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Wed February 24 10:00 am 2016 in category Stock exchange releases

Nokian Tyres' incentive scheme to be updated

Nokian Tyres plc Stock Exchange Release 24 February 2016, 10.00 a.m

The Board of Directors of Nokian Tyres plc has decided to update the Group's incentive schemes. The update aims to clarify and improve the schemes, and to offer a competitive rewarding system for the entire personnel. The incentive scheme has long focused on options, which are due to expire in 2019.

Profit-related bonus scheme

Nokian Tyres plc has decided to begin using a profit-related bonus scheme, which will be based on the profit made by the Group. The profit-related bonus scheme will cover the entire personnel, with the exception of those covered by the share-based incentive scheme for senior executives. The new scheme will take effect in the financial period beginning January 1, 2016, and bonuses earned under the scheme will be paid into a newly established personnel fund in Finland. 50% of the profit-related bonuses paid into Nokian Tyres' personnel fund will be invested in Nokian Tyres plc shares.

"A profit-related bonus based on operating profit will increase the entire personnel's commitment to and interest in the success of the Group as a whole. The personnel fund will enable both the company and the personnel to gain greater benefit from the money invested in bonuses than under other forms of bonus scheme," says Ari Lehtoranta, President and CEO of Nokian Tyres.

Share-based incentive scheme

The aim of Nokian Tyres' new share-based incentive scheme is to align the objectives of the owners and key personnel so as to increase the company's value over the long term and commit key personnel to the company. The share-based incentive scheme covers approximately 5% of the Group's personnel including top management.

The share-based incentive scheme contains three one-year earning periods: the calendar years of 2016, 2017, and 2018. The company's Board of Directors will decide upon the earning criteria for the scheme at the beginning of the earning period, along with the objectives assigned to each criterion. Any bonus to be paid under the scheme for the 2016 earning period will be based on the Group's operating profit and net sales. The maximum value of bonuses to be paid for the 2016 earning period is equivalent to approximately 515,000 Nokian Tyres shares, including a portion to be paid in cash.

Any bonus to be paid for the 2016 earning period will be paid in 2017. Part of the bonus will be paid in shares and part will be paid in cash. The cash portion is intended to cover the taxes and other statutory payments for which key personnel become liable as a result of receiving the bonus. If a key person's employment relationship ends before the bonus is paid, the bonus will not normally be paid. Shares awarded as bonuses are issued in the form of restricted stock that will vest after a period of approximately one year.

Members of the Group's management team must own 25% of the gross number of shares they have earned under the scheme up to the point where they own shares with a total value corresponding to their gross annual salaries. They must retain ownership of this number of shares for the entire duration of their membership of the Group's management team.

NOKIAN TYRES PLC

Antti-Jussi Tähtinen
Vice President, Marketing and Communications

Further information: Ville Nurmi, Vice President, Human Resources, Tel: +358 10 401 7268

Distribution: Nasdaq Helsinki Ltd, media and www.nokiantyres.com