The Board of Directors of Wartsila Corporation has decided on the establishment of a new share-based long-term incentive scheme for the company’s management and selected key employees. The incentive scheme comprises a Performance Share Plan (“PSP”).
The objectives of the share-based long-term incentive scheme are to align the interests of Wartsila's management and key employees with those of the company’s shareholders and, thus, to promote shareholder value creation in the long term, to commit management and key employees to achieving Wartsila's strategic targets, and the retention of Wartsila's key resources.
Performance Share Plan
The Performance Share Plan consists of annually commencing individual performance share plans, each with a three-year performance period, followed by the payment of the potential share reward subject to the achievement of the set performance criteria. The potential share reward is paid in listed shares of Wartsila.
The plan in the PSP structure covers the years 2022-2024.
The performance criterion applied to PSP 2022-2024 are Economic Value Added (EVA) and Sustainability Targets linked to decarbonization.
The members of Wartsila's Board of Management are included in the target group of PSP 2022-2024.
The aggregate maximum number of shares payable as a reward based on this first plan is approximately 2,412,000 shares (gross earning before the withholding of the applicable payroll tax).
Restricted Share Plan
The Board of Directors has also decided on a Restricted Share Plan (“RSP”) as a share-based retention plan for individually selected key employees in specific situations.
The Restricted Share Plan consists of annually commencing individual restricted share plans. Each plan comprises a retention period with an overall length of three years, extended to the first half of the fourth year, during which the company may grant fixed share rewards to individually selected key employees. The granted share rewards are paid to the selected participants in three separate share tranches annually during the retention period, unless the company decides to pay individual share grants in one instalment. The share rewards are paid in listed shares of Wartsila.
The plan in the RSP structure covers the years 2022-2024.
The aggregate maximum number of shares to be paid as a reward based on the plan is approximately 207,000 shares (gross earning before the withholding of the applicable payroll tax).
The value of the reward payable to participants based on the plans is limited by a maximum cap, which is linked to a multiplier of the individual’s annual gross base salary.
If the individual’s employment with Wartsila terminates before the payment of the reward, the individual is not, as a main rule, entitled to any reward based on the respective plan.
Wartsila applies a share ownership recommendation to the members of the company’s Board of Management. According to this recommendation, each member of Wartsila's Board of Management is expected to retain in his/her ownership at least half of the shares received under the share-based incentive plans of the company, until the value of his/her share ownership in the company corresponds to at least his/her annual gross base salary.