Business Context and Reporting Period
This Form 6-K filing by Smith & Nephew plc is dated March 27, 2025. The document serves as a notification and public disclosure of transactions by Persons Discharging Managerial Responsibilities (PDMRs) and persons closely associated with them, in accordance with the UK Market Abuse Regulation. The filing details share awards granted on March 26, 2025, calculated using a share price of £11.575, which reflects the average closing price for the ten dealing days following the announcement of the Company's full-year 2024 results on February 25, 2025.
Key Financial Metrics
This filing is a regulatory disclosure of executive compensation and does not contain financial performance data such as revenue, profit, cash flow, margins, debt, or liquidity. The only financial metric provided is the share price used for valuation of awards:
- Share Price for Award Calculation: £11.575 per ordinary share (US$0.20 nominal value).
- Transaction Date: March 26, 2025.
- Place of Transaction: London (outside a trading venue).
Material Changes Versus Prior Period
The filing does not provide comparative financial data or material changes in business operations versus prior periods. It solely reports the execution of annual equity incentive plans for the 2025 cycle based on performance for the year ended December 31, 2024.
Guidance, Outlook, and Management Commentary
The document outlines the performance conditions attached to the 2025 Performance Share Programme (PSP) awards, which vest on March 26, 2028, subject to the following metrics measured over the period January 1, 2025, to December 31, 2027:
- Adjusted Earnings per Share (EPSA) (30% weighting):
- Threshold: 8% CAGR
- Target: 10.5% CAGR
- Maximum: 13% CAGR
- Relative Total Shareholder Return (TSR) (30% weighting):
- Measured against FTSE100 Peer Group (50%) and MedTech Peer Group (50%).
- Threshold: Equal to Index.
- Maximum: 8% above Index.
- Return on Invested Capital (ROIC) (30% weighting):
- Threshold: 9% (25% vesting)
- Target: 10% (50% vesting)
- Maximum: 11% (100% vesting)
- Strategic Objective (10% weighting):
- Reduction in Scope 1 and 2 Greenhouse Gas emissions relative to a 2019 baseline.
- Threshold: 72% reduction (25% vesting)
- Target: 74% reduction (50% vesting)
- Maximum: 76% reduction (100% vesting)
Restricted Share Plan 2024: Awards granted under this plan are subject to a "reasonable judgement underpin" for the CEO. The Remuneration Committee may scale back vesting to zero if there are material regulatory sanctions, environmental/social/governance issues, major safety incidents, or reputational damage.
Important Facts for Investor Verification
- Share Price Basis: Verify the share price of £11.575 against market data for the ten days following February 25, 2025.
- Performance Targets: Note the specific EPSA CAGR targets (8% to 13%) and ROIC targets (9% to 11%) set for the 2025-2027 period.
- CEO Underpin: Confirm the specific criteria for the "reasonable judgement underpin" applicable to CEO Deepak Nath's Restricted Share awards, which includes regulatory and safety contingencies.
- Vesting Schedules: PSP awards vest in 2028; Deferred Bonus awards vest in 2028 with a two-year hold period until 2030; Restricted Shares vest in equal annual tranches over three years.
- Dividend Equivalents: All plans include provisions for additional shares equivalent to dividends payable on vested shares during the vesting period.