Remuneration principles and decision-making procedure
The fees of the Board
Silmäasema’s Annual General Meeting decides on the remuneration and other potential benefits of the members of the Board of Directors. Fees to the Board members are paid in the form of money. The Board members have no equity incentive programs. The Board members do not participate in the other remuneration or pension schemes of the Company. The proposal on the remuneration of the members of the Board of Directors is prepared by a nomination board established by the largest shareholders.
Silmäasema’s Annual General Meeting of Shareholders on April 11, 2018, decided that the Chair of the Board of Directors shall be paid 40,000 euros per year and other members of the Board shall be paid 22,000 euros per year. In addition to the annual fee the Chair and other members of the Board will be paid a fee for attending the meetings of the Audit Committee of 400 euros per meeting.
The service relationship terms and remuneration of the CEO and the management team
The Board of Directors of Silmäasema decides on the terms of the CEO’s service relationship.
In addition, the Board of Directors of Silmäasema decides on the personal remuneration, other financial benefits and grounds for the performance bonus system and performance bonuses payable to the members of the management team and the CEO’s direct subordinates.
The remuneration program of the CEO and and the members of the management team consists of a fixed salary (monthly salary), fringe benefits, as well as payable bonus determined yearly on the basis of payable bonus criteria. The Board of Directors monitors the implementation of the remuneration programs of the CEO, other management team members and the CEO’s direct subordinates.
The CEO’s retirement age will be determined in accordance with the applicable Finnish Employees’ Pensions Act (Tyel). The retirement age and pension of the Board members will be determined in accordance with the applicable Finnish Employees’ Pensions Act (Tyel).
The CEO’s contract may be terminated at a six months’ notice by the CEO. In addition to notice period salary, Silmäasema shall pay the CEO compensation during the validity of the non-compete agreement which is six months after the termination of the employment relationship. The CEO’s contract may be terminated at a 12 months’ notice by the Company. The CEO is entitled to salary in accordance with the contract from the notice period.
The Company’s key persons have had the possibility to acquire Silmäasema’s shares. More information on the management’s shareholding can be found here.
Target-related incentive program
Silmäasema’s target-related incentive scheme covers all of its employees, with the exception of doctors in an employment relationship. Depending on the personnel group, the payments are made in different cycles. The Management Team’s annual performance bonuses are paid once a year after the completion of the financial statements. The Group’s Board of Directors determines the criteria for the management’s performance bonus scheme annually.
For the CEO the maximum bonus amount is 40 per cent and for the Group’s Management Team 30 per cent of the annual salary, including fringe benefits. The criteria used in the performance bonus scheme is the adjusted EBITDA and the growth of net sales. Other factors may also be used as criteria in other years. The criteria for each year are described in that year’s Remuneration Statement.
Joint-investment arrangements 2014–2016
The Company’s key persons have had the possibility to invest in Silmäasema through targeted share issues between 2014–2016 as part of long-term commitment. The conveyance of shares includes terms.
Share incentive plan 2017
On May 10, 2017, Silmäasema’s Board of Directors decided to establish a share incentive plan for the Company. The target of the share incentive plan is, for instance, to steer Silmäasema’s key persons to implement the Company’s long-term strategic targets, to emphasize to key persons the significance of developing shareholder value, and to commit key persons to the Company. The Company’s Board of Directors is authorised to resolve on the issue of a maximum of 100,000 new and/or existing Shares.
The share incentive plan has three three-year performance periods: 2017–2019, 2018–2020 and 2019–2021. Silmäasema’s Board decides on the plan’s performance criteria at the beginning of each performance period. The possible reward for the performance period 2017–2019 is based on the Group’s cumulative earnings per share. The possible reward for the performance period 2017–2019 will be paid in 2020, partially with the Company’s shares and partially in cash. The cash portion is intended to cover taxes and tax-related costs arising from the rewards to the key personnel. Receiving the reward requires continuation of the employment, with the exception of retirement, disability to work, death or an M&A situation. The key person must own 50% of the shares received from the whole share-based incentive plan until his or her share ownership in the Company is equivalent to the value of his or her gross annual salary. This amount of shares must be owned for as long as the key person’s employment relationship with the Company continues.
A total of 21 key persons were selected to participate in the 2017–2019 performance period, including the members of Silmäasema’s Management Team. The maximum total number of shares to be paid as rewards for the 2017–2019 performance period is 77,611 Silmäasema shares.
A total of 20 key persons were selected to participate in the 2018–2020 performance period, including the members of Silmäasema’s Management Team. The maximum total number of shares to be paid as rewards for the 2018–2020 performance period is 106,907 Silmäasema shares.
Remuneration Statement 2017
The Remuneration Statement 2017 includes the description of the decision-making procedures and main principles of remuneration concerning the remuneration of the Board members, the CEO, and any other executives as well as the Remuneration Report which discloses the remuneration paid during the 2017 financial period. The Remuneration Statement is part of Corporate Governance Statement 2017.