The Lynas Rare Earths Ltd (ASX: LYC) share price is trading lower with the market on Wednesday.
In morning trade, the rare earths producer's shares are down 1.5% to $8.02.
This means the Lynas share price is now down 21% since the start of the year.
Despite this decline, the company's executives have just had their performance rights vested.
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What's going on?
This morning Lynas revealed that the performance outcomes for the 2019 LTI Plan have now been assessed.
According to the release, 89% of the performance rights awarded under the 2019 LTI Plan will vest, with the remaining 11% to be lapsed.
And while the Lynas share price may be struggling this year, there's no denying that management has earned these performance rights after a stellar few years. In fact, despite the recent weakness in the Lynas share price, it is still up over 400% since the start of 2019.
Performance rights vested
As per the FY 2020 annual report, the LTI performance rights issued in 2019 were granted subject to vesting conditions relating to earnings before interest and tax (EBIT) targets, relative total shareholder return (TSR), and Lynas 2025 Strategic Targets.
In respect to its EBIT target, management was tasked with growing the company's EBIT by 7% per annum between 1 July 2019 and 30 June 2022. It ended up delivering EBIT growth of 105% per annum.
As for its total shareholder return, management was aiming to be at least at the 51st percentile of ASX 200 companies calculated over the three-year period from 26 August 2019 to 26 August 2022.
Well, it certainly did a lot better than that. Thanks to the incredible gains by the Lynas share price during this period, the company's shares were in the 98th percentile of ASX 200 companies.
Finally, management fell a touch short on the Lynas 2025 Project Target performance conditions, which is why only 89% of the performance rights vested.
It explained:
[T]wo out of three of the Lynas 2025 Strategic Targets were achieved and two thirds of the performance rights related to this condition will vest. The Lynas 2025 Strategic Target in respect of capacity to separate Heavy Rare Earths was not achieved due to the delay in the US Government's decision on funding and the decision by Lynas not to proceed with the Project prior to funding being confirmed.
Overall, I'm sure the majority of shareholders would agree that the vesting of these performance rights is entirely deserved after an incredible three years.
