Notes to the Consolidated Financial Statements

20. Share-based payments  

The Group offers share-based bonuses as part of the key personnel commitment and incentive scheme. The share-based bonus scheme offers the target group an opportunity to receive shares in Digia Plc shares as a reward for the achievement of specified goals set for an earning period. The Board of Directors decides the earning criteria for the scheme and specifies the targets, as well as the maximum remuneration for the earning period for each person belonging to the target group.

On 30 September 2009, the Board of Directors made the following decisions regarding share-based bonus systems for management and key personnel:

The CEO’s share-based incentive scheme covers the earnings periods 2009 and 2010. It entitles the CEO to a maximum bonus equal to the value of 160,000 company shares according to the terms of the scheme, based on the company’s EPS. The bonus is payable 50/50 in shares and cash and is made available to the CEO annually after the financial statements are approved.

In a system directed at key personnel, a maximum bonus totalling the value of 200,000 shares will be payable as a 50/50 combination of shares and cash. The earnings periods are 2009, 2010, 2011 and 2012. The bonus will be paid annually, without any disposition restrictions, beginning on 30 January 2010, depending on the fulfilment of certain goals set by the Board and on the condition that the recipient is still employed by the company on the payment date.

On 27 May 2010, the Board of Directors decided on a new share incentive scheme for the CEO and other members of the Group Management Team, as follows:

The scheme comprises four earning periods, which are the calendar years 2010–2013.The earnings principles are the consolidated earnings per share and the growth in consolidated net sales compared to the budget, according to formulae settled separately by the Board.

According to the scheme, rewards totalling a maximum value equivalent to 40,000 shares will be paid for the 2010 earning period, and a maximum value of 200,000 shares will be paid for each of the earning periods from 2011 to 2013. Of the rewards paid, one half will be awarded to the CEO and one half to the other management team members in total. The reward will be paid as a 50/50 combination of shares and cash. The cash portion of the bonus is primarily used to cover taxes and other comparable costs of the scheme.

The scheme is a continuation of the management share incentive scheme initiated in 2009, which remains effective as planned.


The basic details of the schemes are listed in the table below.

 

 

 
Management group

share-based incentive scheme 2010–2013



Key personnel share-based incentive scheme
2009–2010

 

 

 

Granting date

  27/05/2010

30/09/2009

Instrument

 Shares and cash
 Shares and cash

Target group

 Management group
 Key personnel

Maximum number of shares *

 640,000
 200,000

Beginning of the earning period

 28/05/2010

1/10/2009

End of the earning period

31/3/2011 / 31/3/2012 / 31/3/2013 / 31/3/2014

30/1/2010 / 30/1/2011 / 30/1/2012 / 30/1/2013

Vesting condition

 Earnings per share,

net sales growth and
employment requirement

Earnings

 criterion, employment requirement

Maximum validity, years

3.2

3.3

Remaining validity, years

1.2

0.1

Number of persons (31 December 2012

5

17

     

* In addition to the bonus payment in shares, a cash bonus is paid to cover the cost of taxes and similar expenses.

The items related to share-based incentive schemes in 2012 are given in the table below. Because the cash portion of the bonus payment is also recorded as a share-based expense, the sums below are gross, i.e. the bonuses include the shares and the equivalent cash sum.







Events in 2012 fiscal year

 

 

 Management group
share-based incentivescheme
2010–2013

Key personnel share-based

incentive scheme
2009–2010

 

 

 




Total

Gross amounts, 1 January 2012 **

 

 

 

  Outstanding at beginning of period

600,000
100,000
700,00

 

 

 

 

Changes during the period

 

 

 

  Forfeited during the year

121,470
15,624
137,094

  Exercised during the year

78,530
34,376
112,906

 

 

 

 

Gross amounts, 31 December 2012 **

 

 

 

  Outstanding at end of period

400,000
50,000
450,000

  Available for exercising at end of period

400,000
50,000
450,000
       

** The amounts include the cash portion (in shares) granted according to the terms of the incentive scheme.

Determination of fair value

The fair value of share-based payments is determined on the day on which the scheme is agreed between the company and the recipient group. As the share-based bonus is paid as a combination of shares and cash, the determination of its fair value is divided into two parts in accordance with the IFRS 2 standard: the part settled in shares and the part settled in cash. The part settled in shares is recognised as shareholders’ equity and the part settled in cash as a liability. The fair value of the part settled in cash is revalued on each reporting date until the end of earning period, and thus the fair value of the liability changes in accordance with the price of the Digia share.


Expense effect of share-based incentive schemes on 2012 income statement





Effect on earnings
and financial position, € 000

Management group
share-based
incentive scheme
2010–2013


Key personnel

share-based incentive

scheme
2009–2010






Total
Share-based payment expense for the fiscal year 95 39 133
Share-based payment expense for the
fiscal year, shareholders' equity, 31 December 2012
0 33 33
Liabilities from share-based
payments, 31 December 2012
0 27 27
       
Comparison data for 2011




Effect on earnings
and financial position, € 000

 

Management group

share-based incentive scheme 2010–2013

 

 
CEO’s
share-based incentive

scheme 2009–2010

 Key personnel
share-based
incentive

scheme 2009–2010








Total

Share-based payment expense for the fiscal year

160

48

87

     296

Share-based payment expense for the fiscal year, shareholders' equity, 31 December 2011

153

0

61 214

Liabilities from share-based payments, 31 December 2011

82

0

35 117