Remuneration

Salary and remuneration report 

Updated in September 2019 after CEO transition

This report on remuneration includes descriptions of the decision-making procedure concerning the remuneration of the Board of Directors of SRV Group Plc, the President & CEO, and other members of the Group’s Corporate Executive Team, as well as the key principles of remuneration. A remuneration report listing the compensation and other financial benefits paid during the financial year 2018 has been drawn up as a part of the report.

The company’s salary and remuneration report is published on this page. The report is updated when the information on remuneration changes significantly.

A Decision-making procedure

1 Board of Directors

The shareholders of SRV Group Plc decide on the remunerations paid to the Members of the Board on their work in the Board and the committees and their determination principles at the Annual General Meeting. The HR & Nomination Committee of the Board prepares a proposal on the remunerations of the Members of the Board and the basis for the compensation of expenses annually.

2 President & CEO and other management

The Board of Directors of SRV Group Plc decides on the terms of employment and other compensation of the President & CEO, Deputy CEO, and other members of the Corporate Executive Team. The Board’s HR & Nomination Committee prepares issues related to the salaries and other benefits of the President & CEO, the Deputy CEO and other members of the Group’s Corporate Executive Team.

The Board of Directors approves the amount of bonuses paid to the President & CEO and the other members of the Corporate Executive Team based on the performance bonus scheme. Bonuses may be approved for payment after the fulfillment of the criteria set for the earnings period has been assessed.

The Board of Directors also approves all the terms of the personnel incentive and remuneration systems used by the Group. The company’s Board of Directors sets the long-term performance criteria when making the decision on the terms of the long-term incentive scheme. In addition, the Board of Directors decides on the performance criteria related to short-term remuneration annually. The performance criteria set by the Board are based on the Group’s long-term strategy, the annually drawn up action plan as well as the budget. The performance criteria set for remuneration annually clarify the gradual achievement of the long-term goals. The aim of short-term remuneration is to strengthen the commitment of the management and the personnel to the Group’s goals. In addition, the aim of long-term remuneration is to ensure that competent and motivated personnel are invested in the Group and its goals, thereby ensuring e.g. that the management stays in the employment of the Group.

The Board of Directors decides on granting possible equity bonuses within the framework of the authorisation to issue shares granted by the General Meeting at the time. The Annual General Meeting on 22 March 2016 authorised the Board of Directors to decide on the issue of new shares or the reissue of treasury shares and/or the issue of special rights entitling to shares as referred to in Chapter 10, Section 1 of the Limited Liability Companies Act either for or without consideration. Based on the authorisation, the Board of Directors may decide on the issue of shares such that the number of shares issued based on the authorisation, including shares issued on the basis of special rights, is a maximum of 6,049,957 in total.

The authorisation entitles the Board of Directors to decide on all the terms and conditions of a share issue and special rights entitling to shares, including the right to derogate from the pre-emptive subscription right of shareholders, if there is a weighty financial reason for the company to do so. A directed share issue may be executed without consideration only if there is an especially weighty financial reason for the company to do so, taking the interests of all shareholders into account.

The authorisation may be used, for example, when issuing new shares or conveying shares as consideration in corporate acquisitions, when the company acquires assets relating to its business and for implementing incentive schemes. The authorisation shall be valid for five years from the decision of the Annual General Meeting.

In 2018, the Board of Directors has not granted any equity bonuses.

B Key principles of remunerations

1 Board of Directors

The Annual General Meeting (AGM) of SRV Group Plc decided on 19 March 2019 that
– the remuneration of the Chairman of the Board is EUR 5,000 per month,
– the remuneration of the Vice Chairman is EUR 4,000 per month, and
– the remuneration of a Member of the Board is EUR 3,000 per month.

In addition, a remuneration of EUR 700 per meeting of the Board and the committees is paid to the Chairman, the Vice Chairman and the Members. Travel expenses arising from performing the duties of a member the Board of Directors are paid according to company’s travel policy.

None of the Members of the Board is in an employment relationship with the company, and therefore they do not receive financial benefits related to an employment relationship from the company. The Members of the Board are not within the scope of the company’s share-based incentive schemes, and they are not paid in shares of the company as remuneration.

2 President & CEO

2.1 Employment agreement and short-term remunerations

Saku Sipola, M.Sc. (Tech.), is the President & CEO of SRV Group Plc. A written President & CEO agreement has been drawn up between SRV Group Plc and Saku Sipola, according to which the salary of the President & CEO consists of the fixed monthly salary (including car, meal and mobile phone benefit). The salary of the President & CEO in money is EUR 36,250.00 per month.

