Remuneration

The compensation shall consist of a balanced mix of base remuneration, variable remuneration, pension, a share-based incentive component and may include conditions for termination and termination payments. The total compensation considers inter alia competence, experience, responsibility and performance.

Base Remuneration

The base remuneration is an appropriate portion of the total remuneration package and is reviewed each year and may be adjusted based on personal performance, changes in roles and responsibility, the Company’s expected development and local directives in terms of cost of living.

Pension & Retirement

The Company’s retirement age depends on local legislation. Four of the members of the Executive Committee are paid, in addition to the base remuneration, 10% in lieu of participation in a group pension plan. Other Executive Committee members participate in different group pension plans (defined contribution plans or defined benefit plans) (for the CEO see below).

Variable Remuneration

The basis for the annual variable remuneration scheme for 2012 for the Executive Committee is based on group consolidated profitability (75%) and personal performance objectives (25%). The maximum annual variable remuneration for the Executive Committee (other than for the CEO, see below) varies depending on target achievement and may for 2012 amount to between 45% and 100% of annual base remuneration depending on the executive’s role.

For the 2012 – 2014 performance period there will be no equity based performance plan proposed to the Annual General Meeting on April 25th, 2012 but instead an exceptional cash-based variable remuneration plan. Participation includes the same group of executives who have participated in the share based incentive programs. The award opportunity is a cash amount dependent on criteria like market practices, individual performance and the executive’s role. For the members of the Executive Committee the award can vary and be up to 60% of their annual base remuneration. Actual amounts granted to the individuals are dependent on achieving performance targets for the Company’s EPS in 2012. Vested awards must be held for a further two years and are subject to further performance and employment criteria. Once amounts are released to executives after the two year holding period, participants are required to invest 50% of the award, net of taxes, in Company shares to be held until at least the end of 2015.

Share-based incentive programmes

The Annual General Meetings in 2009, 2010 and 2011 approved proposals for a long-term share related performance- based incentive programme (“performance based share programmes”) to be offered to executives within Radisson Hospitality AB. All three programmes run for a three year period. The objectives of the performance based share programmes are to offer a competitive remuneration package that helps align executives with shareholder interests; the proportion of remuneration linked to company performance increases and that it encourages executive share ownership. In order to implement the performance based share programmes in a cost efficient and flexible manner, the Board of Directors was authorised by the AGMs to decide on acquisitions or sale of its own shares on the NASDAQ OMX Stockholm exchange.

Other Benefits

Other benefits consist mainly of car and housing benefits, according to the prevailing policy as is revised by the Board’s compensation committee from time to time.

Item 16 – The Board of Directors’ of Radisson Hospitality AB (publ) (the “Company”) proposal for resolutions regarding (A) the implementation of a long-term, performancebased incentive programme, (B) reallocation of shares and authorization for the Board to resolve on acquisitions and transfers of own shares on a regulated market, and (C) transfers of own shares to participants in Performance Share Programme 2011

Background Long-term incentive programmes for the senior executives of the Radisson Hospitality AB (the “Group”) have previously been approved by the shareholders at each of the Annual General Meetings from 2007 until 2010. The Board of Directors considers that, in relation to the programme approved by the Annual General Meeting 2010, a partly modified long-term, performancebased incentive programme should be proposed to the Annual General Meeting 2011 and be implemented for the senior executives of the Group. The purpose of the proposed programme is to ensure that remuneration within the Group helps aligning executives with shareholders and that a suitable proportion of remuneration being linked to Company performance. The Board also considers that the proposed programme supports the retention of senior executives and reflects market practice.

Participants in the programme will be given the opportunity, after a three-year qualification period, to without consideration receive allotments of shares in the Company (“Performance Shares”), subject to the achievement of certain financial targets. The qualification period runs from the day awards under the programme are granted until the day of allotments of Performance Shares. Allotments of Performance Shares are conditional upon certain financial targets, linked to relative Total Shareholder Return (“TSR”) and Earnings per Share (“EPS”), being achieved at the expiration of a three-year performance period comprising the financial years 2011 – 2013. Upon allotment of the relevant number of Performance Shares, the participants shall also be entitled, for each Performance Share allotted, to receive a cash amount equivalent to any cash dividend attributable to the Performance Share during the qualification period.

