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Note 30. Share-based payment
Share-based compensation plan
Kesko operates two share-based compensation plans, the 2011−2013 plan and the 2014−2016 plan, decided by the Company's Board of Directors and intended for members of the Group's management and selected other key persons. Under both plans, a total maximum of 600,000 own B shares held by the Company as treasury shares can be granted within a period of three years.
Both of the share-based compensation plans have three vesting periods, namely the calendar years 2011, 2012 and 2013, and 2014, 2015 and 2016 respectively. Kesko's Board of Directors decides the vesting criteria, the target group and the maximum amounts of the share award separately for each vesting period based on the Remuneration Committee's proposal. At the beginning of the year following the vesting period, Kesko's Board of Directors determines the final amounts of Kesko B shares to be granted based on the fulfilment of the vesting criteria. The criteria for the vesting periods 2011, 2012, 2013, 2014 and 2015 were, with equal weightings, the growth percentage of Kesko Group's sales exclusive of tax, Kesko's basic earnings per share (EPS) excluding non-recurring items, and the percentage by which the total shareholder return of a Kesko B share exceeds the OMX Helsinki Benchmark Cap GI index.
The award possibly paid for a vesting period is paid in Kesko B shares. In addition, a cash component equalling at maximum the value of the shares, is paid to cover the taxes and tax-like charges incurred under the award.
A commitment period of three calendar years following each vesting period is attached to the shares granted, during which the shares must not be pledged or transferred, but the other rights attached to the shares remain in force. If a person's employment or service relationship terminates prior to the expiry of a commitment period, he/she must, as a rule, return the shares under transfer restriction to Kesko or its designate for no consideration. In individual cases, the Board may decide that the grantee can keep the shares under the return obligation, or some of them. If the grantee retires in the commitment period, he/she is entitled to keep the shares and other securities already received.
Based on the 2014 vesting period, 120,022 shares were assigned during the financial year ended 31 December 2015. Based on the 2013 vesting period, 50,520 shares were assigned during the financial year ended 31 December 2014. Based on the 2012 vesting period, 66,331 shares were assigned during the financial year ended 31 December 2013. Based on the 2011 vesting period, 92,751 shares were assigned during the financial year ended 31 December 2012.
The assumptions used in accounting for the share-based compensation plan are presented in the following tables.
Share award grant dates and fair values, vesting period 2011
Grant dates 16 Feb. 2011 27 Apr. 2011 16 May 2011
Grant date fair value of share award, € 31.70 32.25 32.20
Share price at grant date, € 32.40 32.25 32.20
Share-based compensation plan duration
Vesting period start date 1 Jan. 2011
Vesting period end date 31 Dec. 2011
Commitment period end date 31 Dec. 2014
Share award grant dates and fair values, vesting period 2012
Grant dates 2 Feb. 2012 20 Feb. 2012 22 Mar. 2012
Grant date fair value of share award, € 23.76 25.04 23.44
Share price at grant date, € 24.96 26.24 24.64
Share-based compensation plan duration
Vesting period start date 1 Jan. 2012
Vesting period end date 31 Dec. 2012
Commitment period end date 31 Dec. 2015
Share award grant dates and fair values, vesting period 2013
Grant dates 5 Feb. 2013
Grant date fair value of share award, € 23.30
Share price at grant date, € 24.50
Share-based compensation plan duration
Vesting period start date 1 Jan. 2013
Vesting period end date 31 Dec. 2013
Commitment period end date 31 Dec. 2016
Share award grant dates and fair values, vesting period 2014
Grant dates 3 Feb. 2014
Grant date fair value of share award, € 25.66
Share price at grant date, € 27.06
Share-based compensation plan duration
Vesting period start date 1 Jan. 2014
Vesting period end date 31 Dec. 2014
Commitment period end date 31 Dec. 2017
Share award grant dates and fair values, vesting period 2015
Grant dates 9 Feb. 2015
Grant date fair value of share award, € 30.74
Share price at grant date, € 32.24
Share-based compensation plan duration
Vesting period start date 1 Jan. 2015
Vesting period end date 31 Dec. 2015
Commitment period end date 31 Dec. 2018
Assumptions applied in determining the fair value of share award Vesting period
2015
Vesting period
2014
Vesting period
2013
Vesting period
2012
Vesting period
2011
Number of share awards granted, maximum, pcs 262,800 278,400 263,600 257,400 239,000
Changes in the number of shares granted, pcs -3,600 -2,000 -9,500 -6,575 -13,242
Actual amount of share award, pcs 120,022 50,520 66,331 92,751
Number of plan participants at end of financial year 142 143 134 125 114
Share price at balance sheet date, € 32.37 30.18 26.80 24.77 25.96
Assumed fulfilment of vesting criteria,% 33.3 43.4 20.0 30.0 53.3
Estimated number of share awards returned prior to the end of commitment period,% 5.0 5.0 5.0 5.0 5.0
The impact of the above share-based compensation plans on the Group's profit for 2015 was €-6.3 million (€-5.9 million).
As at 31 December 2015, the amount to be recognised as expense for the financial years 2016−2018 is estimated at a total of €3.9 million. The actual amount may differ from the estimate.