Share-based incentive programmes
Outokumpu's Board of Directors has confirmed that share-based incentive programmes are part of the incentive and commitment scheme for the company's key personnel. The objectives are to reward key personnel for good performance and support Outokumpu's strategy while at the same time directing management attention to increasing shareholder value over the long term. The programmes offer the possibility of receiving both Outokumpu shares and cash (an amount equal to taxes not exceeding 1.5 times the value of the shares at the time they are distributed) as an incentive, provided that the targets set by the Board for each earning period are achieved.
| Earnings period | The number of people in scope on Dec. 31, 2009 |
| 2007–2009 | 129 |
| 2008–2010 | 155 |
| 2009–2011 | 139 |
Share-based incentive programme 2006–2010
On February 2, 2006, the Outokumpu Board of Directors confirmed a five-year share-based incentive programme comprising three earnings periods, each lasting three calendar years. These earnings periods commenced on January 1, 2006, January 1, 2007 and January 1, 2008. The aggregate number of shares to be distributed during each earnings period cannot exceed 500 000. In accordance with targets confirmed for the earnings periods, the reward is based on the relative development in Total Shareholder Return (TSR) (amounting to 50% of the maximum reward) and achieving targets set for Operational Excellence programmes (amounting to 50% of the maximum reward). The aggregate annual total payment of rewards (shares and cash) under the programme, together with other short-term and long-term incentives, must not exceed 200% of a participant's annual salary at the end of the earnings period. Rewards allocated under the programme for the earnings period (both shares and cash) will be reduced accordingly if the above limit is exceeded. Under the programme, participants must retain the shares in their possession for a period of at least two years from the date of distribution.
On February 2, 2010, the Outokumpu Board of Directors confirmed that the set targets for the earnings period 2007–2009 were not met for either earning criteria. Therefore, no reward will be paid to the participants for the earning period 2007–2009.
If participants in the remaining earnings period 2008–2010 receive the maximum number of shares as a reward (a total of 240 430 shares), the shareholding they obtain via the programme will amount to 0.13% of the Company's shares and the voting rights.
Share-based incentive programme 2009–2013
On February 3, 2009, Outokumpu's Board of Directors confirmed a new share-based incentive programme which will last five years and comprise of three earnings periods, each lasting three calendar years and commencing on January 1, 2009, January 1, 2010 and January 1, 2011. The Board of Directors decides on the persons who are entitled to participate in the programme for each earnings period. The aggregate number of shares to be distributed for each earning period cannot exceed 500 000.
On February 2, 2010, 134 people were confirmed as participants in the programme for the 2010–2012 earnings period. In accordance with targets confirmed for the 2010–2012 earnings period, the reward is based on the relative development in Total Shareholder Return (TSR, 2/3 of the maximum reward) over the three-year earnings period and Earnings per share (EPS, 1/3 of the maximum reward). The aggregate annual total payment of rewards (shares and cash) under the programme, together with other short-term and long-term incentives, must not exceed 200% of the participant's annual salary at the end of the earnings period. Rewards allocated under the programme for the earnings period (both shares and cash) will be reduced accordingly if the above limit is exceeded. Under the programme, participants must retain the shares in their possession for a period of at least one year from the date of distribution.
If participants in the 2009–2011 and 2010–2012 earnings periods receive the maximum number of shares as a reward (a total of 824 900 shares), the shareholding obtained via the programme will amount to 0.45% of the Company's shares and voting rights.
Share ownership plan
In accordance with the share ownership plan of the Outokumpu Group, members of the Outokumpu Group Executive Committee have an obligation to purchase Outokumpu shares with 10% of the income they receive from stock options. Members of the Group Executive Committee are also obliged to hold Outokumpu shares acquired or received under incentive programmes that correspond to the value of their annual gross base salary.