Remuneration and benefits of the members of the Board of Directors and the Management Team
Fees and other benefits for Board members the Annual General Meeting decides annually on the fees payable to members of the Board of Directors for one term of office at a time. On 16 April 2009, the Annual General Meeting confirmed that the Chairman of the Board will receive EUR 44,000 in remuneration for his term of office, the Vice Chairman eUR 27,500 and the other members of the Board eUR 22,000 each. The Board’s remuneration will be paid in cash. The Chairman of the Board will receive an attendance fee of eUR 800 for each meeting, and the other Board members eUR 400 per meeting. Attendance fees will also be paid in the same manner to members of any committees set up by the Board of Directors or the company. The
Chairman of the Board will also have a company-paid phone. Travel expenses will be paid in accordance with the travel policy of the company. In 2009, the total remuneration paid to the Board amounted to eUR 249,300. Additionally, the Board has decided to pay Board Chairman Mr olli Riikkala and Board member Mr Pauli Kulvik a bonus of eUR 5,000 each for the extra work performed in the swedish pharmacy monopoly deregulation project in 2009.
the members of the Board of Directors are not covered by the company’s share incentive scheme. The company has not granted any loans to Board members nor given guarantees on their behalf.
Remuneration arrangements for 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 and a performance bonus payable upon achievement of the company’s financial targets and personal targets. The maximum performance bonus in 2009 for the President and CEO was 50% of annual salary and for other Group Management team members 25% of annual salary. Deci¬sions on performance bonuses are made by the Board of Directors.
the President and CEO and certain key personnel in the company are also covered by a share incentive scheme determined by the Board. 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.
Payment under the share incentive scheme for 2007–2009 is determined on the basis of the Oriola-KD Group’s operating profit (Ebit) and return on capital employed (ROCE) for 2007–2009. Payment is made over the period 2008–2010 in the form of the company’s class B shares, cash or a combination of these. except for certain special circumstances, no transfer of these shares is permitted during a period of one year after the payment is made. The incentive scheme comprises three earning periods of one year each. The number of class B shares within the scheme may not exceed 650,000. so far, a total of 306,888 class B shares have been transferred to key personnel covered by the scheme. The maximum amount of share-based payments for the 2009 earning period is a total of 254,800 class B shares. The Board decides on the target group for the earning period and the payments for the key personnel in the target group at the beginning of each earning period. The 2007–2009 target group for the share incentive scheme consist of 21 employees.
On 10 February 2010, oriola-KD’s Board of Directors decided on a new share incentive scheme for the Group’s key personnel for the years 2010–2012. The new scheme is a continuation of the 2007–2009 share incentive scheme. The scheme has three earning periods, which are the calendar years 2010, 2011 and 2012. The company’s Board of Directors decides on the earning criteria for the earning period and the targets to be set for these at the start of each earning period. Any payment under the scheme for the earning period 2010 will be based on Oriola-KD Group’s operating profit (eBIt)andreturnoncapital employed (ROCE). The Board of Directors has the opportunity to change the earning criteria in the subsequent earning periods. Any payment made on each earning period will be paid partly in the form of the company’s class B shares and partly as cash. The proportion paid as cash will cover the taxes and tax-like charges associated with the payment. If, at the time the payment is to be made under the scheme, the total earnings of a key employee exceed his/her total salary of the previous year by a factor of 3.5, any amount over and above this will be subtracted from the sum payable under the scheme. Total earnings means the total salary, annual bonus and long-term incentive scheme altogether, and total salary means base salary plus fringe benefits. The new incentive scheme’s target group consists of about 55 employees, and the company’s class B shares under the scheme can total a maximum of 1,200,000 shares. The payments to be made under the scheme correspond in total to a value of no more than approximately 2,400,000 Oriola-KD Corporation class B shares (including the proportion to be paid as cash).
The company has not granted any loans to the President and CEO or to 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.
Financial benefits of the President and CEO
The salary and other remuneration, including fringe and other benefits, paid in 2009 to the President and CEO, Eero Hautaniemi, amounted to a total of eUR 807,655, as follows:
fixed base salary of EUR 352,444
fringe benefits of EUR 15,900
performance bonus of EUR 275,151 and
share-based payments of EUR 164,160, B-shares 43,200 pieces.
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 and his pension is in accordance with the employees’ Pensions Act.
Salaries and other remuneration of the Group Management Team
The base salaries paid in 2009 to the members of the Group Management team totalled EUR 1,469,081 and the performance bonuses totalled EUR 202,936.
