When considering the remuneration elements, the Remuneration Committee and the Board of Directors have primarily 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.
The purpose of the remuneration at CapMan Plc (hereinafter referred to as CapMan or the Company) is to support the company’s business strategy.
The Company adheres in its remuneration of the personnel to the following main principles which support the implementation of the business strategy:
- Overall remuneration is proven to be competitive
- Remuneration attracts and engages to the company
- Remuneration is fair, equal and understandable
- Remuneration is encouraging and directs to achieving strategic business objectives
- The total remuneration rate is based on the requirement level of tasks
- Alignment of interests of the shareholders, fund investors and personnel
The terms of the CEO’s service are agreed upon in the CEO service agreement. The same remuneration principles (e.g. regarding fringe benefits) are generally applied to the CEO as to other employees. Nonetheless, taking into account the special nature and requirement level of the CEO’s duties as well as the position of responsibility related to the role, the CEO can be offered certain benefits that deviate from the personnel’s benefits. These can include for example a pension benefit. The terms of the CEO agreement are described in more detail in the Remuneration Report published annually, and on the Company’s website. The Remuneration Report will be published for the first time for calendar year 2020.
This CapMan Remuneration Policy has been drawn up in accordance with the Finnish Limited Liability Companies Act (624/2006, with amendments), Securities Markets Act (746/2012, with amendments), Decree of the Ministry of Finance 608/2019 and the Finnish Corporate Governance Code (hereinafter referred to as Governance Code) entered into force on 1 January 2020. This Remuneration Policy is applied to the remuneration of CapMan’s Board of Directors, Chief Executive Officer (hereinafter referred to as CEO) and potential deputy CEO. The remuneration principles of the CEO are applied also
to the potential deputy CEO where applicable, unless otherwise stated in this Policy.
The Governance Code is available on Securities Market Association’s website at www.cgfinland.fi/en/. This Policy will was considered in CapMan’s Annual General Meeting on 11 March 2020.
Remuneration and financial benefits
When considering the remuneration elements, the Board’s Remuneration Committee and the Board of Directors have primarily 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”). The Shareholder´s Nomination Board makes the proposals regarding the remuneration of the Board members to the AGM. According to the decision of the AGM 2020, the monthly fee of the Chairman of the Board of Directors is EUR 5 000 (2019: EUR 5 000), the monthly fee of the Vice Chairman is EUR 4 000 (2019: EUR 4 000), the monthly fee of the Chairman of the Audit Committee of the Board is EUR 4 000 (2019: 4 000) in case he/she does not simultaneously act as the Chairman or the Vice Chairman of the Board and the monthly fee of the members of the Board is EUR 3 250 (2019: EUR 3 250). Based on the AGM resolution, the monthly remuneration will be paid in cash. Board members are not in an employment relationship or service agreement with CapMan (except Eero Heliövaara and Olli Liitola who have entered into a consultancy agreement with the Company) and they are not given the opportunity to participate in CapMan’s share-based incentive program, nor does CapMan have a pension plan that they can opt to take part in.
The Chairmen of the Board and Board’s Committees are paid a meeting fee of EUR 800 per meeting (2019: EUR 800) and the members of the Board and Board’s Committees are paid meeting fee of EUR 400 per meeting (2019: EUR 400). The meeting fees are paid in cash. All members of the Board shall be reimbursed for reasonable travel expenses in accordance with the Company´s travel compensation policy.
Remuneration and other financial benefits paid to the Board members in 2020 are described in the Remuneration Report below.
CEO and Management Group
The Board 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.
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 may be increased on the basis of a proposal by the CEO and subsequent approval by the Chairman of the Board. As of 2020, the CEO remuneration must be in compliance with the Remuneration Policy to be considered in the AGM of 2021.
Remuneration of the CEO
The CEO Joakim Frimodig is entitled to remuneration corresponding to a monthly salary of EUR 30 000 and fringe benefits (phone, lunch and sports benefit). 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 CEO’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 retirement age of the CEO is 63 years.
The CEO’s remuneration does not include short-term incentives (STI). The long-term incentive scheme (LTI) for the CEO is a share-based program described in section 3.
The CEO has a mutual notice period of six months and he will be entitled to a severance pay of 12 months’ salary, if his service agreement is terminated by the Company.
The base salary, fees and other financial benefits paid to the CEO in 2020 are described in the Remuneration Report below.
