Stock option plans for executive members of the Board of Directors and senior executives of the Company and Group
Aiming to match the long-term personal goals of its senior executives with the interests of the Company and its shareholders, TITAN CEMENT S.A. has established and has been using stock option plans since 2000.
The initial Plan (the 2000 Plan), which was approved by the General Meeting of Shareholders of 5 July 2000 had a vesting period of three years (2001-2003) and expired in 2007. Under the 2000 plan, options to purchase 119,200 ordinary shares were exercised at a sale price of €29.35 per share and options to purchase 451,900 ordinary shares were exercised at a sale price of €14.68 per share.
In 2004, a second consecutive Plan was approved (the 2004 Plan) again for a three-year period (2004-2006) following the decision of the General Meeting of Shareholders of 8 June 2004 in the context of which 67 senior executives of the Company and its related companies and four executive members of the Board of Directors were granted the option to purchase 387,030 ordinary shares in the company at a sale price equal to the nominal price of the Company’s share.
The 2004 Plan provided that the options granted would vest after three years and after that date the beneficiaries would be entitled, without other formalities, to exercise only 1/3 of the number of options granted, whereas the ability to exercise the other 2/3 of the options would depend on the performance of the Company's ordinary share in relation to the average performance of the ATHEX FTSE 20, FTSE 40 and General Index of the Athens Exchange and the highly merchantable shares of pre-selected high cap companies in the building materials sector worldwide. Under the 2004 Plan, options to purchase 186,000 ordinary shares were eventually exercised up to December 2009 (108,489 in December 2006, 39,370 in December 2007, 14,200 in December 2008 and 23,950 in December 2009).
On 29 May 2007 the General Meeting of Shareholders approved the third stock option plan (the 2007 Plan) covering the three-year period (2007-2009), which again provided an exercise price equal to the nominal price of the Company’s share. In the context of the 2007 Plan, in 2007, 2008 and 2009 options to purchase 399,300 ordinary shares in the Company were granted to 103 senior executives of the Company and its related companies, including five executive members of the Board of Directors.
Under the 2007 Plan, the number of options which was exercised by the beneficiaries after the end of the maturity period varied; the first third depended on the average EBITDA of the Company and its net profits in relation to the return on 3-year Greek treasury bonds during the relevant 3-year period. The second third depended on the performance of the Company’s ordinary share in relation to the performance of the highly merchantable shares of 12 pre-selected high cap companies in the building materials sector internationally and the other third depended on the performance of the Company’s ordinary share in relation to the average performance of the ATHEX FTSE 20, ATHEX FTSE 40 and FTS Eurofirst 300 indexes. The 2007 Plan favoured the long-term retention of a significant number of shares by executives, as it introduced an obligation to hold 50% of the shares until they acquire a specific minimum number of shares and any infringement of that requirement would result in a reduced number of options being granted in the next stock option plan.
In accordance with the vesting terms and conditions of the 2007 Plan, in December 2009 only 11.11% of the options which had been granted to beneficiaries in 2007 vested, while in December 2010 and December 2011, the 22.22% of the total number of options granted to beneficiaries in 2008 and 2009 vested. Overall, in December 2009, December 2010 and December 2011 options to purchase 60,972 ordinary shares in the Company were exercised at a price equal to the nominal price of each share, namely €4 per share.
Lastly, on 3 June 2010 the General Meeting approved the most recent (fourth) stock option plan (the 2010 Plan) which states that in 2010, 2011 and 2012 around 100 beneficiaries in total will be granted stock options for 1 million ordinary shares in the Company (treasury stock), which will vest and be exercisable in 2013, 2014 and 2015 respectively, at a sale price equal to the nominal value of the share (€4 per share) provided that the Plan’s objectives will have been achieved, which depend: (a) on the Group’s operating results and net profits and (b) on the performance of the Company’s share compared to the performance of the merchantable shares of other high cap companies in the building materials sector internationally and (c) the performance of the Company’s share in relation to the performance of the ATHEX FTSE 20, ATHEX FTSE 40 and FTS Eurofirst 300 indexes.
The 2010 Plan also favors the long-term retention of a significant number of shares by company executives, since it contains a term requiring the retention of a minimum number of shares depending on the executive’s position within the hierarchy, and any infringement of that requirement will result in a reduced number of options being granted in the next stock option plan.
It should be also noted that all the above Plans were designed to deter the undertaking of excessive risks by the senior executives of the Company, which, if unsuccessful, could have as a result the significant decrease of the Company’s share price. Therefore, the Plans require the share price to be attractive at the time of the exercise of the option, compared to its trading price at the time of the grant of the option.
As part of the 2010 Plan:
a. In 2010, five executive members of the Board of Directors, who provided their services to the Company on the basis of an employment contract and 98 other executives of the Company and companies in the Group, were granted stock options for 267,720 ordinary shares (treasury stock) of the Company, which will vest and can be exercised in 2013 provided that the objectives of the said plan have been met.
b. In 2011, six executive members of the Board of Directors and 98 other executives of the Company and companies in the Group were granted stock options for 301,200 ordinary shares (treasury stock) of the Company, which will vest and can be exercised, under the same as above conditions, in 2014.
c. Finally, In 2012, five executive members of the Board of Directors who provided their services to the Company on the basis of an employment contract and 104 other executives of the Company and companies in the Group were granted stock options for 376,290 ordinary shares (treasury stock) of the Company, which will vest and can be exercised in 2015 provided that the objectives of the said plan have been met.
A detailed description of these Plans is available on the Company’s website.