Executive Board long-term incentive plan 2007
Under the LTIP for the Executive Board, two instruments are used: stock options and performance shares. As mentioned earlier, an identical plan has been adopted by the Executive Board for the top senior managers across ING. As a result, approximately 7,000 senior leaders participate in a similar plan.
The target level for the 2007 LTIP was set at 100% of base salary for each Executive Board member. The final grant level depends on the Group STIP performance and will vary between 50% of the target level (if Group STI would be 0%) and 150% (if Group STI would be 200%).
As the Group STIP performance outcome over 2007 was 136%, the resulting LTIP award is 118% of target. The number of options and performance shares is determined based on a reference price set at the end of 2007 (EUR 26.79) and a ‘fair value’ calculation of options and performance shares (based on a pricing model).
The grant to the Executive Board members is subject to shareholder approval of the maximum number of stock options, performance shares and conditional share awards pursuant to the 2007 LTIP. The LTIP grant table shows the award amounts for each Executive Board member.
Tom McInerney will receive a conditional share award on the same grant date as the other long-term incentive awards. The conditional share award will be 100% vested four years after the grant date with the condition being an active employment contract at the date of vesting. This award is part of Tom McInerney’s employment contract to align his total remuneration with the market practice of senior executives in the United States. The LTIP grant table shows the number of the conditional shares.
The exercise price of the options will be fixed at the Euronext Amsterdam by NYSE Euronext opening price of the ING share on 15 May 2008. The performance shares are granted provisionally at the beginning of 2008; the final number will depend on the ranking within the performance peer group after the three-year period (2008 – 2010) based on the performance/payout scale as indicated above.
The performance shares granted in 2005 had a three-year performance period of 2005 – 2007 and will vest in 2008. The actual results of 71% are based upon ING’s TSR ranking of 13 within the designated peer group. The results were determined by an independent third party. ING’s external auditor has reviewed the calculations performed. For members of the Executive Board who received an award as an Executive Board member in 2005, such award will vest in the final number of performance shares in May 2008. For the other senior leaders who participated in the 2005 – 2008 performance share award, such award vested in March 2008.
Long-term incentives of the individual members of the Executive Board (1)
| fair market value at grant in thousands of euros | 2007 | 2006 | 2005 |
|---|---|---|---|
| Michel Tilmant | |||
| Number of options | 132,054 | 132,163 | 108,200 |
| Number of performance shares | 31,293 | 27,650 | 19,300 |
| Fair market value of long-term incentive(2) | 1,521 | 1,734 | 1,160 |
| Eric Boyer de la Giroday | |||
| Number of options | 87,066 | 87,138 | 71,400 |
| Number of performance shares | 20,632 | 18,230 | 12,800 |
| Fair market value of long-term incentive(2) | 1,003 | 1,143 | 765 |
| Dick Harryvan(3) | |||
| Number of options | 64,967 | 43,347 | |
| Number of performance shares | 15,396 | 9,069 | |
| Fair market value of long-term incentive(2) | 748 | 569 | |
| John Hele(4) | |||
| Number of options | 42,228 | ||
| Number of performance shares | 10,007 | ||
| Fair market value of long-term incentive(2) | 486 | ||
| Eli Leenaars | |||
| Number of options | 64,967 | 65,021 | 53,200 |
| Number of performance shares | 15,396 | 13,603 | 9,500 |
| Fair market value of long-term incentive(2) | 748 | 853 | 571 |
| Tom McInerney(3) (5) | |||
| Number of options | 96,875 | 70,695 | |
| Number of performance shares | 22,957 | 14,790 | |
| Number of conditional shares | 54,312 | 37,633 | |
| Fair market value of long-term incentive(2) | 2,571 | 2,201 | |
| Hans van der Noordaa(3) | |||
| Number of options | 64,967 | 43,347 | |
| Number of performance shares | 15,396 | 9,069 | |
| Fair market value of long-term incentive(2) | 748 | 569 | |
| Koos Timmermans(4) | |||
| Number of options | 43,312 | ||
| Number of performance shares | 10,264 | ||
| Fair market value of long-term incentive(2) | 499 | ||
| Jacques de Vaucleroy(3) | |||
| Number of options | 64,967 | 43,347 | |
| Number of performance shares | 15,396 | 9,069 | |
| Fair market value of long-term incentive(2) | 748 | 569 | |
| Cees Maas(6) | |||
| Number of options | 0 | 58,600 | |
| Number of performance shares | 0 | 10,500 | |
| Fair market value of long-term incentive | 938 | 628 |
(1) Long-term incentives are granted in the year following the reporting year. The long-term incentive plan provides for a combination of share options and provisional performance shares based on a 50/50 split in value. The ratio of options to performance shares varies each year as a result of the fair value calculation and the 50/50 split in value. The fair value calculation for the performance year 2007 resulted in a ratio of options to performance shares of 4.22 : 1 (2006: 4.78 : 1, 2005: 5.6 : 1). The maximum number of stock options and performance shares to be granted to the Executive Board members will be tabled for approval at the General Meeting of Shareholders.
(2) The fair market value of a long-term incentive award reflects the estimated fair market value of the long-term incentive award based on a fair value calculation. The valuation is calculated on the last trading day of the year for grants made to the Executive Board members for performance over the specified year and is not updated for current market values.
(3) Dick Harryvan, Tom McInerney, Hans van der Noordaa and Jacques de Vaucleroy were appointed to the Executive Board on 25 April 2006. The figures for these members reflect compensation earned in their capacity as Executive Board members.
(4) John Hele and Koos Timmermans were appointed to the Executive Board on 24 April 2007. The figures for these members reflect compensation earned in their capacity as Executive Board members.
(5) Tom McInerney will receive conditional shares on the same grant date as the other long-term incentive awards. The conditional shares will be 100% vested four years after the grant date with the condition being an active employment contract. The conditional shares are provided to align Tom McInerney’s total remuneration with US market practice.
(6) As a result of his retirement from the Executive Board in 2007, Cees Maas received the fair market value of his 2006 long-term incentive award in cash instead of options and performance shares.
The fair market value of long-term incentive awards of former members of the Executive Board who are not included in the above table amounted to nil in 2007 and 2006, and EUR 2,150 thousand in 2005.