Remuneration of the Management Group members
In addition to a monthly salary and fringe benefits, certain 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 (excluding fringe benefits). 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.
When considering the remuneration of the Company, the Board has emphasized long-term commitment of the management and decreased the amount of short-term incentives in the remuneration schemes. The CEO and the CFO are not included in the short-term incentive programs. Other Management Group members may be entitled to annual bonuses according to the Corporate Remuneration Policy approved by the Board annually. Annual bonuses are typically based on both business performance and personal/team performance.
Share-based remuneration programmes
Share Plan 2018
The Board resolved in January 2018 to establish a Performance Share Plan 2018-2021 (the “Plan”) for CapMan and its subsidiaries’ (jointly CapMan Group) management, as well as selected CapMan Group’s key employees. The participants were committed to shareholder value creation by investing a significant amount into the CapMan share, which was the prerequisite for the participation in the Plan. In addition, the aim of the new long-term incentive Plan was to retain the participants at CapMan Group’s service, and to offer them a competitive incentive plan based on owning, earning and accumulating CapMan shares. The performance-based reward from the Plan was based on the CapMan share’s Total Shareholder Return (TSR) and on a participant’s employment or service upon reward payment.
The Plan included one (1) performance period, from which the participants earn a matching reward and a performance-based reward. According to the resolution by the Board in January 2018, the performance period commenced on 1 April 2018 and was planned to end on 31 March 2021. In January 2020, the Board resolved to shorten the performance period to end on 31 March 2020 due to the launch of new share plan as set out below in section 3.2.
With the adjusted performance period, the rewards from the Plan will be paid fully in CapMan shares in 2020. As a rule, no reward will be paid, if a participant’s employment or service ends before the reward payment. The shares paid as reward may not be transferred during the lock-up period established for the shares. As the adjusted performance period is ending in 2020, the lock-up period shall end in 2021.
The participants of the Plan are approximately 20 people, including the members of the Management Group. The rewards to be paid based on the performance period amount up to a maximum of approximately 3.8 million CapMan’s shares, indicating a maximum dilution of approximately 2.5 %. The rewards to be paid correspond to 63% of the original maximum of the Plan.
As a rule, a participant must hold a minimum of 25 per cent of the gross shares issued on the basis of the Plan, until the participant’s shareholding in the Company in total corresponds to the value of the participant’s fixed annual gross salary and for as long as the participant’s employment or service in a company belonging to the CapMan Group continues.
The Plan was terminated early in 2020.
Share Plan 2020
The Board resolved in February 2020 to implement a new performance share plan (the “New Plan”). The New Plan shall be established to form part of the incentive and commitment program for selected key employees of CapMan Group. The aim is to align the objectives of the shareholders and the key employees in order to increase the value of the Company in the long-term, to retain the key employees at the Company, and to offer them a competitive reward plan that is based on owning, earning and accumulating the Company´s shares.
The New Plan consists of a performance period based on which the selected key employees, i.e. the participants may earn CapMan’s shares as reward based on the key employee´s personal investment into CapMan’s shares and performance requirements established by the Board. The Performance Period shall commence on 1 April 2020 and end on 31 March 2023.
The prerequisite for reward payment in the New Plan is that a participant allocates previously owned freely transferable CapMan’s shares or acquires CapMan’s shares, in compliance with the insider regulations, up to the number and by the date and in the manner informed by the Board in advance (the “Share Ownership Prerequisite”). A participant must hold CapMan’s shares subject to the Share Ownership Prerequisite until the reward payment.
The performance criterion for the Performance Period is based on the Total Shareholder Return of CapMan’s shares (TSR) during the Performance Period. The New Plan also includes one- and two-year vesting periods. From the Performance Period, a participant shall receive, as a gross reward, a maximum of four and a half (4.5) CapMan’s shares for each one (1) CapMan’s share subject to the Share Ownership Prerequisite and to the achievement of the required TSR performance levels.
CapMan’s shares given as reward on the basis of the New Plan may not be sold, transferred, pledged or otherwise assigned during the lock-up period established for the CapMan’s shares. The lock-up period shall begin from reward payment and end on 30 April 2024.
As a rule, a participant must hold a minimum of 25 per cent of the gross CapMan’s shares issued as a reward on the basis of the New Plan, until the participant´s shareholding in the Company in total corresponds to the value of the participant´s annual salary, and the participant´s employment or service in the CapMan Group continues.
