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Financial statements

28. Share-based compensation

Share-based remuneration arrangements: Board of Management

A share plan is in place for the Board of Management. The (former) members of the Board of Management have a total of 159,752 unvested share rights in the company as at 31 December 2019 (2018: 166,822). The nominal amount of the shares (€ 0.25 per share) which are claimable under unvested share rights equals € 39,938 per that date.

The program was introduced in 2015, as part of the new remuneration policy agreed to by the annual General Meeting of Shareholders (AGM) on 22 May 2015, aimed at longer-term value creation in line with shareholders’ interests, measured over a performance period of three calendar years. The targets consist of the following components: 60% of the LTIP is determined by EBITDA, 20% by Earnings Per Share (EPS), and 20% of the LTIP depends on relative TSR as compared to a specific TSR peer group.

Each year members of the Board of Management are entitled to a conditional grant of Corbion shares. There are two target levels for this incentive: one applies to the CEO and one to the CFO. The CEO is entitled to a conditional share grant value of 100% of his base salary. The CFO is entitled to a conditional share grant value of 80% of the base salary. The total number of conditionally granted shares is determined by dividing the “at target” amount applicable for the respective Board member (as a percentage of base salary) by the share price. The share price is defined as the average closing price of the Corbion share during the last full calendar quarter preceding the conditional grant of shares.

At the beginning of the performance period, targets for the LTIP are set by the Supervisory Board for the three-year performance period as follows.

  • A target based on EBITDA, a threshold (minimum) and a range around the performance target to determine the actual payout for 60% of the LTIP.

  • A target based on EPS, a threshold (minimum) and a range around the performance target to determine the actual payout for 20% of the LTIP.

  • The TSR performance is benchmarked against the TSR performance of Corbion’s TSR peer group and the relative ranking determines the actual payout for another 20% of the LTIP.

Meeting the performance target(s) results in an LTIP payout at target level. A range of 50% around the performance target(s) (or lower as determined by the Supervisory Board) is set for the EBITDA and EPS performance to determine the actual payout. There is no payout below the low end of the range and no additional upside above the top end of the range. For the TSR performance, threshold payout is set at meeting the eighth position in the peer group. Target payout is achieved at the fourth and fifth position in the peer group and maximum payout is achieved at reaching the first and second position in the peer group.

Movements in number of unvested shares of the (former) Board of Management (at maximum)

Year of allocation

Total as at 31-12-2018

Allocated in 2019

Vested and expired in 2019

Total as at 31-12-2019

2016

62,033

 

62,033

 

2017

53,036

  

53,036

2018

53,753

 

9,823

43,930

2019

 

62,786

 

62,786

Total

168,822

62,786

71,856

159,752

Valuation model and input variables

The fair value of the non-market-based components of the above-mentioned performance-related shares allocated in 2019 was € 28.22 per share (2018: € 27.72). The fair value of the market-based components of the above-mentioned performance-related shares allocated in 2019 was € 32.61 per share (2018: € 32.36). The fair value of the market-based components is estimated by using the Black & Scholes model and the assumptions set forth below.

 

2019

2018

Risk-free interest rate

0.00%

0.00%

Expected dividend gains

  

Expected volatility in share price

23%

24%

Term

3 years

3 years

Share-based remuneration arrangements: Senior management

An equity-settled plan similar to the program for the Board of Management exists for senior management.

Movements in number of unvested shares of senior management

Year of allocation

Total as at 31-12-2018

Allocated in 2019

Vested and expired in 2019

Total as at 31-12-2019

2016

109,106

 

109,106

 

2017

121,461

 

8,481

112,980

2018

182,395

 

28,884

153,511

2019

 

130,882

 

130,882

Total

412,962

130,882

146,471

397,373

Certain members of management receive a package of Corbion shares worth 9.5% of fixed salary (commitment award). The acquired shares shall be held in a separate blocked account until the end of their employment at Corbion.

Movements in number of blocked commitment award shares

 

Total as at 31-12-2018

Allocated in 2019

Released in 2019

Total as at 31-12-2019

Total

6,019

  

6,019