Compensation systems have been designed to support the strategic, financial and operative development of DNA, to motivate the personnel and to reward the personnel for good financial results. DNA adheres to the compensation principles approved by the Board of Directors.
Board of Directors’ compensation
DNA’s Annual General Meeting decides on the compensation of the members of the Board of Directors and its committees. The Shareholders’ Nomination Committee reviews the Board members’ compensation and compensation methods annually and submits proposals to the AGM. Compensation of the Board of Directors of the Company is paid mainly once a year. No pension payments relate to the compensation paid to the Board of Directors of the Company.
DNA’s Annual General Meeting decides on the Board of Directors’ compensation for one term of office at a time. DNA’s AGM of March 22, 2017 decided not to change the compensation paid to the Board of Directors, which are the following:
- Annual compensation, Chairman of the Board of Directors: EUR 144,000
- Annual compensation, members of the Board of Directors: EUR 48,000
- Meeting fee, members of the Board of Directors: EUR 1,050/meeting/person
- Meeting fee, Committee Chair: EUR 1,050/meeting/person
- Meeting fee, Committee members: EUR 525/meeting/person
Based on the decision of the General Meeting, each member and the Chairman of the Board of Directors are entitled to receive 40 per cent of their annual compensation in DNA shares. Such acquired shares are measured at fair value at acquisition date. The shares may not be pledged or transferred during board membership, and certain conditions apply to the transferability of shares.
Travel expenses will be reimbursed in accordance with the Decision of the Tax Administration on tax-exempt allowances for travel expenses in force from time to time.
Board of Directors' compensation in 2015 and 2014
|Name||Annual remuneration||Meeting fees||Total|
|Anssi Soila (member until 26 March 2015)||12,080||47,025||2,100||15,750||14,180||62,775|
|Margus Schults (member since 26 March 2015)||48,000||0||8,707||0||56,707||0|
Shares held by members of the Board
Shareholders’ Nomination Committee
In accordance with the decision of the General Meeting, the Chairperson of the Shareholders' Nomination Committee will be paid EUR 1,050 for each meeting of the Nomination Committee and other members will be paid EUR 525 per each meeting of the Nomination Committee.
Compensation of the CEO and the Executive Team
The Board of Directors decides on the CEO’s and Executive Team’s compensation. The Board of Directors has established a Compensation Committee to prepare, among other things, matters relating to the compensation of the CEO and members of the Executive Team. Short-term incentives comprise performance-based payments in accordance with the annual target and performance-based payments that are based on the annual targets specified by the Board of Directors of the Company. Share-based reward systems serve as long-term incentives. The General Meeting decides on such share purchase authorisations and share issue authorisations.
The compensation of the CEO and the Executive Team of DNA is based on a monthly salary, performance-based payment according to DNA’s incentive and performance-based payment scheme and a share-based reward system.
The salary of the CEO consists of a total salary (which includes monetary salary and customary fringe benefits, such as a potential car benefit and mobile phone benefit) as well as long-term and short-term incentive schemes. The fixed annual salary of the CEO amounts to EUR 346,440 and the taxable annual fringe benefits amount to EUR 13,800.
Short- and long-term incentive schemes
The performance-based payments for the CEO are based on company-level targets that are related to the development of cash flow and service net sales as well as customer satisfaction. The targets support DNA's strategy and long-term realisation of DNA's financial success. The fulfilment of the criteria are monitored annually, and the maximum amount of the annual performance-based payment can be equal to nine months' fixed monetary salary for the DNA's CEO.
The CEO participates in the Share-Based Compensation Plan that was established on November 20, 2014. The plan is described in more detail below under Incentive Schemes. The maximum possible compensation payable to the CEO on the basis of the Share-Based Compensation Plan is 216,000 shares.
The long-term share-based incentive scheme, described in more detail below under Incentive Schemes, is effective from January 1, 2017.
Pensions and terms related to the end of service relationship
The CEO’s period of notice is six months for both the company and the CEO. If the contract is terminated due to a reason attributable to DNA, the CEO is entitled to severance pay that equals the CEO’s total salary for eight months in addition to the six months' salary paid during the notice period.
The CEO has the right to retire at the age of 60. Supplementary pension rights are payment-based. The premium share of the CEO's and his deputy' supplementary pension is 20% of their fixed annual salary. The CEO’s pension includes vested rights, which are fully vested in 6 years after joining the supplementary pension scheme.
The premium of the CEO’s supplementary pension amounted to EUR 68,901 in 2015.
Other Executive Team members of DNA
The members of the Executive Team receive a total salary (which includes monetary salary and customary fringe benefits, such as a potential car benefit and mobile phone benefit) as well as long-term and short-term incentives. The total annual fixed monetary salary of the Executive Team members amounts to EUR 1,333,430 and the total annual taxable fringe benefits amount to EUR 33,419 (the CEO's salary and taxable fringe benefits are excluded from the figures).
