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Long-term share-based incentive plan 2020-2022

Long-term share-based incentive plan 2020-2022

In 2020, a new long-term share-based incentive plan was defined for the next three years.

LONG-TERM SHARE-BASED INCENTIVE PLAN 2020-2022

In 2020, a new long-term share-based incentive plan was defined for the next three years. Continuing on from the previous version in place during the previous three years, the new share plan provides for three annual attributions (“rolling plan”), each of which coincides with a three-year reference period for performance (2020-2022, 2021-2023, 2022-2024). For each attribution, any disbursement is envisaged after three years (vesting period) in an amount that is tied to the results obtained and will have a maximum value for the Chief Executive Officer of 210% and for Managers with Strategic Responsibilities of 130% of the respective fixed remuneration.

The Ordinary Shareholders’ Meeting, held on 18 June 2020, approved an update of the information document which presents the methods and implementation clauses valid for the second (2021-2023) and third (2022- 2024) allocation cycles of the Share-Based Plan.

 

The performance conditions applicable for the second attribution of the Plan (2021) are connected to the following parameters, two of which are economic-financial indicators and two of which relate to sustainability:

  • Adjusted Net Profit (with weight of 50%) calculated as the sum of adjusted net profit for the years 2020, 2021 and 2022. The degree of achievement of the objective is calculated according to a criterion of linear interpolation between minimum, target and maximum values.

 

 
Scenarios Performance (absolute values) Performance (% vs. target) Payout (% of right accured)
Minimum € mln 3,489 99% 33%
Target € mln 3,524 100% 50%
Maximum € mln 3,612 103% 67%

 

  • Added Value (with a weight of 30%) which reflects the value generation of the regulated business, calculated as the change in the RAB in the period 2021-2023 added to distributed dividends, to treasury shares repurchased and reduced by the change in net debt. The degree of achievement of the objective is calculated according to a criterion of linear interpolation between minimum, target and maximum values.

 

 
Scenarios Performance (absolute values) Performance (% vs. target) Payout (% of right accured)
Minimum € mln 2,245 98% 20%
Target € mln 2,292 100% 30%
Maximum € mln 2,363 103% 40%

 

  • Reductions in natural gas emissions (with a weight of 10%). The degree of achievement of the target is calculated according to a criterion of linear interpolation between minimum, target and maximum values compared to the final emission values recorded at the end of 2015 (49.74 MSmc). In this regard, it should be noted that, following adherence to the new Oil and Gas Methane Partnership Framework (OGMP 2.0) prepared by the United Nations Environment Programme (UNEP), the Company, in September 2020, adopted a new emissions reduction plan to 2025, which includes more ambitious targets than those previously set. As a result of this, with reference to the 2021-2023 cycle and the 2022-2024 cycle, the targets of this objective will be aligned with what is envisaged from time to time in the Company’s aforementioned emissions reduction plan (which currently envisages a target to 2025 of -44.9%). In the event of changes and/or variations within the UNEP Framework and consequent modification of the Company's emission reduction plan, the targets of the emission reduction target of the LTI Plan Cycles will be adjusted and re-measured, depending on the achievement of the final target under the UNEP Framework. It should also be noted that Snam's Chief Executive Officer and management team have voluntarily decided to adjust their emissions reduction targets to the UNEP Framework objectives as early as the 2020-2022 cycle. For this reason, the accrual of the incentive for these beneficiaries, with reference to the 2020-2022 cycle, will be anchored to the following performance levels, calculated according to the new methodology (variation with respect to the actual values of emissions, recorded at the end of 2015, equal to 49.74 MSmc): minimum level -26%; target level -27%; maximum level -29%.

 

 
Scenarios Performance (absolute values) Performance (% vs. target) Payout (% of right accured)
Minimum -34% 94% 7%
Target -36% 100% 10%
Maximum -38% 106% 13%

 

  • Equal representation in terms of gender diversity in Snam's management team (with a weight of 10%), calculated in terms of the % of women managers and middle managers of the total management and middle management figures of the Group. The degree of achievement of the objective is calculated according to a criterion of linear interpolation between minimum, target and maximum values.

 

 
Scenarios Performance (absolute values) Performance (% vs. target) Payout (% of right accured)
Minimum 23% 92% 7%
Target 25% 100% 10%
Maximum 27% 108% 13%

 

The achievement of performance conditions at target, maximum and threshold level respectively entails the accrual of 100%, 133% and 67% of the shares attributed; below threshold level, the percentage will always be zero.

At the end of the vesting period, an additional number of shares will be assigned, defined as “dividend equivalents”, calculated as the equivalent value of dividends not used with respect to the number of shares effectively accrued.

The plan also provides for a two-year lock-up on 20% of the shares assigned, gross of those necessary to fulfil tax requirements.

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updated
03 September 2021 - 13:10 CEST