BUWOG AG / Release according to Article 82 Section 9 BörseG
23.09.2014 14:26

Dissemination of a Post-admission Duties announcement, transmitted by DGAP - a service of EQS Group AG.
The issuer is solely responsible for the content of this announcement.

---

Report on item 6 of the Agenda

1st Ordinary Shareholders' Meeting of BUWOG AG on 14 October 2014

Report of the Supervisory Board of BUWOG AG in accordance with section 159 para 2 item 3 of the Austrian Stock Corporation Act in preparation of the resolution on a conditional capital increase for the purpose of granting stock options to the members of the executive board under the Long-Term Incentive Programme 2014


 1. General

The resolution on a conditional capital increase in accordance with section 159 para 2 item 3 of the Austrian Stock Corporation Act for the purpose of granting stock options to the members of the executive board of BUWOG AG (hereafter referred to as 'Company') under the Long-Term Incentive Programme 2014 (hereafter referred to as 'LTIP 2014') shall be proposed to the ordinary shareholders' meeting of the Company on 14 October 2014 as follows:

The registered capital of the Company shall be increased conditionally in accordance with section 159 para 2 item 3 of the Austrian Stock Corporation Act (Aktiengesetz) by up to EUR 720,000.00 by issuance of up to 720,000 new, no-par value ordinary bearer shares. The purpose of the conditional capital increase is to fulfil subscription rights from stock options to be granted to the members of the executive board of the company under the Long-Term Incentive Programme 2014. The issue price of the shares is EUR 13.00 (exercise price of the stock options). The new shares shall have a dividend entitlement with respect of profits from the beginning of a business year, for which at the time the subscription right is exercised, no resolution of the shareholders' meeting on the appropriation of the balance sheet profit has been passed. The supervisory board shall be authorised to resolve upon amendments to the Articles of Association resulting from the issuance of shares on the basis of the conditional capital.

In preparation for the resolution of the shareholders' meeting on the conditional capital increase for the purpose of granting stock options, the supervisory board of the Company submits a report in accordance with section 159 para 2 item 3 of the Austrian Stock Corporation Act which outlines in particular the principles and performance incentives for the stock options to be granted under the LTIP 2014 and the number and distribution of stock options allocated to each member of the executive board, further the number of shares to be acquired as well as the main terms and conditions of the stock-option agreements.

 2. Principles and performance incentives

During the business year 2013/2014 the separation of BUWOG Group took place by way of a spin-off from IMMOFINANZ AG with BUWOG AG as new holding company of BUWOG Group. The shares of BUWOG AG (ISIN AT00BUWOG001) (hereafter referred to as 'BUWOG-Shares') were admitted to trading on the Regulated Market of the Frankfurt Stock Exchange, on the Official Market of the Vienna Stock Exchange and on the Main Market (Rynek Podstawowy) of the Warsaw Stock Exchange (Spin-off). In the course of the spin-off and the admission to trading of the BUWOG-Shares the implementation of a Long-Term Incentive Programme for the members of the executive board of BUWOG AG has already been reported with the respective terms and conditions of the programme to be determined by the supervisory board after the spin-off.
By granting options to purchase BUWOG-Shares to the members of the executive board of the Company (hereafter also referred to as 'Participants') under the LTIP 2014, a part of the variable remuneration of the executive board members shall be linked directly to the development of the share price of BUWOG-Shares, the motivation and identification of the executive board member as well as his commitment to the BUWOG Group shall be strengthened and an additional alignment of the interests of the executive board member to those of the shareholders of BUWOG AG shall be established. The executive board members shall participate in the success achieved as well as in the further positive development of the share price of BUWOG-Shares.

