Hexagon Annual Report 2019

NOTE 26 SHARE-BASED PAYMENT The Group has an incentive program including options, performance share units (PSUs) and restricted share units (RSUs) covering certain employees in senior and key positions. The incentive programs are in accordance with the Board of Director's compensation policy for the senior executive management and key personnel. This policy is described in "Declaration to the Annual General Meeting of Hexagon Composites ASA concerning determination of Salary and other remuneration to the CEO and other Management". As at 31.12.2019, 67 employees were included in the programs. 3 March 2015 Hexagon Composites ASA issued 975,000 call options to senior executives and managers in the Group. The share options give rights to buy shares in Hexagon Composites ASA at NOK 25 per share. The options could be exercised in part or in full following the official announcement of the financial results for the second quarter of 2018. The exercise period was extended to 14 December 2018. None of the options was exercised at these dates. 1 April 2016 Hexagon Composites ASA issued 925 000 call options to senior executives and managers in the Group at NOK 20 per share. The options may be exercised in part or in full within three weeks following the official announcement of the financial results for the fourth quarter of 2018, first quarter of 2019 or second quarter of 2019. The company decided to extend the exercise period and all these options are exercised in first quarter 2019. The options are exercised at weighted average share price of NOK 32.22. 5 April 2017 Hexagon Composites ASA issued 1,450,000 call options to senior executives and managers in the Group at NOK 27 per share. 7 September 2017 additional 190,000 call options were added to this program. The options may be exercised in part or in full within three weeks following the official announcement of the financial results for the fourth quarter of 2019, first quarter of 2020 or second quarter of 2020. 22 May 2018 Hexagon Composites ASA issued 1,200,000 call options to senior executives and managers in the Group at NOK 20,85 per share, provided that the share price on the date of exercise is minimum NOK 25.36 per share. The options may be exercised in part or in full within three weeks following the official announcement of the financial results for the fourth quarter of 2020, first quarter of 2021 or second quarter of 2021. 20 December 2018 Hexagon Composites ASA issued 100 000 Restricted Stock Units (RSUs) to certain employees of the Group. Subject to continued employment three years after date of grant, each employee will at such time receive such number of Hexagon shares as corresponds to the number of RSUs allocated. The fair value of the options, RSUs and PSUs was calculated on the grant date, based on the Black-Scholes model, and the cost is recognized over the service period. 12 April 2019 Hexagon Composites ASA decided to provisionally award up to 2 492 438 Performance Share Units ("PSUs") to executives. Of these, up to 2 422 476 PSUs are actually provisionally awarded. The PSUs are non-transferable and will vest on 11 February 2022 subject to satisfaction of the applicable vesting conditions. The actual number of PSUs to be allocated will depend on 2019 performance and attain minimum zero and maximum 2 492 438. Each vested PSU will give the holder the right to receive one share in the Company at an exercise price corresponding to the par value of the shares being NOK 0.10. 20 September 2019 Hexagon Composites ASA issued 49 994 Restricted Stock Units (RSUs) to certain employees of the Group. Subject to continued employment three years after date of grant, each employee will at such time receive such number of Hexagon shares as corresponds to the number of RSUs allocated. The fair value of the options, RSUs and PSUs was calculated on the grant date, based on the Black-Scholes model, and the cost is recognized over the service period. Cost associated with the share option, RSUs and PSUs scheme were NOK 19.0 million in 2019 and NOK 12,5 million in 2018. The unamortized fair value of all outstanding share options (2 705 000), RSUs (149 994) and PSUs (maximum 2 235 906) is estimated to NOK 37.9 million per 31 December 2019. There are no cash settlement obligations. The Group does not have a past practice of cash settlement for outstanding share options. 58 144 2019 AT A GLANCE FROM THE BOARD ROOM FINANCIAL STATEMENTS