Remuneration Statement

Updated on 7 February 2014. 

 

Remuneration Statement of CapMan Plc (CapMan) has been prepared in accordance with the Recommendation 47 of the Finnish Corporate Governance Code (Code), which entered into force on 1 October 2010. The Code as a whole is publicly available on the website of the Securities Market Association at www.cgfinland.fi.


When deliberating the remuneration elements set out in this Remuneration Statement, the Remuneration Committee and the Board of Directors have foremost applied principles of fairness and competitiveness, balancing of interests of shareholders, fund investors as well as employees, and promoting as well as strengthening the performance culture both short and long term.

 

Board of Directors

Board of Directors - principles of remuneration and the decision-making process

The remuneration of the members of the Board of Directors is confirmed by the AGM. According to the decision of the AGM 2013, the Chairman of the Board of Directors is paid a monthly basic fee of EUR 4,000, the Vice Chairman is paid a monthly basic fee of EUR 3,200 and members of the Board are each paid a monthly basic fee of EUR 2,800. In addition, the Chairmen of the Board’s Committees are paid a meeting fee of EUR 900 per meeting and the members of the Board’s Committees are paid a meeting fee of EUR 600 per committee meeting. These remunerations are not currently payable in shares. All members of the Board shall be reimbursed for reasonable travel expenses.

 

Remuneration and benefits related to an employment contract or service agreement with the company

Heikki Westerlund was appointed CEO of CapMan as of 8 August 2013. As a consequence of Westerlund’s appointment, he has stepped down from his position as Chairman of the Board of Directors. During his tenure as Chairman of the Board of Directors, Heikki Westerlund was also employed by a CapMan Group company and worked actively with CapMan’s investment operations as a Senior Partner. The base salary and bonuses paid to Westerlund during his tenure as Chairman of the Board in 2013 are displayed in the table below. As a Senior Partner Westerlund was also entitled to additional contribution based pension insurance with annual premiums corresponding to 5% of annual salary. Heikki Westerlund’s remuneration as CEO is described in section “CEO and Management Group”.

 

Ari Tolppanen, a Senior Partner at CapMan, was elected member of the Board of Directors at the 2013 Annual General Meeting. Ari Tolppanen has a twelve months mutual notice period and is entitled to a severance fee corresponding to twelve months’ salary, if his employment is terminated by the company. Tolppanen is also entitled to additional contribution based pension insurance with annual premiums corresponding to 5% of annual salary. The base salary and bonuses paid to Tolppanen during his tenure as Member of the Board in 2013 are displayed in the table below.

 

Participation in share-related compensation schemes

CapMan deviates from the Code’s Recommendation 43, which covers the participation of non-executive Board members in share-related remuneration schemes. Non-executive members of the Board can participate in a share-related remuneration scheme in accordance with the decision of the AGM, in which case the shareholders have the opportunity to evaluate whether such remuneration is in their interest. Over the past years the practice has been that non-executive Board members do not participate in share-related compensation schemes. All shares and share-related rights that are granted to Board members are published in the Insider issues section on the company’s website.

 

Biographical details of the members of the Board

The biographical details of the current members of the Board are available at the company’s website in Board of Directors and Insider issues.

 

Remuneration of the members of the Board in 2013

 

Name

Position

Main occupation

Board
remune-ration, €

 Committee
fees, €

Time Period

Other remuneration paid to members of the Board employed by CapMan or members acting as advisors to CapMan, €

             

Current board members:

         

Karri Kaitue

Chairman of the board since 7.8.2013

Board professional

44,415

 5,900

01.01.-31.12.2013

-

Nora Kerppola

Vice Chairman since 7.8.2013

Managing Director of Nordic Investments Oy

38,767

 9,000

01.01.-31.12.2013

-

Ari Tolppanen

Board member since 20.3.2013

Senior Partner, CapMan Buyout

26,040

 800

20.03.-31.12.2013

147,421

Claes de Neergaard

Board member

Board professional

36,840

4,000

01.01.-31.12.2013

-

Koen Dejonckheere*

Board member

CEO of Gimv NV

 

 

01.01.-31.12.2013

-

             

Former board members:

 

 

   

 

Heikki Westerlund

Chairman of the board until 7.8.2013

CEO of CapMan Plc

30,259

2,400

01.01.-7.8.2013

119,185

Teuvo Salminen

Vice Chairman of the board until 20.3.2013

Board professional

12,150

4,000 

01.01.-20.03.2013

-

* Mr. Dejonckheere has informed the company that he prefers not to accept board compensation.

 

CEO and Management Group

Principles of remuneration and the decision-making process

The Board of Directors of CapMan confirms the overall remuneration principles and elements covering the CEO and Management Group members on an annual basis. The Board’s Remuneration Committee, consisting of at least two independent Board members and non-executives, prepares remuneration-related matters for the Board.

 

Currently, the total compensation program consists of a monthly fixed salary, fringe benefits (such as lunch, sports and phone benefit), additional pension insurance, performance bonuses as short-term incentives (STI) and stock options as long-term incentives (LTI). No share plans are currently in use. The CEO and other Management Group members do not receive any payment or remuneration for their work on any CapMan-related boards, committees, or other decision-making or preparatory bodies.

 

Any adjustments to the CEO’s salary and other compensation can only be made with the Board’s approval. The monthly salary of other individual Management Group members can be increased on the basis of a proposal by the CEO and subsequent approval by the Remuneration Committee / the Board.

