Remuneration

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 Shareholders’ Nomination Board prepares a proposal concerning the composition of the Board of Directors for the company’s Annual General Meeting.

On 17 March 2020, the Annual General Meeting confirmed that the fee for the term of office of the Chairman of the Board of Directors is EUR 60,000, the fee for the term of office of the Vice Chairman of the Board of Directors and for the Chairman of the Board's Audit Committee is EUR 36,000 and the fee for the term of office of other members of the Board of Directors is EUR 30,000. The Chairman of the Board of Directors receives an attendance fee of EUR 1,000 per meeting and the other members EUR 500 per meeting. Attendance fees are correspondingly also paid to the chairmen and members of Board and company committees. Travel expenses are compensated in accordance with the travel policy of the company.

In accordance with the decision of the Annual General Meeting, 60% of the annual remuneration was paid in cash and 40% in class B shares. Oriola Corporation class B shares were acquired on the market for the Board members as follows: Panu Routila 11,265 shares, Anja Korhonen 6,759 shares, Mariette Kristenson 5,632 shares, Juko-Juho Hakala 5,632 shares, Eva Nilsson Bågenholm 6,759 shares, Lena Ridström 5,632 shares and Harri Pärssinen 5,632 shares.

Restriction periods are not included in the remuneration paid in Oriola 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 2020 and shareholdings in the company on 31 December 2020 are available in notes 4.4. and 8.4. to the Consolidated 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 and Human Resources 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 and Human Resources Committee reviews management and personnel remuneration policies and issues related to management appointments and makes proposals on such matters to the Board of Directors. More information about the Compensation and Human Resources Committee can be found in the Corporate Governance statement.

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 and Human Resources 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 area, the Vice President Pharma business area and the Vice President Retail business area, who have a defined contribution pension benefit typically applied in Sweden.

Short-term performance bonuses

The performance bonus is based on the achievement of the company’s financial targets and personal targets. The maximum performance bonus in 2020 for the President and CEO was 85% of the annual salary and for the other Group Management Team members 60% of the annual base 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 and Human Resources Committee.

Share-based incentive programmes

The members of Oriola’s Group Management Team are part of 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.

Executive incentive plan 2019 - 2023

On 14 December 2018 The Board of Directors of Oriola Corporation resolved to establish a new share-based long-term incentive plan 2019–2023 directed to the Group’s key personnel. The long-term incentive plan arrangement has three three-year performance periods 2019–2021, 2020–2022 and 2021–2023. 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 30 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 the key person has enrolled in the key personnel share savings plan and makes the monthly saving from his or her fixed gross monthly salary, in accordance with the rules of the key personnel share savings plan in force during the first year of the three-year performance period. A member of the Group Management Team must hold 50% of the net shares given on the basis of the long-term incentive plans, until his or her shareholding in the Company in total equals the value of his or her gross annual salary. Such number of shares must be held as long as the key person holds a position as a Group Management Team member.

The potential reward from the performance period 2019–2021 will be based on the Group's earnings per share (EPS) and Group’s total shareholder return (TSR). The rewards to be paid on the basis of the performance period 2019-2021 correspond to the value of an approximate maximum total of 1,700,000 Oriola Corporation Class B shares including also the proportion to be paid in cash. The potential reward will be paid partly in Oriola Corporation Class B shares and partly in cash in spring 2022 after the end of the performance period. The potential reward from the performance period 2020–2022 will be based on the Group's earnings per share (EPS) and Group’s total shareholder return (TSR). The rewards to be paid on the basis of the performance period 2020-2022 correspond to the value of an approximate maximum total of 1,820,000 Oriola Corporation Class B shares including also the proportion to be paid in cash. The potential reward will be paid partly in Oriola Corporation Class B shares and partly in cash in spring 2023 after the end of the performance period. The potential reward from the performance period 2021–2023 will also be based on the Group's earnings per share (EPS) and Group’s total shareholder return (TSR). The rewards to be paid on the basis of the performance period 2021-2023 correspond to the value of an approximate maximum total of 2,700,000 Oriola Corporation Class B shares including also the proportion to be paid in cash. The potential reward will be paid partly in Oriola Corporation Class B shares and partly in cash in spring 2024 after the end of the performance period. The cash proportion is intended to cover taxes and tax-related costs arising from the reward to a key person.

