Inspired Energy PLC Implementation of Long Term Incentive Plan (5661L)

TIDMINSE

RNS Number : 5661L

Inspired Energy PLC

20 July 2017

20 July 2017

Inspired Energy plc

("Inspired" or the "Company")

Implementation of Long Term Incentive Plan

Inspired Energy (AIM: INSE), a leading UK energy procurement consultant to UK and Irish corporates and SMEs, announces the implementation of a new Long Term Incentive Plan ("LTIP") that has been adopted by the Board, together with grants under the LTIP to Mark Dickinson, Chief Operating Officer, and Paul Connor, Finance Director (together the "Executives").

Background

To date, the Company has not had a long-term equity incentive plan in place. The LTIP has been established to incentivise the Executives, who currently have limited equity interests in the Group, to deliver long-term value creation for shareholders and ensure alignment with shareholder interests. The structure of the awards is designed as a program of awards over a six year period ("Award Period") which the Board believes will reward and incentivise the Executives to deliver sustainable and managed growth for the Company.

Size of grant

The Company has today issued 14,850,000 ordinary shares to Inspired Energy EBT Limited as trustee of the Inspired Energy plc Employee Benefit Trust ("EBT"). These shares ("JSOP Award") will be held by the trustee for the joint benefit of itself and the Executives. The JSOP Award vests in three separate tranches which are individually governed by achievement of adjusted EPS performance targets over a three year period, as set out in the table below. Should there be a change in control of the Company, by way of an offer for the entire issued share capital of the Company, during the Award Period the JSOP Award will automatically vest in full.

 
            EPS Target             FY17        FY18        FY19        FY20        FY21        Total 
             Set 
---------  ----------------  ----------  ----------  ----------  ----------  ----------  ----------- 
 
 Mark Dickinson 
            Target for 
             3 years ended 
             Dec 19, set 
 Tranche     at time of 
  1          award            1,100,000   1,100,000   1,100,000                            3,300,000 
            Target for 
             3 years ended 
 Tranche     Dec 20, set 
  2          at 1 Jan 2018                1,100,000   1,100,000   1,100,000                3,300,000 
            Target for 
             3 years ended 
 Tranche     Dec 21, set 
  3          at 1 Jan 2019                            1,100,000   1,100,000   1,100,000    3,300,000 
                              1,100,000   2,200,000   3,300,000   2,200,000   1,100,000    9,900,000 
 
 Paul 
  Connor 
            Target for 
             3 years ended 
             Dec 19, set 
 Tranche     at time of 
  1          award              550,000     550,000     550,000                            1,650,000 
            Target for 
             3 years ended 
 Tranche     Dec 20, set 
  2          at 1 Jan 2018                  550,000     550,000     550,000                1,650,000 
            Target for 
             3 years ended 
 Tranche     Dec 21, set 
  3          at 1 Jan 2019                              550,000     550,000     550,000    1,650,000 
                                550,000   1,100,000   1,650,000   1,100,000     550,000    4,950,000 
 
                              1,650,000   3,300,000   4,950,000   3,300,000   1,650,000   14,850,000 
                             ==========  ==========  ==========  ==========  ==========  =========== 
 

Note:

The table above represents the maximum number of ordinary shares available for each participant in each year under the LTIP subject to achievement of adjusted EPS performance targets.

The Executives will benefit from the growth in value of their respective JSOP Award from the date of grant. The Executives also hold a nil cost option over the EBT's interest in the JSOP Award which may be exercised in certain circumstances. The subscription monies for these ordinary shares have been satisfied in cash advanced by the Company to the EBT.

Adjusted earnings per share ("Adjusted EPS")

The JSOP Award vests subject to the achievement of Adjusted EPS performance targets. Adjusted EPS will be calculated by taking the net attributable profit and adjusting by:

   --              adding back acquisition related amortisation items; 
   --              adding back exceptional items; 
   --              adding back share based payments charge; and 
   --              removing any impact (positive or negative) of any deferred tax. 

The resultant figure is then divided by the number of ordinary shares in issue on a fully diluted basis.