Incentive programmes in accordance with the principles set out above may be implemented also in forthcoming years, provided that each relevant Annual General Meeting resolves to that effect. For 2011, the Board of Directors proposes that the Annual General Meeting resolves on the implementation of a long-term, performance-based incentive programme with the main terms and conditions set out below (“Performance Share Programme 2011”).

Description of the Performance Share Programme 2011

General

Participation in the Performance Share Programme 2011 shall comprise no more than 35 senior executives within the Group. The term of the Performance Share Programme 2011 shall be approximately three years and the programme shall in total comprise no more than 1,342,650 shares – of which no more than 1,084,000 shares may be transferred to participants in the programme as Performance Shares and no more than 258,650 shares may be transferred on a regulated market to cover social security costs and other costs related to the programme. The maximum number of shares that may be allotted as Performance Shares under the Performance Share Programme 2011 corresponds to approximately 0.72 per cent of the total number of outstanding, registered shares in the Company. Including the number of shares that may be sold on the market at the prevailing market price in order to cover social security costs and other costs related to the programme, the total number of shares corresponds to approximately 0.90 per cent of the total number of outstanding, registered shares in the Company.

Participants are given the opportunity, provided that the TSR and EPS targets are achieved, to receive without consideration allotments of Performance Shares after the expiration of the three-year qualification period. Upon allotment of the relevant number of Performance Shares the participants shall also be entitled, for each Performance Share allotted, to receive a cash amount equivalent to any cash dividend attributable to the Performance Share during the qualification period.

The total number of Performance Shares to be allotted amounts to 300,000 for the Chief Executive Officer, 150,000 for the Chief Financial Officer, 55,000 for each of the Chief Operating Officer and the Chief Development Officer, 45,000 for other participants within the top management and 13,000 for other participants in the programme. Awards under the programme to participants are estimated to be granted in June 2011 at the latest or, in exceptional cases, in August 2011 at the latest.

As is further described below, the financial targets, and thus the allotment of Performance Shares, will during a three-year performance period comprising the financial years 2011 – 2013 be based 75 per cent on the Company’s TSR (of which 75 per cent will vest subject to Radisson Hospitality AB's TSR percentage outperformance of a comparator group of 10 publicly traded international hotel companies and 25 per cent will vest subject to Radisson Hospitality AB's TSR percentage outperformance of the constituents of the OMXS 30 Index) and 25 per cent on the Company’s cumulative EPS.

Allotments of Performance Shares will take place in conjunction with the announcement of the Company’s quarterly report for the first quarter 2014. Upon allotment of the relevant number of Performance Shares the participants shall also be entitled, for each Performance Share allotted, to receive a cash amount equivalent to any cash dividend attributable to the Performance Share during the qualification period.

Recalculation of the conditions for allotment of Performance Shares shall take place in the event of an intervening bonus issue, split, preferential rights issue and/or other similar corporate events.

Upon termination of the employment within the Group during the three-year qualification period, the right to receive allotments of Performance Shares normally lapses. In case the Chief Executive Officer retires during the qualification period, the Chief Executive Officer’s right to receive allotment of Performance Shares will be proportionately reduced in relation to remaining time of the qualification period. The Board of Directors shall under certain circumstances be entitled to adjust or terminate Performance Share Programme 2011 in advance. In addition, the Board of Directors shall be entitled to make such local adjustments of the programme, that may be necessary to implement the programme with reasonable administrative costs and efforts in the concerned jurisdictions.

Financial targets

Allotments of Performance Shares are conditional upon the financial targets, linked to TSR and EPS as set out below, being achieved during a three-year performance period.

The financial targets, and thus the allotment of Performance Shares, will during the three-year performance period comprising the financial years 2011 – 2013 be based 75 per cent on the Company’s TSR (of which 75 per cent will vest subject to Radisson Hospitality AB's TSR percentage outperformance of a comparator group of 10 publicly traded international hotel companies1 and 25 per cent will vest subject to Radisson Hospitality AB's TSR percentage outperformance of the constituents of the OMXS 30 Index) (“Index TSR”) (“TSR-based allotment of Performance Shares”) and 25 per cent on the Company’s cumulative EPS (“EPS-based allotment of Performance Shares”). TSR is equal to the overall return a shareholder would receive on his or her shareholding taking into account both share price appreciation and dividends (if any). The Board of Directors believes that linking the allotment of Performance Shares to both TSR and EPS improves the programme’s robustness, is more motivational for participants, and is more in line with market practice.

As is further described below, the financial targets include a minimum level which must be achieved in order for any allotment to occur at all, as well as a maximum level in excess of which no additional allotment will occur. Should lower financial targets than the maximum level be achieved during the three-year performance period, a lower number of Performance Shares will be allotted.

TSR-based allotment of Performance Shares shall be made based on 3-year TSR measured over the period 1 January 2011 – 31 December 2013. If the Company’s TSR exceeds the Index TSR by 26 per cent or more during the three-year performance period (i.e. equivalent to eight per cent p.a. or more), the participants have a right to receive the maximum TSR-based allotment of Performance Shares. If the Company’s TSR equals the Index TSR, the participants have a right to receive 30 per cent of the TSR-based allotment of Performance Shares. If the Company’s TSR is lower than Index TSR, the participants will have no right to receive any of the TSR-based allotment of Performance Shares. If the Company’s TSR exceeds the Index TSR, but by less than 26 per cent, a proportionate reduction of the right to receive TSR-based allotments of Performance Shares shall be made.

Radisson Hospitality AB TSR outperformance of Index TSR Per cent of TSR based allotment that vests
Less than 0 per cent Nil
0 per cent 30 per cent
26 per cent or more 100 per cent

The EPS-based allotment of Performance Shares shall be made based on 3-year cumulative EPS during the financial years 2011-2013. If the cumulative EPS amounts to EUR 1.00 or more during the three-year performance period (i.e. equivalent to approximately EUR 0.33 p.a. or more), the participants have a right to receive the maximum EPS-based allotment of Performance Shares. If the cumulative EPS amounts to EUR 0.50 (i.e. equivalent to approximately EUR 0.17 p.a.), the participants have a right to receive 30 per cent of the EPS-based allotment of Performance Shares. If the cumulative EPS amounts to less than EUR 0.50, the participants will have no right to receive any of the EPS-based allotment of Performance Shares. If the cumulative EPS amounts to more than EUR 0.50 but less than EUR 1.00, a proportionate reduction of the right to receive EPS-based allotments of Performance Shares shall be made.

Cumulative EPS Per cent of EPS based allotment that vests
Less than EUR 0.50 Nil
EUR 0.50 30 per cent
EUR 1.00 or more 100 per cent

Estimated costs and values of Performance Share Programme 2011

The participant’s right to receive allotment of Performance Shares on the final day of the programme are not securities and cannot be pledged or transferred to others. An estimated market value relating to the right to receive allotment of Performance Shares can however be calculated. Based on IFRS 2 methodology, the Board of Directors has calculated the total value of the right to receive allotment of Performance Shares under Performance Share Programme 2011 to be approximately EUR 2m, assuming that participants are granted the maximum number of Performance Shares, and an annual employee turnover of 5 per cent. If the performance conditions are achieved in full the value relating to the right to receive allotment of Performance Shares under the Performance Share Programme 2011 is estimated to be approximately EUR 4.7m.

The costs are treated as staff costs in the profit and loss account and are expensed over the three-year qualification period in accordance with the IFRS 2 standard on share-based benefits. The size of the social security costs under the programme is reported in accordance with UFR 7 and is estimated to amount to approximately EUR 0.49m using the assumptions described above, and under the assumption of an average tax rate for social security contributions of 35 per cent and zero increase in the market value of the Radisson Hospitality AB share over the performance period. If the performance conditions are achieved in full, the social security cost is estimated to amount to approximately EUR 1.1m.

