"Long Term Incentive Programs" (LTIs) in the form of performance share plans are an important means of motivating and binding managers to the company in the long term.
A1 Telekom Austria Group introduced a Long Term Incentive Program (LTI) in 2010. Participants are required to invest an amount depending on the annual gross basic salaries and the management-level of the entitled employee in Telekom Austria shares and to hold these shares until the end of the holding period (at least three years). For each tranche, the number of shares granted is calculated based on the average Telekom Austria stock price for a defined period.
At the vesting date (at the earliest three years after issuance) bonus shares will be allocated for the issued Tranches 2010, 2011 and 2012 to the participants equaling the personal investment if the targets are fully met. This compensation may at the company's choice also be effected in cash, which was determined for the tranches 2010, 2011, 2012 and 2013.
If the targets are exceeded more than 100%, additional shares will be allocated on a pro rata basis, up to 175% of the number of shares related to 100% meeting the performance targets. In case of significant underperformance no shares will be allocated. The target values for these key indicators as well as the achievable stock allotments are determined by the Supervisory Board at the beginning of each tranche.
The performance period for meeting the performance targets was determined to be three years. Free Cash Flow, Total Shareholder Return and EBITDA were defined as key performance indicators in 2010, 2011 and 2012. Net Income, EBIDTA and Relative Total Shareholder Return were defined as key performance indicators in 2013. The Relative Total Shareholder Return will be identified on basis of a peer group of nine European Telecoms Companies.
Following tranches have been issued:
A detailed description of the LTI can be found in the Annual Report and the Notes to the Annual Financial Statements.