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 6 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 50 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. 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
The goals of Silmäasema’s share incentive plan include guiding Silmäasema’s key persons in achieving the company’s long-term strategic targets, stressing the importance of developing shareholder value and increasing key persons’ commitment to the company. The target group consists of the CEO, the members of the Management Team and other key managers.
At the end of 2018, the share incentive plan had three three-year performance periods: 2017–2019, 2018–2020 and 2019–2021. Silmäasema’s Board of Directors decides on the plan’s performance criteria at the beginning of each performance period. The reception of any rewards requires the continuation of the employment relationship, with the exception of retirement, incapacity for work, death or corporate reorganisation. A key person must own 50 per cent of the shares received through the share incentive plan until the holding in the company is equivalent to their gross annual salary. The shares must be owned for as long as the key person’s employment relationship with the company continues. The potential reward will be paid during the calendar year immediately following the end of the performance period. The reward will be paid partly in Silmäasema shares and partly in cash. The cash portion is intended to cover taxes and tax-related costs arising from the rewards to key personnel.
At the end of the review period, the target group for the 2017–2019 performance period consisted of 12 people, with the maximum total number of shares to be paid as rewards being 38,978; the target group for the 2018–2020 performance period consisted of 12 people, with the maximum total number of shares to be paid as rewards being 55,434; and the target group for the 2019–2021 performance period consisted of 19 people, with the maximum total number of shares to be paid as rewards being 125,352. A total of 156,176 Silmäasema shares have been reserved for the 2019–2021 performance period.
Remuneration Statement 2018
The Remuneration Statement 2018 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 2018 financial period. The Remuneration Statement is part of Corporate Governance Statement 2018.