Saab 2015 Annual Report Download - page 63

Plan and a Performance Share Plan. e reason is
that the Board considers it important that Saab’s
employees share a long-term interest in a good value
development of the company’s shares. e long-term
incentive programme comprises not more than
1,340,000 Series B shares in Saab per year.
Since 2007, Saab oers permanent employees the
opportunity to participate in the Share Matching
Plan. Employees can withhold up to 5 per cent of
their gross base salary to purchase Series B shares on
Nasdaq Stockholm during a twelvemonth period.
Provided that a participant retains the purchased
shares for three years aer the investment date and is
still employed by the Saab Group, the participant
will be allotted a corresponding number of Series B
shares free of charge. Currently, Share Matching
Plans 2012–2015 are in place.
Since 2008, Saab also has a Performance Share
Plan for senior Executives and key employees. In the
Performance Share Plans for 2011–2013, up to 286
key employees (in each plan), including the Presi-
dent, are able to allocate a maximum of 7.5 per cent
of their gross xed salary to purchase Saab Series B
shares during a 12-month period. Investments made
under this plan also count as a basis for participation
in the Share Matching Plan, up to a maximum of
5 per cent of base salary. In addition to the require-
ment that the employee remain employed by Saab
aer three years, earnings per share must grow by an
annual average of 5 to 15 per cent during the three-
year period to qualify for matching performance
shares. e Performance Share Plans 2011–2013
entitle participants to 1–4 performance shares,
depending on employee category. e Board may
reduce the number of performance shares if the
Board considers it reasonable given the company’s
nancial results and position, conditions on the
stock market and other circumstances.
In April 2014, Saab’s Annual General Meeting
resolved to modify the Performance Share Plan to
increase interest among the target group. e Perfor-
mance Share Plan now covers a maximum of 175 key
employees, including the President. Participants can
also save up to 7.5 per cent of their base salary in this
plan to purchase Series B shares during a twelve-
month period, while participating in the Share
Matching Plan as well. Depending on which cate-
gory they belong to, participants are entitled to
2–7 performance shares for each purchased share.
Participants are entitled to performance match-
ing shares, free of consideration, provided that the
performance targets are achieved and the partici-
pants have retained the purchased shares for three
years aer the investment date and remain employed
by the Saab Group.
e number of performance shares is linked to
the performance targets established by the Board of
Directors. e terms for the performance matching
are based on three independent targets for a one-
year performance period: organic sales growth1),
EBIT margin2) and free cash ow3). e relative
apportionment between the targets is as follows:
30 per cent of the allotment is attributable to organic
sales growth, 40 per cent to EBIT margin and 30 per
cent to free cash ow. e performance targets are
established by the Board of Directors with a mini-
mum and maximum level for each target. e Board
of Directors decides on the performance matching
aer the end of the one-year performance period.
If the maximum levels for the performance targets
are reached or exceeded, the performance matching
will amount to (and not exceed) the maximum of
440,000 shares. If the performance outcome falls
short of the maximum level but exceeds the mini-
mum level, a linear proportionate performance
matching will occur. No performance matching will
occur if the performance outcome is equal to or
below the minimum level. Before the performance
matching is ultimately determined, the Board of
Directors will assess whether it is reasonable in rela-
tion to the company’s nancial results and position,
conditions in the stock market and other circum-
stances. If it determines that this is not the case, the
Board of Directors will reduce the number of perfor-
mance shares that will be matched to the lower num-
ber of shares it considers appropriate.
Performance shares are allotted three years aer
the investment. Currently, Performance Share Plans
2012–2015 are in place.
e Annual General Meeting 2015 also resolved
to authorise the Board of Directors to decide to
acquire not more than 1,340,000 Saab Series B shares
to secure delivery of shares to participants in Saab’s
long-term Share Matching Plan and Performance
Share Plan and for subsequent transfers to cover
certain expenses associated with LTI 2015, mainly
social security costs. Repurchases may be eected on
Nasdaq Stockholm.
Furthermore, the Annual General Meeting 2015
resolved to authorise the Board of Directors to
decide to repurchase Saab Series B shares up to a
maximum of 10 per cent of all the shares in the
company. e purpose of the authorisation is to be
able to adapt the company’s capital structure and
thereby contribute to increased shareholder value
as well as to enable continuous use of repurchased
shares in connection with potential company acqui-
sitions and for the company’s share-based incentive
programmes. Repurchases may be eected on
Nasdaq Stockholm.
During 2015, the Board of Directors did not
resolve to utilise any of the two repurchase
mandates. Both repurchase mandates apply until
the Annual General Meeting 2016.
SAAB ANNUAL REPORT 2015 – 59