The Group's incentive programmes for management and staff build on value creation within the Group and include share options, rights to purchase conditional shares, employee shares and cash bonuses.
The Group's incentive programmes are based on value creation in the organisation. Incentive payments reflect individual performance and also depend on financial results, customer development and other measures of value creation.
Share-based payment
The Group offers senior managers and selected employees incentive programmes that consist of share options and conditional shares. Incentive payments reflect individual performance and also depend on financial results and other measures of value creation. Moreover, employee shares are allotted by the discretionary decision of the Board of Directors, which is based on the financial results over several years and other factors.
Issued options carry a right to buy Danske Bank shares that can be exercised between three and seven years after they are allotted subject to continued employment with the Group. The strike price of the options is computed as the average price of Danske Bank shares for 20 stock exchange days after the release of the Annual Report plus 10%.
Rights to buy Danske Bank shares under the conditional share programme are allotted as a portion of the annual bonus earned. The shares become available after three years subject to continued employment.
Employee shares
In view of the excellent financial results achieved in 2004 and 2005, shares of a total amount of Dkr 228m were allotted to the employees in March 2005 (DKr 110m) and March 2006 (DKr 118m) respectively.
The shares must be held in custody for a period of seven years and will thereafter be at the disposal of the employees. The employee share programme takes into account of both financial and customer targets.
On the basis of developments over several years and at its discretion, the Group considers offering employee shares.
2007
The total number of share options for the 2006 accounting year, which were allotted in 2007, was 2,497,200, including 185,500 allotted to Executive Board members. The strike price was fixed at DKr294.1. The market value of the share options was DKr75m, and the amount is recognised over a period of three years. Moreover, the Group allotted 549,806 rights to purchase conditional shares, including 21,052 allotted to members of the Executive Board. The market value of these conditional shares was expensed in 2006 as part of the bonus awards for the year.
From April 1, 2007, Group employees in Denmark were permitted to buy Danske Bank shares through a voluntary reduction in the gross salary of the individual employee and an annual contribution from the Group of up to DKr5,000 per employee. The programme will run for three years. For 2007, the Group's expenses for this programme are expected to amount to DKr45m. More than 90% of the Group's Danish employees joined the share purchase programme.
Last updated on May 5, 2008