Long Term Incentive Plan
|Effective as of 1 January 2013,
the LTIP is designed to provide
awards in fully paid A shares of
NWR Plc which will normally
vest three years after the grant
date or such other period as
the Remuneration Committee
may set when the LTI Award is
granted. When granting an LTI
Award, the Remuneration
Committee may attach vesting
conditions to it. These may be
linked to the performance of the
Company, the Director or any
other factors. An LTI Award can
only be granted if the Director
is entitled to a bonus in the
||The LTIP enhances the Board’s
ability to retain and incentivise
Executive Directors and gives
the Board the flexibility to adapt
to future changes in business
environment, law, tax and best
||The aggregate market value (at
the time of the grant) of the
shares subject to any LTI
Award may not exceed 300 per
cent of base salary. The
amount of the LTI Award is
determined by the
Remuneration Committee in
accordance with the
The LTI Awards will typically be
settled by the issue of new
||The Company uses a balanced
scorecard format, as described
below (the ‘Balanced
Three levels of attainment are
defined in advance for the grant
of the LTI Awards - target,
stretch and super-stretch, the
achievement of which over the
financial year preceding the
year of grant, will determine the
actual size of the LTI Awards.
An LTI Award at ‘target’ would
be 100 per cent of base salary,
at ‘stretch’ would be 200 per
cent and at ‘super-stretch’
would be at 300 per cent.
The qualifying conditions for
the LTI Awards to be granted to
the Executive Directors are
financial criteria (25 per cent;
covering EBITDA, net income,
pre-dividend cash flow),
operations (25 per cent;
covering LTIFR, unit cost,
coking coal sales), customers
and supplier relationships (12.5
per cent), organisational
effectiveness (12.5 per cent)
and delivery on growth strategy
(25 per cent).
|It is the Company’s policy to honour any commitments made to a Director before this remuneration policy took effect or before he or she became a Director. This may include satisfying entitlements to remuneration payments or payments for loss of office.
(1) The Company adopted the DBP on 8 April 2011. A modification of the DPB allowing for the grant of LTI Awards was approved by the shareholders of NWR Plc and took effect on 26 April 2013. Several other changes that did not require shareholder approval were made at the same time and the name of the DBP was changed to the Long Term Incentive Plan. If, in relation to any Deferred Bonus Award granted before 26 April 2013, there is any conflict between the LTIP and the DBP as they applied on that date, the latter will prevail.
(2) By focusing not only on financial outcomes but also on the operational, marketing and developmental inputs to these outcomes, the Balanced Scorecard provides a comprehensive connection with NWR’s strategy. The Remuneration Committee ensures that these are fully aligned. The Balanced Scorecard consists of quantitative (financial and operational) and qualitative (customers and suppliers, organisational effectiveness and growth strategy) performance criteria, which shall apply as relevant to each Executive Director and his area of responsibility.
(3) In addition to the rules and principles already described in the table above, the following LTIP rules also apply:
Timing of awards: The awards will normally be granted within 42 days of the announcement of theGroup’s results for any period but may be granted at other times (e.g. on recruitment).
Put option: For a period of three years after vesting, the Director has the right to sell shares acquired on vesting and receive at least the market value of a share at the time of vesting. This right lapses earlier if the Director leaves NWR or otherwise sells his shares.
No dividend and no transfer: The Directors are not entitled to vote, to receive dividends or to have any other shareholder rights in respect of shares subject to an award until they are issued or transferred to him. Similarly, they may not, except on death, transfer, assign or dispose of an award, otherwise the award will immediately lapse.
Adjustment: If there is a variation in the Company’s capital (including a capitalisation or rights issue, sub-division, consolidation or reduction of share capital), a demerger, a special dividend or distribution or any other corporate event which might affect the current or future value of any award, the Remuneration Committee may adjust the number or class of shares subject to the award.
Clawback provisions: If the Board considers that extraordinary circumstances have occurred during or after the period over which the predetermined performance criteria have been or should have been achieved, which lead to an unfair result with respect to the grant or vesting of an award, the Board retains the discretionary power to reduce the values or delay the vesting date as appropriate. If any variable remuneration, be it in the form of cash or A shares of NWR Plc, has been paid or awarded or has vested on the basis of incorrect financial or other data, the Board is entitled to recover such remuneration from the Director. This right of recovery exists irrespective of whether the Director was responsible for the incorrect financial or other data or was aware or should have been aware of the incorrectness.
Termination: If the Director leaves employment from the NWR Group due to death, illness or disability, retirement at normal retirement age or early retirement with the agreement of his employer, the Director’s employing company ceasing to be under control of any member of the NWR Group, change of control or authorised leave of absence (‘good leaver’), his award will not lapse and will continue in effect. Alternatively, the Board may decide that it will vest in full on the date he leaves employment. If the Director leaves in other circumstances, his award will lapse. The Board may, at its discretion, decide to treat a Director who leaves employment for any other reason as if he were a good leaver, and vice versa. The Board will not normally exercise this discretion if it would be inappropriate given overall performance of the NWR Group or the Director or for other reasons the Board may determine.
