Remuneration Statement 13 February 2013
Remuneration of the Board of Directors
The Annual General Meeting of the Shareholders of Stonesoft Corporation decides on the remuneration and other benefits of the Board Members annually. The company has no separate nomination or remuneration committee. Based on the prevailing practice, the major shareholders of the company prepare proposals to be made to the Annual General Meeting regarding the nomination of the Board Members and their compensation.
The Annual General Meeting of Stonesoft Corporation confirmed in April 2012 that the remuneration for the Chairman of the Board is EUR 60,000 per year and for the Members of the Board EUR 30,000 per year. Board members whose direct or indirect ownership of Stonesoft Corporation is less than 100,000 shares, will be purchased Stonesoft Corporation’s shares for the amount of 50 per cent of their total gross compensation For those Board members, whose direct or indirect ownership in Stonesoft Corporation is more than 100,000 shares, the annual compensation will be paid in cash in its entirety. In addition, remuneration for the work performed within the committees of the Board is EUR 4,000 per year for the Chairman and EUR 2,000 per year for each member of a committee. Neither annual remuneration nor remuneration for the committee work will be paid for the Board members who are employed by the company. No separate remuneration will be paid for participation in the meetings of the Board of Directors.
Remuneration in cash is paid on a monthly basis. The shares paid as remuneration for the Board members were purchased in the name of and for the benefit of each Board member within five (5) trading days followed by the decision of the Annual General Meeting.
During 1.1.-31.12.2012 the combined remuneration paid to the Chairman of the Board and the Board Members was EUR 130.000 and 33,210 shares.
Remuneration paid to the Board of Directors 1.1.-31.12.2012:
|
Remuneration paid to the Board of Directors |
1.1.-31.12.2012 |
1.1.-31.12.2012 |
|
|
Paid in cash |
Paid as Shares EUR/Shares |
|
Hannu Turunen, Chairman of the Board |
56 000 |
- |
|
Ilkka Hiidenheimo, CEO, Board member |
- |
- |
|
Harri Koponen, Board member |
18 000 |
15 000/11 070* |
|
Jukka Manner, Board member |
18 000 |
15 000/11 070* |
|
Timo Syrjälä, Board member |
28 000 |
- |
|
Satu Yrjänen, Board member 5/12 |
10 000 |
15 000/11 070* |
|
*) Entire annual remuneration payable in shares |
Remuneration of the Chief Executive Officer
The Board of Directors of Stonesoft Corporation nominates the CEO and determines the terms of his/her appointment. The terms of the appointment are composed in writing in the service contract.
The terms of CEO’s remuneration has been changed for the year 2013
The CEO’s gross base salary comprises of a fixed salary (EUR 16 000 per month in 2013) and of a variable salary based on the targets set for the CEO, which are annually approved by the Board of Directors (short-term remuneration). The variable part of the CEO’s salary is tied to meeting the net sales targets set for the company The CEO’s annual target salary in 2013 is EUR 252 000. The CEO’s overall annual net salary can exceed the target salary for the year 2013 by 300 % at the maximum. However, this would require the company’s budgeted net sales target to be significantly exceeded. The CEO is entitled to participate in long term incentive schemes in use each time by the company according to their conditions, as has been described below and in the terms of the Stock Option Programs. There is no specific retirement age set forth for the CEO. The CEO's pension is the same as Finland's Employee Pension Act (TYEL) enacts and which is compulsory for all Stonesoft employees. The CEO is not entitled to any additional pension scheme. The service contract for the CEO provides for a notice of six (6) months prior to termination with compensation being six (6) months salary and a further optional six (6) months fixed salary in case the company terminates the contract without essential breach of contract by the CEO.
An up-to-date table of Ilkka Hiidenheimo’s shareholdings is available in : Board and Management Holdings.
CEO’s remuneration 1.1.-31.12.2012:
|
Compensation and salary paid to the CEO, EUR |
1.1.-31.12.2012 |
|
|
Fixed salary and other benefits |
- |
|
|
Variable remuneration |
- |
|
|
Payments based on option rights and shares |
210 000 kpl |
|
|
Total |
- |
Main principles and decision-making order of remuneration of the Executive Management:
The Board of Directors approves the selection of a member to the Executive Management. The CEO decides on the remuneration of the Executive Management within the limits of the salary and remuneration level as well as according to the compensation scheme approved by the Board of Directors.
The company’s long-term remuneration is based on the option plans. During the fiscal year 2012, Stonesoft Corporation has two option plans, option plan 2008 and option plan 2012 issued. Further details about the option plans are available in section: Option Plans and Interim Reports. The Board of Directors decides on granting option rights to members of the Executive Management or other key personnel. The option rights are used to engage and commit the key personnel of the company to long-standing efforts for product development and sales, and thereby to increasing the value of the company. 36 persons are included in the company’s option programs.
In the option plan 2008, the subscription period for the shares is graded as follows: March 1, 2010, March 1, 2011, March 1, 2012 and March 1, 2013. The subscription period for all the shares ends on December 31, 2014.
In the option plan 2012, there is a three-year graded engagement period. 2012 option rights include a share ownership obligation, under which the key employees are obliged to acquire the company’s shares with 25 per cent of the gross stock option income gained from the exercised stock options. The acquisition obligation will expire once a key person owns the company’s shares worth his or her 12 months’ gross salary. Such shares must be held as long as the employment or service contract is in force and for one year thereafter.
A regularly updated table of the shareholdings and options of the Executive Management is available in section: Board and Management Holdings.
Short-term remuneration is based on the company’s sales development. Some of the members of the Executive Management have a target salary, which is materialized if the quarterly budgeted sales targets in the market areas are met. The target salary consists of a fixed (60% - 70%) and a variable part (30% - 40%). The overall annual salary of the members of the Executive Management cannot be more than twice as much as the target salary. However, this would require that the budgeted goals would be significantly exceeded. More detailed determination criteria of the target salary are set individually for all entitled members of the Executive Management and the materialization of the set goals are monitored regularly in such a way that the accomplishment of the strategic goals of the company can be secured through setting the target salaries. The variable part of the salary is paid to the entitled member of the Executive Management quarterly.
The remuneration of some members of the Executive Management consists of a fixed salary.
There is no special age of retirement for any member of the Executive Management and the pension scheme equals to the employment pension (TYEL) that applies to all the employees of the company.
This Remuneration Statement represents a statement recommended by the Finnish Corporate Governance Code 2010 (Recommendation 47).