The target group of the New Plan consists of approximately 20 people, including the members of the Management Group and the CEO. The rewards to be paid based on the performance period amount up to a maximum of approximately 4.5 million CapMan’s shares, indicating a maximum dilution of 3.0 %.
Stock option programmes
CapMan has had two stock option programmes, stock option programme 2013 and stock option programme 2016. However, new stock options are not granted under the option programmes as the program has been replaced by a share-based remuneration programme described above. The terms and conditions of the programmes are available in the Stock options section on CapMan’s website.
Remuneration report 2020
24 February 2021
This remuneration report of CapMan Plc (“CapMan” or “Company”) describes the implementation of the Company’s Remuneration Policy and provides information on the remuneration of the Company’s board of directors and CEO in the financial year 2020. The report has been prepared in accordance with Finnish legislation and the Finnish Corporate Governance Code 2020. This report will be considered at the Annual General Meeting (“AGM”) of CapMan on 17 March 2021.
The AGM of the Company held on 11 March 2020 approved the Remuneration Policy for Company’s governing bodies unanimously. The Remuneration Policy is available on the Company’s website (www.capman.com/shareholders/governance/compensation/) and the Corporate Governance Code 2020 at cgfinland.fi/en.
This report is the first remuneration report to be considered by the general meeting under current regulation and, therefore, the general meeting has not previously made a statement on the content of the remuneration report. The Company will in future include in the remuneration report information on how any advisory vote of the previous general meeting concerning the remuneration report has been taken into account.
Implementation of the Remuneration Policy at CapMan in 2020
The AGM held on 11 March 2020 decided on the remuneration of the members of the board of directors (“Board”) in accordance with the proposal by the Shareholders’ Nomination Board. The Shareholders’ Nomination Board consists of representatives of the largest shareholders and, thereby, the Board is not involved in the preparation of its own remuneration.
According to the decision of the AGM, the members of the Company’s Board were paid monthly remuneration and meeting fees in 2020. The remuneration decided by the AGM in 2020 remained unamended compared to the year 2019. According to the decision of the AGM, the monthly fees of the Board members are the following: the Chairman of the Board be paid EUR 5 000 per month, the Vice Chairman be paid EUR 4 000 per month, the Chairman of the Audit Committee of the Board be paid EUR 4 000 per month in case he/she does not simultaneously act as the Chairman or the Vice Chairman of the Board, and other members of the Board be paid EUR 3 250 per month. In addition, the AGM decided that the Chairmen of the Board and Board’s Committees are paid a meeting fee of EUR 800 per meeting and the members of the Board and Board’s Committees are paid a meeting fee of EUR 400 per meeting in addition to the monthly fees. In 2020, all remuneration were paid in cash.
The Remuneration Committee of CapMan’s Board convened twice in 2020 to decide, among others, on matters concerning the remuneration of the Company’s CEO and other management. Based on the preparation by the Remuneration Committee, the Board resolved on a new long-term incentive programme, in which the CEO of the Company is included. In addition, the Board decided to shorten the term of the previous long-term incentive programme by approximately one year and pay the reward accrued by the end of the term. The Board decided on short-term incentive rewards to the Company’s management which were paid in March 2020, as well as, on short-term incentive programme for the financial year of 2020. In accordance with the Board’s previous decision in principle, the CEO was not included in the short-term incentives in 2020 or 2019. The Board has outlined that the CEO’s variable remuneration is to be based mainly on long-term incentives in the Company’s current situation. The Board has not made adjustments to the fixed remuneration or benefits of the CEO in 2020.
According to the Board’s opinion, the decision-making on remuneration complied with the decision-making order described in the Remuneration Policy, and the remuneration components are consistent with the principles set out in the Policy, and there has been no deviation from the Remuneration Policy. No clawback was exercised to the remuneration of the Board or CEO.
Focus on Long-Term Remuneration
The Company aims at maintaining attractive, competitive, fair, and encouraging remuneration which strives to achieving strategic business objectives of the Company in short-term but especially in the long-term. The Company has a long-term share-based incentive programme designed to encourage and retain. The duration of the programme is three years (2020–2023) and participation requires investment in the Company’s shares. The CEO participates in the programme in full with the contribution allocated to him (300 000 shares), as well as, other members of the Management Group. The Board has emphasized the significance of the long-term success by excluding the CEO entirely from the short-term incentive programme.
