Corporate Governance

Share-related incentive programs (LTI-programs)

As of December 31, 2015, Meda has two outstanding LTI-programs approved by the AGM in 2014 and 2015. The programs covers senior executives and other key employees of the Group. The participants are divided into four groups: the CEO, EVPs, and additional two groups which consist of country managers, and other senior executives. The participants are given the opportunity to earn allotments of Class A shares in Meda at no cost. The board of directors believes it is advantageous to Meda when key individuals in the Group have a long-term interest in ensuring the good value performance of the company’s stock. The program is also intended to increase the Group’s attractiveness as an employer in the global market and promote the ability to recruit and retain key individuals.

Each program will run for three years and shares may be transferred in 2017 and 2018 provided that the individual is employed by the Group for an indefinite term at the transfer date. Exemptions from the requirement may be permitted in individual cases, such as the participant’s death, disability, retirement, or sale of the unit by which the participant is employed. In order to set the participants’ interest on par with those of shareholders, the participants shall be paid compensation equivalent to the dividends paid during the three year vesting period up to the date of transfer. Compensation will be paid only for dividends whose distribution was decided after the allotment date.

As of December 31, 2015 the programs cover, LTI 2014, 83 persons and, LTI 2015, 98 persons. The allotment of shares according to the programs is determined based on the participant’s position according to the four groups mentioned and the outcome of three performance criteria’s regarding 1) net sales, 2) EBITDA margin, and 3) cash flow. Each performance criteria has been divided into three levels for a total of nine equally weighted levels corresponding to 11.1% per level. The performance criteria’s have been adjusted for non-recurring items. The outcome for each program is presented in the following table. 

Performance criteria

LTI 2015 - level

LTI 2014 - level

Net sales

2

2

EBITDA-margin

3

2

Cash flow

3

1

Outcome performance criteria (%)

88.8%

55.5%


The number of shares to be allotted to the participants of the LTI 2014 as of December 31, 2015 is presented in the following table. The number of shares to be allotted to the participants of the LTI 2015 will be based on the market value of the share and determined when the annual report has been adopted by the board of directors and signed by the auditor.

 

LTI 2014

Value of shares at allotment (million SEK)1)

48

Number of shares at allotment 2)

350,665

Additional shares due to dividend compensation

6,844

Number of forfeited shares during the period

-19,388

Total allotted shares as of December 31, 2015

338,121

 

1) The value of allotted shares at allotment have been calculated as the volume weighted average share price of Meda’s class A-shares at Nasdaq Stockholm during ten trading days for the period 2015-03-13 – 2015-03-26. The program fully compensate for dividends.
2) The number of shares is based on a price per share of SEK 136.98.

Cost

The total cost of the programs, which is allocated across its duration, is SEK 129 million excluding social security contributions. In 2015, the programs resulted in a cost recognized in the income statement of SEK 28 million excluding social security contributions, which amounted to SEK 2 million. The total reserve for social security contributions in the balance sheet amounts to SEK 4 million.

 

Deliver of shares

The AGM has passed a resolution allowing the company to meet its obligations to deliver shares under the programs by entering into an equity swap agreement or other comparable agreement with a third party.

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