 

The annual performance-based incentive scheme is tied to CapMan Group’s profit level, Business Unit profit level, where applicable, as well as to the annual individual performance. The Board defines a minimum profit level (threshold) for any bonuses to be paid out, together with a profit level at which the maximum bonuses are payable subject to individual performance. The CEO’s and the Management Group members’ bonuses are approved by the Board.

 

The CEO Heikki Westerlund is entitled to remuneration corresponding to a monthly salary of EUR 29,959.60 including fringe benefits.  

 

The CEO has a mutual notice period of 6 months and he will be entitled to a severance fee of twelve months’ salary, if his employment is terminated by the Company

 

Before Heikki Westerlund was appointed CEO of CapMan, Niko Haavisto acted as CEO for an interim period of 8 February 2013 to 7 August 2013 after Lennart Simonsen’ resignation. The remuneration paid to Westerlund, Haavisto and Simonsen during their tenure as CEO in 2013 is displayed in below table.

 

Additional pension scheme

In addition to annual base salary and fringe benefits, the Management Group members are entitled to an additional pension scheme.

 

The CEO is entitled to an additional defined contribution based pension insurance for which the Company pays an annual premium of 10 % of the participant’s annual salary, the retirement age of the CEO is determined according to the Finnish legislation.

 

The Management Group members in Finland, excluding current CEO, are covered by an additional defined contribution based pension insurance, for which the company pays an annual premium equivalent to 5% of the participant’s annual salary including vacation pay. This premium can be increased by up to 10% of the annual salary if the Board so decides. The individual’s entitlement to a premium-free policy grows gradually after 3 years and after 6 years covers 100% of the cumulative additional pension saving.

 

Any Management Group member in Norway is entitled to a defined benefit plan which will currently give about 66% of pensionable income, including national pension, up to 12 Basic Amounts if employed 30 years.

 

Performance incentive scheme

The Management Group members also belong to an annual performance-based incentive scheme which is tied to CapMan Group’s profit level, Business Unit profit level, where applicable, as well as to the annual individual performance. The maximum bonus potential for each individual is defined based on career path level and/or role.

 

The CEO’s performance incentive is defined based on actual EPS (earnings per share) achieved during the year. The CEO’s current incentive scheme includes a threshold of 4 cents per share after which the incentive scheme is generating bonus potential to the CEO. The maximum bonus potential is limited to an amount corresponding to 28 months’ salary. 

 

Any Management Group member belonging to CapMan investment teams is entitled to a Management Fee Incentive Scheme where 50% of the profit generated by the team as management fees, deducted with team costs and service fees, forms the bonus pool for the team including social charges. The maximum bonus potential for Management Group members belonging to this scheme is capped at an amount corresponding to 12 months’ fixed base salary. Bonuses will be paid out only if the minimum threshold for Plc profit set by the Board is reached.

 

Any Management Group member not belonging to one of CapMan’s investment teams is entitled to an EPS Incentive Scheme based on actual EPS (earnings per share) achieved during the year. A threshold is set at 4 cents per share after which the incentive scheme is generating bonus potential.  The maximum bonus potential for Management Group members belonging to this scheme is capped at an amount corresponding to 28 months’ salary.

 

The annual base salaries and bonuses paid to Management Group members are displayed in the below table.

 

  

Stock option program

Stock options are used to commit key individuals/executives to the company and reinforce the alignment of interests of key individuals/executives and CapMan shareholders. CapMan currently has one stock option program in force, the stock option program 2013. The subscription period for the previous program, the stock option program 2008, ended in late December 2013. The terms and conditions of the programs are available in the Stock options section on the company's website.

 

In October 2013 the Board granted the CEO, the CFO and the Head of Business Development and Investor Relations 2013A options. The Management Group members’ holdings are specified in the Insider issues section on company’s website.

 

Biographical details of Management Group members

The Management Group’s biographical details are available in the Management section on the company’s website.

 

Remuneration of CEO and Management Group in 2013

 

Name

Salary, €

Bonus linked to financial performance and achievement of personal goals, €

In total, €

Option rights granted 

Heikki Westerlund

CEO since 7.8.2013

142,227

474

142,701

400,00

Niko Haavisto

Interim CEO 8.2.-7.8.2013

174,346

60,000

234,346

200,000

Lennart Simonsen

CEO until 8.2.2013

35,100

360,000

395,100

-

Management Group*

1,299,879

865,241

2,165,120

200,000

* Excluding the CEO. The figures include the aggregate remuneration paid by CapMan during the financial year 2013 to the members of the Management Group.

 

Carried interest income 

The investment team responsible for the fund’s investment activities is entitled to receive a share of carried interest from funds established in 2004 and thereafter. This is a requirement from the external fund investors in order to ensure that the interests of the investment professionals and investors are aligned and that the investment professionals are committed to the company in a long term. In connection with the establishment of a new fund, the Board makes a decision on the division of the possible carried interest between CapMan and the investment team responsible for the fund’s investment activities. Each member of the investment team has been obliged to make a capital investment in the carried interest vehicle of the fund in order to obtain a share of carried interest from the fund.  The investment team’s share of carried interest received by the management company from a fund is typically at least 50 %.

 

It is common practice in the private equity industry to direct part of the carried interest income to the members of the investment teams. A new fund typically starts to generate carried interest after 6 or 7 years, provided that the original investment and a preferred annual return, which is generally 8 %, have been paid to investors. The investment team’s share of carried interest is further divided among the team members. An individual investment professional’s right to receive carried interest income requires that he or she has made an investment in the carried interest vehicle of the fund. The amount of carried interest income also depends on the fund’s overall performance (i.e. on the success of the investment operations) and on the investment professional’s career path level.

 

For additional information, please see:

Remuneration statement as approved by the Board of Directors on 5 February 2014