The maximum amount of the annual bonus corresponds to the President & CEO’s total salary of eight months. The starting point is that when the profits calculated after the SRV Group’s financing costs correspond to the budget approved by the Board of Directors for the financial year, and when the President & CEO otherwise fulfills his or her duties in a way that meets the goals set on the President & CEO, the bonus amount corresponds to the total salary of four months. However, the Board has the right to decide the amount, payment or lack of payment of the bonus in the manner it considers best. For 2019, the President & CEO will be paid a performance bonus equal to four months’ total salary, according to working months during the year. For 2020, will be paid a bonus equal to four months’ total salary at minimum.

The company is responsible for assuring the President & CEO’s pension insurance in accordance with the legislation in force at any given time.

Each party has the right to terminate the service agreement between the company and President & CEO. If President & CEO terminates the agreement,  the period of notice is six (6) months. If SRV Group Plc terminates the agreement, the period of notice is 12 months.

2.2 Long-term remuneration for the President & CEO

The Board of Directors of SRV Group Plc has made the decision for a share-based incentive scheme for the President & CEO for 2019–2026.

Under the scheme, Saku Sipola has been given 600,000 acquisition rights, entitling him to acquire the number of SRV Group Plc’s shares corresponding to the acquisition rights EUR 1.62 per share.

Under the scheme, new shares or treasury shares in the possession of the company can be issued. The company’s Board of Directors will make a decision on the manner of implementation separately each time. Under the terms of the scheme, the acquired shares are subject to a transfer restriction, which is valid for two years from the acquisition of the shares. The acquisition rights can be exercised in three two-year long exercise periods, the first of which begins on 1 March 2021 and ends on 28 February 2023, the second begins on 1 September 2022 and ends on 31 August 2024, and the third begins on 1 September 2024 and ends on 31 August 2026. During each exercise period, the acquisition rights holder is entitled to exercise 200,000 acquisition rights.

The total recognised IFRS cost of the incentive scheme 2019–2026 is approximately EUR 0.3 million.

3 Other management

3.1 Short-term remunerations

The remunerations of the Group’s Corporate Executive Team consist of the fixed monthly salary, the ordinary fringe benefits and the bonuses.

The members of the Group’s Corporate Executive Team are within the scope of the Group’s annual performance bonus scheme. The maximum bonus amount for the members of the Group’s Corporate Executive Team corresponds to the total salary of five or six months. The Board of Directors approves the principles and the performance and result criteria of the performance bonus scheme as well as the maximum bonus amounts for one year at a time. In 2019, the bonus amount of the Group’s Corporate Executive Team is influenced by the achievement of personal goals as follows: personal share max. 1 month, Group level share max. 3 months, and the result of the business area in question max. 3 months.

In addition to the pay for the period of notice, some members of the Corporate Executive Team are entitled to receive a remuneration corresponding to the salary of six (6) months, if the company or its subsidiary dismisses the person in question without the person being guilty of e.g. a gross misdemeanor concerning the company’s business.

The Executive Vice Presidents of SRV Group are within the scope of the supplementary pension system, based on which they are entitled to retire at 60 years of age. The supplementary pension is based on contributions, and the policyholder is not responsible for the amount of pension to be paid later. The annual insurance premium amounts to 20% of the annual salary of the insured parties, excluding possible bonuses. The insured parties are entitled to a paid-up free policy after the employment relationship ends, if their employment relationship ends for a reason other than the occurrence of pension. The supplementary pension system ends when the person turns 60 years.

There are no other agreements based on which the members of the company’s Corporate Executive Team would be entitled to additional benefits after the end of the employment relationship.

3.2 Long-term remunerations

Members of the Group’s Corporate Executive Team are within the scope of the share-based incentive scheme 2017-2019 acting as long-term incentive scheme

On 2 February 2017, the Board of Directors of SRV Group Plc approved a new share-based incentive scheme for the Group’s key personnel. When approved, the scheme covered 40 key SRV personnel. The purpose of the scheme is to align the objectives of shareholders and key personnel in order to increase the company’s value, and to enhance key personnel’s commitment to the company. The key indicators for the scheme’s earnings period of 2017–2019 are the improvement of the Group’s profit percentage and the return of the Group’s own capital and capital employed. In addition, other business-specific indicators specified for 2017–2019 will affect the bonus earned. The scheme’s objectives are focused especially on the year 2019.

