48. Share-based payment of executives

METRO AG has been implementing share-based payment programmes since 1999 to enable executives to participate in the Company’s value development and reward their contribution to the sustained success of METRO GROUP compared with its competitors. The members of the Management Board and other executives of METRO AG as well as managing directors and executives of the other operating METRO GROUP companies are eligible.

Performance share plan and share ownership guidelines (2009–2013)

In 2009, METRO AG introduced a performance share plan for a period of 5 years.

Executives are given an individual target amount for the performance share plan (target value) in accordance with the significance of their functional responsibilities. The target number of performance shares is calculated by dividing this target value by the share price upon allotment, based on the average price of the METRO share during the 3 months up to the allotment date. A performance share entitles its holder to a cash payment matching the price of the METRO share on the payment date, based on the average price of the METRO share during the 3 months up to the payment date.

Based on the relative performance of the METRO share compared to the median of the DAX 30 and Dow Jones Euro STOXX Retail indices – total return – the final number of payable performance shares is determined after the end of a performance period of at least 3 and at most 4.25 years. It corresponds to the target number of shares when an equal performance with said stock market indices is achieved. Up to an outperformance of 60 percent, the number increases on a straight-line basis to a maximum of 200 percent of the target amount. Up to an underperformance of 30 percent, the number is accordingly reduced to a minimum of 50 percent. In the case of an underperformance of more than 30 percent, the number is reduced to 0.

Payment can be made at 6 possible times. The earliest payment date is 3 years after allotment of the performance shares. From this time, payment can be made every 3 months. Executives can choose the payment date upon which they wish to exercise their performance shares. A distribution over several payment dates is not allowed. The payment cap amounts to 5 times the target value.

METRO GROUP introduced so-called share ownership guidelines along with its performance share plan: as a precondition for payments of performance shares, eligible executives are obliged to undertake a continuous self-financed investment in METRO shares up to the end of the 3-year vesting period. This ensures that, as shareholders, they will directly participate in share price gains as well as potential losses of the METRO share. The required investment volume amounts to about 50 percent of the individual target value.

The value of the performance shares allotted in 2012 amounted to €31 million (previous year: €20 million) at the time of the allotment and was calculated by external experts using recognised financial-mathematical methods (Monte Carlo simulation). The following conditions apply:

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Performance share plan (tranches 2009 to 2012)

Tranche

End of
vesting period

3-month
average price
before allotment

Number of performance
shares as of 31/12/2012

2009

August 2012

€ 36.67

647,162

2010

August 2013

€ 42.91

648,481

2011

August 2014

€ 41.73

728,080

2012

April 2015

€ 29.18

1,128,100

The tranches of share-based payment programmes that applied in the financial year 2012 generated income of €3 million (previous year: €18 million). This was essentially due to the decline in the METRO share, which directly impacts the determination of the obligation.

The related provisions as of 31 December 2012 amount to €6 million (previous year: €9 million). The 2009 tranche accounts for €0 million (previous year: €3 million) of this total, the 2010 tranche for €3 million (previous year: €4 million), the 2011 tranche for €1 million (previous year: €2 million) and the 2012 tranche for €2 million.