49 Share-based Payments
Accounting Policies
The obligations arising from share-based payments are calculated using standard valuation methods based on option pricing models (Monte Carlo simulation). Calculation of the fair value on the reporting date is based on various parameters for the Monte Carlo simulation (risk-free rate, annualized volatilities, correlations). The annualized volatility and the correlation are calculated based on historical volatility and historical correlation in the period matching the residual term based on daily returns. The risk-free rate is calculated using the interest rate structure curve based on the Svensson method. As the LTIP provides for the granting of a dividend equivalent, there is no need to include the dividend yield.
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 [E39] Provisions).
Vonovia Management Board
As part of the LTIP 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 target achievement level for targets defined at the beginning of the performance period and on the development of the share price. The pre-defined target achievement level is based on the targets Relative Total Shareholder Return (RTSR), the development of EPRA Net Tangible Assets (NTA) per share, the development of the Group FFO per share, and the Sustainability Performance Index (SPI), with each target weighted equally at 25%. As a result, this LTIP constitutes a cash-settled plan 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, 2023, was calculated by an external expert based on recognized actuarial principles (Monte Carlo simulation). The obligation disclosed as of the reporting date breaks down as follows:
Management Board Vonovia – The value of the total phantom stocks that had been granted but not paid out from the new LTIP plan as of December 31, 2023
Tranche in € | End of | Number of shares | Average fair value per share | Earned provision | ||||
2020–2023 | Dec. 31, 2023 | 97,115 | 28.03 | 2,904,555 | ||||
2021–2024 | Dec. 31, 2024 | 88,524 | 18.39 | 1,301,250 | ||||
2022–2025 | Dec. 31, 2025 | 138,742 | 18.27 | 1,265,779 | ||||
2023–2026 | Dec. 31, 2026 | 262,026 | 20.09 | 1,273,282 | ||||
The LTIP program resulted in expenses pursuant to IFRS 2 totaling € 2.9 million in the 2023 reporting year (2022: € -0.8 million).
Vonovia Executives Below Management Board Level
The LTIP was implemented for the first level of management in 2016. This LTIP plan is based largely on the LTIP in place for the Management Board, also regarding the 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, 2023, was calculated by an external expert based on recognized actuarial principles (Monte Carlo simulation). 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, 2023
Tranche in € | End of | Number of shares | Average fair value per share | Earned provision | ||||
2020–2023 | Dec. 31, 2023 | 37,580 | 28.03 | 1,052,835 | ||||
2021–2024 | Dec. 31, 2024 | 33,565 | 18.39 | 462,168 | ||||
2022–2025 | Dec. 31, 2025 | 33,354 | 18.27 | 304,164 | ||||
2023–2026 | Dec. 31, 2026 | 83,223 | 20.09 | 416,846 | ||||
The LTIP program results, in accordance with IFRS, in expenses of € 0.9 million in the 2023 reporting year (2022: € -0.5 million).
Employees
The Group works council agreement “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. All employees that had at least one full year of service as of December 31 of the calendar year concerned are eligible to participate. Shares with a value of between € 90 and € 360 at the most are granted to employees, depending on their gross annual salary, without the employees having to make any contribution of their own.
In accordance with IFRS, the new employee share program results in total expenses of € 2.5 million in the 2023 reporting year (2022: € 2.4 million), which have been offset directly against the capital reserves.