Management Board and Employee and Long-Term Incentive Plan
The Company has adopted various share plans (e.g. stock option plans, a restricted share plan and a performance share plan) and has entered into share agreements with the Management Board and various employees. Under the stock option plans, the Management Board and employees may purchase per the vesting date a specific number of shares of the Company’s common stock at a certain price. Options are priced at market value in euro or US dollars on the date of grant. Under the restricted share plan, employees receive per the vesting date a specific number of shares of the Company’s common stock. Under the performance share plan, the Management Board receives per the vesting date and provided the performance criteria have been met a specific number of shares of the Company’s common stock.
Authority to issue options and shares
By resolution of the Annual General Meeting (AGM) of May 21, 2015 the formal authority to issue options and shares was allocated to the Management Board subject to the approval of the Supervisory Board. This authority is valid for 18 months and needs to be refreshed by the 2016-AGM to allow the continued application of the Long-Term Incentive (LTI) plans beyond November 20, 2016.
The ASM International N.V. 2014 Long Term Incentive Plan for Employees (ELTI) is principally administered by the Management Board and the ASM International N.V. 2014 Long Term Incentive Plan for members of the Management Board (MLTI).is principally administered by the Supervisory Board. This complies with applicable corporate governance standards. However, the Supervisory Board has no power to represent the Company. For external purposes the Management Board remains the competent body under both LTI plans. The LTI plans envisage that the Supervisory Board, or – in the case of the ELTI – the Management Board with the approval of the Supervisory Board, will determine the number of options and shares to be granted to the Management Board members and to employees.
2011 Long-term Incentive Plan
In 2011 a Stock Option Plan was adopted. In this plan to limit potential dilution, the amount of outstanding (vested and non-vested) options granted to the Management Board and to other employees will not exceed 7.5% of the issued ordinary share capital of ASMI. The Stock Option Plan 2011 consists of two sub-plans: the ASMI Stock Option Plan for employees (ESOP) and the ASMI Stock Option for members of the Management Board (MSOP).
For employees and existing Management Board members the Grant Date for all options granted is December 31 of the relevant year. In each of these situations the three year Vesting Period starts at the Grant Date. The exercise price in euro of all options issued under the ESOP and the MSOP is determined on the basis of the market value of the ASMI shares at (i.e. immediately prior to) the Grant Date.
The exercise period is 4 years starting at the 3rd anniversary of the grant date.
The following table is a summary of changes in options outstanding under the 2011 and previous Long-term Incentive Plan:
|Number of options||Weighted average exercise price in €||Number of options||Weighted average exercise price in US$|
|Balance January 1, 2014||2,920,352||20.22||388,150||18.75|
|Balance December 31, 2014||2,703,336||20.49||86,225||21.18|
|Balance December 31, 2015||2,012,710||21.09||22,209||19.91|
The total intrinsic value of options exercised was €11,432 for the year ended December 31, 2015 (2014: €7,311). In 2015 treasury shares have been sold for the exercise of 627,427 options.
On December 31, 2015 options outstanding and options exercisable classified by range of exercise prices are:
|Options outstanding||Options exercisable|
|Range of exercise prices||Number outstanding||Weighted average remaining contractual life||Weighted average exercise price||Number exercisable||Weighted average exercise price|
|US dollar plans||In years||In US$||In US$|
|Euro plans||In years||In EUR||In EUR|
At December 31, 2015, the aggregate intrinsic value of all options outstanding and exercisable under these plans is €35,976 and €10,189.
Under these plans no more options to purchase shares can be issued. Under the various stock option plans a total of 2,034,919 options to purchase common stock were outstanding at December 31, 2015, expiring at various dates through 2020.
2014 Long-Term Incentive Plan
In 2014 a new Long-Term Incentive Plan was adopted. In the new plan to limit potential dilution, the amount of outstanding (vested and non-vested) options and shares granted to the Management Board and to other employees will not exceed 5% of the issued ordinary share capital of ASMI. The new Long-Term Incentive Plan 2014 consists of two sub-plans: ELTI and the MLTI.
Options and performance shares are issued to Management Board members and restricted shares are issued to employees once per annum on the date following the publication of the first quarter results of the relevant year. Possible grant to newly hired employees can be issued once a quarter, on the date following the publication of the financial results of the relevant quarter. The number of options and shares outstanding under the Long-Term Incentive plans or under any other plan or arrangement in aggregate may never exceed 5% of ASMI’s share capital. In accordance with the ASMI Remuneration Policy an exception is made for a transition period of four years, during which the dilution may exceed 5% but will not exceed 7.5%.
Performance and Restricted shares outstanding
The following table is a summary of changes in performance shares and restricted shares outstanding under the 2014 Long-term Incentive Plan.
|Number of performance shares||Number of restricted shares||Status||Fair value at grant date (weighted average)|
|Balance January 1, 2014||–||–|
|Balance December 31, 2014||–||10,215|
|Shares granted, employees||–||165,519||Unconditional||€43.79|
|Shares granted, Management Board||12,994||–||Conditional||€43.21|
|Balance December 31, 2015||12,994||166,337|
In 2015 treasury shares have been sold for the vesting of 3,173 restricted shares.
The following table is a summary of changes in options outstanding under the 2014 Long-term Incentive Plan.
|Number of options||Exercise price in €||Fair value at grant date|
|Balance January 1, 2015||–||–|
|Options granted, April 24, 2015||42,659||44.24||€17.33|
|Balance December 31, 2015||42,659|
The cost relating to stock options is measured at fair value on the grant date. The fair value was determined using the Black-Scholes option valuation model with the following weighted average assumptions:
|Expected life (years)||7|
|Risk free interest rate||2.27%|
|Fair value per grant date||€17.33|
The expected volatility measured at the standard deviation of continuously compounded share returns is based on statistical analysis of daily share prices over the last seven years.
At December 31, 2015, the aggregate intrinsic value of all options outstanding and exercisable under the 2014 Long-Term Incentive Plan is nil .
Share based payments expenses
The grant date fair value of the stock options, the restricted shares and the performance shares is expensed on a straight-line basis over the vesting period, based on the Company’s estimate of stock options, restricted shares and performance shares that will eventually vest. The impact of the true up of the estimates is recognized in the consolidated statement of profit or loss in the period in which the revision is determined. We recorded compensation expenses of €8,312 for 2015 (2014: €7,476). The compensation expenses for 2015 include a true up for a lower non-vesting assessment of €568.