The important principles of Componenta guiding remuneration are remuneration based on performance and overall remuneration of personnel. Componenta seeks to motivate, attract and retain skilled persons with remuneration. The objective of remuneration is to contribute to the favourable development of shareholder value, to develop the company’s performance and to help the company in fulfilling its business strategy and in attaining the long-term financial benefits.
Remuneration is one of the most important ways to ensure that the company’s employees understand the result targets, their own possibilities to influence the results and the causal connection between the result of operations and remuneration. Componenta aims to keep the remuneration principles and practices comprehensible and transparent.
Read more in our Remuneration Policy >>
The General Meeting of Componenta decides on the Board’s remuneration. The Shareholders’ Nomination Board prepares well-grounded proposals for the General Meeting regarding the election and remuneration of Board members and usually also presents the proposals to the General Meeting. The Shareholders’ Nomination Board consists of the company’s largest shareholders.
The Board of Directors of Componenta appoints the President and CEO and approves the terms andconditions of the President and CEO’s contract of service, as well as the salaries and remuneration payable to the President and CEO. The Board also decides on the salaries and remuneration of the members of the Corporate Executive Team on the basis of the proposal of the President and CEO, in accordance with the ”one over one” approval principle applied in the Group.
Remuneration of the Board members is based on the annual fee approved by the General Meeting. In 2020, the Annual General Meeting held on 16 April 2020 decided that the following fixed annual fees will be paid to the Board members for their term of office that ends at the close of the next Annual General Meeting:Chairman of the Board of Directors EUR 50,000, Members of the Board of Directors EUR 25,000 , and the members of possible committees reporting to the Board of Directors EUR 5,000.
Furthermore, the General Meeting decided that the travel expenses of the Board members will be paid in accordance with the company’s travel regulations. The Board members do not have a contract of employment or service with Componenta or its subsidiaries and are not included in the scope of Componenta’s incentive schemes.
The total remuneration of the President and CEO and other members of the Corporate Executive Team consists of a fixed part, i.e. a monthly salary and fringe benefits (including company phone) and of a variable part comprising short-term and long-term incentive schemes. The fixed part of the remuneration of members of the Corporate Executive Team includes compensation for any work they perform in the Boards of Componenta Group’s subsidiaries and affiliate companies.
|2019||Salaries, fees and fringe benefits, €||Short-term bonuses, €||Total, €|
|President and CEO Marko Penttinen (as of 30 August 2019)||81,011||81,011|
|President and CEO Harri Suutari (until 30 August 2019)||235,899||10,656||246,555|
|Other members of the Corporate Executive Team*||634,022||20,712||959,204|
*The members of the Corporate Executive Team in 2019 (in addition to the President and CEO) were Mervi Immonen, Marko Karppinen, Pasi Mäkinen and, as of 2 September 2019, Miikka Jämsen, Arto Pitkämö and Sami Sivuranta.
The President and CEO’s contract of service is valid until further notice. The main terms and conditions of the President and CEO’s contract of service are shown in the table below.
