Connect - Schneider Electric
Connect - Schneider Electric
Connect - Schneider Electric
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6. Performance share grants<br />
GENERAL PRESENTATION OF SCHNEIDER ELECTRIC SA<br />
PERFORMANCE SHARE GRANTS AND STOCK OPTION PLANS<br />
and stock option plans<br />
Performance share grant plans with<br />
performance criteria and stock option plans<br />
The fi gures below have been calculated where necessary<br />
to take account of the two-for-one share split, effective from<br />
September 2, 2011.<br />
Grant policy<br />
As part of its overall staff pay policy, each year <strong>Schneider</strong> <strong>Electric</strong><br />
sets up a long-term incentive plan based on an annual allocation of<br />
stock grants, and, for employees who are US citizens or residents,<br />
Stock Appreciation Rights (SARs) that are akin to stock options,<br />
and stock options until December 2009. Since December 2010,<br />
stock options have no longer been granted. Phantom shares which<br />
track performance share grants have also been granted to certain<br />
benefi ciaries in emerging market countries.<br />
These plans are established by the Management Board, as<br />
authorized by the Supervisory Board, which takes decisions based<br />
on the report from the Remuneration, Appointments and Human<br />
Resources Committee.<br />
Benefi ciaries include members of Senior Management, top<br />
managers of the Group in all countries, high-potential managers<br />
and employees whose performance and potential were<br />
judged exceptional.<br />
Each year <strong>Schneider</strong> <strong>Electric</strong> increases the number of benefi ciaries<br />
of the annual plan. There were 1,579 benefi ciaries in 2009, 2,360 in<br />
2010 and 2,637 in 2011.<br />
Allocations to Senior Management, including corporate offi cers,<br />
dropped from 17% of the total in 2006 to 11.1% in 2011.<br />
The annual plans are set up in December for the following fi scal<br />
year so that benefi ciaries can be informed of their stock option and<br />
performances shares grants at the same time as their targets for<br />
the year ahead.<br />
The annual plan for 2012 was set up in December 2011. It comprises<br />
the following plans, all of them subject to performance criteria:<br />
• performance share plan 13 and 13bis, concerning 647,943 shares<br />
and 608 benefi ciaries (French residents);<br />
• performance share plan 14 and 14bis, concerning 1,386,800 shares<br />
and 2,029 benefi ciaries (residents of countries other than France);<br />
• SAR plan, concerning 816,636 SARs and 145 benefi ciaries<br />
(American citizens or residents);<br />
• Phantom shares plan concerning 70,272 phantom shares and<br />
274 benefi ciaries.<br />
Description of the shares allocated<br />
The vesting and lock-up periods for performance shares allocations<br />
to residents of France under plans 5 and 7 are three years and<br />
two years respectively. The vesting and lock-up periods for stock<br />
allocations made under plans 8, 10, 10bis, 13 and 13bis are at least<br />
two years each.<br />
The vesting period for performance shares allocations made to<br />
residents of countries other than France under plans 6, 9 and 11,<br />
11bis, 12, 14 and 14bis is four years, with no lock-up period.<br />
Similarly the benefi ciaries of phantom shares have a vesting period<br />
of three years.<br />
performance shares grants and phantom shares vest only if the<br />
benefi ciary is a Group employee as of the vesting date and if certain<br />
performance targets, detailed below, are met (see page 253 ).<br />
Since January 2009, for members of the Management Board, and<br />
since December 2011 for members of the Executive Committee,<br />
allocations of stock grants are fully subject to the achievement of<br />
performance conditions.<br />
Description of the stock option plans<br />
The option exercise price is equal to the average closing price<br />
of the twenty trading days prior to the date of allocation by the<br />
Management Board. No discount is applied.<br />
Since 2006, the options have a ten year life. They may not be<br />
exercised until after the fourth year. However, they can be exercised<br />
before maturity in the case of a takeover bid for the Company’s<br />
shares. Exceptionally, options granted under plans 22, 23 and<br />
25 may be exercised as from the fi rst year. Similarly, US citizens and<br />
residents may exercise their rights following the third year under<br />
certain plans.<br />
Options may only be exercised by Group employees. In addition,<br />
exercise of 50% of the options allocated is dependent on specifi c<br />
targets being met, detailed below (see page 251 ). Effective from<br />
January 2009, all of the options granted to members of the<br />
Management Board are subject to performance criteria.<br />
Description of Stock Appreciation Rights<br />
(SARs)<br />
SARs have the same vesting period and expiration date as the<br />
corresponding options or grants and are subject to the same<br />
performance criteria. The benefi ciary receives the proceeds in cash.<br />
2011 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC<br />
249<br />
7