One-off incentive plan 2019 - 2020

On 14 December 2018 The Board of Directors of Oriola Corporation resolved to establish a two-year one-off incentive plan 2019-2020 directed to the Group’s key personnel to enable the prolonging of the long-term incentive plan performance period to three years and with that change better answer to the requirements of the investors and corporate governance and to be more aligned with the market practice. The one-off long-term incentive plan had a two-year performance period 2019–2020. The Board of Directors of the Company resolved on the plan's performance criteria and on the required performance level for each criterion at the beginning of a performance period. Approximately 30 key persons, including the members of the Group Management Team, belonged 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 key personnel share savings plan and makes the monthly saving from his or her fixed gross monthly salary, in accordance with the rules of the key personnel share savings plan in force.

The potential reward from the performance period 2019-2020 was based on the Group's earnings per share (EPS) and separately defined two-year strategic projects. The performance criteria for the plan was not met, and thus there will be no payment based on the plan.

Share savings plan

Oriola Corporation has had a key personnel share savings plan in force since 2013. The Board of Directors of Oriola Corporation always decides on the launch of a new savings period in the plan separately. According to the rules of the share savings plan in force, the maximum monthly saving is 8.3% and the minimum is 2% of each participant's fixed monthly gross salary. The accumulated savings will be used for purchasing Oriola Corporation class B shares for the participants at the market price quarterly. In return, each participant will receive two free class B matching shares for every three acquired savings shares if the participant holds the acquired shares from the savings period until the end of the designated holding period and if his or her employment with a company has not been terminated on bad leaver terms. The matching shares are paid partly in Oriola’s class B shares and partly in cash. The cash proportion is intended to cover taxes and tax-related costs arising from the reward to a key person.

Approximately 40 key employees participated in the share savings plan for the savings period 1 January – 31 December 2017. The matching shares transferred to eligible participants in May 2019 corresponded to the value of 40,398 Oriola Class B shares, including the proportion paid in cash.

Approximately 50 key employees participated in the Oriola Corporation key personnel share savings plan for the savings period 1 January – 31 December 2018. The matching shares transferred to eligible participants in February 2020 corresponded to the value of 78,295 Oriola Class B shares, including the proportion paid in cash.

Approximately 55 key employees participated in the share savings plan for the savings period 1 January – 31 December 2019. The holding period ended on the publication date of the Oriola’s Financial Statements Release 1 January – 31 December 2020. The matching shares will be transferred to eligible participants in 2021.

Approximately 59 key employees participated in the share savings plan for the savings period 1 January – 31 December 2020. The holding period will end on the publication date of the Oriola’s Financial Statements Release 1 January – 31 December 2021. The matching shares will be transferred to eligible participants in 2022.

Approximately 60 key employees will participate in the share savings plan for the savings period 1 January – 31 December 2021. The holding period will end on the publication date of the Oriola’s Financial Statements Release 1 January – 31 December 2022. The matching shares will be transferred to eligible participants in 2023.

Financial benefits of the President and CEO in 2020

The salary and other remuneration, including fringe benefits, paid in 2020 to the President and CEO Robert Andersson, amounted to a total of EUR 776,954 as follows:

Fixed base salary of EUR 624,080;
Fringe benefits of EUR 25,601;
Performance bonus of EUR 104,009; and
Share-based payments of EUR 23,265.

Financial benefits of other Group Management Team members 2020

The salaries and other remuneration, including fringe benefits, paid in 2020 to the members of the Group Management Team totalled EUR 1,779,699 as follows:

Fixed base salaries totalling EUR 1,442,023;
Fringe benefits totalling EUR 114,665;
Performance bonuses totalling EUR 175,292; and
Share-based payments totalling EUR 47,719.

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 note 8.4. to the Consolidated Financial Statements and in the Remuneration report on the company web site.