Share Incentive Schemes

Oriflame offers a Share Incentive and Retention Plan covering Oriflame's executive management and approximately 70 additional senior employees. Each year, the individuals are invited by the board of directors to designate as Investment Shares under the Plan a number of Oriflame shares they either already own or will purchase at the current market price. In return, the participants will, within an Investment Period of normally three to five years, receive between 0 and 8 free shares (i.e. the Achievement Shares) per Investment Share. The number of Achievement Shares awarded depends on the increase in Oriflame's adjusted operating profit over the Investment Period. For each investment year, an award grid proposal is developed by the Remuneration Committee and ultimately resolved upon by the board of directors. The award grid is based on Oriflame's long-term strategic scenario and is set so that reaching the targets results in an award of 4 Achievement Shares per Investment Share. The number of Investment Shares offered is determined so that the potential dilution of the share Incentive and  Remuneration Plan never exceeds 1 per cent per year of the plan. In order to be eligible for any Achievement Shares, the participants need to i) remain employed by Oriflame throughout the Investment Period*, and ii) keep their Investment Shares for the entire Investment Period**. The historical pay-out under previous Share Incentive Plans issued on similar terms for the past five years is illustrated by the table below. The aggregated dilution over the past five years, resulting from the plans, amounts to a total of less than 1 per cent.

Historical outcome of Oriflame's Share Incentive Plans

historical outcome of oriflame share incentive plans

The fair value of services received in return for the achievement shares granted is measured by reference to the value of the investment shares, which is the market price at the time of investing, less forecasted dividends that are discounted at Euribor rate. In 2015, the total equity compensation cost recorded in Administrative Expenses is €3.5 million (€0.6 million income).

historical outcome of oriflame share incentive plan data

For further information, please see the separate Compensation Report as well as Note 23 of the Annual report.

* Employees who have been employed with Oriflame for more than 10 years are under certain conditions entitled to parts of their Achievement Share contributions even if their employment has ended.

** The Board of Directors can in exceptional cases decide to shorten such investment period.