50 Share-based Payments

Management Board

Under the long-term incentive plan (LTIP), the former Management Board members were granted a total of 931,030 notional shares (SARs = stock appreciation rights) in 2013. These were paid out in five annual tranches with a cliff vesting of 20% per calendar year of the total number of notional shares granted. In 2018, the last annual tranche was paid out to Rolf Buch, resulting in income pursuant to IFRS 2 of € 0.2 million (2017: € 2.5 million).

As part of the new LTIP plan, the Management Board members are granted annually on a fixed number of phantom stocks (performance share units or “PSU”), which are paid out at the end of a four-year performance period based on the extent to which a pre-defined target achievement level has been reached. The level of target achievement that determines the payout amount under the new LTIP plan is calculated based on the following parameters: Relative Total Shareholder Return (RTSR), Performance of NAV per Share, Performance of FFO I per Share and the Customer Satisfaction Index (CSI), which are all assigned an equal weighting of 25%. As a result, this new LTIP plan constitutes a form of cash-settled share-based payment pursuant to IFRS 2; in turn, the payout claim can be lost entirely if the defined target achievement level has not been reached.

The value of the total notional shares that had been granted but not paid out from the new LTIP plan as of December 31, 2018, was calculated by an external expert based on recognized actuarial principles. The obligation disclosed as of the reporting date breaks down as follows:

The LTIP plan program resulted in expenses pursuant to IFRS 2 totaling € 5.9 million in the 2018 reporting year (2017: € 8.0 million), with € 2.1 million attributable to Rolf Buch, € 1.2 million to Klaus Freiberg, € 0.1 million to both Helene von Roeder and Daniel Riedl, € 1.0 million to both Dr. A. Stefan Kirsten and Gerald Klinck and € 0.4 million to Thomas Zinnöcker.

For further information, please refer to the remuneration report.

Executives Below Management Board Level

In 2014, Vonovia resolved a virtual share program (LTIP) for executives at the highest level of management below the Management Board with effect from January 1, 2014. Notional shares were granted under this LTIP, subject to a waiting period of three calendar years, for the last time on January 1, 2015. The last tranche was paid out in 2018, with expenses of k € 19 being incurred for the last time in 2018 (2017: € 0.5 million).

In 2016, a new LTIP plan was launched for the first level of management, replacing the LTIP that was launched in 2014, to bring the targets for the Management Board and other employees in management positions below Management Board level even closer into line with shareholder interests.

The LTIP plan is based largely on the LTIP launched for the Management Board in 2015, also regarding the identical performance objectives and the calculation of the objective values with regard to the minimum value, the “target achievement value,” and the maximum value.

The value of the total notional shares that had been granted but not paid out from the new LTIP plan as of December 31, 2018, was calculated by an external expert based on recognized actuarial principles. The obligation disclosed as of the reporting date breaks down as follows:

The LTIP plan program results, in accordance with IFRS, in expenses of € 1.5 million in the 2018 reporting year (2017: € 1.0 million).

Employees

An employee share program was resolved on the basis of a works agreement in 2014. The program started in the first quarter of 2015 and the shares granted are subject to a vesting period of six months. The costs associated with the securities deposit account are borne by Vonovia. Shares with a value of between € 90.00 and € 360.00 at the most are granted to the eligible employees, depending on their gross annual salary, without the employees having to make any contribution of their own.

The new employee share program resulted in expenses totaling € 1.8 million in the 2018 reporting year (2017: € 1.5 million), which have been offset directly against the capital reserves.