Stock-option plans are an essential component of remuneration systems in listed companies. The LTIP 2014 shall motivate the Participants to increase the Company's value - which is inter alia expressed in the share price of the BUWOG-Shares - on a long-term basis and to contribute to the economic success of BUWOG AG with their work and performances.
Within the scope of stock-option programmes for executive board members, long-term incentives for the purpose of a sustainable development of the Company shall be be provided and pursuant to the rules of the Austrian Corporate Governance Code (ACGC), sustainable, long-term and multi-year performance criteria shall be stipulated (rule 27 ACGC). Stock option plans for executive board members shall be linked to predetermined, measurable, long-term and sustainable criteria and shall define an appropriate volume of shares in the own company as well as a waiting period of at least three years (rule 28 ACGC).

The structure of the LTIP 2014 being proposed addresses the relevant criteria accordingly. Under the LTIP 2014 options for the purchase of BUWOG-Shares shall be granted to the members of the executive board. Thus, a performance incentive is created based on the corporate value as a benchmark that is to be increased and reflected in the share price of the BUWOG-shares.

The LTIP 2014 provides the granting of basis-options and bonus-options. The exercise of the basis-options depends on whether the executive board member works for the Company until the exercise period (certain cases of termination events are excluded). It is thereby intended to enhance his commitment to the Company as well as to enable the executive board member to participate in the further development of the Company expressed in the share price. The exercise of the respective tranche of bonus-options is linked to the achievement of annual performance objectives in order to provide long-term and multi-year performance criteria. The LTIP 2014 requires an appropriate personal investment in BUWOG-Shares as well as a waiting period prior to the exercise period (certain cases of termination events are excluded).

The exercise price of the stock options amounts to EUR 13.00. This corresponds with the initial listing price of the BUWOG-Shares on 28 April 2014 at the Frankfurt Stock Exchange. The performance incentive for the members of the executive board under the LTIP 2014 shall be linked to this share price referred to above as starting point after the separation of the BUWOG Group in the course of the spin-off. For this reason, the first performance objective (bonus-option tranche I) shall be linked to the share price performance in the first business year after admission to trading of the BUWOG-Shares (business year 2014/2015) in order to consider the performance of the members of the executive board in course of the admission to trading of the BUWOG-Shares accordingly.
By way of the LTIP 2014 a competitive remuneration structure for members of the executive board shall be established in relation to the peer group in order to strengthen the long-term commitment of the executive board members to the company.


3. Number and allocation of stock options to be granted
The LTIP 2014 includes a total of 720,000 stock options which shall be granted to the members of the executive board as follows:
Option holder and respective number of options to be granted
Mr. Daniel Joachim Riedl
Chairman of the executive board

75,000 basis-options
100,000 bonus-option tranche I
130,000 bonus-option tranche II
175,000 bonus-option tranche III

Mr. Ronald Roos
Member of the executive board  

50,000 basis-options
50,000 bonus-option tranche I
60,000 bonus-option tranche II
80,000 bonus-option tranche III

The total number of shares of the Company to be purchased at the time the options are exercised represents 0.7 per cent of the current share capital of the Company.

The exercise requirements for both the basis-options and bonus-options are detailed below.


 4. Main terms of the stock option agreements

   4.1. Performance criteria

The exercise of bonus-options requires the achievement of performance criteria, each separately linked to the respective tranche of bonus-options as follows:

- bonus-option tranche I (business year 2014/2015)
The share price*) equals or exceeds on at least 5 trading days in the business year 2014/2015 the amount of 85 per cent of the EPRA NAV**) per share of the Company as stated in the IFRS consolidated financial statements as of 30 April 2014 of BUWOG AG.

- bonus-option tranche II (business year 2015/2016)
The share price equals or exceeds on at least 5 trading days in the business year 2015/2016 the amount of 92.5 per cent of the EPRA NAV) per share of the Company as stated in the IFRS consolidated financial statements as of 30 April 2015 of BUWOG AG.

- bonus-option tranche III (business year 2016/2017)
The share price equals or exceeds on at least 5 trading days in the business year 2016/2017 the amount of 100 per cent of the EPRA NAV) per share of the Company as stated in the IFRS consolidated financial statements as of 30 April 2016 of BUWOG AG.
 
*)'Share price' means the volume weighted average price of the BUWOG-Shares at the Vienna Stock Exchange.

