The new system to grant variable remuneration components for some of the Group’s executives introduced in 2009, which is accounted for as an equity-settled share-based payment transaction in accordance with IFRS 2, was extended to include other groups of Group executives in 2010. Under this system, certain executives receive part of their variable remuneration for the financial year in the form of shares of Deutsche Post AG in the following year (incentive shares); all Group executives can specify an increased equity component individually by converting a further portion of their variable remuneration for the financial year (investment shares). If certain conditions are met, the executive will again be awarded the same number of Deutsche Post AG shares four years later (matching shares).
|Share Matching Scheme|
|2009 tranche||2010 tranche||2011 tranche|
|Grant date||1 Nov. 2009||1 Jan. 2010||1 Jan. 2011|
|End of term||March 2014||March 2015||March 2016|
|Share price at grant date||€||11.48||13.98||12.90|
|Number of incentive shares||in thousands||430||638||691|
|Number of matching shares expected||in thousands||762||1,674||1,913|
In the consolidated financial statements as at 31 December 2011, €33 million (previous year: €20 million) was recognised in equity for the grant of variable remuneration components; see table in Note 38.1.
Since 3 July 2006, selected executives have received annual tranches of SARs under the Long-Term Incentive Plan introduced in 2006. This allows them to receive a cash payment within a defined period in the amount of the difference between the respective price of Deutsche Post shares and the fixed issue price if demanding performance targets are met. All SARs under the 2006 and 2007 tranches expired at the end of the respective waiting periods, since the performance targets were not met. After the expiry of the waiting period for the 2008 tranche on 30 June 2011, two-sixths of the SARs granted became exercisable. However, they could not be exercised so far because the share price has not yet exceeded the issue price of €18.40.
Since 1 July 2006, the members of the Board of Management receive SARs under the 2006 Long-Term Incentive Plan. Each SAR under the 2006 LTIP entitles the holder to receive a cash settlement equal to the difference between the average closing price of Deutsche Post shares during the last five trading days before the exercise date and the issue price of the SAR.
The members of the Board of Management each invested 10% of their fixed annual remuneration (annual base salary) as a personal financial investment in 2011. The number of SARs issued to the members of the Board of Management is determined by the Supervisory Board. Following a four-year waiting period (or following a three-year waiting period for SARs issued up to 2008, inclusive) that begins on the issue date, the SARs granted can be fully or partly exercised within a period of two years provided an absolute or relative performance target is achieved at the end of the waiting period. Any SARs not exercised during this two-year period will expire. To determine how many – if any – of the granted SARs can be exercised, the average share price or the average index is compared for the reference period and the performance period. The reference period comprises the last 20 consecutive trading days before the issue date. The performance period is the last 60 trading days before the end of the waiting period. The average (closing) price is calculated as the average closing price of Deutsche Post shares in Deutsche Börse AG’s Xetra trading system.
The absolute performance target is met if the closing price of Deutsche Post shares is at least 10, 15, 20 or 25% above the issue price. The relative performance target is tied to the performance of the shares in relation to the STOXX Europe 600 Index (SXXP, ISIN EU0009658202). It is met if the share price equals the index performance during the performance period or if it outperforms the index by at least 10%.
A maximum of four out of every six SARs can be “earned” via the absolute performance target, and a maximum of two via the relative performance target. If neither an absolute nor a relative performance target is met by the end of the waiting period, the SARs attributable to the related tranche will expire without replacement or compensation. More details on the 2006 LTIP tranches are shown in the following table:
|SARs ||2007 tranche||2008 tranche||2009 tranche||2010 tranche||2011 tranche|
|Issue date||1 July 2007||1 July 2008||1 July 2009||1 July 2010||1 July 2011|
|Issue price in €||24.02||18.40||9.52||12.27||12.67|
|Waiting period expires||30 June 2010||30 June 2011||30 June 2013||30 June 2014||30 June 2015|
The fair value of the 2006 SAR Plan and the Long-Term Incentive Plan for members of the Board of Management (2006 LTIP) was determined using a stochastic simulation model. As a result, an expense of €24 million was recognised for financial year 2011 (previous year: €21 million).
See Note 53.2 for further disclosures on share-based payment for members of the Board of Management. A provision for the 2006 LTIP and the 2006 SAR Plan (Board of Management and executives) was recognised as at the balance sheet date in the amount of €61 million (previous year: €37 million).