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29. 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 161,388 unvested share rights in the company as at 31 December 2020 (2019: 159,752). The nominal amount of the shares which are claimable under unvested share rights equals € 40,347 per that date.

A new share grant program was introduced in 2020 as part of the new remuneration policy adopted by the annual General Meeting of Shareholders (AGM) on 29 June 2020, measuring performance over a period of three calendar years. 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 120% of base salary. The CFO is entitled to a conditional share grant value of 100% of 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 three-year performance period, targets for the LTIP are set by the Supervisory Board as follows:

  1. The Total Shareholders' Return (TSR) performance is benchmarked against the TSR performance of Corbion’s TSR peer group and the relative ranking determines the actual payout for 30% of the LTIP.

  2. A target based on organic sales growth, a threshold (minimum) and a range around the performance target to determine the actual payout for 25% of the LTIP.

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

  4. A target based on return on capital employed (ROCE), a threshold (minimum) and a range around the performance target to determine the actual payout for 12.5% of the LTIP.

  5. A target based on return on sustainability goals, a threshold (minimum) and a range around the performance target to determine the actual payout for 12.5% of the LTIP.

Prior to each conditional grant the Supervisory Board sets a target level for the performance measures, i.e. organic net sales growth, adjusted EBITDA, ROCE, and sustainability. A threshold
performance level is determined below which no pay-out is granted and a maximum performance level where maximum pay-out is reached.

For share grants before 2020 a different program is in place. This program was introduced in 2015, as part of the remuneration policy adopted by the AGM on 22 May 2015, aimed at longer-term value creation in line with shareholders’ interests, measuring performance over a period of three calendar years. The LTIP targets are the following: 60% 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.
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 base salary. The CFO is entitled to a conditional share grant value of 80% of 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 three-year performance period, targets for the LTIP were set by the Supervisory Board 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 31-12-2019

Allocated in 2020

Vested and expired in 2020

Total as at 31-12-2020

2017

53,036

 

53,036

 

2018

43,930

  

43,930

2019

62,786

  

62,786

2020

 

54,672

 

54,672

Total

159,752

54,672

53,036

161,388

Valuation model and input variables

The fair value of the non-market-based components of the above-mentioned performance-related shares allocated in 2020 was € 32.00 per share (2019: € 28.22). The fair value of the market-based components of the above-mentioned performance-related shares allocated in 2020 was € 37.89 per share (2019: € 32.61). The fair value of the market-based components is estimated by using the Black & Scholes model and the assumptions set forth below.

 

2020

2019

Risk-free interest rate

0.00%

0.00%

Expected dividend gains

  

Expected volatility in share price

27%

23%

Term

3 years

3 years

Share-based remuneration arrangements: Senior management

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

Movements in number of unvested shares of senior management

Year of allocation

Total as at 31-12-2019

Allocated in 2020

Vested and expired in 2020

Total as at 31-12-2020

2017

112,980

 

112,980

 

2018

153,511

 

7,218

146,293

2019

130,882

 

12,804

118,078

2020

 

132,821

 

132,821

Total

397,373

132,821

133,002

397,192

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 31-12-2019

Allocated in 2020

Released in 2020

Total as at 31-12-2020

Total

6,019

  

6,019