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Long Term Incentive Plan

 2nd Oct 2015

Plastics Capital has adopted a new Long Term Incentive Plan (“LTIP”) to run from FY2015-16 to FY2019-20, succeeding the FY2010-15 scheme which closed at the end of FY2014-15.  It applies to approximately 35 directors and senior managers at Group and subsidiary level (the “Participants”) with the objective of attracting, motivating and retaining key staff over the long term.  

Background

The Group's Remuneration Committee (the "Committee") has liaised with external advisers to create a management incentive scheme designed to reward the creation of value for shareholders through the successful implementation of the Company's long term strategy.  

The Group’s primary financial objective is to more than double EBITDA over the next five years.  The key principle of the new LTIP is to link any reward to the performance of the Company's share price over the long term.

Awards under the LTIP

The LTIP has been designed so that the Participants will only benefit if significant value is delivered to shareholders through share price accretion. 

The LTIP involves the issue of special classes of shares (known as "Growth Shares" - in total 1,113,334) in an intermediate group holding company that sits between the current trading subsidiaries and the parent, Plastics Capital plc.  The Growth Shares will be exchanged for a certain number of new ordinary shares in Plastics Capital plc ("Plastics Capital Shares") at the end of the LTIP five year period, based on the Company's share price at the end of this period, subject to financial performance and vesting criteria being met as described below.

In the case of most of the Participants, they will be giving up statutory employment rights in order to participate in the scheme under Employee Shareholder status (“ESS”), so providing tax advantages to those who give up such rights.

Performance Criteria

The performance period will run over the five financial years ending 31 March 2020.  For any of the Growth Shares to be exchanged for Plastics Capital Shares, the share price of Plastics Capital ordinary shares (“Ordinary Shares”) at the end of the period must exceed a "Hurdle".  This Hurdle is set at £1.50 per share, representing a premium to the closing middle market price of an Ordinary Share over the previous 30 business days of circa 40%.  The total value of the Growth Shares at the end of the five year performance period will equate to 20% of the increase in share price above the £1.50 hurdle, multiplied by the number of Ordinary Shares in issue at the commencement of the scheme (35,344,573).  The value received by the Growth Shares will however be capped so that shareholders cannot be diluted by more than 10% based on the number of shares in issue at the commencement of the scheme.  

The number of Growth Shares that each Participant receives at the end of the scheme will additionally depend on the financial performance of the subsidiary in which they are employed over the period FY2015-20, or in the case of Directors of Plastics Capital plc, on the financial performance of the Group as a whole.  

The Participants will not be participating in any other LTIPs or option schemes during the five year performance period of the financial years ending 31 March 2020.

Conditions

Subject to the usual good leaver provisions, half the Growth Share award will vest in September 2020 and the other half in September 2021, provided the Hurdle has been achieved and relevant performance conditions have been met.

Grant to Directors of Plastics Capital plc

On 1st October 2015, the following Directors were granted awards over Growth Shares under the LTIP.

Director

Position

Growth Share Award

Faisal Rahmatallah

Executive Chairman

175,667

Nicholas Ball

Finance Director

120,020

Keith Butler-Wheelhouse

Non-Executive Director

26,917

Andrew Walker

Non-Executive Director

26,917

Richard Vessey

Non-Executive Director

26,917

The Directors’ interests in Ordinary Shares remain unchanged following the above grants of Growth Shares.

Commenting, Faisal Rahmatallah, Chairman, said:

“Our target is to more than double EBITDA over the next five years; this is a target which will stretch our management resources.  Our new LTIP scheme is a powerful mechanism for attracting, retaining and motivating management talent; it also aligns management action with the generation of shareholder value over the long term.”

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