Kesko's share-based commitment and incentive plans for 2020-2023

Stock exchange release / 05.02.2020 09:40

Kesko Corporation's Board of Directors has decided that the target group for the 2020–2021 performance period of Kesko’s share-based commitment and incentive plan PSP (Performance Share Plan) will comprise approximately 50 key members of Kesko’s management. The Board of Directors has also decided to establish a new share-based commitment and incentive plan, the Key Personnel Share Plan (KPSP) for other Kesko key persons selected separately. The target group for the KPSP for the 2020 performance period comprises approximately 100 persons. The Board has also confirmed the criteria for 2020 for the PSP 2019-2022, PSP 2020-2023 and KPSP 2020. The Board has also decided to initiate a Restricted Share Pool (RSP) plan for 2020-2022.

Kesko’s share-based commitment and incentive scheme comprises three share-based plans. By the Board’s decision, the scheme established in 2017 is complemented with a new Key Personnel Share Plan (KPSP). The PSP and RSP plans, which have been part of the scheme since 2017, were first communicated in a stock exchange release on 2 February 2017. The Performance Share Plan (PSP) consists of individual annually commencing share plans, each with a two-year performance period and a two-year commitment period following the payment of the potential share award. The second performance-based plan is the new Key Personnel Share Plan (KPSP) first initiated in 2020. The KPSP is aimed at selected key persons at Kesko, and has a one-year performance period followed by a two-year commitment period. The complementary Restricted Share Pool (RSP) plan consists of annually commencing share plans. Each RSP plan has a three-year commitment period. Share awards based on all the plans are paid in Kesko B shares.

Kesko Corporation's Board of Directors has decided that the target group for the PSP 2020-2023 will comprise some 50 key members of Kesko’s management. The Board decided to set the development of Kesko Group's comparable tax free sales (%), Kesko Group's comparable return on capital employed (ROCE, %) and the absolute total shareholder return (TSR, %) of a Kesko B share as the performance criteria for the 2020 calendar year, matching the 2019 criteria. A maximum total of 202,325 Kesko B shares may be granted in relation to the PSP 2020-2023. This number of shares represents gross earnings, from which the applicable withholding tax is deducted and the remaining net amount is paid to the participants in shares.

Kesko Corporation's Board of Directors has decided that the target group for the Key Personnel Share Plan (KPSP) 2020 will comprise some 100 Kesko key persons specified separately. The KPSP has a one-year performance period, the criteria of which comprise indicators related to Kesko’s profitability and the profitability, growth and capital efficiency of the participant’s area of responsibility, and Kesko’s share performance. The one-year performance period is followed by a two-year commitment period, after which shares are paid to the recipients after the financial results release for the 2022 financial year, in March 2023 at the latest. A maximum total of 64,025 Kesko B shares may be granted in relation to the KPSP 2020. This number of shares represents gross earnings, from which the applicable withholding tax is deducted and the remaining net amount is paid to the participants in shares.

Kesko Corporation's Board of Directors has also decided on initiating a RSP plan for 2020-2022. The plan has a three-year commitment period, after which the potentially granted share awards for an individual plan will be paid to the participants in Kesko B shares, provided that their employment or service relationships with Kesko Group are in force at the time of payments. The purpose of the RSP plan is to serve as a complementary long-term share plan to be used as a commitment instrument for selected key persons in special situations. In addition to the above employment precondition, Kesko may set participant-specific or company-specific criteria, the fulfilment of which is a precondition for the payment of restricted share awards. The total maximum amount of share awards payable under the RSP 2020–2022 is 20,000 Kesko B shares. This number of shares represents gross earnings, from which the applicable withholding tax is deducted and the remaining net amount is paid to the participants in shares. Any potential share awards from the RSP beginning in 2020 will be paid out in the spring of 2023.

At its discretion, the Board may decide not to pay a share award or to recover an award that has already been paid, if the recipient has been found guilty of malpractice or an action in breach of Kesko’s ethical or responsibility principles or guidance that, as a whole, cannot be considered insignificant, or if there are weighty grounds for assuming that the recipient is guilty of such acts.

The amount of share award paid to a share plan participant on a single year must not exceed the maximum amount separately set by the Board of Directors.

Kesko applies a share ownership recommendation to the members of Kesko's Group Management Board. According to the recommendation, each Group Management Board member shall maintain a holding of at least fifty per cent of the net shares they have received under the Company's share-based compensation scheme until their holding of Kesko shares corresponds to at least their fixed gross annual salary.

Further information is available from Matti Mettälä, Executive Vice President, tel.
+358 105 322 200.