APC 2012 Annual Report Download - page 281

2792012 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC
ANNUAL AND EXTRAORDINARY SHAREHOLDERS’ MEETING
8
MANAGEMENT BOARD REPORT TO THE COMBINED ANNUAL AND EXTRAORDINARY SHAREHOLDERS’ MEETING
The purpose of these authorizations is to give the Board of Directors
the necessary fl exibility when it comes to selecting the type of
issues to be carried out, depending on demand and the conditions
prevailing in the French, foreign or international fi nancial markets.
Authorization granted to the Board of
Directors to allocate free shares to corporate
officers and employees of the Company and
its subsidiaries and affiliates, subject to
performance criteria, if appropriate
sixteenth resolution -
The Combined Annual and Extraordinary Shareholders’ Meeting
held on April 21, 2011 authorized the Management Board to grant
free shares to the employees and corporate offi ces of the Company
and its subsidiaries and affi liates, as defi ned in article L.225-197-2
of the French Commercial Code.
On the basis of this authorization, the Management Board:
•2,036,868shares under the 2012 long-term incentive plan (plans
13 to 13ter and 14 to 14ter ), awarded to 2,639 benefi ciaries. The
Board of Directors set 72,000shares as the number of shares
awarded to the two members of the Management Board;
•proposes that at the end of March 2013 and on the basis of the
authorization granted by the Supervisory Board of February20,
2013 a maximum of 2.59 million shares to be awarded to
approximately 2,800 benefi ciaries under the 2013 long-term
incentive plan. The Management Board, which traditionally put
in place long-term incentive plans in December for the following
year, has decided to postpone this implementation to the end of
March to allow for the alignment of the allocations with the annual
review of the personal situations of Group employees.
In accordance with the AFEP/MEDEF guidelines and the
commitments made by the Management Board during the
Shareholders’ Meeting of April 21, 2011, 100% of the shares
granted to members of the Executive Committee in the framework of
the long-term incentive plans were subject to performance criteria.
For other benefi ciaries, the performance criteria are on 50% of the
shares granted. Therefore, part of the shares may be cancelled. For
example, 100% of the shares subject to performance criteria of the
2008 long-term incentive plan 2008 and 3.2% of the shares subject
to performance criteria of the 2011 long-term incentive plan were
canceled due to the failure to meet these conditions.
The performance criteria are part of the objectives of the Company
program. For the last two long-term incentive plans in place, these
performance criteria are:
a) for the 2011 annual plan in December 2010:
•for 80% of the shares granted subject to performance criteria,
on average over the years 2011 and 2012, EBITAR excluding
the impact of acquisitions made after December 31, 2010,
consistent with the target margin of 13% to 16% of EBITA of the
One company program over a normal cycle of activity, as follows:
0% if the margin rate is ≤ 13.5%, 100% if the rate is ≥ 14.5%,
with a linear progression between the two points. The rate of
achievement of this goal was 100%, with an average EBITAR
excluding the impact of acquisitions over the years 2011 and
2012 of 14.6 %;
•20% of the shares granted subject to performance criteria, a
positive growth differential for Group revenues related to worldwide
GDP as part of the wider aim of the One business program of
average 2011-2012 organic growth equal to worldwide GDP
plus three points throughout the cycle, as follows:
0% if the growth in the Group’s revenue is less than 2 points
higher than global GDP, 100% if this increase is higher by at least
3 points, with a linear progression between the two points. The
rate of achievement of this goal was 84%, with average organic
growth over the 2011-2012 period, more than 2.2 points higher
than that of global GDP.
b) for the 2012 annual plan
•for 80% of the shares allotted under performance criteria, an
average level for 2012 and 2013 of adjusted EBITA operating
margin, at constant scope, as follows: 0% if the margin rate
is ≤ 12%, 100% if the rate is ≥ 13%, with a linear progression
between the two points. This range, defi ned in December 2011,
was chosen to refl ect the risk of the breakup of the euro zone,
which prevailed at that time;
•for 20% of the shares granted subject to performance criteria, an
objective of increasing the “Planet & Society Barometer”, which
measures the progress of the Group with regard to environmental
sustainability and social responsibility across 14 indicators (see
page 45 ) as follows: 0% if the index at the end of 2013 is ≤
4.5/10, 100% if the index is ≥ 4.5/10, with a linear progression
between the two points, where the level of the Planet & Society
Barometer was 3/10 and the objective of Connect is to bring it to
8/10 at the end of 2014.
Expectations for the 2013 annual plan are, as follows:
•for 80% of the shares allotted under performance criteria, the
average level for 2012 and 2013 of adjusted EBITA margin
objective will be, at constant scope, in the range from 13% to
17%, which is the Group’s objective through a normal cycle of
activity presented in early 2012 in the framework of the Connect
program;
•for 20% of the shares that granted subject to performance criteria,
an objective of increasing the “Planet & Society Barometer” at the
end of 2014 as follows: 0% if the index is ≤ 7/10, 100% if the
index is ≥ 8/10, with a linear progression between the two points,
where the level of the Planet & Society Barometer was 6.42/10 in
the 4th quarter of 2012.
In addition, subject to the achievement of the performance criteria,
the shares are vested in favor of their benefi ciaries at the end of a
period of more than two years, then a retention period of at least
two years or after a vesting period of four years with or without a
minimum holding period.
The authorization to grant bonus/performance shares expires in
2015. However, taking into account unallocated stock options and
the increase in the number of shareholders of performance shares,
it appears that the remaining amount of the authorization granted in
2011 (0.4% of capital) may be insuffi cient for implementation of the
2014 long-term incentive plan. In addition, we ask you to renew this
authorization forthwith subject to the following conditions:
•the total number of shares granted may not represent more than
1.8% of the Company’s issued capital;
•the annual number of shares granted to the Company’s senior
corporate offi cers (the CEO and the Executive Vice President in
charge of fi nance) pursuant to this authorization may not exceed
0.03% of the capital per year;
•the vesting period cannot be less than two years and the holding
period must also be at least two years. However, these periods
may be replaced with a minimum vesting period of four years,
with or without a holding period;
•100% of the shares granted to the Company’s senior corporate
offi cers and to members of the Executive Committee, in the
framework of the Group’s annual long-term incentive plans,