Vesting Performance Conditions

Tranche 1

The JSOP Award in respect of Tranche 1 will vest on the achievement of an Adjusted EPS of 1.34p, 1.52p and 1.66p for FY17, FY18 and FY19 respectively. Should Adjusted EPS fall below these target levels in any of the financial years, the award for that financial year will be lost and not be capable of vesting by the Executives.

Tranches 2 and 3

The remuneration committee will, on 1 January 2018 and 1 January 2019 respectively, determine the Adjusted EPS targets for Tranche 2 and 3 respectively. The Adjusted EPS targets for Tranche 2 will cover the three financial years ending 31 December 2020 and for Tranche 3 will cover the three financial years ending 31 December 2021. The targets set by the remuneration committee for both Tranches 2 and 3 represent a target below which none of the award will vest to the Executives for that financial period (the "Threshold Targets").

For both Tranches 2 and 3, the criteria for full vesting of Awards will be set at 110% of the Threshold Targets (the "Maximum Targets") for each financial year within each Tranche, with the amount vesting rising on a straight line basis between the Threshold Target and the Maximum Targets.

As part of the Tranche 2 and 3 awards, if the Threshold Target is not achieved in any given year, then the Executives will not receive the share awards attributable to that financial year and will have no means of recovery. If the Threshold Target is achieved, but the Maximum Target not met to enable vesting of the full award, the Executives will have the opportunity to recover the part of the award that did not vest in that financial year by achieving Adjusted EPS above the Maximum Target in a subsequent year, within that Tranche of awards, whereby the value of Adjusted EPS above the Maximum Target is deemed to be carried back into the prior financial years and used to calculate a revised Adjusted EPS for that prior year.

In order to further align the LTIP with Shareholder interests, the Board have set a cap on maximum leverage of 2x EBITDA for any financial year which is subject to the LTIP. In financial years where leverage is above this level, vesting in respect of that financial year, under any of Tranche 1, 2, or 3, would be zero, unless specifically agreed by the Board.

Exercise and Hold Period

The Executives will only become fully entitled to the JSOP Award in respect of each tranche at the end of the three year period relating to that tranche. The Executives will be empowered to sell up to 50% of the JSOP Award at the end of the three year period with the balance being subject to an undertaking that they will not dispose of any further ordinary shares subject to that award for a period of 12 months, except in very limited circumstances. Accordingly, 50% of Tranche 1 awards could be sold in FY20 and a further 50% in FY21 or beyond. Similarly, the earliest sale date of Tranche 3 JSOP Award, would be in FY22 in respect of 50% of the award and FY23 or later in respect of the remaining 50% of the award.

Application for admission

Application has today been made to the London Stock Exchange for the admission of the 14,850,000 new Ordinary Shares ("New Shares"). The New Shares are expected to be admitted to trading on AIM on 25 July 2017. The New Shares will, on admission, represent 2.62% of the Company's issued share capital.

Following the admission, the Company will have 567,551,574 ordinary shares in issue. All dividend and voting rights comprised in the JSOP Award are waived whilst jointly held by the relevant Executive and the trustee of the EBT.

Commenting on the LTIP, Janet Thornton, Chief Executive of Inspired, said: "Mark and Paul are key executives who are both important to the long term value of the Company. By aligning the interests of Mark and Paul to our shareholders and by incentivising them over the long term, the Board believes that the Company will benefit significantly from their drive, energy and experience over the next six years. We are delighted to have them on board and we look forward to continuing the development of the business and to executing our exciting growth strategy of organic and acquisitive growth."

Enquiries:

 
Inspired Energy plc 
 Janet Thornton, Chief Executive     [phone] 
 Paul Connor, Finance Director       www.inspiredenergy.co.uk 
Shore Capital (Nomad and Joint 
 Broker) 
 Bidhi Bhoma 
 Edward Mansfield                   [phone] 
 
 Panmure Gordon (Joint Broker) 
 Ben Thorne 
 Erik Anderson                       [phone] 
Gable Communications               [phone] 
 Justine James                      [phone] 
 John Bick                          [e-mail] 
 

This information is provided by RNS

The company news service from the London Stock Exchange

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July 20, 2017 02:00 ET (06:00 GMT)