Based on the assumptions described above, the aggregated maximum cost for the Performance Share Programme 2011 amounts to approximately EUR 5.9m.

Effects on key-ratios

As per 9 March 2011, the Company has 150,002,040 issued shares. The Company has repurchased a total of 3,694,500 own shares. In order to implement the Performance Share Programme 2011, a total of 1,342,650 shares are required (including those shares required to cover the social security costs and other costs related to the programme), corresponding to approximately 0.90 per cent of the total number of outstanding, registered shares in the Company. Out of the 1,342,650 shares required for the Performance Share Programme 2011, 1,084,000 shares shall be transferred to participants free of consideration, which may cause a dilutive effect of 0.72 per cent on earnings per share.

Preparation of the proposal

The proposal on the Performance Share Programme 2011 to the Annual General Meeting 2011 has been prepared by the Board of Directors’ compensation committee supported by external advisors and in consultation with major shareholders. At a Board meeting on 21 February 2011, the Board of Directors was informed of the main features of a partly revised long-term, performance-based incentive programme. At a Board meeting on 9 March 2011 the Board of Directors resolved to present the proposal on Performance Share Programme 2011 to the Annual General Meeting 2011. Except for the executives who have prepared the matter on behalf of the compensation committee, no person who might be a participant of the Performance Share Programme 2011 has taken part in the development of the terms and conditions of the programme.

Hedging

In order to implement the Performance Share Programme 2011 in an efficient and flexible manner, the Board of Directors proposes that the Annual General Meeting 2011 resolves as follows. The Board of Directors proposes that the Annual General Meeting 2011 resolves to reallocate shares which have secured previous share performance programmes to Performance Share Programme 2011 and to authorise the Board of Directors to resolve on acquisitions of own shares on a regulated market and that the authorisation shall comprise acquisitions of the number of own shares that later may be transferred to participants in the Performance Share Programme 2011 and acquisitions of the number of own shares that may be transferred on a regulated market to cover social security costs and other costs related to the Performance Share Programme 2011 and the Performance Share Programme 2008. The Board of Directors further proposes that the Annual General Meeting 2011 resolves on transfers of own shares to participants in the Performance Share Programme 2011 and also that transfers of own shares may be made to another employing company within the Group in order to secure its obligation to deliver shares to participants in the Performance Share Programme 2011.


The Board of Directors’ proposal for resolutions

Implement the Performance Share Programme 2011, based on no more than a total of 1,342,650 shares including the shares that may be necessary in order to cover social security costs and other costs related to the programme, on the main terms and conditions set out in item (A) below, (ii) on reallocation of shares and authorization to the Board to resolve on acquisitions and transfers of own shares in accordance with item (B) below, and (iii) on transfers of own shares to participants in the Performance Share Programmes 2011 and also that transfers of own shares may be made to another employing company within the Group in order to secure its obligation to deliver shares to participants in the Performance Share Programmes 2011, in accordance with item (C) below.

