TIDMASC
RNS Number : 5285D
ASOS PLC
30 April 2013
30 April 2013
ASOS plc (the "Company")
ASOS Long Term Incentive Plan ("ALTIP")
Background
The Company's 2012 Annual Report and the Report and Accounts for
the five months ended 31 August 2012 stated that the Company would
establish a new long-term incentive plan for Executive Directors
and Senior Management (the "ALTIP"). The Company is pleased to
announce that, following consultation with some of its major
shareholders, the implementation of the ALTIP has now been
finalised.
The purpose of the ALTIP is to support the published strategy
and business plan for the next three years by incentivising and
retaining the wider ASOS senior management team. This team
comprises a larger pool of participants when compared with the
previous Management Incentive Plan, to reflect the strengthening of
the management capabilities across all areas of the ASOS business
over the last three years. The ALTIP has a performance period from
1 September 2012 to 31 August 2015 (the "Performance Period") and
is measured on challenging earnings per share ("EPS") and total
shareholder return ("TSR") targets which are aligned to the
strategic plans of the Company and designed to ensure growth is
delivered in a profitable way.
Structure of the ALTIP
Under the terms of the ALTIP, awards will be structured in one
or both of two ways.
The structure used depends upon whether the participants in the
ALTIP make an investment equivalent to the tax fair value of all or
part of their respective awards.
Executive Directors are required to make a minimum investment of
their own money of at least one third of the tax fair value of
their award. Senior Management participants are invited to invest
at their choosing, with a required minimum investment of one third
of the tax fair value of their awards. All participants also have
the opportunity to voluntarily increase the value of their
investment up to 100% of the tax fair value of their award.
This upfront investment by the ALTIP participants is designed to
strengthen the link between their personal interests and those of
the Company and its shareholders, providing a strong incentive to
achieve the plan's performance targets. In return, for that part of
their award for which an investment is made, Capital Gains Tax (and
potentially Entrepreneur's Relief) should be payable by a
participant on any gain made at vesting, as the invested award is
purchased at the tax fair value. However, these investments will be
forfeited if the performance conditions of the ALTIP are not
met.
The proportion of any participant's award that is not covered by
an upfront investment will be granted as conventional nil-cost
options ("Option Scheme awards"). Should a member of Senior
Management choose not to make the minimum investment of one third
of the tax fair value of their award, the base value of their award
will be reduced by 25%, to recognise the significantly lower risk
profile, whilst still providing a market-competitive award
value.
At the end of the three year Performance Period on 31 August
2015, awards under the ALTIP will vest, subject to the achievement
of the performance conditions (which are set out in more detail
below), in two tranches: Option Scheme awards will vest on 31
October 2015 up to a maximum value of 50% of a participant's total
award; and the investment, together with any remaining Option
Scheme award, on 31 October 2016.
The base value of each participant's award will be calculated as
a set multiple of salary (as at 1 September 2012, or on joining, if
later) and there is a maximum benefit restriction imposed on each
participant.
Given that maximum benefit restriction, the Company expects the
maximum dilution to existing shareholders to be approximately 1.3
million Ordinary Shares (or c.1.5% of issued share capital as at 31
March 2013).
Performance targets
The extent to which an award will vest will depend on
interdependent EPS and relative TSR performance targets, measured
over the performance period from 1 September 2012 to 31 August
2015. While the performance targets will be tested separately, both
hurdles must be achieved for the awards to vest.
There are three performance levels under the EPS performance
target. The 'threshold' performance level, which delivers a 6.7%
maximum vesting (subject to any scale back as a result of the TSR
performance), will not be met unless the compound rate of growth in
fully-diluted underlying EPS (before exceptional items, but after
the cost of the ALTIP) equals 17% per annum over the three years
ending 31 August 2015. This equates to fully-diluted EPS for the
year to 31 August 2015 of 63.4p per share and implies sales of
GBP0.9bn.
The 'target' performance level, which delivers a 70% maximum
vesting (subject to any scale back as a result of the TSR
performance), will not be met unless the compound rate of growth in
fully-diluted underlying EPS (before exceptional items, but after
the cost of the ALTIP) equals 23% per annum over the same period.
This equates to fully-diluted EPS for the year to 31 August 2015 of
73.7p per share and implies sales of GBP1.0bn, providing direct
alignment with our previously communicated strategy.
The 'stretch' performance threshold, which delivers a 100%
maximum vesting (subject to any scale back as a result of the TSR
performance), will not be met unless the compound rate of growth in
fully-diluted underlying EPS (before exceptional items, but after
the cost of the ALTIP) equals or exceeds 32% per annum over the
same period. This equates to fully-diluted EPS for the year to 31
August 2015 of 91.1p per share and implies sales of GBP1.3bn.
The TSR performance condition requires the comparison of TSR on
an investment in ASOS with TSR on a notional investment in a
comparator group during the Performance Period. The comparator
group comprises all of the companies in the FTSE All Share General
Retailers Index, as constituted at the commencement of the
Performance Period, plus Mulberry plc. The TSR performance will be
applied to the outturn from the EPS performance condition and may
scale back (potentially to zero) whatever would have vested solely
under the EPS condition. There will no scale back to the EPS
outturn if the TSR of ASOS is at the upper quartile or above. The
award will be scaled back progressively in the event that the TSR
of ASOS is below upper quartile, such that there will be a scale
back of up to one third if ASOS's TSR is at median. There will be
zero vesting if ASOS's TSR is below median.
Other incentive awards
Whilst participants of the ALTIP will not receive any awards
under the Company's existing Performance Share Plan ("PSP") during
the performance period of the ALTIP, the Company will ensure that
all other employees are able to share in the continued success of
ASOS by continuing to make grants under the PSP and Share Incentive
plan ("SIP"), which offers a grant of free shares to all eligible
employees.
Share ownership guidelines
To align further the interests of Executive Directors with those
of the Company's shareholders, the ALTIP is also intended to be a
mechanism to encourage Executive Directors to build and maintain a
significant shareholding in the business. Accordingly shareholding
guidelines have been introduced requiring Executive Directors to
retain 50% of any shares acquired on vesting of the ALTIP and any
subsequent share awards thereafter (net of tax) until the following
shareholdings are achieved:
-- CEO: 5 x salary
-- Executive Directors: 2 x salary
For further information:
ASOS plc
Nick Robertson, Chief Executive Officer Tel: 020 7756 1000
Nick Beighton, Chief Finance Officer
Greg Feehely, Head of Investor Relations
College Hill
Matthew Smallwood/Justine Warren/Jamie Ramsay Tel: 020 7457 2020
JPMorgan Cazenove
Luke Bordewich / Gina Gibson Tel: 020 7742 4000
Numis Securities
Alex Ham Tel: 020 7260 1000
This information is provided by RNS
The company news service from the London Stock Exchange
END
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