Remuneration

At Loihde, remuneration is about promoting strategy fulfilment, long-term success, and an increase in shareholder value. The aim of remuneration is to motivate and commit employees and management to the company’s goals, support the acquisition of desired skills, and create a strong and responsible corporate culture.

Loihde Plc is formulating the company’s first remuneration policy in accordance with the Corporate Governance Code, and it will be presented to the Annual General Meeting in spring 2022. In addition, a remuneration report for 2021 will be published together with the financial statements release.

Remuneration of the Board of Directors

The Annual General Meeting decides on the remuneration of the members of the Board of Directors. Until 6 October 2021, the company’s Supervisory Board elected the members of the Board of Directors and decided on their remuneration. On 26 November 2020 they decided the following:

  • The Chairperson of the Board of Directors will be paid an annual fee of EUR 36,000 and a meeting fee of EUR 700 per meeting.
  • Each member of the Board of Directors will be paid an annual fee of EUR 15,000 and a meeting fee of EUR 600 per meeting.
  • The meeting fee is EUR 700 per meeting for the Chairperson of a committee and EUR 600 per meeting for the members of a committee.

The company’s Annual General Meeting held on 25 June 2020 resolved to adopt a long-term share-based incentive scheme for the members of the Board of Directors. Under the incentive scheme, the members of the Board of Directors can subscribe for company shares at an amount corresponding to half of their annual fee at a maximum. The Annual General Meeting may resolve on issuing commitment shares to the participants in the scheme based on their share ownership after a specified vesting period. Eligibility for the commitment shares is conditional on the participant still being a member of the company’s Board of Directors.

Remuneration of the members of the Shareholders’ Nomination Board

On 6 May 2021, the Annual General Meeting decided that each member of the Nomination Board and the Chairperson of the Board of Directors, who will participate in the work of the Nomination Board as an expert member, will be paid a meeting fee of EUR 400 per meeting, and the Chairperson of the Nomination Board EUR 700 per meeting.

Remuneration of the CEO

The Board of Directors decides on the remuneration and benefits of the CEO, as well as other terms of the CEO contract. The CEO contract also includes financial benefits, including compensation for dismissal and other possible compensations.

The remuneration of the CEO consists of basic salary (including benefits in kind), annual merit pay (STI) and long-term incentive schemes, like share-based incentive schemes (LTI). The fixed salary of the CEO is EUR 24,020 per month. The remuneration and benefits paid to the CEO in 2020 amounted to EUR 307,500.

The CEO is entitled to statutory pension. The retirement age of the CEO is defined in the statutory employee pension scheme.

The period of notice for the contract is 6 months on either side. If Loihde terminates the contract, the CEO is under certain conditions entitled to a one-time payment corresponding to 12 months’ monthly salary.

Remuneration of the Leadership Team

The company’s personnel committee resolves on the fixed salaries of the members of the Leadership Team, apart from the Group CEO and deputy CEO. Incentive schemes and their terms are resolved on by the Board of Directors.

The remuneration of the members of the Group’s Leadership Team consists of basic salary (including benefits in kind), annual merit pay (STI) and long-term incentive schemes, like share-based incentive schemes (LTI). In 2020, the remuneration and benefits paid to the members of the Leadership Team, with the exception of the CEO, amounted to EUR 728,700. There has not been a significant change in the remuneration after the end of the accounting period on 31 December 2020.

The members of the Leadership Team are entitled to statutory pension benefits.

Each member of the Leadership Team has a 3 months’ period of notice. In addition, some of the members are entitled to a separate payment corresponding to 6 months’ salary, if the company terminates their contract.

Share-based incentive schemes

Share-based incentive scheme for the personnel 2018–2023

In autumn 2018, Loihde launched a share-based incentive scheme for the personnel. Its aim is to align the interests of the company’s employees and shareholders by encouraging the company’s employees to invest in the company’s shares and to commit to working for the company’s goals.

The incentive scheme includes an additional share scheme offered to all employees of the Group’s core businesses as well as a performance-based bonus scheme for the senior management and selected key employees. The participants in the scheme have had the opportunity to subscribe for company shares at a reduced subscription price (a 10 per cent discount on the average price of the preceding six months on Privanet) and, after a two-year vesting period, they receive additional shares free of charge at a rate of one quarter of the number of shares subscribed. To receive additional shares, the employee must hold the shares purchased until the end of the commitment period and also be employed by the Loihde Group at the end of the commitment period. The criteria for the performance-based bonus scheme are the Group’s EBITDA and total shareholder return (TSR). The bonuses under the incentive scheme are, depending on the participant’s choice, paid entirely in shares or in a combination of shares and cash where the cash component is intended to cover the taxes and tax-like charges arising from the bonus.

Three vesting periods have begun under the scheme: 2018–2021, 2019–2022 and 2020–2023. The share issues included in the scheme are based on authorisations issued by the Annual General Meeting in 2018, 2019, 2020 and 2021.

