BASF Report 2021 Consoli dated Financial Statements – Notes 281 ultimately paid out at the end of the performance periods for Fair value of PSUs and parameters used as of December 31, 2021 BASF Option Program (BOP) Strive!2021 and Strive!2020 depends on the achievement of the Strive! program of the year three strategic targets: growth (volume growth compared with The “BOP” LTI program last offered in 2020, grants virtual option global chemical production), profitability (increase in EBITDA before 2021 2020 rights. When exercised, the option rights are settled in cash. special items) and sustainability (CO emissions). Number of PSUs granted 892,146 724,405 2 Number of PSUs vested 223,037 362,203 Participation in BOP was voluntary. In order to take part in the Achievement of each strategic target is calculated for each year of Fair value including fluctuation / PSU € 78.59 82.06 program, a participant had to make a personal investment: the four-year performance period. Upon conclusion of the perfor- Fair value excluding fluctuation / PSU € 88.83 89.04 Participants were required to hold BASF shares representing mance period, the average degree of target achievement for each between 10% and 30% of their respective variable compensation strategic goal is equal to the arithmetic mean of the degrees of target Weighted target achievement % 158.3 137.5 for a two-year period from the granting of the option (holding period). achievement for the four years. The total target achievement for the Base price € 57.15 67.85 The number of shares to be held was determined by the amount of respective Strive! plan is determined by adding the target achieve- variable compensation and the volume-weighted average share ment degree for the three strategic targets after having multiplied In 2021, the number of PSUs granted under the 2021 Strive! price on the first trading day after the Annual Shareholders’ Meeting. each by the corresponding weighting factor. To calculate the final program amounted to 892,146 and under the 2020 Strive! program number of PSUs, this weighted target achievement is multiplied by to 724,405. PSUs vested by the deadline totaling 223,037 for the Participants received four option rights per invested share. Each the preliminary number of PSUs. The payment amount upon 2021 Strive! program and 362,203 for the 2020 Strive! program option consists of two parts, right A and right B, which may be conclusion of the four-year performance period is calculated by were measured at fair value. Fair value is determined using the BASF exercised if defined thresholds have been met: The threshold of multiplying the final number of PSUs by the average BASF share share price of €61.78 on the balance sheet date plus expected right A is met if the price of the BASF share has increased by more price for the fourth quarter of the last year of the performance period, dividend payments during the term of the program. The weighted than 30% in comparison with the base price on the option grant plus the accumulated dividend payments in the four fiscal years. The target achievement degrees of 158.3% for the 2021 Strive! program date (absolute threshold). The value of right A is the difference payment occurs in May of the following year and is capped at 200% and 137.5% for the Strive! program 2020 are also taken into between the market price of BASF shares on the exercise date and of the target amount. The payment amount therefore not only account. A fluctuation rate of 4% is assumed in the fair value the base price; it is limited to 100% of the base price. Right B may reflects achievement of the strategic targets, but performance of calculation for senior executives. be exercised (relative threshold) if the cumulative percentage BASF’s dividend and share price as well (total shareholder return). performance of BASF shares exceeds the percentage performance The LTI provision for Strive! rose from €11 million as of Decem- of the MSCI World Chemicals IndexSM (MSCI Chemicals). The value A personal investment in BASF shares is the prerequisite for ber 31, 2020, to €48 million as of December 31, 2021, due to the of right B is the base price of the option multiplied by twice the participation in Strive!. Participants are required to own BASF shares increased number of vested PSUs and higher fair values. The percentage by which the BASF share outperforms the MSCI amounting to a predetermined percentage of their base salary for expense from the addition of provisions totaled €37 million in 2021 Chemicals Index on the exercise date. It is limited to the closing the duration of the performance period. A set-up phase applies to and €11 million in 2020. No provisions were attributable to the price on the date of exercise less the calculated nominal value of the first-time participants. During this period, they are required to hold a disposal groups as of December 31, 2021, or December 31, 2020. BASF share. Right B may only be exercised if the price of the BASF percentage of shares as their predetermined personal investment. share equals at least the base price. When a two-year vesting period The set-up phase for the 2021 Strive! program ends on Decem- is over, options granted can be exercised until the end of the ber 31, 2024. The 2021 Strive! program has the same fundamental respective exercise period. During the exercise period, there are structure as the 2020 Strive! program. certain times (closed periods) during which the options may not be exercised. Each option can only be exercised in full, and one of the thresholds must be exceeded. If the other threshold is not exceeded, the other option right lapses. A participant’s maximum gain from