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ACAS plans

Plans for the Conditional Award of Shares to Employees and Stock Option Plan for 2013

At its meeting on September 26, 2013, Air Liquide’s Board of Directors adopted the stock option plan and the plans for the conditional award of shares to employees (ACAS plans) for 2013 aimed, in addition to incentive and profit sharing schemes, to associate employees more closely with the company’s performance. It also endeavoured to respond to the expectations of its shareholders, following the dialogue that began at the time of the last Annual Shareholders’ Meeting.

Within this framework, it pursued its policy of grant under consistent conditions and continued enlargement of the plans to include an increasing number of beneficiaries, notably including again this year inventors and innovators; the total number of beneficiaries within the scope of the 2013 plans has increased by 100, to 1,453 beneficiaries, representing 2.9% of the Group’s workforce.

2013 stock option plan

The Board granted stock options to subscribe for shares in the Company to a certain number of employees, to Executive Committee members and to the executive officers of the Company within the scope of a plan for 2013 providing for the following terms:

Length

The length of the plan is 10 years and includes a 4-year waiting period during which the stock options cannot be exercised.

Exercise price

The exercise price is €102 (corresponding to the average of the opening trading prices for the Air Liquide share during the twenty trading sessions prior to the date of the Board of Directors’ meeting, rounded down to the nearest euro).

Performance conditions/condition of continued employment

The stock options allocated may only be exercised if the Company meets certain performance conditions. These performance conditions are identical to those adopted in 2012. Thus, the number of stock options that may be exercised out of the total number of stock options granted under the 2013 plan will depend:

  • for 65%, on the rate of achievement of an objective, set by the Board, of growth in Group undiluted net earnings per share excluding foreign exchange impact and exceptional items (Recurring EPS) for the financial year 2015 as compared to Recurring EPS for the 2012 financial year; and
  • for 35%, on a target compound annual growth rate, set by the Board, defined as the average annual growth in TSR over financial years 2013, 2014 and 2015.

These performance conditions apply to the members of the Executive Management and Executive Committee members for 100% of the stock options granted to them, and to any other beneficiaries of more than 1,500 options, for 50% of the number of options allocated to them above such limit.

As regards EPS, the growth objective set takes account of the economic environment, historical growth and the Group’s medium-term ambitions. From the objective set, the grant decreases on a straight-line basis and no grant is made if there is zero growth in EPS.

For information purposes, over the last three years, the objective was extremely close to the rates of growth in EPS shown in the consolidated annual budgets presented to the Board of Directors.

With respect to Total Shareholder Return (TSR), the objective set is in line with past performance. From the objective set, the grant decreases on a straight-line basis, down to a lower limit which remains significantly higher than the historical Total Shareholder Return for the CAC 40 index with reinvested dividends (an annual average of 1.6% for the period 2009-2012. Source: Bloomberg). The Board has asked the Remuneration Committee to study the possibility of changing this criterion in future, to include in it a reference to a comparative analysis, to be determined. The Committee’s recommendations on this point will be discussed at the Board meeting before grants are made under the Stock Option Plan in 2014.

It was decided that the targets set for each performance condition will be made public ex post, at the end of the Board meeting determining the rate of achievement of the performance conditions at the time of adoption of the financial statements for the financial year concerned. The result achieved and the percentage of stock options/shares that vest will also be communicated.

Furthermore, a condition of continued employment in the Group at the time of exercise of the stock options is also defined, as was the case in 2012.

Beneficiaries

Executive officers

100,000 stock options and 57,000 stock options to subscribe for shares were granted to Benoît Potier and Pierre Dufour respectively within the scope of the 2013 Plan; the number of options has increased for the first time in 6 years for Benoît Potier and the first time in 4 years for Pierre Dufour; this represents in total 0.05% of the share capital.

For the executive officers, it should be noted that the total number of options granted in 2013 may not grant entitlement to a number of shares exceeding:

  • for all the executive officers combined, 0.1% of the share capital (it being specified that a sub-limit on grants specific to the executive officers of 0.3% of the capital for 38 months was set by the Annual Shareholders’ Meeting on May 7, 2013);
  • for each executive officer individually, on the basis of a valuation of the stock options in accordance with the IFRS standard, approximately the amount of the executive officer’s maximum gross annual remuneration for the same financial year.

In addition, the Board specifies that the executive officers are subject to an obligation to retain, until the end of their duties, a defined minimum quantity of shares resulting from each exercise of stock options, corresponding to 50% of the capital gain on acquisition. In addition, the executive officers are also subject to an obligation to hold a number of shares equivalent to twice the amount of fixed gross annual remuneration for the Chairman and Chief Executive Officer and to the amount of fixed gross annual remuneration for the Senior Executive Vice-President. At its meeting on September 26, 2013, the Board of Directors recorded that this holding obligation is complied with by each of the executive officers at July 1, 2013.

The Company’s corporate governance practices and all the components of the remuneration of the executive officers are set out in detail in Air Liquide’s 2012 Reference Document.

Other beneficiaries

The Board of Directors decided to enlarge the number of beneficiaries of stock options, which is thus increased from 672 to 727.

2013 Plan for the Conditional Award of Shares to Employees

The conditional awards of shares to employees were made within the scope of plans providing for the following terms:

Length

France Plan: the length of the vesting period has been increased to 3 years and is followed by a 2-year holding period;

World Plan: the 4-year vesting period is maintained, without any holding obligation.

Performance conditions/condition of continued employment

For both plans, the Board has adopted the criterion of growth in recurring EPS, now calculated over a period of 3 financial years, which decreases on a straight-line basis, identical to that defined for stock options (see above). This performance condition applies to all the conditional shares awarded to employees. Accordingly, the number of shares that shall finally vest for the employees who are beneficiaries of the Conditional Share Award – ACAS – Plan will depend on the rate of achievement of the growth target, set by the Board, in respect of recurring EPS for financial year 2015 as compared to recurring EPS for 2012.

The Plan also provides for a condition of continued employment which must be met at the end of the vesting period.

Beneficiaries

The Board of Directors decided not to include any of the Company’s executive officers or any member of the Executive Committee in the list of beneficiaries of the 2013 Pl an for the Conditional Award of Shares to Employees. It confirmed that if one day such an award appears to be appropriate, if applicable, it would be made within the scope of a plan providing for a 3-year vesting period and performance conditions also covering a 3-year period, identical to those provided for in respect of stock options.

It was decided to enlarge the number of beneficiaries of conditional share awards, which has thus increased from 1,022 to 1,077.