Vesting period Number of participants Number of subscriptions Additional shares and bonus shares
Time of payment Maximum amount
2018–2021 266 63,170 Spring 2021 31,5611)
2019–2022 330 83,789 Spring 2022 70,919
2020–2023 298 82,003 Spring 2023 20,2862)

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1) This figure takes into account the actual achievement of the criteria of the performance-based bonus scheme at the end of the 2018–2021 vesting period.

2) The 2020–2023 vesting period does not include a performance-based bonus scheme.

Share-based incentive scheme for the personnel 2021–2023

On 27 May 2021, the Board of Directors of Loihde decided on a long-term incentive scheme for the company’s personnel (Share-based incentive scheme for personnel 2021). The target group for the incentive scheme includes all of the personnel of Loihde Group, including the management. The purpose of the scheme is to align the goals of the shareholders and personnel in order to increase the value of the company and implement the business strategy in the long term as well as to engage the personnel’s commitment to the company and offer them a competitive reward system based on the earnings and value development of the company’s shares.

The incentive scheme consists of one vesting period, 1 June 2021–31 December 2023. After the vesting period, which will last approximately two and a half years, participants who have subscribed for shares will receive one additional share free of charge for each three shares they have subscribed for and still hold at the time of the payment of the reward. In order to be eligible to receive the additional shares, the participant must still be employed by the Group at the time of the payment of the reward. Rewards based on the earning of additional shares will be paid to the eligible participants after the vesting period, tentatively in early 2024. The rewards under the incentive scheme will be primarily paid in a combination of company shares and cash. The cash component is intended to cover the taxes and tax-like charges arising from the reward. The Board of Directors also has the right to decide that the reward be paid fully in shares or fully in cash.

During the subscription period, 18 June 2021–24 June 2021, the participants in the scheme have had the opportunity to subscribe for company shares at a reduced subscription price (a 10 per cent discount on the average price of the share on Privanet during the period 1 November 2020–30 April 2021). The share issue was based on the authorisation by the Annual General Meeting held on 9 May 2019, and the new shares were entered in the Trade Register on 19 July 2021.

Vesting period Number of participants Number of subscriptions Additional shares
Time of payment Maximum amount
2021–2023 327 82,842 Spring 2024  27,614

Long-term incentive scheme for the management and key personnel 2021 (LTI)

On 3 March 2021, the company’s Board of Directors decided on a performance-based long-term incentive scheme aimed at the Group Management Team and selected key employees. The scheme consists of three-year vesting periods starting annually, each of which requires separate approval by the Board of Directors. The criteria for the payment of the reward consist of revenue and EBITDA targets set by the Board of Directors for the vesting period. The potential share rewards to be paid based on the first vesting period, 2021–2023, will be paid in spring 2024 and the total amount will be at most 48,000 shares. The potential share rewards to be paid based on the second vesting period, 2022–2024, will be paid in spring 2025 and the total amount will be at most 58,800 shares. The condition for the payment of the reward is that the key employee’s employment or service relationship has not been terminated by the key employee or the company before the end of the vesting period.

Share-based incentive scheme for the CEO

In November 2020, the company also carried out a directed paid share issue of 6,000 shares to the company’s new CEO Samu Konttinen as part of the CEO’s share-based incentive scheme. The subscription price was EUR 16.09 per share, based on the average price of the company’s share on Privanet for the period 24 May–23 November 2020, on which a discount of 10 per cent was applied. Under the terms of the incentive scheme, Konttinen is entitled to receive, free of charge, 3,000 shares in one year’s time and a further 3,000 shares in two years’ time if he still serves as the company’s CEO on the dates in question.

Share-based incentive scheme for the Board of Directors

The Annual General Meeting held on 25 June 2020 resolved to adopt a long-term share-based incentive scheme for the members of the Board of Directors and resolved on a related share issue. Under the incentive scheme, the members of the Board of Directors can subscribe for company shares at an amount corresponding to half of their annual fee at a maximum. In the incentive scheme, which began in 2020, the subscription price was EUR 15.62, which corresponds to the average price of the company share for the six-month period preceding the resolution on the share issue, with a 10 per cent discount applied. The Annual General Meeting may resolve on issuing commitment shares to the participants in the scheme based on their share ownership after a specified vesting period. Eligibility for the commitment shares is conditional on the participant still being a member of the company’s Board of Directors. In 2020, two members of the Board of Directors participated in the incentive scheme and subscribed for 960 shares in total.

On 6 May 2021, the Annual General Meeting decided on a directed share issue related to the company’s long-term share-based incentive scheme for the members of the Board of Directors, in which a maximum of 3,168 shares were issued for subscription by the members of the Board of Directors at a subscription price of EUR 17.50 per share.  The share subscription price corresponded to the average price of the share on Privanet during the period 1 October 2020–31 March 2021 with a 10% discount. Five members of the Board of Directors subscribed for shares, with the total number being 2,740 subscribed shares. The subscription price was entered in the company’s reserve for invested unrestricted equity after the review period, in July 2021, and entered in the Trade Register on 20 July 2021.