Long Term Incentiveplan (LTI)
For the 2010/2011 fiscal year ThyssenKrupp AG introduced the Long-Term Incentive plan (LTI), a global Groupwide compensation instrument for top-level executives in the ThyssenKrupp Group. The LTI replaces the Mid Term Incentiveplan (MTI).
- Objective
- Term
- Allocation of stock rights
- Performance measurement
- Payout
- Participants
- New installments
Objective
The LTI is an attractive long-term compensation component. It is awarded on top of the fixed salary and variable compensation. The objective of this compensation instrument is to strengthen identification with the Group and promote executive retention.
The long-term orientation of the LTI is based on the alignment to ThyssenKrupp AG's share price and ThyssenKrupp Value Added (TKVA) over a period of three fiscal years, with the previous three fiscal years also used for comparative purposes. By linking compensation to TKVA, the LTI sets an additional incentive to create value through value-based management geared to achieving the Group's goals.
Term
The LTI runs for a term of three fiscal years (performance period).
Allocation of stock rights
At the beginning of the performance period, an initial value in euros is determined for each participant. This initial value is divided by the average price of ThyssenKrupp shares in the first quarter of the first fiscal year of the performance period to give the number of stock rights for the participant.
Performance measurement
Depending on the performance of the Group TKVA, the number of stock rights granted is adjusted at the end of the performance period. For the performance measurement the average TKVA over the performance period is compared with the average TKVA over the previous three fiscal years (comparative period). For every €200 million increase in the average TKVA, the number of stock rights increases by 10%; if the average TKVA decreases, the number of stock rights is reduced accordingly. The final number of stock rights, adjusted to reflect the change in TKVA, forms the basis for the compensation.
Payout
The stock rights are paid in gross amounts after the plan ends based on the average ThyssenKrupp share price in the first quarter of the fiscal year following the performance period.
The payout is limited to a maximum of three times the awarded initial value in euros.
Participants
Eligible to participate in the plan are the top-level executives in the ThyssenKrupp Group worldwide.
New installments
New installments and participants in the LTI plan are subject to a new decision by the Executive Board of ThyssenKrupp AG each year.
