Remuneration Statement

This Remuneration Statement is published in accordance with the Corporate Governance Code 2015.

Remuneration and other benefits of the members of the Board of Directors

The Annual General Meeting decides annually on the remuneration payable to members of the Board of Directors for their term of office. The Nomination Committee of Oriola-KD prepares and presents to the Board a recommendation for the proposal to be put by the Board to the Annual General Meeting concerning the composition and remuneration of the Board.

On 14 March 2016, the Annual General Meeting decided that the Chairman of the Board will receive EUR 48,400 in remuneration for his term of office, the Vice Chairman of the Board and the Chairman of the Board’s Audit Committee EUR 30,250 and the other members of the Board EUR 24,200 each. The Chairman of the Board will receive an attendance fee of EUR 1,000 per meeting, and the other Board members EUR 500 per meeting. Attendance fees will also be paid correspondingly to the chairmen and members of Board and company committees. Travel expenses will be paid in accordance with the travel policy of the company. In accordance with the decision of the Annual General Meeting, 60 per cent of the annual remuneration was paid in cash and 40 per cent in class B shares. Oriola-KD Corporation class B shares were acquired on the market for the Board members as follows: Anssi Vanjoki 4,404 shares, Anja Korhonen 2,752 shares, Mariette Kristenson 2,202 shares, Kuisma Niemelä 2,202 shares, Eva Nilsson Bågenholm 2,752 shares, Lena Ridström 2,202 shares, Matti Rihko 2,202 shares and Staffan Simberg 2,202 shares.

Restriction periods are not included in the remuneration paid in Oriola-KD Corporation class B shares. The members of the Board of Directors have not received any share-based rights as remuneration. They are not included in the company’s share incentive scheme. The company has not granted any loans to Board members nor given guarantees on their behalf.

The total fees and other benefits of the Board members for 2016 and shareholdings in the company 31 December 2016 are available in the Financial Statements and Remuneration Report.

Main principles and decision-making process on the remuneration of the President and CEO and other executives

The salary of the President and CEO and other members of the Group Management Team consists of a fixed base salary, fringe benefits, a short term performance bonus and a long term share incentive plan.  The remuneration commits management to develop the company and its financial success in the long term. The development stage and strategy of the company are considered when determining the principles for remuneration.

In accordance with its charter approved by the Board of Directors, the Compensation Committee monitors the effectiveness of the incentive schemes to ensure that the schemes promote the achievement of  the company’s short term and long term goals. According to the charter, the Compensation Committee reviews management and personnel remuneration policies and issues related to management appointments, and makes proposals on such matters to the Board of Directors. The Committee’s responsibilities include:

  • reviewing, evaluating and making proposals on the remuneration structure and incentive schemes of management and the personnel of the Oriola-KD Group
  • monitoring the effectiveness of these systems to ensure that incentive schemes of the management promote achievement of the company’s short term and long term goals
  • reviewing and preparing other matters relating to the remuneration of management and personnel, and submitting proposals on these to the Board
  • considering and preparing appointments of top management to be decided by the Board.

The Board of Directors reviews and decides annually on the remuneration and benefits of the President and CEO and other members of the Group Management Team, and the underlying criteria thereof.

The Board of Directors decides annually on the earnings criteria and the determination of the performance bonuses based on the proposal of the Compensation Committee.

The company has not granted any loans to the President and CEO or to the members of the Group Management team, nor given guarantees on their behalf. The company has no share option scheme in place. The President and CEO and the members of the Group Management Team have no supplementary pension scheme, except the Vice President Consumer Business and Vice President Healthcare Business, who have a defined contribution pension benefit typically applied in the Swedish market.

Short term performance bonus

The performance bonus is based on the achievement of the company’s financial targets and personal targets. The maximum performance bonus in 2016 for the President and CEO is 75 per cent of the annual salary and for the other Group Management Team members 40 per cent of the annual salary. The Board of Directors decides annually on the earnings criteria and the determination of the performance bonuses based on the proposal of the Compensation Committee.

Long term share based incentive scheme

The members of Oriola-KD’s Group Management Team are in the company’s long term share incentive scheme. The scheme unites the objectives of shareholders and key personnel to increase the value of the company, commits the key personnel to the company, and offers key personnel a competitive remuneration system based on ownership of shares in the company.

