PETALING JAYA: AirAsia Group Bhd (AAGB) has proposed to establish and implement a long-term incentive scheme (LTIS) of up to 10% of the issued shares of the company for eligible employees and directors and its subsidiaries which consists of an employee share option scheme (ESOS) and a share grant scheme (SGS).
In the event that any foreign laws, regulatory requirements and/or administrative constraints prevent or restrict the ability of AAGB to allow the eligible employees of overseas subsidiaries to participate in the proposed LTIS, an alternative, such as a cash settled performance-based scheme, may be made available to them.
The proposed LTIS will be in force for six years. It may be extended for up to four years immediately from the expiry of the first six years at the discretion of the board. Any extension of the proposed LTIS will not, in aggregate with the initial term, exceed 10 years.
The proceeds from the exercise of the ESOS options will be used, among others, for the group’s working capital purposes, including but not limited to payment of trade and other payables, employee costs, marketing and administrative expenses. Such proceeds are expected to be utilised within a period of 12 months, as and when received throughout the duration of the proposed LTIS.
“The proposed LTIS is intended to align the motivation of the eligible persons to the corporate goals of the group and the shareholders’ interests, by allowing them to participate in the scheme and benefit from the increase in the share price of the company,” AAGB said in a stock exchange filing.
In addition, the exercise is intended to enable AAGB to pay competitively in the market to attract the best talent to drive the transformation of the company; retain and reward the eligible persons based on their performance to create a high performance culture; create a good balance between the various components of the employee compensation scheme with the proposed LTIS driving the long-term shareholder value creation.
Driven by its need to control cost over the next few years, the exercise allows AAGB to compensate eligible persons through shares, in lieu of their cash bonuses to some extent thereby saving cost in the short term.
“The vesting conditions of the share options will ensure that the eligible persons will stand to benefit only if the share price reaches a certain threshold ensuring the shareholders’ interests are protected. The proposed LTIS will also ensure that the leadership of all the AirAsia group companies strive towards collaboration and creating synergies between the various lines of businesses to maximise shareholder value,” it said.
The proposed LTIS is subject to approvals being obtained from Bursa Malaysia Securities and shareholders of AAGB at the an EGM to be convened.
The application to Bursa Securities is expected to be made within one month and the exercise is expected to be implemented by the second quarter of this year.
