Case Study: CEVA. Winners of the GEO 2008 Award Best Plan Effectiveness. Paul Nelson Group Reward CEVA Logistics

Transcription

1 Case Study: CEVA Winners of the GEO 2008 Award Best Plan Effectiveness Paul Nelson Group Reward CEVA Logistics Patricia Boepple Senior Vice President Plan Administration Global Shares Paris - June 19th, 2008 Content Introduction Company profile Plan Objectives Challenges How CEVA LTIP works? Successes and Learning points Criteria for Plan Effectiveness 1

2 Company profile November CEVA Logistics, a private company formed as a result of the LBO of TNT Logistics by Apollo Management July 2007 shareholders of Eagle Global Logistics (EGL) approve merger with CEVA Logistics Combined organization: 6.3bn revenue 54,000 employees 100+ countries freight forwarding and contract logistics Plan Objectives Objectives of Apollo integrated approach focus on global upside management absolutely engaged via skin in the game Immediate impact on company culture - individual wealth creation through collective performance Drive the pace of the evolution of the business Fit with other incentive plans e.g., annual bonus 2

3 How CEVA LTIP works? Initial Subscription Targeted at Management board Cascaded to full senior management population 250 participants Investing in restricted shares Subscription price same as for Apollo Subscription to be completed in 3 tranches Dividend reinvestment How CEVA LTIP works? EGL Participation Subscription at FMV Options on a similar multiple basis Vesting on same basis Offered to smaller population but across many more jurisdictions 3

4 How the CEVA LTIP works? Options Options granted as a multiple of the subscription Three tranches time vesting 20% each year for 5 years vesting on cash and ROI targets additional cash and ROI targets Strike price at the original subscription value How CEVA LTIP works? Leaver rules Good Leaver leaving with good reason, dismissal without cause repurchase at higher of purchase price or FMV Bad Leaver repurchase at lower of purchase price or FMV Vested options to be exercised within 90 days 4

5 Total Participation 354 management investors Investing 30,000,000 EUR Successes Buy-in and tie-in Alignment of focus of the senior team Growth Unity Excellence Acceleration of cultural change Underpinned the operational strategy: Optimize Enhance Transform 5

6 Learning points Need a good administrator Know your stuff Get good advice Robust plan and stick to it but Plan for the unplanned Communication processes Clarity Context Conviction Criteria for Plan Effectiveness Take-up Rate 30 million invested by the managers 354 participants / over 80% take-up rate Voluntary Plan Totally voluntary (i.e., no bearing on future employment or success) Employee Retention Rate Retention rate over 90% Most leavers have been considered as good leavers 6

7 Criteria for Plan Effectiveness Employee Attraction Rate CEVA has hired a number of key executives since High Employee Stock Retention Rate Stock retention rate = 97% Company Performance Issue 2 performance vesting schedules 2 performance criteria: - internal rate of return - cash-on-cash return Criteria for Plan Effectiveness Economic effect on Employee Finances Subscription price same as Apollo Largest single investment after their home Clear Statement of Company Goals Support to Corporate Culture 7

8 Questions & Answers Thank you for your participation 8