Management and governanceManagement

Corporate governance

Corporate governance Share Option Scheme, in order to maintain the incentive for all The Company was incorporated in The Netherlands on May 17, employees of the Elbit group based upon the same principles. 1993 as a private limited liability company (besloten vennootschap met beperkte aansprakelijkheid). The Company was converted • Best Practice Provision II.2.7 stipulates that neither the exercise into a public limited liability company (naamloze vennootschap) price nor the other conditions regarding the granted options on October 12, 2006, with the name “Plaza Centers N.V.”. The shall be modified during the term of the options, except insofar principal applicable legislation and the legislation under which as prompted by structural changes relating to the shares of the the Company and the ordinary shares in the Company have been Company in accordance with established market practice. The created is book 2 of the Dutch Civil Code (Burgerlijk Wetboek). Company had on November 25, 2008 adjusted the exercise price of the granted options and in November 2012 the Company Compliance extended the option term from ten (10) to fifteen (15) years from The Board is committed to high standards of Corporate the date of grant of the Share Option Scheme as was adopted in Governance, in order to maintain the trust of the Company’s 2006 (“2006 Share Option Scheme”). This has been done since shareholders and other stakeholders. The Company has a one-tier the Board was of the view that the 2006 Share Option Scheme Board whereas the Dutch Corporate Governance Code is based should serve as an effective incentive for the employees of the on a separate management Board and supervisory Board. Where group of companies, headed by the Company, to encourage possible, taking the aforesaid into consideration, the Company them to remain in employment and work to achieve the best complies with the Dutch Corporate Governance Code and the possible results for the Company and its shareholders. Market UK Corporate Governance Code, with the exception of a limited conditions and the global economic crisis that is still impacting number of best practice provisions which it does not consider to the geographic regions and real estate sectors in which the be in the interests of the Company and its stakeholders or which Company operates, however, led to a strong decline in the are not practically feasible to implement. Company’s share price at both the London Stock Exchange and the Warsaw Stock Exchange, resulting in practically all options These exceptions are listed below. being out of the money without a favorable outlook for a quick recovery. In order to maintain the incentive for all employees, the The Best Practice Provisions of the Dutch Corporate Governance Board has submitted to the extraordinary meeting of shareholders Code not applied by the Company in the year 2012 are: that was held on November 25, 2008, a proposal to amend the 2006 Share Option Scheme and to determine the exercise price • Best Practice Provision II.1.3 stipulates inter alia that the of all options granted on or prior to October 25, 2008, to GBP Company should have an internal risk management and control 0.52 and to the extraordinary meeting of shareholders that was system which should in any event employ as instruments of the held on November 20, 2012, a proposal to amend the 2006 Share internal risk management and control system a code of conduct Option Scheme and to extend the option term from ten (10) to which should be published on the Company’s website. Such fifteen (15) years from the date of grant to be in line with the code of conduct is not available at the date of publication of end date of the option term under the “Plaza Centers N.V. Second this document. Incentive Plan”, adopted by the extraordinary general meeting of shareholders on November 22, 2011. In an attempt to insure that • Best Practice Provision II.1.4 (b) stipulates that the management the options are and remain an effective incentive and to assist in Board shall provide a description of the design and effectiveness the retention of employees, and that the option holders should of the internal risk management and control system for the main have the opportunity to exercise their options until the same end risks. Since the Company has no such code, it cannot refer its date as the holders of options under the ESOP 2011, the revised design and effectiveness. 2006 Share Option Scheme includes an extension of the vesting term for options granted less than one year prior to October 25, • Best Practice Provision II.1.6 stipulates that the management 2008. The shareholders approved the amendments of the 2006 Board shall describe the sensitivity of the results of the Company Share Option Scheme, the adjustment of the exercise price and to external factors and variables. Since the Company has no the extension of the option term. streaming/fixed annual revenue from operation of properties, it does not perform such analysis. • Best Practice Provision II.2.12 and Best Practice Provision II.2.13 stipulate inter alia that the remuneration report of the • Best Practice Provision II.2.4 stipulates that granted options supervisory Board shall include account of the manner in which shall not be exercised in the first three years after the date of the remuneration policy has been implemented in the past granting. The current share incentive schemes of the Company financial year as well as an overview of the remuneration policy do not restrict the exercise of options to a lockup period of three planned by the supervisory Board for the next financial year and years. The reason therefore is that the Company and the Elbit subsequent years and should contain the information specified group share the same remuneration policy and the Company’s in these provisions. The current remuneration policy of the Share Option Schemes were drafted in accordance with Elbit’s Company has remained unchanged from 2006 at the moment

Plaza Centers N.V. Annual report 2012 51