Philips 2011 Annual Report Download - page 102

10 Supervisory Board report 10.2.5 - 10.2.6
102 Annual Report 2011
Pay-out in 20121)
in euros
realized annual
incentive
as a % of base
salary (2011)
F.A. van Houten 2) 363,000 44.0%
R.H. Wirahadiraksa2) 148,500 33.0%
G.H.A. Dutiné 214,500 33.0%
P.A.J. Nota2) 148,500 33.0%
S.H Rusckowski 231,000 33.0%
1) Reference date for board membership is December 31, 2011
2) Period March 31 - December 31, 2011
10.2.6 Long-Term Incentive Plan
The LTIP consists of a mix of stock options and restricted
share rights. It aims to align the interests of the
participating employees with the shareholders’ interests
and to attract, motivate and retain participating
employees.
The stock option plan vests three years after grant,
dependent upon employment on the vesting date. The
exercise price is the share price upon grant, and the total
option term is 10 years.
A restricted share right is a right to receive a share,
subject to being employed with Philips on the vesting date.
Vesting occurs in three equal tranches 1, 2 and 3 years
respectively after grant. An additional 20% of the
restricted share rights grant is deferred, subject to the
condition that released shares are held for three years
after vesting, and employment with Philips is continued
during this period.
The actual number of stock options and restricted share
rights to be granted to the board members is
performance-related and depends on the ranking of
Philips in the Total Shareholder Return (TSR) peer group
and the realization of the team targets of the Board of
Management. The peer group comprises the following
companies: Electrolux, Emerson Electric, General
Electric, Hitachi, Honeywell International, Johnson &
Johnson, Matsushita, Philips, Schneider, Siemens, Toshiba
and 3M.
The TSR ranking is the basis for the two different
multipliers that apply to the grant of stock options and
restricted share rights. The multipliers are determined in
line with the table below.
TSR multiplier
Philips’ position ranking 1 2 3 4 5 6
restricted share rights 2.0 1.8 1.6 1.4 1.2 1.0
stock options 1.2 1.2 1.2 1.2 1.0 1.0
TSR multiplier
Philips’ position ranking 7 8 9 10 11 12
restricted share rights 1.0 0.8 0.6 0.4 0.2 0.0
stock options 1.0 1.0 0.8 0.8 0.8 0.8
Based on Philips’ share performance over the period
December 2007 - December 2010, Philips ranked 8th in its
peer group.
In 2011, members of the Board of Management were
granted 303,000 stock options and 80,808 restricted
share rights under the LTIP (excluding 20% premium
shares deferred for a three-year holding period).
The following tables provide an overview of stock option
grants made, but not yet vested (locked up), and of
restricted share rights granted but not yet released. The
reference date for board membership is December 31,
2011.