Incentive Programs

Exel Composites' performance-based incentive program covers all employees. Office employees receive a monthly salary and an annual bonus tied to the attainment of annually established goals emphasizing growth and profitability. Production employees are also eligible for incentive compensation. Their annual bonus is mainly based on productivity.

The Group has long-term incentive programs for the President and CEO and the Group Management Team and selected key employees of the Company. The objectives of the programs are to align the interests of the management with those of the company’s shareholders and, thus, to promote shareholder value creation in the long term, to commit the management to achieving the strategic targets of the company and to retain the company’s valuable key individuals.

The Group has three monetary and one share-based long-term incentive programs. 

 

Monetary programs

The 2014 program is based on a long-term monetary incentive program and is targeted at 20 executives for the earning period 2014 – 2016. The President and CEO and the members of the Group Management Team are included in the target group of the 2014 program. The potential long-term monetary performance reward is based on the Group’s cumulative Economic Profit and on the Group’s Total Shareholder Return (TSR). The potential reward will be paid in 2017. The maximum reward to be paid will be EUR 1 million.

The 2015 program is based on a long-term monetary incentive program and is targeted at 25 executives for the earning period 2015 – 2017. The President and CEO and the members of the Group Management Team are included in the target group of the 2015 incentive program. The potential long-term monetary performance reward is based on the Group’s cumulative Economic Profit and on the Group’s Total Shareholder Return (TSR). The potential reward will be paid in 2018. The maximum reward to be paid will be EUR 1.5 million excluding employer’s social costs. 

The 2016 program is based on a long-term monetary incentive program and is targeted at approximately 20 executives for the earning period 2016 – 2018. The President and CEO and the members of the Group Management Team are included in the target group of the 2016 incentive program. The potential long-term monetary performance reward is based on the Group’s cumulative Economic Profit and on the Group’s Total Shareholder Return (TSR). The potential reward will be paid in 2019. The maximum reward to be paid will be EUR 1 million.

No reward will be paid to an executive based on the 2014, 2015 and 2016 programs described above, if his or her employment or service with the Company ends before the reward payment unless the executive is leaving the Company due to retirement or unless the Board decides otherwise.

The cost of the programs will be accounted for as operating expenses during the duration of the programs.

Share-based program

A new share-based long-term incentive program was established in May 2017 by the Board of Directors of Exel Composites.
The program consists of annually commencing individual performance share plans, each with a three-year performance period and a one-year restriction period following the delivery of the share reward. The commencement of each individual plan, its performance targets, the eligible participants and the earning opportunity are subject to a separate decision of the company’s Board of Directors in each case.

The first plan within the program

The first individual plan within the program commences as of the beginning of the year 2017. The performance targets applied to this first plan are operating profit (EBIT) and the absolute total shareholder return of the company’s share (TSR). The potential share rewards payable based on the first plan will be paid in the spring 2020, provided that the performance targets set by the Board of Directors are achieved. The potential rewards will be paid in listed shares of Exel Composites.
The Board of Directors has approved 14 persons belonging to the company’s top management as eligible to participate in the first plan. The Board of Directors may nominate additional participants to this plan within the maximum limits of the plan set out below.

If the performance targets set for the first plan are fully achieved, the aggregate maximum number of shares to be paid under this individual plan is 153,700 shares. This number of shares represents a gross earning, from which the applicable payroll tax is withheld and the remaining net value is delivered to the participants in shares.

The aggregate value of the first three-year plan, estimated based on the average share price of the last trading day preceding the date hereof, is approximately EUR 0.8 million.

Other terms

If the participant terminates his/her employment relationship before the reward is paid, he/she is not entitled to any reward under the plan. If the participant terminates his/her employment relationship after the reward is paid but before the end of the restriction period, he/she forfeits the share reward without compensation.

The earning opportunity of the individual participant within the program is capped. The value of the reward paid to the participant based on the individual three-year plan may not exceed 200 per cent of the individual’s annual base salary.
According to a share ownership recommendation applied by the company, each participant of the program who is a member of the company’s Group Management Team is expected to accumulate and, once achieved, maintain a share ownership in the company corresponding in value to the individual’s annual gross base salary. Each such individual is expected to use at least fifty per cent of the net shares received under the program for accumulating his/her share ownership until the above recommendation is fulfilled.

The Board of Directors anticipates that no new shares will be issued based on the program and that the program will, therefore, have no dilutive effect on the registered number of the company’s shares.

 

Updated 8 May 2017

Exel Composites Oyj, Vantaa head office, Mäkituvantie 5, FI-01510 Vantaa, Finland