Share-based incentive programmes

In order to promote the long-term conduct and to strengthen the community of interest between employees and shareholders, NORDEN uses share-based incentive programmes such as employee shares and share options.

 

In January 2008, NORDEN granted employee shares to the employees, just as the Company did in December 2005 and February 2007. All employees with at least one year’s seniority received 53 shares each, totalling 11,713 shares with a market value of USD 0.9 million. The shares were taken from NORDEN’s portfolio of treasury shares. This will also be the case for future grants.

 

At 10 March 2008, the Board of Directors furthermore granted share options to 50 employees. As in previous instances, the programme equals 1% of the share capital. Also as previously, the exercise price will be determined as a five-day average of the market price after the grant with the deduction of all dividend payments and the addition of an effective rate of interest of 8% p.a. until the exercise date, which means that the employees will only profit once the shareholders have received a return. A new requirement, however, is that the 11 top executives upon exercise of the options must reinvest 25% of any net gain in NORDEN shares and keep these for two years. In this way, the programme not only has an up-side, but also retains a stronger long-term community of interest between executives and shareholders.

 

The options are distributed with 72,400 to the President, Carsten Mortensen, 43,180 to Executive Vice President Ivar Hansson Myklebust, 39,980 to Senior Vice President Jacob Meldgaard, 143,320 to the eight other top executives and 147,180 to the 39 remaining key employees. The option grant is based on the salaries of the employees in question, weighted according to various allocation keys, depending on the seniority of the employees. The theoretical market value of the options has been calculated at USD 7.9 million according to the Black-Scholes model, provided that all options are granted and exercised at the earliest opportunity. The calculation is based on a two-year volatility of 42.3% (source: Bloomberg); an annual dividend of DKK 35 per share; a risk-free interest rate of 3.7% and a USD/DKK exchange rate of 511.