**)'EPRA NAV' means the net asset value calculated according to the guidelines of the European Public Real Estate Association (EPRA) applied mutatis mutandis for the IFRS consolidated financial statements of BUWOG AG as of 30 April 2014.

If the respective performance criterion of a bonus-option tranche is not achieved in the respective business year, the respective bonus-option tranche will not vest and cannot be exercised and expires without substitution.

The exercise of bonus-option tranche II and bonus-option tranche III is also subject to the additional performance criterion that the EPRA NAV per share has to be increased compared to the consolidated financial statements as of 30 April 2014 of BUWOG AG as follows: the EPRA NAV per BUWOG-Share relevant for the respective bonus-option tranche must be higher than the initial value (pursuant to the IFRS consolidated financial statements as of 30 April 2014).

No subsequent changes to the performance criteria are permitted.
   4.2. Term of the LTIP 2014 and exercise period

After resolution of the shareholders' meeting of the Company, Long-Term Incentive Agreements will be concluded with the members of the executive board granting the stock options and regulating the exercise conditions.
Options can in general be exercised in the period 01 May 2018 until 30 April 2019 (both dates inclusive) (certain cases of termination events are excluded). Therefore, in course of an effective executive board mandate or management contract options can be exercised for the first time in the fifth business year 2018/2019 after the start of the programme, hence with a waiting period of four business years. Thus, no additional holding period for the BUWOG-Shares purchased by exercising the options is provided (rule 28 ACGC).

The mandates of the Participants as executive board members currently expire in the last quarter of the business year 2016/2017. In case of expiry of a mandate basis-options and those bonus-options for which the performance criteria have been achieved may be exercised in the period from 30 April 2017 up to 31 July 2017 (both dates inclusive). Based on the programme start with the separation of the BUWOG Group and the admission to trading of the BUWOG-Shares, the stock options may be exercised with a waiting period of three business years.

Options have to be exercised no later than the end of the respective exercise period. If the last day of the exercise period falls within an excluded period, the exercise period ends with expiry of the tenth day after the end of the excluded period.

The exercise of the options shall be excluded during any of the following periods: (i) lock-up period for orders in financial instruments of BUWOG AG in accordance with section 8 of the Compliance Decree for Issuers (Emittenten-Compliance-Verordnung); (ii) in connection with any shareholders' meeting of the Company, a period commencing on the record date for such shareholders' meeting and ending on the third business day following such shareholders' meeting (both dates inclusive) and (iii) a period commencing on the date on which an offer by the Company to its shareholders by way of a rights offering to subscribe to shares, convertible bonds, profit-linked bonds or similar is published and ending on the date on which the securities subscribed in the subscription offer are delivered (both dates inclusive).

Please refer to specific rules for exercising the stock options in case of retirement from office of the executive board members under point 4.5.
   4.3. Exercise price 

Each granted option entitles the respective Participant to acquire one BUWOG-Share at the exercise price provided that the exercise requirements of the LTIP 2014 are met.

The Company is entitled to deliver the BUWOG-Shares to be transferred in case of an exercise of an option exercise either from the conditional capital proposed for resolution (section 159 para 2 item 3 Austrian Stock Corporation Act), from an authorised capital (section 169 Austrian Stock Corporation Act) or from treasury shares of the Company.
The exercise price per option and therefore the subscription price per BUWOG-Share is EUR 13.00. This exercise price corresponds to the initial share price of the BUWOG-Share upon listing on the Frankfurt Stock Exchange at the time of the spin-off of BUWOG Group from IMMOFINANZ AG.
The new shares are having dividend entitlement regarding profits from the beginning of business years for which, at the time the subscription right is exercised, no resolution of the shareholders' meeting upon the appropriation of the balance sheet profit has been passed.
   4.4. Personal investment in BUWOG-Shares

The exercise of options under the LTIP 2014 is subject to a personal investment in BUWOG-Shares by each Participant.

