud shares. Moreover LTIP 2010 consists of an additional 109 000 Billerud shares that are related to shares that can be transferred by Billerud for the purpose of covering certain costs, chiefly social fees. Thus the maximum number of Billerud shares included in LTIP 2010 is 371 916, which corresponds to about 0.4% of the total number of Billerud shares outstanding. On the allocation date, the programme comprised 67 150 saving shares, which initially entitled their owners to an allotment of a maximum of 268 600 Billerud shares in total. Based on a theoretical assumption of an annual 10% increase in share price, from SEK 47.2 when the programme started, and a vesting period of three years, the cost of LTIP 2010 including social fees is estimated at about SEK 10 million, which, on an annual basis, corresponds to about 0.3% of Billerud’s total employee benefits expense during financial year 2009. The maximum cost of LTIP 2010 based on the above assumptions is estimated at about SEK 33 million, including SEK 22 million in social fees. For 2010, earnings were charged SEK 2 million.
For further information about the content of the programme, please refer to the press release dated 24 March 2010 and the document for the 2010 AGM, which is available below.