|Salary and fringe benefits||Total monthly salary EUR 20,000, consisting of a cash salary and possible fringe benefits (phone, meal and car benefits). In addition, the President and CEO is entitled to supplementary health insurance.|
|Short-term incentives||The President and CEO is entitled to an incentive based on achievement of financial targets. The maximum amount of the annual total remuneration is equal to the President and CEO’s six months’ total salary. The short-term incentive scheme is discretionary, and the company may amend the terms and conditions or basis of payment of the incentive schemes or discontinue an incentive scheme. The incentive scheme is discussed in closer detail in section “Short-term incentive scheme” below.|
|Long-term incentives||The President and CEO is entitled to the share-based incentive schemes for the Group’s key employees, introduced by a Board decision in November 2018, the stock option scheme and a restricted share unit plan. In compliance with the terms and conditions of the long-term incentive scheme, Harri Suutari, who was the President and CEO of Componenta until 30 August 2019, gave up all stock options and the shares of the restricted share unit plan allocated to him in 2018 when he became a member of Componenta’s Board of Directors on 30 August 2019. In line with the decision of the Board of Directors, Marko Penttinen, who started as Componenta’s President and CEO on 30 August 2019, was allocated stock options at the same terms and conditions and the same amount as Harri Suutari received. The incentive schemes are discretionary, and the company may amend the terms and conditions or basis of payment of the incentive schemes or discontinue an incentive scheme. The incentive schemes are discussed in closer detail in section “Long-term incentive scheme” below.|
|Pension||The President and CEO is covered by the statutory pension scheme.|
|Termination of employment||Unless terminated before that time, the President and CEO’s contract of service will end when he reaches the age of 68. The President and CEO’s contract of service can be terminated by the President and CEO by giving three months’ notice and by the company by giving six months’ notice. If the President and CEO’ contract of service is terminated by the company without the President and CEO being guilty of e.g. crimes, dishonest conduct or breach of contract relevant to the company, the President and CEO will be entitled to one-off severance pay equal to six months’ total salary.|
The purpose of the short-term incentive scheme is to support attainment of the targets set and to promote commitment by setting unambiguous and measurable annual targets that have a direct impact on the company’s result. Componenta’s Board of Direc-tors will approve the terms and targets of short-term incentive scheme annually for the whole Group. The amount of remuneration payable from the short-term incentive scheme depends on attainment of the Group’s targets and business unit specific targets.
The remuneration based on short-term incentive schemes is paid in cash. In 2019, the performance bonus payable to the Corporate Executive Team members from the short-term incentive scheme was based on cash flow. The maximum remuneration payable to the President and CEO and other Corporate Executive Team members from the short-term incentive scheme must not exceed half of their fixed annual salary.
The purpose of long-term incentive schemes is to provide an incentive to key employees and to bring their benefits in line with the shareholders’ benefits and the long-term strategy aimed at sustainability of business operations. Those included in the scope of a long-term incentive scheme can earn the company’s shares.
The Board of Directors decides on the long-term incentive schemes, such as share-based remuneration schemes. The share-based remuneration schemes have earning and commitment periods of several years. Basically, it is a prerequisite for receiving the remuneration that the person’s contract of employment or service is valid at the time the remuneration is paid, but the Board of Directors may decide otherwise at its discretion. The renumeration is decided on by the Board of Directors which can also amend the predetermined criteria of long-term incentives.The share of remuneration earned on the basis of the valid long-term incentive schemes of the total remuneration of the President and CEO and other Corporate Executive Team members depends on the development of the company’s shareholder value.
On 12 November 2018, the Board of Directors resolved, by virtue of an authorization granted by the General Meeting, to implement share-based incentive plan for the Group key employees. The purpose of the stock options is to encourage the key employees to work on a long-term basis to increase the shareholder value. The purpose is also to retain the key employees of the company.
The maximum total number of stock options issued is 7,320,500, and each stock option entitles their owners to subscribe for one (1) Componenta share. Of the stock options, 2,430,000 were marked with the symbol 2018A, 2,445,250 were marked with the symbol 2018B, and 2,445,250 were marked with the symbol 2018C.On 12 November 2018, the Board of Directors decided to grant 2,430,000 stock options (stock option 2018A) to a maximum of 20 key employees, including the members of the Corporate Executive Team. The options were issued gratuitously.
On 10 February 2020, the Board of Directors resolved to convert stock options 2018A (416,250) that have been returned to the company to stock options 2018B. Read more in the stock exchange release >>
On 12 November 2018, the Board of Directors resolved to implement a restricted share plan to key employees. The reward from the Restricted Share Plan 2018 will be based on the key employee’s valid employment or service and the continuation of work during the vesting period. The reward will be paid partly in the company's shares and partly in cash after the expiry of a 36 month vesting period by the end of December 2021, at the latest.
The cash proportion is intended to cover taxes and tax-related costs arising from the reward to the key employee.The Restricted Share Plan is intended for approximately 15 key employees resolved by the Board of Directors, including the members of the Corporate Executive Team. The rewards to be paid on the basis of the Restricted Share Plan 2018 correspond to the value of a maximum total of 1,999,500 Componenta Corporation shares including also the proportion to be paid in cash.
Read more about Componenta's remuneration: 2019 Remuneration Report.
Earlier, the Remuneration Report has been included in the Corporate Governance Statement document.