Long-term incentive plans, described below, are part of the Remuneration Policy adopted by the Group and described in the section “Incentive system” in the Report on Operations.
Plan beneficiaries are the Chief Executive Officer/General Manager of Enel and Group managers in the positions most directly responsible for company performance or considered to be of strategic interest. The plans provide for the award to the beneficiaries of a non-transferrable incentive consisting of an equity component (share-based payment transaction) and a monetary component (classified as another long-term employee benefit).
For more details on the accounting treatment of these plans, please see note 2.2 “Significant accounting policies”.
The following information describes the main characteristics of the share-based incentive plans adopted by Enel outstanding during 2020.
|Date of approval||Grant date||Performance period||Verification of achievement of targets||Payout|
|2019 LTI Plan||16.05.2019(1)||12.11.2019(2)||2019-2021||2021(3)||2022-2023|
|2020 LTI Plan||14.05.2020(4)||17/09/2020(5)||2020-2022||2022(6)||2023-2024|
(1) The date of the Enel Shareholders’ Meeting that approved the 2019 LTI Plan pursuant to Article 2359 of the Civil Code, granting the Board of Directors all powers necessary to implement the Plan.
(2) The date on which the Board of Directors approved the procedures and timing for granting the 2019 LTI Plan to the beneficiaries (taking account of the proposal issued by the Nomination and Compensation Committee at its meeting of November 11, 2019).
(3) On the occasion of the approval of the financial statements of Enel SpA at December 31, 2021, the Company will verify the level of achievement of the performance targets of the 2019 LTI Plan.
(4) The date of the Enel Shareholders’ Meeting that approved the 2020 LTI Plan pursuant to Article 2359 of the Civil Code, granting the Board of Directors all powers necessary to implement the Plan.
(5) The date on which the Board of Directors approved the procedures and timing for granting the 2020 LTI Plan to the beneficiaries (taking account of the proposal issued by the Nomination and Compensation Committee at its meeting of September 16, 2020).
(6) On the occasion of the approval of the financial statements of Enel SpA at December 31, 2022, the Company will verify the level of achievement of the performance targets of the 2020 LTI Plan.
The vesting of the incentive envisaged under these plans is subject to the condition that the beneficiaries remain employed with the Group during the vesting period (i.e. the service condition), with a small number of exceptions specifically governed by the Rules, and that they achieve specific performance conditions connected with the following three-year performance variables:
- Enel’s average TSR (Total Shareholder Return)(1)compared with the average TSR for the EURO STOXX Utilities - EMU for the three-year reference period (with a weight of 50%);
- cumulative consolidated ROACE (Return on Average Capital Employed) over the three-year reference period (with a weight of 25% in the 2020 LTI Plan and 40% in the 2019 LTI Plan);
- emissions of CO2 in grams per kWh equivalent produced by the Group in the last year of the three-year reference period(2) (with a weight of 10%);
- consolidated net installed renewables capacity as a percentage of total consolidated net installed capacity at the end of the last year of the three-year reference period (only in the 2020 LTI Plan; with a weight of 15%).
This incentive – determined, at the time of the award, as a base value calculated in relation to the fixed remuneration of the individual beneficiary – may vary depending on the degree of achievement of each of the three-year performance targets by the plans, ranging from zero up to a maximum of 280% or 180% of the base value in the case, respectively, of the Chief Executive Officer/General Manager or the other beneficiaries.
The plans establish that any bonus vested shall be represented by an equity component, which can be supplemented – depending on the level of achievement of the various targets – by a cash component. More specifically, the plans envisage that 100% of the base value for the Chief Executive Officer and General Manager and 50% of the base value for key management personnel will be paid in Enel shares previously acquired by the Company for the amount of the award that has effectively vested. This equity component represents a share-based payment transaction settled with equity instruments.
If the targets have been achieved, the disbursement of a significant portion of the equity and cash components of the vested incentive (70% of the total) is deferred to the second year following the three-year performance period covered by the plans, without prejudice to the beneficiaries’ right to request deferred payment of the entire incentive.
(1) If performance targets are achieved.
In implementation of the authorization granted by the Shareholders’ Meeting and in compliance with the relevant terms and conditions, the Board of Directors approved the launch of a share buyback programs to support the LTI Plans.
|Purchases authorized||Actual purchases|
|Number of shares||Total (euro)||Number of shares||Weighted average price (euros per share)||Total (euro)|
|2019 LTI Plan (1)||2,500,000||10,500,000||1,549,152(2)||6.7779||10,499,999|
|2020 LTI Plan (3)||1,720,000||1,720,000(4)||7.4366||12,790,870|
(1) On September 19, 2019 the Board of Directors approved the launch of a share buyback program to support the 2019 LTI Plan.
(2) Number of shares purchased in the period between September 23 and December 2, 2019 equivalent to approximately 0.015% of Enel’s share capital.
(3) On July 29, 2020 the Board of Directors approved the launch of a share buyback program to support the 2020 LTI Plan.
(4) Number of shares purchased in the period between September 3 and October 28, 2020 equivalent to approximately 0.017% of Enel’s share capital.
As a result of the purchases made to support the LTI Plans, at December 31, 2020 Enel holds a total of. 3,269,152 treasury shares, equal to approximately 0.032% of the share capital.
The following information concerns the equity instruments granted in 2019 and 2020.
|Number of shares granted||Fair value per share||Number of shares potentially available for award||Number of shares granted||Fair value per share||Number of shares potentially available for award|
|2019 LTI Plan||-||-||1,529,182||1,538,547||6.983||1,538,547|
|2020 LTI Plan||1,635,307||7.380||1,635,307||-||-||-|
The fair value of those equity instruments is measured on the basis of the market price of Enel shares at the grant date. (3)
The total costs recognized by the Group through profit or loss amounted to €5 million in 2020 (€0.3 million in 2019).
There have been no terminations or amendments involving either of the plans.
(1) Average Total Shareholder Return (TSR) of Enel and the EURO STOXX Utilities – EMU index is calculated for the three months preceding the start and end of the performance period in order to neutalize any market volatility.
(2) Emissions from generation by Group plants.
(3) For the 2019 LTI Plan, the grant date is November 12, 2019, i.e. the date of the meeting of the Board of Directors that approved the procedures and timing of the grant under the 2019 LTI Plan to the beneficiaries.
For the 2020 LTI Plan, the grant date is September 17, 2020, i.e. the date of the meeting of the Board of Directors that approved the procedures and timing of the grant under the 2020 LTI Plan to the beneficiaries.