Short- and long-term incentive schemes
The performance-based payments for the management are based on company-level targets that are related to the development of cash flow and service net sales as well as customer satisfaction. The targets support DNA's strategy and long-term realisation of DNA's financial success. The fulfilment of the criteria are monitored annually, and the maximum amount of the annual performance-based payment can be equal to seven months' fixed monetary salary for a member of DNA's Executive Team.
The Executive Team members participate in the Share-Based Compensation Plan that was established on November 20, 2014. The plan is described in more detail below under Incentive Schemes. The maximum possible compensation payable to the Executive Team members on the basis of the Share-Based Compensation Plan is 522,000 shares in total (excluding the compensation of the CEO).
The long-term share-based incentive scheme for DNA's top management and certain other key person, described in more detail below under Incentive Schemes, enters into force on January 1, 2017.
Pensions and terms related to the end of service relationship
The Executive Team members have the right to retire at the age of 62. Supplementary pensions of the members of DNA's Executive Team are payment-based. The premium share of the Executive Team members' supplementary pension is 8 % of their fixed annual salary. The Executive Team members’ pensions include vested rights, which are fully vested in 6 years of participating in the supplementary pension scheme. The total payments for the Executive Team members’ supplementary pensions amounted to EUR 165,534 in 2015.
The notice period of the employment relationships of the Executive Team members if six or three months for both parties. If DNA terminates the agreement, the Executive Team member is entitled to a termination compensation corresponding to a six months' salary of an Executive Team member in addition to the pay for the period of notice.
Compensation of the CEO and the Executive Team in 2015 and 2014
|Name||Wages and salaries and benefit costs||Performance-based payment for the results||Total paid in|
|CEO, Jukka Leinonen||381,240||407,040||162,108||152,382||543,348||559,442|
|Other members of the Executive Team||1,417,857||1,313,445||438,349||378,331||1,856,206||1,691,776|
Share-Based Compensation Plan
On November 20, 2014, the Board of Directors of DNA resolved to implement a long-term share-based compensation plan for the top management and other selected key employees of DNA, based on the development of company share value. In total, 35 people are participants in the plan. Participants have the opportunity to receive a reward in the form of the company’s shares or as cash in connection with a stock exchange listing or an exit by the largest shareholders. The reward will consist of two shares per each subscribed share (base component). In a stock exchange listing, the value of the reward is based on the listing price of the share, and will entitle each participant to up to 14 shares per each share already held in accordance with the terms and conditions of the Share-Based Compensation Plan.
A maximum total of 1,920,000 new shares can be issued under the plan. The maximum total, which was previously 128,000 new shares, has been adjusted pursuant to the terms and conditions of the plan following the resolution of the company’s extraordinary general meeting on October 25, 2016 regarding share split. If the performance-based portion of the share-based compensation plan would become fully payable, participants would be entitled to a total of 1,614,000 shares in the company, of which an estimate of no more than 807,000 shares would be given after withdrawing taxes. Any shares that participants may be entitled to pursuant to the share-based compensation plan will be awarded approximately a year following the listing. There are no restrictions on the ownership or transferability of the shares received on the basis of the scheme after they have been paid for.
Receiving of shares under the share-based compensation plan is tied to, among other things, the continuance of the participant’s employment or service in DNA upon the listing.
New Share Based Incentive Schemes
Long-term incentive schemes
On October 20, 2016, the Board of Directors of the Company resolved to implement a new long-term share-based incentive scheme for the top management and other selected key employees of DNA, effective from January 1, 2017. The new share-based incentive scheme is performance based. The participants of the new share-based incentive scheme have the right to receive shares based on the achievement of preset performance criteria, which will be determined separately for each individual included in the scheme and primarily measured over a three-year period.
In total, approximately 50 people are expected to become participants of the performance-based incentive scheme. The maximum reward under the three-year scheme is estimated to be approximately EUR 5 million and the reward may be paid in shares or in cash in the company’s discretion. Any reward that the participants may be entitled to pursuant to the new share-based incentive scheme will be awarded after the third calendar year of the entry into force of the scheme. Receiving any reward is conditional upon the continuance of the participant’s employment in DNA at the payment date of the reward.
In addition, the Board of Directors has decided to carry out a conditional share-based compensation plan, which will be used as a tool for supplementary incentivisation in special circumstances, such as in connection with transactions and recruitments. The conditional share-based compensation plan consists of a three-year earning period and does not include any special performance criteria. Receiving the reward is conditional upon the continuance of the participant’s employment in DNA throughout the validity of the scheme. Typically, only a few individuals are included in the conditional scheme annually.
Short-term incentive scheme
The Board of Directors of the Company resolved on October 20, 2016 that a bridge element between DNA’s long-term share-based compensation plan launched in 2014 and the new long-term share-based incentive scheme will be covered with an adjusted short-term incentive earning opportunity (bridge plan) for the years 2017 and 2018. Decisions regarding the 2017 short-term incentive scheme will be made by the Board of Directors of the Company by the beginning of 2017.
Shares held by company management
|Timo Karppinen||12, 200|