Lemminkäinen Corporations General Meeting elects the members of the Board of Directors on an annual basis and also determines their fees.
Lemminkäinens Board of Directors decides on the salaries, incentive schemes and other benefits received by the President & CEO and the Executive Board.
Board of Directors´ remuneration
Lemminkäinen Corporations Annual General Meeting elects the members of the Board of Directors on an annual basis and also determines their fees. These fees are paid entirely as monetary compensation. The Board members term of office ends upon the conclusion of the first Annual General Meeting held after their election.
Members of Lemminkäinens Board of Directors do not fall within the scope of the companys share scheme, nor do they have an employment contract with Lemminkäinen.
The 2012 Annual General Meeting decided that the Chairman of the Board is paid a fee of EUR 10,000 per month (2011: EUR 10,000) and Board members each receive EUR 3,000 per month (EUR 3,000). Members of the Board also received an attendance fee of EUR 500 per meeting (EUR 500).
The Chair of the Audit Committee was paid an attendance fee of EUR 1,000 (EUR 1,000) and members EUR 500 (EUR 500) per committee meeting.
|Fees - Board of Directors ()|
|Berndt Brunow (chair)|
|Juhani Mäkinen (vice)|
|Kristina Pentti-von Walzel|
|Meeting fees - Board of Directors ()|
|Berndt Brunow (chair)|
|Juhani Mäkinen (vice)|
|Kristina Pentti-von Walzel|
On the basis of a proposal submitted by the Remuneration Committee, Lemminkäinens Board of Directors decides on the salaries, short- and longterm incentives and other benefits received by the President & CEO and the Group Executive Board.
According to the remuneration policy adopted by the Board of Directors, the remuneration of the President & CEO, the members of the Group Executive Board and other management personnel consists of a fixed basic salary, other benefits, annual short-term incentives (a performance-based bonus), and long-term incentives (share-based incentives and pension schemes).
A fixed basic salary denotes monthly monetary compensation, which is determined by the nature of the position and the persons experience and performance. In addition to meal benefits and the use of a company car and mobile phone, management personnel also have extended insurance coverage for accidents and travel during their leisure time. Total remuneration therefore consists of both a basic salary and benefits.
Each year, Lemminkäinens Board of Directors decides on indicators and targets for short- and long-term incentives, which seek to support the achievement of the strategic targets. On the basis of a proposal by the President & CEO, the Board decides on the targets to be reached and the size of the incentives.
Managements short-term incentives are based on the opportunity to receive an annual performancerelated bonus. The size of this reward depends on whether or not the financial and operational targets specified at the beginning of each year have been achieved. Lemminkäinens management is divided into four groups, which determine the maximum percentage applicable to each individual. Individuals are allocated to these groups on the basis of their position in the organisational hierarchy and the nature and commercial value of their position.
In 2012, the size of managements performance-based incentive was based on the Groups pre-tax profit and other growth and development targets, such as those associated with the optimisation of working capital. Performance- based incentives for the Executive Vice Presidents of business segments were also based on each segments operating profit. Achievements were monitored every six months. The maximum performance-related bonus payable to the President & CEO was 80 per cent of his annual salary, and 60 per cent for other members of the Group Executive Board.
SHARE-BASED INCENTIVE PLAN
The 2010-2012 incentive plan
For long-term incentives, Lemminkäinen uses a share-based plan comprising three one-year earning periods: the calendar years 2010, 2011 and 2012. The commitment period is two years. The Board of Directors decides on both the earning criteria and the targets to be established at the beginning of each earning period. Achievements are monitored every six months.
The plans target group consists of the President & CEO, members of Lemminkäinens Executive Board, and about 45 others. The Board of Directors decides on the distribution of shares to key personnel.
In 2012, the earning criteria for long-term incentives were the targets set for the Groups equity ratio and return on investment.
The incentive for the 2012 earning period will be paid out in 2013, partly in company shares and partly as monetary compensation. The monetary portion will cover any taxes and tax-related costs arising from the reward. Shares may not be transferred during the commitment period, which ends two years after the end of the earning period. The President & CEO and Group Executive Board members must retain ownership of half of the shares granted to them through the plan for two years after the end of the commitment period.
The 2013-2015 incentive plan
At the end of 2012, Lemminkäinens Board of Directors decided to introduce a new share-based incentive plan for key personnel. The plan consists of both performance-based and conditional reward. The conditional reward seeks to encourage the Groups key personnel to increase their holding in the company. The Board of Directors recommends that the President & CEO and members of the Groups Executive Board retain ownership of half of all the shares they receive through the plan until the value of their holding corresponds to half of their annual salary. They should maintain this holding during the validity of employment or service.
Reward paid through this plan may correspond to the value of a maximum of 700,000 Lemminkäinen Corporation shares (including the monetary portion). The value of the reward will be determined by the market price of the reward shares on the payment date. The Lemminkäinen shares handed over as rewards will be bought from the stock market. Therefore, the incentive plan will not have a diluting effect on the value of the shares.
The plan consists of three earning periods: the calendar years 2013, 2014 and 2015. The companys Board of Directors decides on the plans earningcriteria and the targets to be set at the beginning of each earning period.
About 45 people fall within the scope of the plan during the 2013 earning period. Their performancebased reward is based on the Groups operating profit and its return on investment. Possible performance-based reward for the earning period 2013 will be paid out by the end of April 2014, partly in company shares and partly in cash. The cash portion will cover any taxes and tax-related costs arising from the reward. The shares may not be transferred during the commitment period of approximately two years. If a key persons employment or service contract ends during the commitment period, they will generally have to return any reward shares to the company without compensation.
In addition to the performance-based reward, the above-mentioned individuals also have the opportunity to receive a conditional reward based on share ownership and a continuation of their employment or service contract. In order to receive the conditional reward, a key person must already own or acquire a specified number of company shares, or a percentage thereof, by a specified date. The number and date are set by the Board of Directors. If they do so, key personnel will then be granted one share for each share acquired, as long as their employment or service contract remains valid and they retain ownership of these shares until the conditional reward is paid. The earning period for the conditional reward is the calendar years 20132015. The conditional reward will be paid by the end of April 2016, partly in shares and partly in cash.
As of 1 January 2010, supplementary pension plans for the President & CEO and Group Executive Board have been based on a defined contribution plan and obtaining a paid-up policy. Contributions are calculated as a percentage of annual salary. The President & CEO is entitled to retire upon reaching 60 years of age. Other members of the Group Executive Board are entitled to retire either upon reaching 60 years of age (under the old system) or upon reaching 63 years of age (under the new system, which came into force on 15 September 2011).
The President & CEOs employment contract
The President & CEOs employment contract may be terminated with six months notice. Upon termination of the contract by the company, the President & CEO shall be entitled to receive a oneoff severance payment equivalent to 18 months salary in accordance with his or her salary rate at the time of termination.
|Remuneration and fees - Executive Board (excl. CEO) members ()|
|Share-based incentive (shares, no.)|
|Remuneration and fees - President and CEO ()|
Share-based incentive (shares, no.): 10,220 shares in 2012 and 2,605 shares in 2011.