(A) Main terms and conditions for Performance Share Programme 2011

(a) Participants in the Performance Share Programme 2011 shall comprise no more than 35 senior executives within the Group.
(b) The term of the Performance Share Programme 2011 shall be approximately three years.
(c) Participants are given the opportunity, provided that the TSR and EPS targets are achieved, to receive without consideration allotments of Performance Shares after the expiration of the three-year qualification period.
(d) The total number of Performance Shares to be allotted amounts to 300,000 for the Chief Executive Officer, 150,000 for the Chief Financial Officer, 55,000 for each of the Chief Operating Officer and the Chief Development Officer, 45,000 for other participants within the top management and 13,000 for other participants in the programme. Awards under the programme to participants are estimated to be granted in June 2011 at the latest or, in exceptional cases, in August 2011 at the latest.
(e) Allotments of Performance Shares shall be conditional upon certain financial targets, linked to TSR and EPS as set out above, being achieved during the three-year performance period comprising the financial years 2011 – 2013. The financial targets, and thus the allotments of Performance Shares, will during the three-year performance period be based 75 per cent on the Company’s TSR (of which 75 per cent will vest subject to the Company’s TSR percentage outperformance of a comparator group of 10 publicly traded international hotel companies and 25 per cent will vest subject to the Company’s TSR percentage outperformance of the constituents of the OMXS 30 Index) and 25 per cent on the Company’s cumulative EPS as set out above.
(f) The financial targets shall include a minimum level which must be achieved in order for any allotment to occur at all, as well as a maximum level in excess of which no additional allotment will occur. Should lower financial targets than the maximum level be achieved during the three-year performance period, a lower number of Performance Shares may thus be allotted.
(g) Allotments of Performance Shares will take place in conjunction with the announcement of the Company’s quarterly report for the first quarter 2014. Upon allotment of the relevant number of Performance Shares the participants shall also be entitled, for each Performance Share allotted, to receive a cash amount equivalent to any cash dividend attributable to the Performance Share during the qualification period.
(h) Recalculation of the conditions for receipt of Performance Shares shall take place in the event of an intervening bonus issue, split, preferential rights issue and/or other similar corporate events.
(i) Upon termination of the employment within the Group during the three-year qualification period the right to receive allotments of Performance Shares normally lapses. In case the Chief Executive Officer retires during the qualification period, the Chief Executive Officer’s right to receive allotment of Performance Shares will be proportionately reduced in relation to remaining time of the qualification period.
(j) The Board of Directors shall under certain circumstances be entitled to adjust or terminate the Performance Share Programme 2011 in advance. In addition, the Board of Directors shall be entitled to make such local adjustments of the programme that may be necessary to implement the programme with reasonable administrative costs and efforts in the concerned jurisdictions. The Board of Directors shall be responsible for the detailed terms and conditions and the administration of the Performance Share Programme 2011 taking into account these main terms and conditions.

(B) Reallocation of shares and authorization for the Board to resolve on acquisitions and transfers of own shares on a regulated market

The Company has 3,694,500 repurchased shares of which 2,591,523 secure the obligations of the Company pursuant to Performance Share Programmes 2008, 2009 and 2010. The Board of Directors proposes that the Annual General Meeting resolves that the in total 1,102,977 shares that are no longer needed to secure the obligations of the Company under the Performance Share Programmes 2008, 2009 and 2010 may be reallocated from the previous programmes to Performance Share Programme 2011.

The Board of Directors shall be authorised to decide on acquisitions and transfers of own shares on a regulated market on the following terms and conditions.

(a) The authorisation may be exercised on one or several occasions, however until the Annual General Meeting 2012 at the latest.
(b) No more than 177,536 shares may be acquired to secure delivery of shares to participants in the Performance Share Programme 2011, corresponding to approximately 0.12 per cent of the total number of outstanding, registered shares in the Company.
(c) No more than 62,137 shares may be acquired to cover social security costs and other costs pertaining to the Performance Share Programme 2011, corresponding to approximately 0.041 per cent of the total number of outstanding, registered shares of the Company.
(d) No more than 8,589 shares already held by the Company may be transferred to cover social security costs and other costs related to the Performance Share Programme 2008, corresponding to approximately 0.005 per cent of the total number of outstanding, registered shares of the Company.
(e) Acquisitions and transfers on NASDAQ OMX Stockholm may only be made to a price within the from time-to-time prevailing range of prices (spread), meaning the interval between the highest purchase price and the lowest selling price.

(C) Transfers of own shares to participants in Performance Share Programme 2011

Out of the 1,342,650 shares that are subject to the obligations of the Company under Performance Share Programmes 2011, 258,650 shares are such shares that may be transferred on a regulated market in order to cover social security costs and other costs related to the programmes. Since such costs are not expected to arise prior to the Annual General Meeting 2014, the Board of Directors has resolved not to propose that the Annual General Meeting 2011 authorises the Board of Directors to resolve on transfers of shares on a regulated market for the mentioned purpose.

