Long-term incentive for executives

Pursuant to the recommendation in Subsection 7.1.3 of the German Corporate Governance Code, the share-based compensation of executives of METRO GROUP will also be reported in the following section.

Long-term incentive METRO Cash & Carry (MCC LTI)

A long-term incentive tailored specifically to the New Operating Model was developed for the METRO Cash & Carry sales line. It replaces the sustainable performance plan version 2014 and was issued to high-level executives and the management of METRO Cash & Carry companies for the first time in financial year 2015/16. This is a cyclical plan that is issued once every three years. The respective performance targets focus on value creation in the individual national subsidiaries as well as their sustained development and prospects. The performance period of the MCC LTI extends from 1 April 2016 to 31 March 2019. The individual target amounts are accumulated proportionally during this period. The final target amount that has been accumulated at the end of the performance period is based on the period of eligibility for the MCC LTI as well as the individual’s position.

After the end of the performance period, the payout amount is determined by multiplying the respectively accumulated individual target amount with a total goal achievement factor. The goal achievement rate of this factor for the past performance and future value components accounts for 45 per cent each; the remaining 10 per cent are accounted for by the goal achievement rate of the sustainability component. The payout amount is capped and the total goal achievement factor cannot drop below zero. The relevant measure for the past performance and future value components for eligible executives at the national subsidiaries is the performance/value creation of the respective national subsidiary of METRO Cash & Carry. The relevant measure for the other eligible executives is the sales line’s overall performance.

The past performance component rewards the achievement of internal economic target values and is determined on the basis of the internal metric EBITDA after special items generated cumulatively over financial years 2015/16 to 2017/18. Separate target values for a goal achievement factor of 1.0 and 0.0, respectively, have been defined. In the case of intermediate values and values above 1.0, the factor for goal achievement is calculated using linear interpolation to two decimal points. The goal achievement factor for the past performance component cannot drop below zero and is capped.

The future value component mirrors METRO Cash & Carry’s external valuation with respect to the expected future performance of the respective national subsidiary and the sales line as a whole from an analyst’s perspective. For the purpose of target setting, the enterprise value of the METRO Cash & Carry sales line was determined on the basis of analyst valuations before the start of the performance period. It is determined again at the end of the performance period. The national subsidiaries’ enterprise value is derived from the respective enterprise values of the sales line. Separate target values for a goal achievement factor of 1.0 and 0.0, respectively, have been defined. In the case of intermediate values and values above 1.0, the factor for goal achievement is calculated using linear interpolation to two decimal points. The goal achievement factor for the future value component cannot drop below zero and is capped.

Performance achievement for the sustainability component is determined on the basis of the average rating which METRO AG (or, once the planned demerger has become effective, the Wholesale & Food Specialist entity spun off from METRO AG) is awarded in an external corporate sustainability assessment during the performance period. In each year of the performance period, METRO AG participates in the Corporate Sustainability Assessment conducted by the independent service provider RobecoSAM AG. RobecoSAM AG uses this assessment to determine METRO AG’s ranking within the industry group Food & Staples Retailing that is defined in accordance with the Global Industry Classification Standard (GICS). RobecoSAM AG will inform METRO AG of any changes in its sector classification. In case of material changes in the composition of companies or the ranking method, RobecoSAM AG can determine adequate comparable values.

The company’s average ranking – rounded to whole numbers – is determined on the basis of the rankings communicated during the performance period. The factor for the sustainability component is determined in the following manner on the basis of the average of the performance period:

Average ranking (rounded)

Sustainability factor

1

3.00

2

2.50

3

2.00

4

1.50

5

1.25

6

1.00

7

0.75

8

0.50

9

0.25

Below 9

0.00

As of 30 September 2016, the target amount for the eligible group of persons was €28.1 million.

The value of the METRO Cash & Carry Long-Term Incentive plan distributed in financial year 2015/16 was €35.9 million at the time of granting. It was calculated by external experts using recognised financial-mathematical methods.

Sustainable performance plan / sustainable performance plan version 2014

The sustainable performance plan and the sustainable performance plan version 2014 apply not only to the members of the Management Board, but also to high-level executives of METRO AG as well as to high-level managing directors and executives of METRO GROUP companies, insofar as no distribution from the METRO Cash & Carry Long-Term Incentive was made in financial year 2015/16 due to the respective function. Eligible managers are given an individual target amount in accordance with the significance of their responsibilities. The additional rules of this plan correspond to the provisions for the Management Board.

Sustainable performance plan / sustainable performance plan version 2014

 Download XLS (22KB)

Tranche

End of the performance period

Starting price for the TSR component

Target amount executives as of 30/9/2016

2013/14

41st trading day following the Annual General Meeting three years after the issuance of the tranche

€29.73

€2,612,593

2014/15

41st trading day following the Annual General Meeting three years after the issuance of the tranche

€31.69

€21,550,001

2015/16

41st trading day following the Annual General Meeting four years after the issuance of the tranche

€25.53

€8,410,000

The value of the tranches granted in financial year 2015/16 as part of the sustainable performance plan version 2014 amounted to €14.2 million at the time of granting and was calculated by external experts using recognised financial-mathematical methods.

Performance share plan

The performance share plan 2009–2013 also applies not only to the members of the Management Board, but also to high-level executives of METRO AG as well as to high-level managing directors and executives of METRO GROUP companies. Under this scheme, eligible managers were given an individual target amount as part of the performance share plan (target value) in accordance with the significance of their responsibilities. The additional rules of this plan correspond to the provisions for the Management Board.

With the performance share plan, the share ownership guidelines – the requirement to undertake self-financed investments – were also applied to this group of eligible individuals. The required investment volume generally amounts to approximately 50 per cent of the individual target value.

Like those for the Management Board, the following conditions apply:

Performance share plan

 Download XLS (22KB)

Tranche

End of vesting period

Three-month average price before grant

Number of performance shares for executives as of 30/9/2016

2009

August 2012

€36.67

Expired

2010

August 2013

€42.91

Expired

2011

August 2014

€41.73

Expired

2012

April 2015

€29.18

Expired

2013

April 2016

€22.84

45,753

The vesting period of the 2013 tranche ended in April 2016. It was exercised by 192 executives with 507,436 performance shares in financial year 2015/16.