Development of Remuneration
The development of remuneration of the Company’s Board members and CEO compared to the development of average remuneration of the Company’s personnel and the Company’s financial development over the past five financial years are presented in the table below.
|Key figure / Position||2016||2017||2018||2019||2020||CAGR*|
|Share (Total Shareholder Return, TSR), €||1.25||1.86||1.67||2.68||2.77||22 %|
|Turnover, €||26 677 000||34 843 000||33 482 000||48 972 000||42 989 000||13 %|
|CEO, annual income, €**||487 630||292 632||376 392||376 300||361 974||-7 %|
|CEO, share rewards, €***||0||0||0||0||2 241 675|
|Board member, €****||49 372||55 930||53 400||49 091||49 038||0 %|
|Personnel, € *****||175 495||187 699||164 333||159 551||150 664||-4 %|
|Personnel, share rewards, €***||0||0||0||0||4 079 849|
* Compound annual growth rate 2016–2020.
** The remuneration related to preceding CEO has been deducted from the figure in 2017. During years 2017–2019, the CEO has in addition received income from executing options granted based on previous positions. Social costs have not been included in the CEO figures.
*** Rewards paid from the performance share plan of years 2018–2020.
**** Average remuneration paid to a Board member (monthly fee and meeting fees in total).
***** Personnel costs reported in the financial statements of the Company divided by the annual full-time equivalent (FTE) personnel head count, including e.g. variable remuneration and social costs (excluding share rewards).
Remuneration to the board members in 2020
The following table includes the board fees and meeting fees paid to the members of the Board in 2020.
|Name||Board fee, €||Meeting fees, €|
|Fagerholm Catarina||39 000||6 800|
|Hammarén Johan*||31 466||2 000|
|Heliövaara Eero**||39 000||4 800|
|Kaario Mammu||48 000||7 200|
|Liitola Olli***||39 000||3 200|
|Ramsay Peter||39 000||5 200|
|Tallberg Andreas||60 000||9 600|
* Elected to the Board in the AMG held on 11 March 2020.
** In addition to Board fee, Heliövaara was paid 14 880 € in consultancy fees unaffiliated to the Board membership.
*** In addition to Board fee, Liitola was paid 3 472 € in consultancy fees unaffiliated to the Board membership.
The meeting fees were paid in cash in full. In addition to the fees described above, the members of the Board have been reimbursed for travel expenses in accordance with the Company’s travel compensation policy.
Remuneration if the CEO in 2020
The following table includes the remuneration and other financial benefits paid to the CEO in 2020.
|Name||Fixed annual salary, €||Annual bonus, €||Shares, €||Supplementary pension, €|
|Frimodig Joakim||361 974||0||2 241 675*||36 198|
*VWAP 17 March 2020: 1.6605 €
The shares (1 350 000 pieces) have been given as a reward on the basis of investment-based long-term incentive plan of year 2018 and the realization of the incentive plan has been based on Total Shareholder Return (TSR). The shares given as a reward are subject to one year lock-up period during which the shares may not be transferred.
The variable remuneration paid to the CEO in 2020 consisted solely of long-term variable remuneration and corresponds to approximately 6.2 x the fixed annual salary when converted to cash. Since the CEO is not currently, in accordance with the Board’s decision in principal, entitled to any short-term incentives, the proportional share of the variable remuneration in the total remuneration of the CEO may become very substantial in those years when rewards are realized based on the long-term incentive programme. At the moment, the Board has decided on a three-year programme based on which rewards are subsequently paid in 2023. The shares given as a reward will be subject to one year lock-up period during which the shares may not be transferred. The Company does not currently obtain annually commencing programmes.
The CEO participates in the performance share plan in full. He has allocated to the share plan the maximum amount of shares as defined by the Board, i.e. 300 000 CapMan shares held by him. In case the performance criterion of Total Shareholder Return of CapMan’s shares (TSR) is achieved in full, shall the CEO be entitled to receive as a gross reward a maximum of 4.5 x the amount of allocated shares, i.e. maximum of 1 350 000 shares in total. The share plan is described in more detail on the Company’s website at https://www.capman.com/shareholders/governance/compensation/.
The CEO is entitled to an additional defined contribution-based pension plan for which the Company pays an annual premium of 10% of the participant’s annual salary. The CEO’s entitlement to a paid-up policy increases gradually after three years and after six years covers 100% of the cumulative additional pension saving. The retirement age of the CEO is 63 years.