Resolutions on transfers of own shares to participants in the Performance Share Programmes 2011 may be made on the following terms and conditions.

(a) No more than in total 1,084,000 shares may be transferred to participants in Performance Share Programme 2011 as Performance Shares.
(b) Entitled to acquire shares without consideration shall be such persons within the Group that are participants in Performance Share Programme 2011. Further, subsidiaries shall be entitled to acquire shares without consideration, in which case such company shall be obliged, pursuant to the terms and conditions of Performance Share Programme 2011, to immediately transfer these shares to such persons within the Group being participants in Performance Share Programme 2011.
(c) Transfers of shares shall be made without consideration at the time and on such additional terms and conditions that participants in Performance Share Programme 2011 are entitled to receive allotment of shares, i.e. in conjunction with the announcement of the Company’s quarterly report for the first quarter 2014.
(d) The number of shares that may be transferred is subject to recalculation in the event of an intervening bonus issue, split, preferential rights issue and/or other similar corporate events.

The reasons for deviation from the shareholders’ preferential rights are the following. The transfers of own shares is an integrated part of the implementation of the Performance Share Programme 2011 The Board of Directors considers it to be an advantage for the Company and the shareholders that the participants in the Performance Share Programme 2011 are offered to become shareholders in the Company.

Majority requirements

The Board of Directors’ proposal pursuant to items (A) – (C) above shall be resolved on as one decision and requires that the resolution is supported by shareholders representing no less than nine-tenths of both the votes cast and the shares represented at the Annual General Meeting.

Miscellaneous

Please see note 33 of the 2010 Annual Report for a description of the Company’s other sharerelated incentive programmes.

The board’s statement pursuant to the Swedish Companies Act, Chapter 19, Section 22 is appended.


Stockholm, March 2011
Radisson Hospitality AB (publ)
The Board of Directors

1 Currently Accor, Choice Hotels, Intercontinental, Marriott, Millennium & Copthorne, NH Hoteles, Orient- Express, Shangri-La Asia, Sol Melia and Starwood. The Board of Directors may however change the composition.

Click here for a description of the 2011 programme.
Click here for a summary of the 2011 programme.

On April 23rd, 2009, the Annual General Meeting approved a long–term equity settled performance–based incentive programme to be offered to no more than 30 executives within the Radisson Hospitality AB. Grant date was set to July 23rd, 2009, and the vesting period ends in connection with the release of the first quarterly report in 2012.

Based on the outcome of certain performance criteria, the participants of the programme may at the end of the vesting period, at no cost, be awarded a certain number of so called performance shares in the Company. The total value of the perfomance shares is limited to 50% of the 2009 base salary before taxes (base salary) for the CEO and the CFO, to 35% of the base salary for the COO’s, the Chief Development Officer and the EVP of Brands, to 25% of the base salary for other participants within top management and to 15% of the base salary for the rest of the participants. As of December 31st, 2010, the maximum number of performance shares that may be awarded after the full vesting period was 1.131,108.

The award is dependent on certain performance criteria for the financial years 2009 to 2011, of which 25% is related to the development in earnings per share (EPS) and 75% to total shareholder return (TSR) of which 75% will vest subject to the Company’s outperformance of a defined peer group of hotel companies and 25% will vest subject to the Company’s outperformance of the constituents of the OMXS 30 Index. As for the EPS part, the participants are entitled to a 20% allotment if the three year annualised EPS growth is equal to or above 0%. The allotment increases proportionally based on the growth in EPS with a 100% allotment if the three year EPS growth is 73% (equal to 20% per year) or above. As for the TSR part, the participants are entitled to a 20% allotment if the three year TSR is equal to or above 0% (i.e. Radisson Hospitality AB TSR compared to Index TSR for the peer group and to Index TSR for OMXS 30 respectively). The allotment increases proportionally based on outperformance of Index TSR with a 100% allotment if the three year TSR is 26% (equal to 8% per year) or above Index TSR.

