Remuneration Statement

Confirmed by the Board of Directors on 4 February 2015. 

 

Remuneration Statement of CapMan Plc (“CapMan”) has been prepared in accordance with the Recommendation 47 of the Finnish Corporate Governance Code (the “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/en/.


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

Decision-making process and main principles of remuneration

 

The remuneration of the members of the Board of Directors (the “Board”) is confirmed by the Annual General Meeting (the “AGM”). According to the decision of the AGM 2014, 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. Based on the currently confirmed remuneration principles, these fees are not convertible into the company’s shares or share-based rights. All members of the Board shall be reimbursed for reasonable travel expenses.

 

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 2014

 

Name

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

48,000

 7,500

01.01.-31.12.2014

-

Nora Kerppola, Vice Chairman of the Board

38,400

 4,500

01.01.-31.12.2014

-

Ari Tolppanen, Board Member 

33,600

 1 800

01.01.-31.12.2014

151,029

Claes de Neergaard, Board Member

33,600

1,200

01.01.-31.12.2014

-

Koen Dejonckheere*, Board Member

01.01.-31.12.2014

-

 

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

 

Financial benefits of the Board members pertaining to employment relationship or service contract

 

Mr Ari Tolppanen, who was re-elected as member of the Board in AGM 2014, is also in employment relationship to a CapMan Group company and works as Senior Partner in the investment activities at CapMan. Mr Tolppanen has a twelve months’ mutual notice period. The retirement age of Mr Tolppanen is determined according to the Finnish legislation. Mr Tolppanen is entitled to additional defined contribution based pension insurance of Senior Partners arranged by the company with annual premiums corresponding to 5% of annual salary. The base salary, fees and other financial benefits paid to Mr Tolppanen during his tenure as member of the Board in 2014 are displayed in the table above. Mr Tolppanen has not received shares or share-based rights as remuneration during the financial period 2014.

 

Participation of the Board members in share-based remuneration schemes

 

Non-executive Board members of CapMan do not participate in share-based remuneration schemes in accordance with the Code’s Recommendation 43.

 

CEO and Management Group

Decision-making process and main principles of remuneration

 

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 of the CEO and Management Group 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 salaries of the Management Group members can be increased on the basis of a proposal by the CEO and subsequent approval by 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 in advance an annual 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.

 

Remuneration of the CEO

 

The CEO Heikki Westerlund is entitled to remuneration corresponding to a monthly salary of EUR 29,970 including fringe benefits. Additionally, he 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 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 four cents per share after which the incentive scheme is generating bonus potential to the CEO. The maximum bonus potential is capped at an amount corresponding to 28 months’ salary. To achieve the maximum bonus potential EPS before bonuses needs to exceed 25 cents.

 

Based on agreements entered into prior to his current appointment as CEO, Heikki Westerlund is entitled to receive a share of carried interest from certain CapMan funds

 

The CEO has a mutual notice period of six months and he will be entitled to a severance fee of 12 months’ salary, if his employment is terminated by the company.

 

The base salary, fees and other financial benefits paid to the CEO in 2014 are displayed in the table below.

 

Remuneration of Management Group members

 

In addition to annual base salary and fringe benefits, the Management Group members are entitled to 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 increases gradually after three years and after six years covers 100% of the cumulative additional pension saving.

 

The Management Group members belonging to CapMan investment teams are 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 CapMan Group’s profit set by the Board is reached.

 

The Management Group members not belonging to one of CapMan’s investment teams are entitled to an EPS Incentive Scheme based on actual EPS (earnings per share) achieved during the year. A threshold is set at four 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. To achieve the maximum bonus potential EPS before bonuses needs to exceed 25 cents.

 

The base salaries and fees paid to the Management Group members in 2014 are displayed in the table below

 

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 terms and conditions of the programs are available in the Stock options section on the company's website.

 

In 2014 the Board granted the CEO, the CFO and the Head of Business Development and Investor Relations 2013B 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 2014

 

Name

Salary, €

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

In total, €

Option rights granted 

Heikki Westerlund

CEO since 7.8.2013

373,632

640

374,272

400,000

Management Group*

1,079,201

395,523**

1,474,724

400,000

 

*The figures include the aggregate remuneration paid by CapMan to all members of the Management Group (excluding CEO) in 2014.

**Includes fees related to previously applied fundraising bonus scheme, which has been replaced by incentive scheme based on EPS (earnings per share).

 

 

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 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. The fund typically starts to generate carried interest after 6 or 7 years from the establishment, 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. 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 4 February 2015