The Restricted Share Unit plan (RSU plan) and the Performance Share Unit plan (PSU plan), adopted at the annual shareholders’ meeting on 10 May 2011, are designed to enhance the long-term performance of the company and to retain key employees. Yearly grants under the RSU plan and the PSU plan are subject to the approval of the annual general meeting of shareholders. The two plans are intended to complete ArcelorMittal’s existing programme of annual performance-related bonuses, the reward system for short-term performance and achievements. Before 2011 equity incentives were in the form of stock options as described further below.
Both plans are intended to promote the alignment of interests between the company’s shareholders and eligible employees by allowing them to participate in the success of the company.
Restricted Share Unit (RSU) plan
The RSU plan provides a retention incentive to eligible employees.
Awards made under the RSU plan are subject to ‘cliff vesting’ after three years, contingent upon the continued active employment of the employee with the ArcelorMittal group. The RSU plan is targeted at the 500 to 700 most senior managers across the ArcelorMittal group.
For the period from the May 2012 general shareholders’ meeting to the general meeting of shareholders to be held in 2013, a maximum of 2,500,000 Restricted Share Units (RSUs) of the company may be allocated to qualifying employees under the RSU plan (the 2012 RSU Cap).
Performance Share Unit (PSU) plan
The PSU plan’s main objective is to be an effective performance-enhancing scheme based on the employee’s contribution to the achievement of the company’s strategy.
Awards made under the PSU plan will be subject to the fulfillment of cumulative performance criteria over a three-year period from the date of award. The employees eligible to participate in the PSU plan are a subset of the group of employees eligible to participate in the RSU plan and they will receive part of their award in RSUs and part in PSUs.
For the period from the May 2012 general shareholders’ meeting to the general meeting of shareholders to be held in 2013, a maximum of 1,000,000 Performance Share Units (PSUs) of the company may be allocated to qualifying employees under the PSU plan (the 2012 PSU Cap).
The allocation of RSUs and PSUs to eligible employees under the RSU plan and the PSU plan is reviewed by the board of directors’ appointments, remuneration and corporate governance committee, comprised of four independent directors, which makes a recommendation to the full board of directors. The committee also decides the criteria for granting PSUs and makes its recommendation to the board of directors. The criteria are based on the principle of rewarding for performance upon the achievement of clear and measurable metrics for shareholder value creation.
Global Stock Option Plan
Before the general shareholders’ meeting adopted the RSU-PSU proposal in May 2011, ArcelorMittal’s equity based incentive plan took the form of a stock option plan called the Global Stock Option Plan.
The overall cap on stock options available for grant during any one-year period was approved yearly by the shareholders at the annual general meeting. The main differences between stock options and RSUs and PSUs are the following:
- the stock options vest in tranches of one-third of the grant per year within three years of the date of the grant
- the eligible employee pays an exercise price in order to exercise a stock option, which is not the case for RSUs and PSUs.
The number of RSUs-PSUs that may be allocated to an eligible employee will be proportionately smaller than the number of stock options that would have been allocated to the employee. Information about historical stock option grants is available in ArcelorMittal’s statutory annual reports and annual report on Form 20-F. The stock options awarded most recently (in 2010) are scheduled to expire in 2020.
Stock options information system
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