Valmet Oyj Introduces New Share-Based Incentive Plans
Valmet Oyj has made a strategic decision to establish a new long-term incentive plan aimed at key employees, enhancing their commitment to the company's long-term success. This initiative is not just about rewarding performance; it's about fostering a culture where leadership and talent can thrive.
Understanding the Performance Share Plan
The newly introduced Performance Share Plan (PSP) is designed for Valmet's executives and select key personnel. The core objective of the PSP is to align the interests of shareholders with those of key employees. By doing so, Valmet aims to boost its value over time while ensuring that these individuals are motivated to meet the company's strategic objectives.
Key Features of the Performance Share Plan
The Performance Share Plan will commence annually and will incorporate a three-year performance period. During this period, participants will earn shares based on their success in achieving set performance metrics. Each annual plan will have unique performance measures distinct to the specific goals for that term.
For the first plan covering 2025 to 2027, performance indicators include Comparables EBITA and organic growth of orders from established business lines such as Services, Automation Systems, and Flow Control. Additionally, the plan accounts for an Environmental, Social, and Governance (ESG) Index, reflecting Valmet's commitment to sustainability and climate initiatives.
Details of Participation and Rewards
This incentive plan is targeted at members of the Executive Team and around 200 other key staff members recognized for their critical roles. The potential share awards, expected to be distributed in spring 2028, will be calculated before applicable payroll taxes. Those leaving the company or their position prior to the payout will not be eligible for these rewards.
Overall, approximately 652,940 shares will be available under the PSP 2025-2027 plan, anticipating an estimated total expense of around EUR 16 million based on current share evaluations.
The Restricted Share Pool for 2025
In addition to the PSP, the Board has approved the Restricted Share Pool for 2025. This pool will allow for fixed-share allocations to carefully chosen employees to ensure their retention during crucial times. The pool will contain 100,000 shares, plus any shares that are unallocated from the PSP, pending Board approval.
The shares from the Restricted Pool will generally have a three-year holding period before being paid out, contingent upon meeting performance benchmarks related to Comparable EBITA and maintaining employment with Valmet until the payout occurs.
Commitment to Share Ownership
To further reinforce the alignment between executives and shareholders, both incentive plans recommend that members of Valmet's Executive Team should own shares equivalent to their annual gross salary. This requirement serves to encourage ongoing commitment to the company's success, demonstrating their belief in the company's future.
Share Buyback Authorization
On the same day, the Board also resolved to utilize the share buyback authorization granted at the latest Annual General Meeting. This buyback program will acquire shares to fulfill obligations stemming from both the LTI plans and the Restricted Pool. The program is expected to run from February 13, 2025, through March 7, 2025, with a total share purchase cap of 115,000 shares valued at approximately EUR 2.6 million.
The acquired shares will be purchased through public trading on Nasdaq Helsinki Ltd., thereby further enhancing shareholder value and reflecting confidence in the company's ongoing operations.
About Valmet Oyj
With a rich history of over 220 years, Valmet Oyj has established itself as a global leader in providing process technologies and automation for various industries, including pulp, paper, and energy. The company had net sales of approximately EUR 5.5 billion and serves a diverse global customer base through its extensive network of around 19,000 professionals dedicated to improving customer performance daily.
Frequently Asked Questions
What is the Performance Share Plan at Valmet?
The Performance Share Plan is a long-term incentive program aimed at aligning key employees' interests with those of shareholders, rewarding performance based on predefined metrics.
Who is eligible for the Performance Share Plan?
It targets members of the Executive Team and around 200 other key employees recognized for their impact on the company.
When will the rewards from the Performance Share Plan be distributed?
The potential share rewards will be paid out in spring 2028, subject to the achievement of performance targets during the plan period.
How many shares are included in the Restricted Share Pool?
The Restricted Share Pool for 2025 will include 100,000 shares alongside any shares unallocated from the Performance Share Plan.
What is the goal of the share buyback program?
The buyback program aims to acquire shares to fulfill obligations related to the long-term incentive plans and to enhance shareholder value.
