Long-term variable remuneration component to support sustainable increase in shareholder value
The long-term variable remuneration component was based on a stock option plan for key Group managers up to the end of 2008 (also see details on the Wienerberger website). This plan was discontinued in 2009 because it was no longer considered to be an effective or appropriate incentive for the members of the Managing Board and management due to the changed economic environment. The Supervisory Board subsequently developed an alternative model for the Managing Board and key Group managers (approx. 30 persons), which covers the medium- to long-term component of remuneration. This long-term incentive (LTI) program is designed to support a sustainable increase in shareholder value, with the share price working as added leverage. The program will encourage managers to focus their actions more on the value-oriented viewpoint of shareholders and also strengthen their identification with corporate planning and goals.
Starting in 2010 virtual shares, so-called performance share units (PSUs), were issued and allocated to the program participants based on their position in the company (CEO: 8,000, board member: 6,000, executive managing director: 2,500, holding company top management and managing directors of larger local companies: 1,000 – 2,000). Special conditions for participation apply to the Managing Board: each of these persons must hold an investment in Wienerberger shares equal to or exceeding the number of PSUs granted, and the shares may not be sold until the respective program expires. The monetary value of the PSUs will be determined at the end of a three-year performance period by multiplying the target achievement with the average price of the Wienerberger share during the last 20 ATX trading days in the third year. The target achievement depends on CFROI in the third year after the PSUs are issued. There will be no payout if CFROI falls below a defined target corridor. Payouts resulting from the target achievement are not made at once, but in three equal installments over a period of two years. The following installment is canceled if annual CFROI falls below the minimum value during this period. As a result of the challenging market environment CFROI targets have not been met and no payments were made from the program to date. For 2012 no PSUs were issued.
Wienerberger set a benchmark for Austria with this LTI program, which fully meets the requirements of the Austrian Corporate Governance Code for sustainable, long-term remuneration programs for managing boards and management.