The board of directors of Finnair Plc has decided to launch a new 12-month savings period under the Employee Share Plan, the airline said.
The purpose of the plan introduced in 2013 is to encourage the employees to become shareholders in the company, to provide long-term rewards through potential share price appreciation and thereby strengthen the employees´ interest in the development of Finnair´s shareholder value.
Participation in the share savings plan is voluntary. The decided 12 month savings period will commence on 1 July 2016. Potential future savings periods are subject to separate board decisions.
The eligible Finnair employees are offered the opportunity to invest part of their base salary in Finnair shares through the plan. Finnair awards each participant one Matching Share for each two purchased shares after a holding period of approximately two years. The awarded shares are taxable income for the recipient.
To increase the attractiveness of the plan, each employee participating in the plan for the first time in this savings period will additionally be awarded 20 bonus shares in October 2016, provided that employee participates at least in the first three months of the plan.
Shares will be purchased with the accumulated savings at the market price quarterly, after the publication dates of the Finnair´s interim results. Any dividends paid on purchased shares during the commencing savings period will be reinvested into additional shares on the following purchase date. These shares will have equal rights to Matching Shares.
Finnair has used Alexander Corporate Finance Oy as advisor in designing the plan. Evli Alexander Management Oy serves as Plan administrator.
Finnair board of directors has also approved, as a part of existing long-term incentive arrangement, a performance share plan covering years 2016–2018 for the key personnel of Finnair Group.
The share plan is a part of Finnair´s long-term share-based incentive arrangement that Finnair board of directors approved in 2013, which consists of annually commencing individual plans. The purpose of the share plan is to encourage the management to work to increase long-term shareholder value and also to commit the management to the company.
The participants have the opportunity to earn Finnair shares as a long-term incentive reward if the performance targets set by the board of directors are achieved. The performance criteria applied to the 2016–2018 plan are ROCE (Return on Capital Employed) and TSR (total shareholder return). The number of employees eligible to participate in the plan is approximately 60 persons.
If the targets set for the plan for years 2016–2018 are met, the estimated total value of the shares to be paid on the basis of this plan would be 1.7 million euros, corresponding to approximately 360,000 Finnair shares based on current share price (gross before the payroll tax withholding). If the maximum targets are met, the estimated total value of shares to be paid would be approximately 3.3 million euros corresponding to approximately 710,000 Finnair shares (gross before the payroll tax withholding).
Finnair is a network airline specialising in passenger and cargo traffic between Asia and Europe. In 2015, Finnair´s revenues amounted to EUR2,324 million and it had a personnel of 4,800 at the year-end.