Reward system for the CEO and other corporate management
The Board of Directors approves the terms and conditions of the employment contracts and the reward plan for the CEO and the persons reporting directly to the CEO. The reward plan of the Group is made up of performance-based rewards and share-based rewards. The maximum performance-based reward for the CEO is equivalent to five months’ salary, and the rewards of other members of the Group Executive Management are equivalent to four months’ salary. The Board of Directors decides on the terms and conditions and the payment of the rewards each year. As a rule, the performance-based rewards are determined on the basis of the growth in consolidated net sales, consolidated operating profit and the targets set for the individual areas of responsibility each year.
Talentum Oyj’s CEO received a total of EUR 306 thousand in salary payments, bonuses and benefits in 2010, which includes EUR 90 thousand other financial benefit payments. The rest of the Group’s management together received a total of EUR 688 thousand in salaries, bonuses and benefits in 2010.
Terms and conditions of the CEO's employment contract
The Talentum CEO's period of notice is nine months on both sides.
Pension agreements
The Talentum CEO’s pension is determined according to the current employment pension law. There is no agreement on supplementary pension benefits.
Share-based management incentive system
Talentum's group management has a share-based incentive plan. The plan includes three earning periods. The earning period lasts for at least one financial year and not more than three financial years. The first earning period began on 1 January 2010 and will end on 31 December 2010. The rewards will be paid partly in the Company’s shares and partly in cash payment after the end of each earning period. The proportion to be paid in cash will cover taxes and tax-related costs arising from the reward. It is prohibited to transfer the shares earned from the earning period within two years from the end of the earning period. Thus the total length of the plan is five years. After this, the CEO of the Company must, however, own 50% of the shares earned on the basis of the plan as long as the service of the CEO continues and one year after the end of the service. The Board of Directors will later decide on the following earning periods and transfer restrictions concerning shares earned on the basis of those earning periods.
The potential reward from the plan for the earning period 2010 will be based on the Talentum Group’s net sales and operating profit as well as on the shareholder return of the Talentum share. The incentive plan is directed to nine management members during the earning period 2010.
If the targets of the plan are attained in full in the earning period 2010, the rewards to be paid on the basis of the plan will total not more than 151,000 shares, and cash the amount which will cover taxes and tax-related costs arising from the reward.
If the targets of the plan are attained in full, within three years the rewards to be paid on the basis of the plan will total not more than 484,500 shares, and cash the amount which will cover taxes and tax-related costs arising from the reward.
This plan substitutes the corresponding plan, which was introduced on January 1, 2007, and which expired on December 31, 2009. Rewards paid on the basis of the plan totalled in 74,970 shares in 2007.
In 2010, a total of 1,268 shares were given on the basis of the result, which corresponds to a cost of about six thousand euros for the company. Talentum Oyj's Board of Directors decided in its meeting held on 14 February 2011 that the bonus will be paid in cash instead of in shares.
