105
Notes to the Consolidated Financial Statements (continued)
27. Share-based payments - Long-Term Variable Award
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Report of the
Report of the
Financial
Sustainability
Other
Introduction
Executive Board
Supervisory Board
Statements
Review
Information
Heineken N.V. Annual Report 2017
HEINEKEN has a performance-based share plan (Long-Term Variable award (LTV)) forthe Executive Board and senior management. Underthis
LTV plan, share rights are conditionally awarded to incumbents on an annual basis. The vesting of these rights is subject to the performance of
Heineken NV on specific internal performance conditions and continued service over a three-year period.
The performance conditions for LTV 2015-2017, LTV 2016-2018 and LTV 201 7-2019 are the same for the Executive Board and senior
management and comprise solely of internal financial measures, being Organic Revenue Growth, Organic operating profit (as of LTV 2017-2019.
LTV 2015-2017 and 2016-2018 are on Organic EBIT beia growth), Earnings Per Share (EPS) beia growth and Free Operating Cash Flow.
At target performance, 100% of the awarded share rights vest. At threshold performance, 50% of the awarded share rights vest. At maximum
performance, 200% of the awarded share rights vest forthe Executive Board as well as senior managers contracted by the US, Mexico, Brazil and
Singapore, and 175% vest for all other senior managers. As per LTIP 201 7-2019 the maximum performance is set at 200% for all senior managers.
The performance period forthe aforementioned plans are:
LTV Performance period start
Performance period end
2015-2017
2016-2018
2017-2019
1 January 2015
1 January 2016
1 January 2017
31 December 2017
31 December 2018
31 December 2019
The vesting date forthe Executive Board is shortly after the publication of the annual results of 201 7, 2018 and 2019 respectively and for senior
management on 1 April 2018, 2019 and 2020 respectively.
As HEINEKEN will withhold the tax related to vesting on behalf of the individual employees, the number of Heineken NV shares to be received will
be a net number. The share rights are not dividend-bearing during the performance period. The fair value has been adjusted for expected dividends
by applying a discount based on the dividend policy and historical dividend payouts, during the vesting period.
The number of share rights granted and share price at grant date are as follows:
Grant date/employees entitled
Number*
Based on share
price
Share rights granted to Executive Board in 2015
54,903
58.95
Share rights granted to senior management in 2015
534,298
58.95
Share rights granted to Executive Board in 2016
34,278
78.77
Share rights granted to senior management in 2016
398,850
78.77
Share rights granted to Executive Board in 2017
37,890
71.26
Share rights granted to senior management in 2017
472,116
71.26
*The number of shares is based on at target payout performance (100%).
Under the LTV 2014-2016, a total of 61,508 (gross) shares vested forthe Executive Board and 740,873 (gross) shares vested for senior
management. The number of shares vested forthe Executive Board only relates to Mr. Jean-Franqois van Boxmeer, as Ms. Laurence Debroux
received LTI as per LTIP 2015-201 7.
Based on the performance conditions, it is expected that approximately 689,495 shares of the LTV 2015-2017 will
management and the Executive Board.
vest in 2018 for senior
The number, as adjusted forthe expected performance forthe various awards, and weighted average share price per share underthe LTV of senior
management and Executive Board are as follows:
Weighted
average share
price 2017
Number of share
rights 2017
Weighted
average share
price 2016
Numberofshare
rights 2016
Outstanding as at 1 January
60.40
1,873,347
52.26
1,854,782
Granted during the year
71.26
510,006
78.77
433,128
Forfeited during the year
69.41
(55,103)
58.33
(121,026)
Vested during the year
49.08
(802,381)
50.47
(785,236)
Performance adjustment
740,773
491,699
Outstanding as at 31 December
69.54
2,266,642
60.40
1,873,347
Under the extraordinary share plans for senior management 1,489 shares were granted and 18,647 (gross) shares vested. These extraordinary
grants only have a service condition and vest between one and five years. The expenses relating to these additional grants are recognised in profit
or loss during the vesting period. Expenses recognised in 2017 are €1,0 million (2016: €1.3 million).
Matching shares, extraordinary shares and retention share awards granted to the Executive Board are disclosed in note 33.
