NOTES TO THE INCOME STATEMENT

4. Employee benefit expenses
2016 2015
Salaries and fees -254.8 -249.2
Share-based payments -0.0 -0.2
Pension expenses, defined contribution plans -28.6 -26.9
Pension expenses, defined benefit plans -1.7 -1.7
Total pension expenses -30.3 -28.6
Other social expenses -41.4 -41.3
Employee benefit expenses -326.6 -319.3
Managing directors and their deputies -4.0 -2.7
Members of the Board of Directors -0.3 -0.3
Management salaries, fees and benefits -4.3 -3.0
Average number of employees during financial year
Clerical employees 1 269 1 234
Workers 6 050 6 203
Total 7 319 7 437
Share-based payments
The Board of Directors of HKScan Corporation approved on 19 December 2012 a share based incentive plan, Performance Share Plan 2013, as a part of the incentive and commitment programme for the Group's key employees. The Plan includes three one-year performance periods, the calendar years 2013, 2014 and 2015, from which the key employees can earn HKScan series A shares based on achieving the set targets. The Board of Directors of the Company will decide on the performance criteria and their targets for a performance period at the beginning of each performance period. Furthermore, the Plan includes one three-year performance period, calendar years 2013–2015. The prerequisite for receiving reward on the basis of this performance period is that a key employee previously owns or acquires the Company´s series A shares up to the number determined by the Board of Directors.
The potential reward from the performance period 2015 will be based on the HKScan Group´s Earnings per Share (EPS) and Return on Capital Employed (ROCE).
The possible rewards from the performance 2015 will be paid in 2018 partly in the HKScan series A shares and partly in cash. The cash proportion is intended to cover taxes and tax-related costs arising from the rewards to the key personnel. In general, no reward will be paid, if the key employee's employment or service ends before reward payment.
From performance period 2013–2015 a total of 44 885 shares were delivered to 17 participants in spring 2016. In addition a cash portion was paid to cover taxes.
On 18 December 2015, HKScan announced that the Board of Directors had approved a share based incentive plan for the Group's key personnel for the year 2016. The new plan covers one performance period, year 2016. The potential reward from the performance period will be based on the HKScan Group´s Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) and Earnings per Share (EPS).
Rewards from the performance period will be paid partly in the Company’s A series shares and partly in cash as follows: 50 per cent pay-out in 2017 and 50 per cent pay out in 2018. The cash proportion is intended to cover taxes and tax-related costs arising from the rewards to the key personnel. No reward will be paid, if the key employee’s employment or service ends before reward payment.
The plan is directed to 37 people. The rewards to be paid on basis of the performance period are a maximum approximate total of 366 000 HKScan Corporation series A shares and cash payment corresponding to the value of such shares.
More specific information of the performance share plan grants are presented in the tables below.
Share based incentives during the reporting period 1 Jan. 2016 – 31 Dec. 2016
Plan LTI Bridge Plan 2016 Performance Share Plan 2013 TOTAL
Instrument Plan 2016–2018,
2017 delivery
Plan 2016–2018,
2018 delivery
Restricted Stock
2013–2015
Performance
Period 2015
TOT/WA
Initial amount, pcs 366 000 366 000 121 000 451 000 1 304 000
Initial allocation date 16 June 2016 16 June 2016 1 Feb. 2013 10 Feb. 2015 -
Vesting date / payment approximately 31 Aug. 2017 31 March 2018 30 Apr. 2016 30 Apr. 2018 -
Maximum contractual life, yrs 1.2 1.8 3.2 3.2 2.2
Remaining contractual life, yrs 0.7 1.3 - 1.3 1.2
Vesting conditions EBITDA (70%),
EPS (30%),
Employment
precondition
EPS (70%),
ROCE-% (30%),
Employment
precondition
Share purchase
and ownership
requirement,
Employment
precondition
EPS (70%),
ROCE-% (30%),
Employment
precondition
Number of persons at the end of the reporting year 28 28 - 20
Payment method Cash & Equity Cash & Equity Cash & Equity Cash & Equity
Changes during the period 2016 Plan 2016–2018,
2017 delivery
Plan 2016–2018,
2018 delivery
Restricted Stock
2013–2015
Performance
Period 2015
Total
1 Jan. 2016
Outstanding at the beginning of the reporting period, pcs 0 0 92 500 442 000 534 500
Changes during the period
Granted 273 000 273 000 0 0 546 000
Forfeited 12 000 12 000 0 20 268 32 268
Excercised 0 0 92 500 0 92 500
Expired 0 0 0 367 962 367 962
31 Dec. 2016
Outstanding at the end of the period 261 000 261 000 0 53 770 575 770
The pricing of the share based incentives granted during the period was determined by the following inputs and had the following effect:
Valuation parameters for instruments granted during period
Share price at grant, euros 3.10
Share price at reporting period end, euros 3.19
Maturity, years 1.5
Expected dividends (unless they are compensated), euros 0.00
Fair value at grant, euros 1 692 600
Fair value 31 Dec. 2016, euros 0
Effect of share-based incentives on the result and financial position during the period
Expenses for the financial year, share-based payments, euros 35 260
Expenses for the financial year, share-based payments, equity-settled, euros 24 646
Liabilities arising from share-based payments 31 Dec. 2016, euros 62 696