MEMBERS OF THE BOARD OF DIRECTORS
The remuneration of the members of the Board of Directors is decided on by the Annual General Meeting of Honkarakenne Oyj. The Chairman of the Board of Directors is paid a monthly fee of EUR 4,000, the deputy chairman EUR 2,000 and the other members EUR 1,500. If the Board of Directors establishes committees from amongst its number, the committee members are paid a fee of EUR 500 per meeting. In 2015 the Board of Directors established the Remuneration and Nomination Committee amongst its members. In addition, the members’ travel and accommodation costs are reimbursed against an invoice.
PRESIDENT AND CEO
The Board of Directors decides on the President and CEO’s salary, bonuses and other terms of employment. In financial year 2015 the Presidents and CEOs were Mikko Kilpeläinen until 24 March 2015, acting President and CEO Mikko Jaskari and since 25 June 2015 Marko Saarelainen. Mikko Kilpeläinen’s salaries in 2015 were 518,310.85 euros and it included fringe benefits 3,670.55 euros and 451,955.04 euros benefits paid upon termination. Mikko Jaskari’s salaries as acting President and CEO were 31,765.00 euros and it included fringe benefits 1,284.03 euros. Marko Saarelainen’s salaries were 104,086.75 euros and it included 1,020.00 euros fringe benefits. Marko Saarelainen’s salary is paid partly by the parent company in Finland and partly by Japanese subsidiary. In addition, the CEO is included in the company’s incentive scheme. No performance bonuses were paid on the basis of the 2015 performance bonus scheme.
In addition to statutory pension security, additional pension security has been arranged for the CEO, and its cost amounted to 15,285.33 euros for Mikko Kilpeläinen in 2015. Additional pension security cost for acting President and CEO amounted to 2,837.44 euros. Additional pension security cost for Marko Saarelainen was 8,750.00 euros. No particular agreements have been made regarding the retirement age of the CEO and CEO’s retirement age complies with current legislation. In addition, if a performance target set separately by the Board of Directors is achieved, the CEO is entitled to receive an additional pension equivalent to one month’s salary.
The CEO has a six-month period of notice. If the company decides to terminate his employment contract, the period of notice is six months. If the company terminates the CEO’s employment contract, he will receive monetary compensation equal to 6 months’ pay in addition to his salary for that period.
PERFORMANCE BONUS CRITERIA OF THE CEO
In accordance with the rules for the short-term incentive bonuses of the senior management, the CEO can be paid a performance bonus equal to six months’ salary.
The Board of Directors determines the annual performance criteria for CEO. CEO’s performance criteria in year 2015 were the company’s result before taxes and advance sales. The relative weight for them both criteria was 50 %.
No performance bonuses were paid on the basis of the 2015 performance bonus scheme.
OTHER MEMBERS OF THE EXECUTIVE GROUP
The annual salaries of the other members of the Executive Group in the 2015 financial year amounted to EUR 729,694.20 euros, of which fringe benefits accounted for EUR 48,826.43. No performance bonuses were paid in 2015. In addition to statutory pension security, additional individual pension security has been arranged for the other members of the Executive Group. The cost to the company of these additional plans was 45,540.06 euros in 2015. In addition, if a performance target set separately by the Board of Directors is achieved, the members of the Executive Group are entitled to receive an additional pension equivalent to one month’s salary.
PERFORMANCE BONUS SCHEME
The Board of Directors decides on the calculation method and amount of the performance bonus scheme for one year at a time. Honkarakenne Oyj has a performance bonus scheme, which includes a performance bonus scheme for the company’s Executive Group. Executive Group Member can be paid a performance bonus equal maximum of 50 % of member’s annual salary of the year under review.
In 2015 bonus criteria for Executive Group Members were the same as criteria for CEO.
No performance bonuses were paid on the basis of the 2015 performance bonus scheme.
LONG-TERM INCENTIVE SCHEME
SHARE BASED INCENTIVE PLAN 2013-2016
The Board of Directors decided on a long-term share-based incentive plan for the Group key employees on 20 June 2013. The performance period of the new plan began on 1 January 2013 and will end on 31 December 2016. The potential reward for the performance period is based on the cumulative earnings per share (EPS) for 2013 – 2016 and on the average return on capital employed (ROCE) for 2013 – 2016.
Any rewards for the performance period 2013–2016 will be paid partly as B-shares and partly in cash in 2017. The cash proportion is intended to cover taxes and tax-related costs arising from the rewards to the key employees. No reward will principally be paid, if a key employee’s employment or service at the Company ends before reward payment.
The members of the Executive Group of Honkarakenne Oyj belong to the target group of the Plan. The reward to be paid on the basis of the performance period 2013–2016 corresponds to a total maximum of approximately 340,000 B-shares, including the amount to be paid in cash.
In the financial year 2014 the amount of allocated shares was 4,191 and in the end of 2014 the amount of all allocated shares was 14,675.
HONKA MANAGEMENT OY
In the long-term, share-based incentive scheme for senior management, the CEO and other members of the Executive Group have had the opportunity to invest in Series B shares of the company, both with their own funds and with loans provided by the company. For their shareholdings, the members of the Executive Group have established a company called Honka Management Oy. After the personal purchases of shares and following the directed rights issues of 220,000 Series B shares in June 2010 and 17,250 Series B shares in June 2011, Honka Management Oy holds a total of 286,250 Honkarakenne Series B shares. The actual owner risk is carried personally by the executives for the part of their personal investment in the plan. Before Honkarakenne Oyj redeemed Esa Rautalinko’s holding in Honka Management Oy, the personal investments of management amounted to EUR 240,000. At the end of 2012, the personal investments of management amounted to EUR 204,849. The loans granted by the company amount to EUR 851,023. Honka Management is owned by the following parties: Honkarakenne 47.0%, Mikko Jaskari 18.8%, Risto Kilkki 9.4% (no longer a member of the Executive Group), Reijo Virtanen 9.4% (no longer a member of the Executive Group), Eino Hekali 9.4% (no longer a member of the Executive Group) and Sanna Wester 6.0% (no longer a member of the Executive Group).