The total number of BUWOG-Shares to be held as personal investment amounts to 50 per cent of the annual gross base salary of the executive board member calculated on the basis of the May 2014 gross base salary ('base amount'). The total amount of the personal investment is calculated by dividing the base amount by the average share price of the BUWOG-Share (VWAP of the BUWOG-Share at the Vienna Stock Exchange) on the trading days in the period 01 May 2014 until 31 July 2014 (both dates inclusive).
The personal investment has to be established on an ongoing basis over a period of three business years commencing with the business year 2014/2015, thus for each business year at least one third of the total number of the personal investment has to be fulfilled. For the fulfilment of the personal investment BUWOG-Shares already held by the Participants shall be taken into account. The personal investment shall be held by each Participant until the exercise of the options.

4.5. Provisions for the retirement of the executive board and the expiry         of mandates

In case the mandate to the executive board or the management contract is terminated prior to 01 May 2018 the following provisions on a potential exercise of basis-options and/or bonus-options shall apply:
 1) Expiry of mandate

Exercisable: basis-options and bonus-options (performance criteria achieved).
Exercise period: 30 April 2017 until 31 July 2017 (both dates inclusive).
Not exercisable: bonus-options (performance criteria not achieved).
2) Termination - Good Leaver Event (Unlawful pre-mature termination of the management contract by the Company or unlawful dismissal by BUWOG AG, permanent incapacity or legitimate voluntary retirement)
Exercisable: basis-options and bonus-options (performance criteria achieved at termination date).
Exercise period:
In case of Good Leaver Event prior to 30 April 2017: period from termination date up to 31 July 2017.
In case of Good Leaver Event after 30 April 2017: period from termination date up to 30 April 2019.

Exercisable: bonus-options (performance criteria achieved after termination date).
Exercise period:
In case of Good Leaver Event prior to 30 April 2017: period from 30 April 2017 up to 31 July 2017.

Not exercisable: bonus-options (performance criteria not achieved)
 3) Termination by mutual agreement

Exercisable: basis-options and bonus-options (performance criteria achieved at termination date).
Exercise period: within 3 months from termination date.
Not exercisable: bonus-options (performance criteria not achieved).
4) Termination of management contract in case of change of control
Exercisable: basis-options and bonus-options (performance criteria achieved).
Exercise period: within 3 months from termination date.
Not exercisable: bonus-options (performance criteria not achieved).
5) Termination - Bad Leaver Event (Dismissal according to section 27 of the Employees Act (AngG), unlawful voluntary retirement by the executive board member or dismissal as member of the executive board pursuant to section 75 para 4 Austrian Stock Corporation Act (AktG),     except in case of permanent incapacity)

All options expire and cannot be exercised.

 6) Event of death

Cash settlement of basis-options and bonus-options (performance criteria achieved).
Payment of cash settlement.

4.6. Options not transferable, hedging-prohibition
The options are not transferable. Option rights must neither be assigned nor transferred, nor shall they be encumbered.

Prior to an option exercise a Participant is not entitled to conclude any hedging transactions, e.g. by purchasing hedging options (put-options).
   4.7. Reimbursement obligation

Benefits gained at the time of the exercise from an option exercise shall be reimbursed by a Participant, if the options have been qualified as exercisable based on incorrect values or number (e.g. in case of a correction of approved annual financial statements).

5. Objective justification / exclusion of subscription right in course of     conditional capital increase

The objectives pursued by the LTIP 2014 as outlined in the report are pursued in both the interest of the Company and the shareholders. The exclusion of the shareholders' subscription right in the course of a conditional capital increase in order to issue shares to fulfil the option rights is both necessary and suitable as well as appropriate and in the interest of the Company objectively justified.


Vienna, September 2014 

BUWOG AG
The Supervisory Board



23.09.2014 The DGAP Distribution Services include Regulatory Announcements, Financial/Corporate News and Press Releases.
Media archive at www.dgap-medientreff.de and www.dgap.de

---

 
Language:     English
Company:      BUWOG AG
              Hietzinger Kai 131  
              1130  Wien
              Austria
Internet:     www.buwog.com
 
End of Announcement DGAP News-Service  

---