Fair value at grant date for the incentive programme is recognised as an expense over the vesting period, adjusted for the number of participants that are expected to remain in service. An amount equal to the expense is credited to equity. The fair value at grant date of the EPS based awards was the share price at grant date, i.e. SEK 17.44 (EUR 1.62). The fair value at grant date of the TSR based awards was calculated to be approximately 49% of the share price at grant date, i.e. SEK 8.63 (EUR 0.80). This value was calculated in a Monte Carlo simulation, in which the following parameters were used: share price volatility of 36% (Radisson Hospitality AB's share price volatility since the IPO to grant date adjusted for the period with extreme financial turmoil), risk–free interest rate of 1.59% (Swedish 3 year governmet bond at interest at grant date) and an average share price correlation of 35% compared to the peer group and of 52% compared to the OMXS 30 Index group. The participants will be entitled to a cash amount equivalent to any cash dividend attributable to the performance shares during the vesting period. Hence, the expected dividend has not been taken into account in the valuation of the performance shares.

Click here for a description of the 2010 programme.

On April 23rd, 2009, the Annual General Meeting approved a long–term equity settled performance–based incentive programme to be offered to no more than 30 executives within the Radisson Hospitality AB. Grant date was set to July 23rd, 2009, and the vesting period ends in connection with the release of the first quarterly report in 2012.

Based on the outcome of certain performance criteria, the participants of the programme may at the end of the vesting period, at no cost, be awarded a certain number of so called performance shares in the Company. The total value of the perfomance shares is limited to 50% of the 2009 base salary before taxes (base salary) for the CEO and the CFO, to 35% of the base salary for the COO’s, the Chief Development Officer and the EVP of Brands, to 25% of the base salary for other participants within top management and to 15% of the base salary for the rest of the participants. As of December 31st, 2010, the maximum number of performance shares that may be awarded after the full vesting period was 1.131,108.

The award is dependent on certain performance criteria for the financial years 2009 to 2011, of which 25% is related to the development in earnings per share (EPS) and 75% to total shareholder return (TSR) of which 75% will vest subject to the Company’s outperformance of a defined peer group of hotel companies and 25% will vest subject to the Company’s outperformance of the constituents of the OMXS 30 Index. As for the EPS part, the participants are entitled to a 20% allotment if the three year annualised EPS growth is equal to or above 0%. The allotment increases proportionally based on the growth in EPS with a 100% allotment if the three year EPS growth is 73% (equal to 20% per year) or above. As for the TSR part, the participants are entitled to a 20% allotment if the three year TSR is equal to or above 0% (i.e. Radisson Hospitality AB TSR compared to Index TSR for the peer group and to Index TSR for OMXS 30 respectively). The allotment increases proportionally based on outperformance of Index TSR with a 100% allotment if the three year TSR is 26% (equal to 8% per year) or above Index TSR.

Fair value at grant date for the incentive programme is recognised as an expense over the vesting period, adjusted for the number of participants that are expected to remain in service. An amount equal to the expense is credited to equity. The fair value at grant date of the EPS based awards was the share price at grant date, i.e. SEK 17.44 (EUR 1.62). The fair value at grant date of the TSR based awards was calculated to be approximately 49% of the share price at grant date, i.e. SEK 8.63 (EUR 0.80). This value was calculated in a Monte Carlo simulation, in which the following parameters were used: share price volatility of 36% (Radisson Hospitality AB share price volatility since the IPO to grant date adjusted for the period with extreme financial turmoil), risk–free interest rate of 1.59% (Swedish 3 year governmet bond at interest at grant date) and an average share price correlation of 35% compared to the peer group and of 52% compared to the OMXS 30 Index group. The participants will be entitled to a cash amount equivalent to any cash dividend attributable to the performance shares during the vesting period. Hence, the expected dividend has not been taken into account in the valuation of the performance shares.

Click here for a description of the 2009 programme.