Impax Asset Management Regulatory News (IPX)

11 Jan 2005 16:29

Impax Group PLC11 January 2005 Following the statement in the preliminary results issued on 9 December 2004,the Company has today issued a circular seeking shareholder approval for theestablishment by the Company of the Impax Group Employee Benefit Trust 2005("EBT" or "Incentive Arrangement") for the purposes, inter alia, of the grant ofawards of Ordinary Shares to employees of the Group. The purpose of establishingthe Incentive Arrangement is to motivate and incentivise eligible participantsto achieve value for Shareholders. Background to and reasons for the Employee Benefit Trust It is appropriate that the long-term interests of Shareholders and employees arealigned. Employees should be encouraged to think of themselves as proprietorsof the business and the best way to achieve this is through share ownership. Giving key employees a stake in the business should make it easier to attractand retain good people. A company with settled and well rewarded employees islikely to perform better than one that does not and should increase the wealthof Shareholders more than would otherwise be the case. Proposed Incentive ArrangementIf the Proposal is approved, the Company will establish the IncentiveArrangement. The Incentive Arrangement will be implemented by means of anemployee benefit trust, to be known as the "Impax Group Employee Benefit Trust2005" or the "EBT". The purpose of the Incentive Arrangement is to motivate andincentivise eligible participants to achieve value for Shareholders. Keyemployees (including executive directors) will be eligible to participate in theIncentive Arrangement. The Incentive Arrangement is intended to provide benefits and incentives foremployees and their families. In particular, it is intended that under theIncentive Arrangement Ordinary Shares will be used to incentivise the executiveteam to achieve value for Shareholders in terms of share price improvements andrelative share price performance. The Incentive Arrangement is also intended toassist staff retention. The Company intends to issue new Ordinary Shares at nominal value to the trusteeof the EBT for the purpose of making share awards. The trustee of the EBT willfund the purchase of such Ordinary Shares with a loan from a person outside theGroup. The new Ordinary Shares will be issued in three tranches. It is expectedthat the three tranches will be issued to the EBT by September 2005, September2006 and September 2007. The Incentive Arrangement provides the opportunity for the key employees toachieve a substantial benefit over the short to medium term reflecting theimportance to the Group of their recruitment and retention. The level of thepotential benefits available under the Incentive Arrangement is in excess ofnormal benefits under standard corporate governance criteria but reflects theBoard's view of the potential benefits to the Group of having an experiencedexecutive team to lead the Company through its current stage of development. The number of new Ordinary Shares to be issued under the Incentive Arrangementwill not in aggregate exceed 18.25 million Ordinary Shares. In addition, thenumber of Ordinary Shares held by the trustee of the EBT will not at any timeexceed 29.9% of the issued share capital of the Company. The Incentive Arrangement provides for awards of Ordinary Shares to be made inrespect of the three financial years ending September 2005, September 2006 andSeptember 2007, each with demanding performance criteria: The First Period: Year ending 30 September 2005For awards in respect of the financial year ending 30 September 2005, theCompany performance target requires that the average mid-market share priceincreases to at least 9.5 pence per share for the 60 business days following theannouncement of the results for that financial year ending 30 September 2005 andthat Total Shareholder Return over the year exceeds that of the FTSE All ShareIndex over the same period. The Second Period: Year ending 30 September 2006For awards in respect of the financial year ending 30 September 2006, theCompany performance target requires that the average mid-market share priceincreases to at least 12 pence per share for the 60 business days following theannouncement of the results for that financial year and that Total ShareholderReturn over the year exceeds that of the FTSE All Share Index over the sameperiod. The Third Period: Year ending 30 September 2007For awards in respect of the financial year ending 30 September 2007, theCompany performance target requires that the average mid-market share priceincreases to at least 14 pence per share for the 60 business days following theannouncement of the results for that financial year and that Total ShareholderReturn over the year exceeds that of the FTSE All Share Index over the sameperiod. The Directors believe that achieving the criteria in full will be challenging.For the maximum award to be made the Ordinary Share price will have to increaseby over 100% from its current price of 6.375 pence (as at the close of businesson 10 January 2005). No Ordinary Shares shall be held under the EBT for the benefit of the family ofa specific employee unless the Company share price target and the Company TotalShareholder Return target are satisfied. In addition, the remuneration committeeof the Company shall only recommend to the trustee of the EBT that OrdinaryShares are held under the EBT for the benefit of the family of a specificemployee if that employee has met demanding targets in relation to his ownperformance. Such performance targets are to be determined by the remunerationcommittee of the Company in due course taking into account the employee'sposition and role in the Company. Furthermore, generally any Ordinary Shares held under the EBT for the benefit ofthe family of any employee shall revert to the EBT for distribution to otheremployees and their families if the employee leaves his employment with theGroup within 2 years of the end of the relevant period. For example for OrdinaryShares awarded in respect of the financial year ending 30 September 2005, theemployee must remain in employment with the Group until 30 September 2007. It is proposed that the Company will be granted an option to repurchase atnominal value any of the Ordinary Shares issued to the trustee of the EBTpursuant to the Incentive Arrangement which are not held by the trustee of theEBT for the benefit of the family of a specific employee as a result of theperformance targets not being satisfied. The issue and award of Ordinary Shares under the Incentive Arrangement mayimpact distributable reserves and may result in a charge to the profit and lossaccount. Ordinary Shares issued to the EBT may initially be regarded foraccounting purposes as not having totally left the Company's control until theemployment condition is satisfied and may therefore be treated as a deductionfrom share capital and reserves. In addition, the allocation of the OrdinaryShares for the benefit of the family of a specific employee will result in acharge to the profit and loss account based on the value of the Ordinary Sharesat the date of allocation. An extraordinary general meeting of the Company for the purpose, inter alia, ofconsidering a resolution to approve the establishment of the EBT is beingconvened for 4 February 2004. For further information please contact Keith Falconer, Chairman 020 7434 1122Impax Group plc Capitalised terms have the meanings set out in the circular dated 11 January2005. Copies of the circular may be obtained from the Company's registeredoffice, Broughton House, 6-8 Sackville Street, London W1S 3DG. This information is provided by RNS The company news service from the London Stock Exchange