The Board of Directors of Oriola-KD approved the terms and conditions of the key employees’ share savings plan on 28 May 2013. A total of about 40 key employees were participating in the plan in the Savings Period 2014-2015.

On 15 June 2015 the Board of Directors decided to launch a third Savings Period 2015-2016 in which approximately 50 group key employees have enrolled. This Savings Period ended on 31 December 2016. The holding period will end on the publication date of the Oriola-KD Q4/2017 interim report.

On 19 October 2016 the Board of Directors decided to launch a fourth Savings Period 2017 targeted at approximately 90 group key employees. This Savings Period will last for 12 months, ending on 31 December 2017. The holding period will end on the publication date of the Oriola-KD Q4/2018 interim report.

The Board of Directors resolved to establish a new share-based incentive plan directed to the Group key personnel (the Plan) on 4 December 2015. The aim of the Plan is to combine the objectives of the shareholders and the key personnel in order to increase the value of the Company in the long-term, to retain the key personnel in the Company, and to offer them a competitive reward plan based on performance and accumulation of share ownership in the Company. The aim is also to harmonize the Company's incentive plans into a One-Platform Plan where the Company's Key Personnel Share Savings Plan and Long-Term Incentive Plan are combined.

The Plan includes three performance periods, calendar years 2016, 2017 and 2018 and three vesting periods, calendar years 2017, 2018 and 2019, respectively. The Board of Directors of the Company will resolve on the Plan's performance criteria and on the required performance level for each criterion at the beginning of a performance period. Approximately 20 key persons, including the members of the Group Management Team, belong to the target group of the Plan.

The prerequisite for participation in the Plan and for receipt of reward on the basis of the Plan is that a key person has enrolled in the Share Savings Plan and makes the monthly saving from his or her fixed gross monthly salary, in accordance with the Rules of the Share Savings Plan in force.

The potential reward of from the performance period 2016 was based on the Group's Earnings per Share (EPS). The rewards to be paid on the basis of the performance period 2016 corresponded to the value of an approximate maximum total of 800,000 Oriola-KD Corporation Class B shares (including also the proportion to be paid in cash). The potential reward will be paid partly in Oriola-KD Corporation Class B shares and partly in cash in 2018. The cash proportion is intended to cover taxes and tax-related costs arising from the reward to a key person. The potential reward of from the performance period 2017 will be based on the Group's Earnings per Share (EPS). The rewards to be paid on the basis of the performance period 2017 corresponded to the value of an approximate maximum total of 800,000 Oriola-KD Corporation Class B shares (including also the proportion to be paid in cash).  The potential reward will be paid partly in Oriola-KD Corporation Class B shares and partly in cash in 2019. The cash proportion is intended to cover taxes and tax-related costs arising from the reward to a key person.

Financial benefits of the President and CEO in 2016

The salary and other remuneration, including fringe benefits, paid in 2016 to the President and CEO Eero Hautaniemi, amounted to a total of EUR 658,927 as follows:

  • fixed base salary of EUR  467,206;
  • fringe benefits of EUR 28,537;
  • performance bonus of EUR 148,743; and
  • share-based payments of EUR 14,441.

The President and CEO has a six-month period of notice and is entitled to severance pay equal to 12 months’ salary. The retirement age of the President and CEO is 63 years and his pension is in accordance with the Employees’ Pensions Act. The President and CEO is included in the company’s share based incentive scheme. Shareholdings of the President and CEO in the company are available in the Financial Statements and Remuneration Report.

Financial benefits of other executives 2016 

The salaries and other remuneration, including fringe benefits, paid in 2016 to the members of the Group Management team totalled EUR 1,819,758 as follows:

  • fixed base salaries totalling EUR 1,511,968;
  • fringe benefits totalling EUR 81,486;
  • performance bonuses totalling EUR 200,547;  and
  • share-based payments totalling EUR 25,757.

The members of the Group Management Team are included in the company’s share based incentive scheme. Shareholdings of the members of the Group Management Team in the company are available in the Financial Statements and Remuneration Report.