Mid Term Incentive Plan (MTI)
- Objective
- Term
- Granting of stock rights
- Performance measurement
- Payout
- Participants
- New installments
In 2003 ThyssenKrupp implemented a value-oriented Mid Term Incentive Plan (MTI). This plan is part of the overall compensation for a selected group of top management.
Objective
The MTI is a compensation component based on the Group's share price and a central measurement, the ThyssenKrupp Value Added (TKVA),aimed at providing a medium-term incentive with the emphasis on creating sustainable value. By linking the compensation to the TKVA, the MTI, which is granted on top of the fixed salary and performance- and earnings-related bonuses, provides an additional incentive to create value. The plan is designed to promote and recognize value-based management geared to achieving the Group's goals. In addition, the plan is aimed at strengthening ties with ThyssenKrupp.
Term
The MTI runs for a term of three fiscal years (performance period).
Granting of stock rights
For beneficiaries an initial value is determined in the form of a € amount at the beginning of the performance period. This initial value is translated into stock rights, applying the average stock price in the first quarter of the first fiscal year of the performance period.
Performance measurement
Depending on the development of the TKVA, the number of stock rights granted is adjusted at the end of the performance period. The average TKVA over the three-year performance period is compared with the average TKVA over the previous three fiscal years (comparative period). For every €50 million increase in the average TKVA, the number of stock rights increases by 10%. If TKVA decreases, the number of stock rights is reduced accordingly. The final number of stock rights is based on the amount adjusted to reflect the change in TKVA.
Payout
The stock rights are settled in cash based on the average price of ThyssenKrupp shares in the first three months of the fiscal year following the performance period.
Participants
Originally, only the Executive Board members of ThyssenKrupp AG and the segment lead companies were eligible to participate in the plan. In fiscal year 2004/05 the group of beneficiaries was expanded to include managing directors and selected executive employees at major Group subsidiaries.
New installments
The MTI was last issued in FY 09/10 and expires at the end of FY 11/12. From FY 10/11 the MTI has been replaced by the Long-Term Incentive plan (LTI).
