TORM plc Long-Term Incentive Program

In accordance with TORM plc’s (“TORM”) Remuneration Policy adopted by the Annual General Meeting of TORM plc on 12 April 2018, the Board of Directors has as part of a long-term incentive program decided to grant certain employees (the “Participants”) Restricted Share Units (“RSUs”) in the form of restricted stock options. The RSUs aim at incentivizing the Participants to seek to improve the performance of TORM and thereby the TORM share price for the mutual benefit of themselves and the shareholders of TORM.

The Participants will for the year 2021 be granted a total of 1,099,919 RSUs and, subject to vesting, each RSU entitles the holder to acquire one TORM A-share. The RSUs will vest over a three-year period, with one third of the grant amount vesting at each anniversary during the three-year period starting on 01 January 2022. The exercise price for each TORM A-share is DKK 53.5, corresponding to the average of 90 calendar days preceding the publication of TORM plc’s 2020 Annual Report plus a 15% premium. Vested RSUs may be exercised for a period of 360 days from each vesting date.  

In addition to the RSUs granted to the Participants, Executive Director Jacob Meldgaard will be granted a total of 255,200 RSUs on similar terms as outlined above.

Holders of the RSUs will have no rights as a shareholder with respect to such RSUs until such time as the RSUs vest and are exercised and TORM A-shares are issued. The RSUs include certain adjustment and acceleration provisions, exercise conditions and other terms customary for restricted stock option programs of this nature.

The theoretical market value of the RSU allocation is calculated at USD 3.0m based on the Black-Scholes model. The key assumptions for the calculation of the market value are:

• The strike price is adjusted for future TORM dividends
• The volatility of the TORM share is estimated at 45% for the first year to account for the currently high volatility in the stock market and 40% thereafter
• The risk-free interest rate based upon expiry of the RSUs is based on Danish government bonds with maturity corresponding to the maturity of the individual RSUs (-0.5%)
• A share price of DKK 55.4 per A-share at the time of allocation

The RSU allocation is expected to affect the P&L statement in the following manner: