To stimulate the realization of long-term company objectives and goals, Arcadis NV has put in place a Long-Term Incentive Plan, and Stichting Lovinklaan, together with Arcadis NV, has put in place a Share Purchase 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.
Arcadis NV 2005 and 2010 Long-Term Incentive Plans
Options and RSUs annually granted 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 provides for a maximum of 10,000,000 shares or options to be allocated during a five-year period, all of which may be granted as ‘qualified’ options in accordance
with Section 422 of the United States Internal Revenue Code 1986. Such ‘qualified’ options may be granted only to employees of the Company.
Options and shares granted are conditional in nature and depend on, amongst others, attaining a performance measure after three years. The performance measure is Total Shareholder Return (TSR), defined as stock price appreciation plus dividend yield.
To date only RSUs have been granted under the 2014 LTIP.
Each year, a three-year cycle begins, whereby achievements are 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 determines whether the options and RSUs granted earlier become unconditional.
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 2010 Employee Share Purchase Plan
In 2002, following the shareholders meeting, the Executive Board together with the Lovinklaan Foundation, established an Employee Share Purchase Plan that allows employees to periodically purchase shares in the Company at a previously set discount. This plan has since been implemented in a number of countries in which Arcadis is located.
In 2010, the General Meeting approved the Arcadis N.V. 2010 Employee Share Purchase Plan (the “Plan”) which allows employees of Arcadis N.V. and its participating subsidiaries to periodically purchase Arcadis N.V. shares at a previously set discount. The Plan has been implemented in a number of countries in which Arcadis operates and, where necessary or appropriate (such as the United States), sub-plans of the Plan have been established to comply with local (fiscal) regulations.
The shares to be acquired under the Plan, as well as the provided discount, are made available by the Lovinklaan Foundation. The Plan therefore does not involve the purchase of company shares or the issue of shares by Arcadis N.V. The Lovinklaan Foundation is a shareholder of Arcadis N.V. and currently holds an equity interest amounting to approximately 17%. The Lovinklaan Foundation absorbs the Plan’s operating costs.
The purpose of the Plan is to promote share ownership in Arcadis N.V. among employees. Unless earlier terminated, the Plan will expire on 31 December 2020.
In 2017, the General Meeting approved a revision to the Plan to increase the number of Arcadis N.V. shares to be made available by Lovinklaan Foundation under the Plan (and sub-plans) from 3 million to 4.5 million to avoid running out of shares before 2020.
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