Share-based long-term incentive schemes
YIT has implemented a long-term share-based incentive scheme to support the company’s strategy of profitable growth and supplement the already available incentive schemes. The scheme aims at encouraging employees to engage in goal-oriented work, rewarding good performance and committing employees to long-term persistent work. Members of YIT’s Board of Directors are not included in the share-based incentive scheme.
Plan of 2010-2012
The first scheme consisted of three earnings periods, i.e. the calendar years 2010, 2011 and 2012. Shares were handed over in 2011, 2012 and 2013 based on the performance in the previous year. A total of approximately 700,000 net shares could be rewarded annually, of which a maximum of 20,000 net shares to the President and CEO. In the case of shares granted for 2010 and 2011, the commitment period has ended.
Plan of 2014-2016
The earnings periods of the 2014 – 2016 incentive scheme are the years 2014, 2015 and 2016. Any bonus will be determined on the basis of the indicators decided annually by YIT’s Board of Directors for each earnings period and their target levels. Return on investment is the key indicator in the scheme. An additional target related to the Group’s cash flow was set for 2014. The targets for 2015 were Return on investment and Net debt and for 2016 were return on investment and Earnings per share. YIT’s Board of Directors also decides on the approximately 200 key persons from different YIT countries to be included in the incentive scheme for each earnings period. The same employees are not automatically covered by the scheme during all earnings period. In the case of shares granted for 2016, the commitment period has ended.
Plan of 2017-2019
The earnings periods of the 2017–2019 incentive scheme are the calendar years 2017, 2018 and 2019. Any bonus will be determined on the basis of the indicators decided annually by YIT’s Board of Directors for each earnings period and their target levels. Return on investment is the key indicator in the scheme (2017: ROI, 2018: ROCE). An additional target related to the Group’s net promoter score (NPS) was set for 2017 and 2018. A maximum of 700,000 net shares from year 2017 and maximum of 1,150,000 net shares can be distributed annually.
In 2018, a maximum of 45,000 net shares can be distributed to the President and CEO and a maximum of 20,000 shares to the Deputy to the President and CEO and the other members of the Group Management Team. The shares to be granted are already held by YIT as a rule. There is a two-year commitment period associated with each earnings period, after which the shares are transferred to key persons still employed by YIT Group. YIT’s Board of Directors may, for justified reasons, decide to provide key employees with a monetary amount corresponding to the market price of the shares determined on the basis of the time of the transfer instead of the shares themselves. The employer will cover the taxes and tax-like fees charged to the key employees covered by the scheme in connection with the handing over of the shares. Under all circumstances, the Board has the right to amend the bonuses in a reasonable manner.
Plan of 2016 – 2018 (transferred from Lemminkäinen)
Those members of YIT’s Group Management Team who transferred from Lemminkäinen Corporation in connection with the merger on February 1, 2018, and who were previously covered by Lemminkäinen Group’s share-based incentive scheme, were paid share rewards for the 2016 earnings period. At the end of 2015, Lemminkäinen Corporation’s Board of Directors decided to introduce a new share-based incentive scheme for key personnel. The incentive scheme consisted of three earnings periods: the calendar years 2016, 2017 and 2018. At the beginning of each earnings period, the company’s Board of Directors decided on the scheme’s earning criteria, the targets set for them, the number of shares to be allocated and the participants. The potential reward for each earnings period is paid in four instalments, each of them corresponding to 25 per cent of the total reward. The payments are made during the four years following the earnings period. If a participant’s employment or service contract ends during the earnings or payment period, they will not, as a rule, be entitled to any unpaid rewards.
The reward is paid as a combination of shares and cash. The aim is that the cash portion will cover any taxes and tax-related costs arising from the reward. In 2016, the maximum share reward for the members of the Group Management Team was 12,500 gross shares.
Plan of 2020-2022
The Board of Directors of YIT Corporation decided on March 16, 2020, to launch a new long-term share-based incentive scheme for key persons.
The earning periods of the incentive scheme are for three years. A potential bonus will be determined on the basis of the indicators decided annually by the Board of Directors of YIT Corporation for each earning period and their target levels. Return on capital employed, absolute TSR (Total Shareholder Return) and the Group’s Net Promoter Score (NPS) have been set for 2020-2022. The Board of Directors also decides on the approximately 260 key persons from different YIT countries to be included in the incentive scheme for each earning period.
After the three-year earning period and the confirmation of the annual report, the shares are transferred to key persons employed by the company. A maximum of approximately 2,100,000 gross shares can be distributed each year. Furthermore, the Board of Directors recommends that the Group Management Team member aims to hold along with the long-term incentive program YIT shares with the value of half of his/her annual salary as long as he/she is the member of the Group Management Team. The President and CEO aims to hold YIT shares with the value equivalent to his annual salary. Under all circumstances, the Board of Directors has the right to amend the bonuses in a reasonable manner.