When the indicators are fulfilled, the bonus will be paid, partly in the company’s shares and partly in cash. This scheme allows the conveyance, without consideration, of a maximum of 1,000,000 SRV Group Plc shares to key employees, and a cash payment for tax purposes corresponding to the value of the conveyed shares. The total recognised IFRS value of shares conveyed over the lifetime of the incentive scheme, 2017–2019, will be approximately EUR 5.5 million, to which the cash payments will be added.

Personnel covered by the scheme must hold at least half of the shares received on the basis of the scheme until 31 December 2020 and at least half until 31 December 2021. If a key employee’s employment ends during the above restriction period, he/she must hand over all shares to the company without compensation.

C Remuneration report

This remuneration report has been published in connection with the salary and remuneration report. The remuneration report describes the remuneration and other financial benefits paid to the Board of Directors, the President & CEO, and the other members of the Group’s Corporate Executive Team during the previous financial year, i.e. financial year 2018.

1 Board of Directors

According to a decision of the Annual General Meeting on 18 March 2018, a remuneration of EUR 5,000 per month was paid to the Chairman of the Board, a remuneration of EUR 4,000 per month to the Vice Chairman and a remuneration of EUR 3,000 per month to the other Members of the Board starting from the Annual General Meeting of 2018[1]. In addition, a remuneration of EUR 700 per meeting of the Board and the committees is paid to the Chairman, the Vice Chairman and the Members. The travel expenses arising from performing the duties of a member the Board of Directors are paid according to company’s travel policy.

Information on the remunerations paid to the people acting as Members of the Board during the financial year 2018 has been compiled in the table below:

2018[2] Monthly remuneration Meeting remuneration Total
Ilpo Kokkila

(chairman)

60 000 15 700 75 700
Olli Pekka Kallasvuo (vice chairman) 48 000 15 700 63 700
Minna Alitalo 36 000 15 900 51 900
Juhani Elomaa 36 000 14 500 50 500
Juhani Hintikka 36 000 15 000 51 000
Timo Kokkila 36 000 15 900 51 900

None of the Members of the Board is in an employment relationship with the company, and therefore they do not receive financial benefits related to an employment relationship from the company. The Members of the Board are not within the scope of the company’s share-based incentive schemes, and they are not paid in shares of the company as remuneration.

2 President & CEO

In 2018, President & CEO Juha Pekka Ojala was paid a total of EUR 405,254.75 in salary and fringe benefits; the share of benefits was EUR 17.974,35. In addition, in 2018 the President & CEO was paid EUR 111.578,00 as bonuses for the previous year. The company or its subsidiaries have not paid other remunerations to the President & CEO.

In 2018, the President & CEO has not received remuneration based on his share-based incentive scheme for 2015–2020.

The salary and remunerations of the President & CEO in 2017 amounted to EUR 516.832,75 in total.

For 2018, the company has paid EUR 78.041,64 in voluntary pension payments on behalf of the President & CEO.

3 Other management

In 2018, a total of EUR 1,357,665.43 as salaries including fringe benefits was paid to the members of the Corporate Executive Team of SRV Group other than the CEO; out of this, the share of fringe benefits was EUR 95.525,83. In addition, in 2018 the members of the Corporate Executive Team were also paid a total of EUR 302.289,80 as bonuses for the previous year.

In 2018, the members of the Group’s Corporate Executive Team have not received remuneration under the long-term share-based incentive scheme.

In 2018, the company paid a total of EUR 51.808,80 in contributions for the pension schemes of members of the Group’s Corporate Executive Team other than the President & CEO.

Information on the remunerations paid to the people acting as the President & CEO and members of the Group’s Corporate Executive Team during the financial year 2018 has been compiled in the table below:

2018 Fixed monthly salaries[3] Bonuses[4] Share-based

remunerations

Total
President & CEO 405 254,75 111 578,00 0 516 832,75
Other members of the Group’s Corporate Executive Team in total 1 357 665,43 302 289,80 0 1 659 955,23

 

[1] The remuneration was the same in the early part of the year up to the AGM.

[2] The remunerations for the members of the Board of Directors are reported based on payments made during the reported year.

[3] Fixed monthly salary including fringe benefits

[4] Short-term remuneration, based in performance during the previous year. The bonuses have been reported based on payments made during the reported year.

Salary and remuneration report

Salary and remuneration report 2018 (22 February 2019)
Salary and remuneration report 2017