Long Term Variable Remuneration Plans

Fisher & Paykel Healthcare maintains a variety of short-term and long-term incentive plans designed to attract, reward and retain high quality employees who will enable the company to achieve its short and long term objectives. The company's remuneration policy includes providing performance incentives which allow executives to share in the long term success of the company and share option and performance share rights plans intended to encourage the retention of senior management and increase the commonality between the interests of management and shareholders.

The remuneration packages of senior management consist of a mixture of a base remuneration package, the company-wide profit sharing bonus, a variable remuneration component based on relevant performance measures, participation in the company's employee share purchase plan, share options plan and performance share rights plan. More details on the company's share options plan, performance share rights plan, employee share purchase plans and employee stock purchase plan is set out below.

 

Fisher & Paykel Healthcare 2003 Share Option Plan

Options are granted to selected employees pursuant to share option plans. One option gives the employee the right to subscribe for one ordinary share in the company subject to meeting the vesting conditions. No amount is payable for the grant of options.

Options granted after 16 July 2012 vest at any time between the third anniversary of the grant date and the fifth anniversary of the grant date as long as the Company’s share price on the NZX has, at any time on or after the third anniversary of the grant date, exceeded the “escalated price” and as long as the employee remains in the service of the Group.

The exercise price of these options will be the volume weighted average price for a share on the NZX for the 5 business days prior to the grant date for the options.

The escalated price is determined as follows:

As at each anniversary of the grant date up to and including the third anniversary of the grant date for an option, a “base price” will be calculated by:

  • increasing the last calculated base price (which as at the first anniversary of the grant date will be the exercise price of the option) by a percentage amount determined by the Board to represent the company’s cost of capital; and
  • reducing the resulting figure by the amount of any dividend paid by the company in respect of a share in the 12 month period immediately preceding that anniversary.

The escalated price will be the base price determined as at the third anniversary of the grant date in accordance with the above.

Options granted before 16 July 2012 vest in three equal annual instalments commencing no earlier than the second anniversary of the grant date as long as the employee remains in the service of the Group. The exercise price of these options is determined as follows:

  • A base price will be established on or around the grant date being the volume weighted average price for a share on the NZX for the 5 business days prior to the grant date; and
  • As at each anniversary of the grant date a new base price will be calculated by:
    • increasing the last calculated base price by a percentage amount determined by the Board, based on independent advice, to represent the Company’s cost of capital; and
    • reducing the resulting figure by the amount of any dividend paid by the company in respect of a share in the 12 month period immediately preceding that anniversary.

The exercise price for the one-third of options that become exercisable on the second anniversary of the grant date shall be the base price calculated as at the second anniversary of the grant date.

The exercise price for the one-third of options that become exercisable on the third anniversary of the grant date shall be the base price calculated as at the third anniversary of the grant date.

The exercise price for the one-third of options that become exercisable on the fourth anniversary of the grant date shall be the base price calculated as at the fourth anniversary of the grant date.

All unexercised options expire on the fifth anniversary of the grant date. Options also become exercisable if a person, or a group of persons acting in concert, acquires more than half of the company’s outstanding ordinary shares. On leaving employment due to serious illness, accident, permanent disablement, redundancy or other circumstances as determined by the company’s Board, the employees will have three months to exercise all outstanding options. On leaving employment upon death the employees’ executor will have three months to exercise all outstanding options. On a termination of employment for any other reason all outstanding vested and
unvested options will lapse. The Group has no legal or constructive obligation to repurchase or settle the options in cash.

Fisher & Paykel Healthcare Corporation Limited registered a prospectus on 16 July 2012 relating to the offer of options and shares under the Fisher & Paykel Healthcare 2003 Share Option Plan and shares under the Fisher & Paykel Healthcare Share Option Plan Cancellation Facility.  A copy of the prospectus and investment statement is available for download from the links at the bottom of this page.

 

Fisher & Paykel Healthcare Performance Share Rights Plan

Performance share rights (PSRs) are granted to selected employees pursuant to the performance share rights plan. One share right gives the employee the potential to exercise a share right for an ordinary share in the company at no cost. Share rights become exercisable if the company’s gross total shareholder return (TSR) performance exceeds the performance of the Dow Jones US Select Medical Equipment Total Return Index (DJSMQDT) in New Zealand dollars over the same period. If the company’s TSR performance exceeds that of the DJSMQDT at either of the third, fourth or fifth anniversary of the grant date of the PSRs, some or all of the PSRs become exercisable as long as the employee remains in the service of the Group. Where an employee has exercised a portion of their PSRs before the fifth anniversary of the grant date, the remaining PSRs lapse at the time that portion has been exercised.

All unexercised PSRs expire on the fifth anniversary of the grant date.

PSRs also become exercisable, subject to the company TSR performance exceeding that of the DJSMQDT, if a person, or a group of persons acting in concert, acquires more than half of the company’s outstanding ordinary shares. On leaving employment due to death, serious illness, accident, permanent disablement, redundancy or other circumstances as determined by the company’s Board, the employees or, if applicable, the employees’ executors may be able to exercise the PSRs. On a termination of employment for any other reason all outstanding PSRs will lapse.

Fisher & Paykel Healthcare Corporation Limited registered a prospectus on 16 July 2012 relating to the offer of performance share rights and shares under the Fisher & Paykel Healthcare Performance Share Rights Plan. A copy of the prospectus and investment statement is available from the links at the bottom of this page.

 

New Zealand and Australian Employee Share Purchase Plans

Shares are issued at a discount of 20% of market price, on terms permitted by the plans in accordance with sections DC13 and 14 of the New Zealand Income Tax Act 2007, with no interest being charged on the loans. All New Zealand and Australian full time employees are eligible to participate after a qualifying period. The qualifying period between grant and vesting date is 3 years. Dividends paid during the qualifying period on shares allocated to employees under the plans are paid to the employees. Voting rights on the shares are exercisable by the Trustees under the plans.

Once vested an employee participant may elect to transfer the shares into their own name after which the shares are freely transferable. All shares are allocated to employees at the time of issue, on the condition that should they leave employment before the qualifying period ends, their shares will be repurchased by the Trustees at the lesser of market price and the price at which the shares were originally allocated to the employee, subject to repayment of the original loan.

Any such repurchased shares are held by the Trustees for allocation to future plans. Trustees of the Employee Share Purchase plans are appointed by the company.

 

North American Employee Stock Purchase Plan

Shares are issued at a discount of 15% being the lower of the market price at the date of issue or the market price at the beginning of the annual offering period in accordance with section 423 of the US Internal Revenue Code, as amended. All North American employees working more than 20 hours per week are eligible after a qualifying period. Employees make regular payroll contributions to the plan with shares being issued to employees quarterly to the value of their accumulated contributions to the plan.

All shares are allocated to employees at the time of issue and vest immediately.

 

Documents

Fisher & Paykel Healthcare 2003 Share Option Plan Prospectus (for share options issued after 16 July 2012)
Fisher & Paykel Healthcare 2003 Share Option Plan Investment Statement (for share options issued after 16 July 2012)
Fisher & Paykel Healthcare Performance Share Rights Plan Prospectus
Fisher & Paykel Healthcare Performance Share Rights Plan Investment Statement

In respect of the offer of options and shares under the Fisher & Paykel Healthcare 2003 Share Option Plan prior to 16 July 2012, Fisher & Paykel Healthcare Corporation Limited has registered prospectuses with the New Zealand Companies Office relating to such offers. A copy of these documents are available on the company’s file on the Companies Office website: www.business.govt.nz/companies.

 

Information updated on 18 May 2015.