49. Share-based payment of executives

METRO AG has been implementing share-based payment programmes since 1999 to enable senior 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 senior executives of METRO AG as well as managing directors and senior 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 five years.

Under this scheme, eligible managers are given an individual target amount for the performance share plan (target value) in accordance with the significance of their 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 three 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 three 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 three 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 per cent, the number increases on a straight-line basis to a maximum of 200 per cent of the target amount. Up to an underperformance of 30 per cent, the number is accordingly reduced to a minimum of 50 per cent. In the case of an underperformance of more than 30 per cent, the number is reduced to zero.

Payment can be made at six possible times. The earliest payment date is three years after allotment of the performance shares. From this time, payment can be made every three months. Eligible executives can choose the payment date upon which they wish to exercise their performance shares. A distribution over several payment dates is not permitted. The payment cap amounts to five 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 three-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 per cent of the individual target value.

The value of the performance shares allotted in the short financial year 2013 amounted to €23 million (12M 2012: €31 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:

Performance share plan (tranches 2009–2013)

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Tranche

End of blocking period

Three-month average price before allotment

Number of performance shares as of 30/9/2013

2009

August 2012

€36.67

611,707

2010

August 2013

€42.91

311,312

2011

August 2014

€41.73

412,095

2012

April 2015

€29.18

739,785

2013

April 2016

€22.84

1,017,279

The blocking periods for the 2009 and 2010 tranches ended in August 2012 and August 2013 respectively. No payouts from these tranches were made in the short financial year 2013.

The tranches of share-based payment programmes that applied in the short financial year 2013 resulted in expenses of €7 million (9M 2012: income of €2 million; 12M 2012: income of €3 million). This was essentially due to the positive development in the METRO share, which directly impacts the determination of the obligation.

The related provisions as of 30 September 2013 amount to €12 million (30/9/2012: €7 million; 31/12/2012: €6 million). The 2009 tranche accounts for €0 million (30/9/ 2012: €0 million; 31/12/2012: €0 million) of this total, the 2010 tranche for €0 million (30/9/2012: €2 million; 31/12/2012: €3 million) of this total, the 2011 tranche for €2 million (30/9/2012: €2 million; 31/12/2012: €1 million) of this total, the 2012 tranche for €5 million (30/9/2012: €3 million; 31/12/2012: €2 million) and the 2013 tranche for €5 million.