Takeovers: Unless exchanged for a new award, the awards will vest on the date of a takeover. The number of shares in respect of which it vests will be reduced by reference to the period up to the normal vesting date which has elapsed before the date of the takeover and it will lapse as to the balance. A takeover typically occurs where a general offer to acquire shares becomes wholly unconditional or a person obtains control of the Company. Instead of vesting, the awards may be exchanged for a new award to the extent it is accepted by the Director and with the consent of the acquiring company or the Board pays the Director an amount equal to the market value of the shares subject to his award.
Amendments: The Board may at any time change the LTIP in any way including the terms of any award already granted or any bonus condition or vesting condition. Shareholder approval is required for amendments to the advantage of participants which relate to, amongst other things, the people who can be granted the LTI Awards, the limits on the number of shares which may be issued under the LTIP, the individual limits on the LTIP, the adjustment of the LTIP Awards if there is a capitalisation issue, rights issue or open offer, sub-division or consolidation of shares or reduction of capital or any other variation of capital. But amendments to performance criteria and certain other minor amendments can be made without shareholder approval.
(4) In addition to the items in the policy table, there are two arrangements forming part of the on-going policy applicable to the Executive Directors.
Gareth Penny - The option plan of Mr Penny was agreed as a condition of employment, in order to attract and secure a unique and high-quality candidate for the top-level position. On 3 September 2012, NWR Plc granted Mr Penny 250,000 share options over A shares of NWR Plc in three equal tranches (representing an aggregate of 750,000 ordinary A shares). Each share option gives Mr Penny the right to acquire one A share of NWR Plc for an exercise price of EUR 0.01. Each tranche vests equally over three years representing one third of the options each year (first tranche on the first, second and third anniversary of the grant date, second tranche on the second, third and fourth anniversary of the grant date and lastly third tranche on the third, fourth and fifth anniversary of the grant date). The options vest subject to Mr Penny remaining employed by NW Plc. If he ceases to be an employee, all unvested options will immediately vest, unless he ceases by reason of death, illhealth, injury, dismissal by NWR Plc or in connection with any other circumstances determined by the Directors at their discretion. Upon change of control the options lapse and may be, at the discretion of the Directors, replaced by equivalent options in the company that obtains control. The Directors may change the option plan, but changes to the advantage of Mr Penny in the number of shares, beneficiary, exercise price and certain other rights are subject to an ordinary resolution of the general meeting. Adjustments can be made in the event of a rights issue, demergers or other variation of capital in any way the Directors consider appropriate to reflect such variation.
Marek Jelínek – Mr Jelínek received certain stock options under the Stock Option Plan of the Company (the ‘SOP’). For the details on their SOP awards, please see the ‘Scheme Interests’ table on page 102. Due to the implementation of the DBP, granting of options was discontinued as of 31 December 2010 and the SOP continues only in relation to options granted prior to that date. In connection with the UK redomiciliation, NWR Plc has granted equivalent (rollover) options over NWR Plc A shares to the Executive Directors who participated in the SOP. These rollover options continue on the same terms and conditions as applied to the options granted originally under the SOP (with appropriate adjustments). The vesting period is three years. For each year during the vesting period, one third of the granted options became eligible for vesting. 50 per cent of the options vested if the EBITDA threshold was achieved, and 100 per cent of the options vested if the EBITDA target was achieved. Vesting between threshold and target was on a straight-line basis. 2013 was the last year in which options granted under the SOP became eligible for vesting. Options can be exercised from the vesting date until the eighth anniversary of the date of award. Options, which have not been exercised will lapse on the eighth anniversary of their grant. Options may, however, be exercised early under certain circumstances, including certain terminations of employment and in the event of a takeover (change of control), scheme of arrangement or winding up. Options are not transferable and may only be exercised by the persons to whom they are granted.
(5) Other than as described above, there are no components of the Executive Directors’ remuneration that are not subject to performance criteria.
(6) All of the items now proposed for inclusion in the Directors’ remuneration policy formed part of the previous policy and none of them has been changed.
(7) The remuneration policy for the Executive Directors applies in unchanged form to our key executives, though the levels of awards tend to be lower than those offered to the Executive Directors and their individual performance criteria usually include elements relating to parts of the business for which the individual executive is responsible.
(8) For senior management personnel of the Group, pay comprises base salary, various allowances provided in cash or kind, eligibility for the Deferred Bonus Awards and participation in the SOP before its discontinuation in 2010. Workers and miners are remunerated in line with the collective agreements agreed between OKD’s management and the trade unions. Their pay comprises base tariff wages, holiday and Christmas bonuses and bonuses linked to performance. In addition, they can receive benefits in cash or in kind (such as pension allowance, life insurance, reimbursement of physiotherapies and various leisure activities, cafeteria plans, etc.). Underground workers also receive two weeks of paid holidays in addition to the statutory holiday of the Czech Republic.