To stimulate the realization of long-term company objectives and goals, Arcadis NV has put in place a Long-Term Incentive Plan.
Long-Term Incentive Plans
To stimulate the realization of long-term Company goals and objectives, Arcadis NV uses Long-Term Incentive Plans (LTIPs). Since 2014, securities under the LTIPs are solely granted in the form of Restricted Share Units (RSUs) and represent an equal number of ordinary shares, subject to meeting the applicable vesting conditions. The RSUs will be converted into ordinary shares on the vesting date, and are delivered as soon as practical thereafter.
RSUs are granted conditionally and depend on achieving/meeting certain conditions during the vesting period.
To prevent dilution, (a portion of) the shares required to meet the obligations from exercising LTIPs can be purchased by the Company (instead of issuing new shares), with due consideration to the Company’s balance sheet, in particular available freely distributable reserves and available cash. Alternatively, shares may be issued, whereby it is intended to limit this to 1% of the number of issued shares.
Arcadis NV 2005 and 2010 Long-Term Incentive Plans
Options and RSUs annually granted under these plans to members of the Executive Board and selected senior executives were conditional and had a vesting period of three years. Vesting was dependent on performance criteria set forth in advance. The granting of such options and RSUs took place each year on or about the second day after the Annual General Meeting of Shareholders, whereby the exercise price for the options matched the closing price of Arcadis NV shares on the day of the grant.
In 2013, the last awards under the 2010 plan were granted.
Arcadis NV 2014 Long-Term Incentive Plan
In 2014, the Supervisory Board approved the continuation of the Arcadis NV 2010 Long-Term Incentive Plan in the form of the Arcadis NV 2014 Long-Term Incentive Plan (“2014 LTIP”). The revised Plan was approved by the General Meeting of Shareholders in May 2014.
The 2014 LTIP provided for a maximum of 10,000,000 shares or options to be allocated during a five-year period, all of which could be granted as ‘qualified’ options in accordance with Section 422 of the United States Internal Revenue Code 1986. Such ‘qualified’ options could be granted only to employees of the Company.
Options and shares granted were conditional in nature and depended, amongst others, on attaining a performance measure after three years. The performance measure is Total Shareholder Return (TSR), defined as stock price appreciation plus dividend yield.
Only RSUs have been granted under the 2014 LTIP.
Under this plan each year a three-year cycle began, whereby achievements were measured at the end of the vesting date against a peer group of companies of comparable size and breadth. Arcadis’ position in the peer group determined whether the RSUs granted earlier become unconditional.
Arcadis NV 2019 Long-Term Incentive Plan
In April 2019, the Arcadis NV 2019 Long-Term Incentive Plan was approved by the Annual General Meeting of Shareholders. Based on this plan the Company can grant equity-settled and cash-settled awards to eligible employees. Conditional performance shares granted to Executive Board members must be held for two more years after vesting. The 2019 LTIP provides for a maximum of 5,000,000 shares to be allocated during a five-year period.
Awards granted under the 2019 LTIP are subject to the condition of continued employment of the participant during the vesting period and may be subject to the achievement of performance conditions or other conditions.