Incentive Programs
The President and selected senior executives (approximately 25 individuals) who have a significant influence on earnings per share for the Trelleborg Group are annually offered a cash-based long-term incentive program. This program applies over a period of three years. The target for the program comprises the Trelleborg Group’s earnings per share based on the company’s forecast for the first year of the program and an annual improvement of 10 percent for the subsequent two years. Participants and the target for the program are determined by the Board. The outcome is linked to the executive’s target level for annual variable salary and is limited to a maximum of 25 percent of annual variable salary for the President and other executives. Payment takes place following completion of the program, that is, after three years, on the condition that the executive is still an employee of the Group at that time. The outcome does not carry entitlement to pension or vacation pay.
At this time, the Group has no ongoing convertible or options programs.
At the 2000 Annual General Meeting, it was resolved to offer a three-year option program. At the Annual General Meetings in 2000, 2001 and 2002, it was decided to issue a maximum of 1,000,000, 1,100,000 and 1,100,000 call options, respectively, against the repurchased Series B shares in Trelleborg AB. It was also decided to transfer a maximum of 1,000,000, 1,100,000 and 1,100,000 Series B shares, respectively, in Trelleborg in connection with the redemption of call options.
The options were allocated to certain senior executives in accordance with the terms of the year 2000 option program in the form of 875,000, 975,000 and 1,070,000 options, respectively. Each option entitles the holder to subscribe for one (1) share.
The redemption period for options from the year 2000 was October 1, 2002 – March 31, 2003. The redemption price was SEK 78. These options expired with no shares subscribed for.
The redemption period for options from the year 2001 was October 1, 2003 – March 31, 2004. The redemption price was SEK 86. Of these options, 916,000 (14,000) were exercised for share subscription in 2004. No new share issue was held, and only previously repurchased shares were provided.
The redemption period for options from 2002 is October 1, 2004 – March 31, 2005. The redemption price is SEK 122. Upon redemption, the options are reported as an increase in shareholders’ equity.
In 1998, Trelleborg issued warrants directed at senior executives. The original conversion price was SEK 74. The conversion price has been reduced to SEK 65.60 as a result of the distribution of Boliden shares in 1998, and a dividend of SEK 4.25 in 2003, which led to an adjustment in accordance with the terms for the warrants. Each warrant entitles the holder to subscribe for 1.13 shares. The redemption period was February 21, 2003 – April 15, 2004. During 2004, 1,197,351 (35,849) warrants were redeemed. This is reported as a new issue of 1,353,006 (40,509) shares, with a total value of SEK 89 M (3).
Trelleborg issued a convertible debenture loan in 1998 that was offered to all employees in Trelleborg’s Swedish companies. Conversion to shares was possible during the period February 21, 2003 – April 15, 2004. The conversion price has been reduced to SEK 65.60 as a result of the distribution of Boliden shares in 1998, and a dividend of SEK 4.25 in 2003, which led to an adjustment in accordance with the terms for the warrants.
In 2004, SEK 207 M (54) of the convertible loan was converted to shares, which is reported as a new issue of 3,156,937 (822,537) shares.