Annual Report 2010 - SBM Offshore

Performance Shares
Performance shares under both former LTI and the
amended 2008 LTI form part of the LTI for Board of
Management members, and are subject to an EPS
growth threshold. Performance shares vest three years
after the provisional award date and must be retained
for two years from the vesting date.
Under the former (2005) LTI scheme, performance
shares were awarded conditionally assuming a 5% EPS
growth threshold, plus additional performance shares
for each percentage point EPS growth above the 5%
threshold. In respect of conditional performance shares
awarded in 2007, the three year measurement period
2007-2009 (the last period governed by the 2005 LTI
scheme) generated average EPS growth below the
threshold of 5%. Accordingly no performance shares
(2007 base award plus performance related) were
awarded to the Board of Management.
As from 2008, under the Remuneration Policy, the number
of conditional performance shares awarded is such
that their value is equivalent to 100% of the Managing
Directors' base annual salary of the previous year,
assuming "At target" EPS growth performance over the
three year period following the period of reference. In
2010, the conditional awards were 30,490 shares for
M.Mace and 28,711 shares for M.Miles. If the threshold
average EPS growth over 2010 to 2012 is not achieved,
the conditional awards will not vest. The maximum possible
award is 150% of the conditional award.
For the performance period 2008-2010, the EPS
growth threshold of 5% was not achieved and consequently
no performance shares will be issued to Board
of Management members who were part of the LTI
scheme in 2008.
PSU and RSU plans
In 2009, new plans were approved by the Supervisory
Board and implemented, replacing the previous Share
Option Plan for senior employees. Under these plans,
shares in the Company are issued annually to eligible
employees. The respective number of shares granted
under these plans in 2010 are 128,470 (PSU, at target)
and 397,750 (RSU) (2009: 116,300 for PSU and
320,380 for RSU).
The annual issue is based on individual performance.
Concerning the PSU plan, a performance condition
applies, based on a combination of EBIT margin and
EBIT growth over a 3-year performance period. When
at target, the conditionally granted number of shares
will vest; a matrix of outcomes has been adopted
including threshold and maximum vesting levels at
25% and 150% respectively of the at-target grant. The
RSU plan has no performance condition, only a service
condition, and will vest over a three year period, with
1/3 vesting on each anniversary date of the original
grant date.
Main assumptions included in the calculation for the
PSU plan are:
2010
Expected departures 5%
Fair value at grant date (excluding entitlement to dividends during vestion period), 1 July 2010 € 10.19
For the RSU plan, the assumptions are as follows:
Financial Review / Financial Statements 2010
2010
Expected departures (tranche 1/2/3) 0% / 2.5% / 5%
Fair value at grant date (excluding entitlement to dividends during vesting period), 1 July 2010 € 11.12 / € 10.64/ €
10.19
SBM Offshore – Annual Report 2010 139