Annual Report 2013

Other disclosures

(33) Share-based payment plans

Global Cash Performance Units Plan (Global CPU Plan) 2004–2012

Since the end of the Stock Incentive Plan in 2004, those eligible for that plan, the senior executive personnel of the Henkel Group (excluding members of the Management Board), have been part of the Global CPU Plan, which enables them to participate in any increase in the price of the Henkel preferred share. Cash Performance Units (CPUs) are awarded on the basis of the level of achievement of certain defined targets. They grant the beneficiary the right to receive a cash payment at a fixed point in time. The CPUs are granted on condition that the member of the Plan is employed for three years by Henkel AG & Co. KGaAKGaA
Abbreviation for “Kommanditgesellschaft auf Aktien.” A KGaA is a company with a legal identity (legal entity) in which at least one partner has unlimited liability with respect to the company’s creditors (personally liable partner), while the liability for such debts of the other partners participating in the share-based capital stock is limited to their share capital (limited shareholders).
or one of its subsidiaries in a position senior enough to qualify to participate and that he or she is not under notice during that period. This minimum period of employment pertains to the calendar year in which the CPUs are granted and the two subsequent calendar years.

The number of CPUs granted depends not only on the seniority of the officer, but also on the achievement of set target figures. For the cycles up 2012, these targets were operating profit (EBIT) and net income attributable to shareholders of Henkel AG & Co. KGaAKGaA
Abbreviation for “Kommanditgesellschaft auf Aktien.” A KGaA is a company with a legal identity (legal entity) in which at least one partner has unlimited liability with respect to the company’s creditors (personally liable partner), while the liability for such debts of the other partners participating in the share-based capital stock is limited to their share capital (limited shareholders).
. The value of a CPU in each case is the average price of the Henkel preferred share as quoted 20 stock exchange trading days after the Annual General Meeting following the performance performance period. An upper limit or cap is imposed in the event of extraordinary share price increases.

Global Long Term Incentive Plan (Global LTI Plan) 2013

In fiscal 2013, the general terms and conditions of the Global CPU Plan were amended and replaced by the Global LTI Plan 2013. Starting in 2013, CPUs are granted on condition that the member of the Plan is employed for four years by Henkel AG & Co. KGaAKGaA
Abbreviation for “Kommanditgesellschaft auf Aktien.” A KGaA is a company with a legal identity (legal entity) in which at least one partner has unlimited liability with respect to the company’s creditors (personally liable partner), while the liability for such debts of the other partners participating in the share-based capital stock is limited to their share capital (limited shareholders).
or one of its subsidiaries in a position senior enough to qualify to participate and that he or she is not under notice during that period. This minimum period of employment pertains to the calendar year in which the CPUs are granted and the three subsequent calendar years. In addition, an Outperformance Reward, which awards CPUs based on the achievement of target figures established in advance, may be set at the beginning of a four-year medium-term plan.

Due to the extension of the cycle, one tranche with a three-year term and another with a four-year term were issued in the reporting period. The number of CPUs granted depends not only on the seniority of the officer, but also on the achievement of set target figures. For the 2011 and 2012 cycles, the target is based on growth in adjusted earnings per preferred share. The value of a CPU in each case is the average price of the Henkel preferred share as quoted 20 stock exchange trading days after the Annual General Meeting following the performance period. The overall payout of the long-term incentive is subject to a cap.

The total value of CPUs granted to senior management personnel is remeasured at each year-end and treated as a payroll cost over the period in which the plan members provide their services to Henkel. The seventh cycle, which was issued in 2010, became due for payment in 2013. At December 31, 2013, the CPU Plan worldwide comprised 383,715 CPUs (previous year: 411,736 CPUs) from the eighth tranche issued in 2011 (expense: 10.2 million euros), 514,776 CPUs (previous year: 492,938 CPUs) from the ninth tranche issued in 2012 (expense: 13.7 million euros) and 1,099,475 CPUs from the tranches issued in the reporting year (expense: 25.6 million euros). The Outperformance Reward comprised 549,473 CPUs (expense: 11.0 million euros). This resulted in an additional expense in the reporting year of 60.5 million euros (previous year: 28.8 million euros). The corresponding provision amounted to 94.7 million euros (previous year: 57.2 million euros).

Cash Performance Units Program

Effective fiscal 2010, the compensation system for members of the Management Board changed. From 2010, they receive as a long-term incentive (LTI)long-term incentive (LTI)
Bonus aligned to long-term financial performance.
a variable cash payment related to the corporation’s long-term financial performance as measured by the future increase in earnings per preferred share (EPS), adjusted for exceptional items, over a period of three years (performance period – for details, please refer to the remuneration report here).