Tecnotree's board of directors has approved a new incentive program for employee retention

Translation: Original comment published in Finnish on 6/13/2024 at 6:25 am EEST.

The incentive program, which will run from 2024 to 2027, aims to promote the commitment of participating employees to Tecnotree's growth strategy. As part of the incentive plan, Tecnotree's board of directors has decided on a directed issue of a total of 1.1 million shares free of charge, corresponding to approximately 6.45% of all shares after the share issue. Thus, the dilution to other investors from the program is, in our opinion, quite significant.

A two-tiered incentive program

Tecnotree's Board of Directors has approved an incentive program for the period 2024-2027 (the "LTI Plan-4"). The aim of the program is to retain employees as part of Tecnotree's growth strategy, thereby supporting the company's ability to keep pace with the market and attract the necessary talent. Currently, the incentive program covers 248 employees. The program is therefore relatively large, as the total number of employees in the group at the end of Q1'24 was 892, which will be reduced in the near future with the completion of the company's efficiency program. The shares granted under the incentive plan could result in a total of 700,000 Tecnotree shares being granted to participating employees. The shares will be distributed in installments of 233,333 shares each year from 2025 to 2027.

In addition to the LTI Plan 4, Tecnotree's board has decided on an additional incentive program for the retention and recruitment of key personnel. A total of 112 persons will be covered by this incentive program, for which the company will carry out a directed issue of 400,000 shares.

Incentive program causes significant dilution

In total, Tecnotree's board of directors has decided on a directed issue of 1.1 million shares, corresponding to approximately 6.45% of all shares in the company after the issue. In our view, the dilution to other investors from the programs is quite high and is practically equivalent to the size of a normal directed issue. However, the company does not receive any subscriptions in exchange for the plan, as it could receive from an employee share savings plan, for example. The trade-off for the dilution is a stronger commitment of the employees to the value creation of the company, which is of course positive. 

We will take the growing number of shares into account in our next update. In addition to the newly announced incentive program, the share capital will be diluted in the coming years by the conversion of the compulsorily convertible bonds into shares between 2026 and 2028, which we also discussed in our recent extensive report.