48 Share-Based Payments
Accounting Policies
The obligations arising from share-based payments are calculated using standard valuation methods based on option pricing models.
Equity-settled share-based payments are recognized at the grant date at the fair value of the equity instruments vested by that date. The fair value of the obligation is therefore recognized as personnel expenses proportionally over the vesting period and is offset directly against the capital reserves.
The cash-settled share-based payments are shown under other provisions and remeasured at fair value at each reporting date. The expenses are also recognized as personnel expenses over the vesting period (see chapter [E39] Provisions).
Management Board
As part of the LTIP plan in place since 2015, the Management Board members are granted a fixed number of phantom stocks (performance share units or “PSU”) annually, 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 and on the development of the share price. The pre-defined target achievement level is based on the targets Relative Total Shareholder Return (RTSR), since this year the development of EPRA Net Tangible Assets (NTA) per share, the development of the Group FFO per share, and since this year the Sustainability Performance Index (SPI), with each target weighted equally at 25%. As a result, this 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 phantom stocks that had been granted but not paid out from the LTIP as of December 31, 2021 was calculated by an external expert based on recognized actuarial principles. The obligation disclosed as of the reporting date breaks down as follows:
Management Board – The value of the total phantom stocks that had been granted but not paid out from the new LTIP plan as of December 31, 2021
Tranche in € | End of vesting period | Dec. 31, 2021 | ||
2018–2021 | Dec. 31, 2021 | 4,976,286 | ||
2019–2022 | Dec. 31, 2022 | 4,533,910 | ||
2020–2023 | Dec. 31, 2023 | 2,792,495 | ||
2021–2024 | Dec. 31, 2024 | 1,154,750 | ||
The LTIP plan program resulted in expenses pursuant to IFRS 2 totaling € 5.1 million in the 2021 reporting year (2020: € 8.4 million).
Management Boards of Deutsche Wohnen
In the 2021 reporting year, the Management Board members of Deutsche Wohnen received the value of phantom stocks – Restricted Share Units (RSU) – for a total period of four years, which were granted every April 1 when they first assumed the office of company Board Members. The Restricted Share Units represented the virtual value of the Deutsche Wohnen share based on a 30-trading day reference price as of the granting date and the gross dividends accrued (under the law of obligations). Expenses of € 0.1 million were incurred by the Deutsche Wohnen Group for the RSU program in the fourth quarter of 2021. RSUs are no longer in place as instruments of remuneration and were no longer a component of the 2021 remuneration system.
Executives Below Management Board Level
The LTIP plan has been in place for the first level of management since 2016. This LTIP plan is based largely on the LTIP in place for the Management Board, 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 phantom stocks that had been granted but not paid out from the LTIP as of December 31, 2021 was calculated by an external expert based on recognized actuarial principles. The obligation disclosed as of the reporting date breaks down as follows:
Executives Below Management Board Level – Value of the total phantom stocks that had been granted but not paid out as of December 31, 2021
Tranche in € | End of Vesting Period | Dec. 31, 2021 | ||
2018 | Dec. 31. 2021 | 2,288,526 | ||
2019 | Dec. 31. 2022 | 1,938,886 | ||
2020 | Dec. 31. 2023 | 1,030,527 | ||
2021 | Dec. 31. 2024 | 416,961 | ||
The LTIP plan program results, in accordance with IFRS, in expenses of € 1.7 million in the 2021 reporting year (2020: € 4.4 million).
Employees
The Group works council “Employee Share Program” was concluded in 2014. The program started in the 2015 calendar year, with the shares granted 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 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 € 2.4 million in the 2021 reporting year (2020: € 2.3 million), which have been offset directly against the capital reserves.