27 Share-based compensation

Restricted- and Performance Share Unit Plan

The dsm-firmenich Restricted- and Performance Share Unit Plan provides rules for the grant of RSUs and/or PSUs to eligible employees. Considering the plan rules that allow multiple grant dates, best practice is to effectuate the grant of share units on the last trading day at the Amsterdam Stock Exchange in March. In principle PSUs will be granted; RSUs may be granted in specific circumstances.

Subject to the plan and considering the effective date of the merger, the 2023 grant was conducted per 31 July 2023. This grant concerned the Members of the Executive Committee and the Global Management Team (i.e., the group of senior leaders composed of employees eligible for an LTI grant under policies applicable at both legacy companies). The performance period of this grant ends 31 December 2025, vesting will be effectuated 31 March 2026.

The number of share units to be granted is based on job level, contribution, and the face value of the dsm-firmenich share over a reference period. As a result, the number of share units to be granted annually will fluctuate with the share price development.

RSUs and PSUs are subject to a vesting period of 3 years starting at the grant date. Vesting of RSUs is subject to continued employment until the vesting date (‘time vesting’). In addition, vesting of PSUs is also subject to the achievement of predefined performance targets at the end of the performance period. In view of the merger of equals between DSM and Firmenich, it was decided (as included in the Offering Circular) that the PSUs granted under DSM’s Long-Term Incentive plan in 2021 and 2022, respectively, shall vest against the average of the vesting result achieved over the vesting that occurred in 2020, 2021 and 2022. Non-vested share units will be forfeited. If employment is terminated prior to the vesting date, specific rules regarding vesting and forfeitures apply.

As included in the Offering Circular, all rights of eligible persons recorded as outstanding immediately prior to the settlement of the merger related to equity grants made under DSM legacy plans related to DSM stock, such as PSUs, RSUs or stock options, have been exchanged for equivalent rights related to dsm-firmenich stock (‘roll-over’).

In line with the Articles of Association and the respective plan rules, fifty percent of the Base Fee due to the Members of the Board of Directors has been delivered in RSUs. The 2023 grant was implemented on 30 September 2023 and concerns the period between 18 April 2023 and the 2024 AGM. In principle, the vesting term is three years. However, if a board mandate ceases for whatever reason within such vesting period, outstanding unvested RSUs will vest (in full or pro-rated) as per the effective date of such cessation, subject to a one year holding period.

The 2023 grant of PSUs under the dsm-firmenich Restricted- and Performance Share Unit Plan to Members of the Executive Committee and other eligible employees is based on the at target level; in 2023 this concerned 398,886 share units.

The grant to the Members of the Board of Directors concerns 50% of the applicable Base Fee and involved 18,239 RSUs in 2023.

At former DSM, grants to the Executive Committee were based on the maximum number to vest while the grant to other eligible employees is – as of 2021 – based on the ‘at-target’ grant level (in previous years this was the ‘maximum number’ that could vest). This ‘at-target’ grant level includes RSUs as well as PSUs. The 2020 grant vested 31 March 2023. The vesting percentage for the Managing Board/Executive Committee was 105% of the at target grant (or 70% of the maximum to vest i.e., the number initially granted). For other eligible employees, all outstanding RSUs vested the vesting date, while the vesting % for the PSUs was 135% of the at target grant. In total 56,088 RSUs and 85,435 PSUs vested.

Restricted- and Performance Share Units may partly vest upon termination of employment in connection with, for example, divestments, retirement or early retirement.

In September 2022, a group of senior key employees (excluding the Co-CEOs) at DSM received an RSU grant, which was subject to completion of the merger between DSM and Firmenich. As the merger was completed, the RSUs were finally granted. Upon vesting, the respective grant will be settled in cash.

These cash-settled RSUs vest in September 2025 and have a fair value on 31 December 2023 of €92.00.

Measurement of fair value

The following assumptions were used to determine the fair value of the equity-settled share units at grant date.

Share-based compensation

An amount of €29 million is included in the costs for wages and salaries for share-based compensation (2022: €35 million).

The following table specifies the share-based compensation.