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

On 19 March 2018, the Annual General confirmed that the fee for the term of office of the Chairman of the Board of Directors is EUR 48,400, 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 30,250 and the fee for the term of office of other members of the Board of Directors is EUR 24,200. 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: Anssi Vanjoki 6,872 shares, Anja Korhonen 4,295 shares, Mariette Kristenson 3,436 shares, Juko-Juha Hakala 3,436 shares, Eva Nilsson Bågenholm 4,295 shares, Lena Ridström 3,436 shares and Staffan Simberg 3,436 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 2018 and shareholdings in the company on 31 December 2018 are available in notes 4.4. and 7.4. to the Consolidated Financial Statements and Remuneration report (http://www.oriola.com/investors/corporate-governance/remuneration-statement).

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 and the vice president Healthcare 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 2018 for the President and CEO was 75% of the annual salary and for the other Group Management Team members 40% 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 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 2013 – 2015

On 19 December 2012, the Company’s Board of Directors approved a share-based incentive plan for the Group executives. At the end of 2017 the scheme covered four persons that remained in the employment of the Oriola Group. The plan included three performance periods, the calendar years 2013, 2014 and 2015. The company's Board of Directors decided on the earning criteria for the earning period and the targets to be set for these at the start of each earning period. The reward from the plan for the performance period 2015 was based on the Oriola Group's earnings per share (EPS). The rewards paid in February 2018 on the basis of the performance period 2015 corresponded to the value of a total of 148,524 Company's class B shares including also the proportion to be paid in cash. There were no payments based on the performance periods 2013 and 2014 since the performance criteria for the plan were not met.

Executive incentive plan 2016 – 2018

The Board of Directors established a share-based incentive plan directed to a group of the key personnel (the plan) on 4 December 2015. The plan harmonises the Group incentive plans into a single-platform plan where the Group’s key personnel share savings plan and long-term incentive plan are combined.

The plan includes three performance periods, the calendar years 2016, 2017 and 2018 and three vesting periods, the calendar years 2017, 2018 and 2019, respectively. The Board of Directors resolved on the plan's performance criteria at the beginning of each performance period. Approximately 20 key members of personnel, including members of the Group Management Team belong to the target group of the plan.

The essential precondition 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 the fixed gross monthly salary, in accordance with the rules of the share savings plan in force.

The reward for the performance period 2016 was based on the Group's earnings per share (EPS). The rewards paid in February 2018 on the basis of the performance period 2016 corresponded to the value of 119,803 class B shares including also the proportion to be paid in cash. The cash proportion is intended to cover taxes and tax-like charges arising from the reward to a key person. The potential reward for the performance period 2017 was based on the Group's earnings per share (EPS). There will be no payments based on the performance period 2017 since the performance criteria for the plan was not met. The potential reward for the performance period 2018 was also based on the Group’s earnings per share (EPS). The set EPS target was not met in 2018.

Executive incentive plan 2019 - 2023

On 14 December 2018 the Board of Directors of Oriola Corporation resolved to establish a new share-based longterm 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.

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 cash proportion is intended to cover taxes and tax-related costs arising from the reward to a key person.

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.

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 has a two-year performance period 2019–2020. 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 a key person has enrolled in the key personnel share savings plan for longterm incentive plan 2019–2021 and makes the monthly saving for this plan 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 will be based on the Group's earnings per share (EPS) and separately defined two-year strategic projects. The rewards to be paid on the basis of the performance period 2019–2020 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 2021 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.

The 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.

Share savings plans

On 18 June 2015 the Board of Directors of Oriola Corporation decided to launch a key personnel share savings plan. The maximum monthly saving was 8.3% and the minimum 2% of each participant's fixed monthly gross salary. Approximately 45 group key employees participated in the savings period that began on 1 October 2015 and ended on 31 December 2016. The matching shares transferred to eligible participants in February 2018 corresponded to the value of 46,024 Oriola class B shares, including the proportion to be paid in cash.

On 19 October 2016 the Board of Directors decided to launch a savings period 2017, from 1 January to 31 December 2017. Approximately 40 key employees participated in the share savings plan. The holding period will end on the publication date of the Oriola’s Financial Statements Release 1 January – 31 December 2018. Matching shares will be paid partly in Oriola’s class B shares and partly in cash. The matching shares will be transferred to eligible participants in 2019. The estimated number of matching shares, including the portion to be paid in cash, is 40,398.

Approximately 50 key employees participated in the Oriola Corporation key personnel share savings plan for the savings period 1 January–31 December 2018. The accumulated savings will be used for purchasing Oriola’s class B shares for the participants at market prices. In return, each participant will receive two free class B matching shares for every three acquired savings shares. The holding period will end on the publication date of the Oriola’s Financial Statements Release 1 January – 31 December 2019. Matching shares will be paid partly in Oriola’s class B shares and partly in cash. The matching shares will be transferred to eligible participants in 2020.

On 14 December 2018 the Board of Directors decided to launch a savings period 2019, from 1 January to 31 December 2019. Approximately 90 key employees will participate in the share savings plan. 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 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 holding period will end 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. Matching shares will be paid partly in the Company's class B shares and partly in cash. Assuming all eligible employees will participate and will save the maximum of 8.3% of their fixed monthly gross salary the aggregated estimated number of new shares to be issued or treasury shares held by the Company to be transferred as matching shares based on the savings period 2019 is approximately 200,000 class B shares.

Financial benefits of the President and CEO in 2018

The salary and other remuneration, including fringe benefits, paid in 2018 to the President and CEO Robert Andersson, amounted to a total of EUR 541,609 as follows:

  • Fixed base salary of EUR 521,773;
  • Fringe benefits of EUR 19,836;
  • Performance bonus of EUR 0; and
  • Share-based payments of EUR 0.

The salary and other remuneration, including fringe benefits, paid to the acting President and CEO Kimmo Virtanen for the period 1 January 2018 – 11 February 2018 amounted to a total of EUR 60,256.

Financial benefits of other Group Management Team members 2018

The salaries and other remuneration, including fringe benefits, paid in 2018 to the members of the Group Management Team totalled EUR 1,806,624 as follows:

  • Fixed base salaries totalling EUR 1,104,380;
  • Fringe benefits totalling EUR 49,316;
  • Performance bonuses totalling EUR 0; and
  • Share-based payments totalling EUR 652,929.

In addition, certain former members of the Group Management Team received termination benefits totalling EUR 187,200 as part of their severance packages.

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 7.4. to the Consolidated Financial Statements and in the Remuneration report on the company website.