APC 2012 Annual Report Download - page 263

2012 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 261
GENERAL PRESENTATION OF SCHNEIDER ELECTRICSA
7
PERFORMANCE SHARES AND STOCK OPTION PLANS
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6. Performance shares and stock
option plans
Performance shares and stock option plans
Grant policy
As part of its overall staff pay policy, each year Schneider Electric
sets up a long-term incentive plan. This plan is based on an
annual allocation of performance shares. Stock options, until
December 2009, and, for employees who are US citizens or
residents, stock appreciation rights (SARs) have been granted .
Since December2009, stock options have no longer been granted
SARs continued to be granted to US citizens or residents. Phantom
shares which mirror performance share grants have also been
granted to certain benefi ciaries in emerging market countries in the
framework of the 2012 long-term incentive plan.
These plans are established by the Management Board, as
authorized by the Supervisory Board, which takes decisions based
on the report from the Remuneration, Appointments and Human
Resources Committee.
Benefi ciaries include members of Senior Management, top
managers of the Group in all countries, high-potential managers
and employees whose performance and potential were judged
exceptional.
Each year Schneider Electric increases the number of benefi ciaries
of the annual plan. There were 1,579benefi ciaries in the framework
of the 2010 long-term incentive plan, 2,360 in the framework of the
2011 long-term incentive plan, and 2,637 in the framework of the
2012 long-term incentive plan. In the framework of the 2013 long-
term incentive plan, there should be about 2,800benefi ciaries.
Allocations Excom members , including corporate offi cers,
represented 17% of the total in2006. This fi gure is projected to be
11% in the framework of the 2013 long-term incentive plan.
As a reminder, Schneider Electric’s practice since 2005 is to
implement, in December of each year, a long-term incentive plan in
the framework of the following year. However, to allow alignment of
allocations with a review of the personal situations of employees, it
was decided to postpone the implementation of long-term incentive
plans to the end of March.
Description of the shares allocated
The vesting and lock-up periods for performance shares allocations
to residents of France under plans 5 and 7 are three years and
two years respectively. The vesting and lock-up periods for stock
allocations made under plans8, 10, 10bis, 13, 13bis and13ter are
at least two years each.
The vesting period for share allocations made to residents of
countries other than France under plans6, 9 and 11, 11bis, 12, 14,
14bis and14ter is four years. There is no lock-up period.
Performance shares and phantom shares vest only if the
benefi ciary is a Group employee as of the vesting date and if certain
performance targets, detailed below, are met (see pages 265
and 279). Since January2009, for members of the Management
Board, and since December2011 for members of the Executive
Committee, allocations of performance shares are fully subject to
the achievement of performance conditions.
Description of the options allocated
The option exercise price is equal to the average closing price
of the twenty trading days prior to the date of allocation by the
Management Board. No discount is applied.
Since 2006, the options have a ten year life. They may not be
exercised until after the fourth year. However, they can be exercised
before maturity in the case of a takeover bid for the Company’s
shares. Exceptionally, options granted under plans22, 23 and25
may be exercised as from the fi rst year. Similarly, US citizens and
residents may exercise their rights following the third year under
certain plans.
Options may only be exercised by Group employees. In addition,
exercise of 50% of the options allocated is dependent on specifi c
targets being met, detailed below (see pages 263 and 280 ).
Effective from January2009, all of the options granted to members
of the Management Board are subject to performance criteria.
Description of Stock Appreciation Rights
(SARs)
SARs mirror the mechanism of options. They are subject to
conditions, particularly performance criteria. The benefi ciary
receives the proceeds in cash.