Corporate Governance
Remuneration
Remuneration
The principles and decision-making processes for the remuneration of the Board of Directors and CEO and for the key terms of the service contract are set forth in Talenom Plc’s remuneration policy. Talenom’s Annual General Meeting has on 14 March 2024 supported the remuneration policy presented to it by the Board of Directors. The remuneration policy is valid until the 2028 Annual General Meeting if the remuneration policy is not replaced with a new or revised version prior to this.
The salaries and benefits paid to Talenom’s Board of Directors and CEO are presented in the annually published Remuneration Report.
Previous Remuneration Reports can be found in the archive at the end of this page.
Remuneration principles add
The key principles of Talenom Plc’s remuneration policy are
- transparency
- market orientation and
- rewarding good performance.
The company’s remuneration principles apply to the entire personnel.
A well-functioning and competitive remuneration is an essential tool for engaging competent directors and executives for the company. This, in turn, contributes to the financial success of the company and the implementation of good corporate governance. In addition to supporting the company’s long-term profitability and results, remuneration supports the implementation of the objectives set by the company and the company’s strategy.
Decision-making process add
Talenom Group’s remuneration principles and policies are addressed by the company’s Board of Directors. The company does not have a remuneration committee appointed by the Board of Directors for the administration of the remuneration scheme. It has not been considered necessary, taking into account the nature and scale of the company’s operations.
Board of Directors
- The company’s Board of Directors approves and proposes the company’s remuneration policy to the general meeting.
- The Board of Directors shall monitor and supervise the functionality of the remuneration policy, the competitiveness of remuneration and how the remuneration policy promotes the company’s and group’s long-term objectives.
- Prepares the suggestion concerning remuneration to the Annual General Meeting.
- In addition to the CEO appoints the other members of the Executive Board and decides on the benefits paid to the members of the Executive Board and other terms of the employment contracts in line with the valid remuneration policy.
- the Board of Directors decides on the company’s remuneration and incentive scheme.
Annual General Meeting
- Decisions concerning the remuneration of the Board of Directors are made in general meetings.
- Decides in an advisory role whether it supports the remuneration policy presented by the Board. If the majority of the general meeting of a listed company opposes the presented remuneration policy, an amended policy and a statement of how the new policy takes into account the general meeting’s resolution on the previous policy must be presented no later than in the next annual general meeting.
Remuneration of Board of Directors add
Decisions concerning the remuneration of the Board of Directors are made in general meetings for a single term of office at a time based on a proposal of the Board of Directors. The decision on the remuneration of the Board of Directors shall be based on the valid remuneration policy presented to the general meeting.
Remuneration of the Borad of Directors 2024
The Annual General Meeting held on 14 March 2024 decided that the Board members shall be paid the following annual fees:
- Chairman of the Board of Directors: EUR 6,000 per month
- Other members of the Board of Directors EUR 2,200 per month
Additionally, the travel expenses of the members of the Board of Directors are compensated in accordance with the company’s travel policy.
Board members do not participate in the company’s short-term share-based incentive schemes or option schemes, or other long-term share-based incentive schemes and Board fees are not paid in the form of shares in the company.
Remuneration of the CEO add
Decisions concerning the remuneration of the company’s CEO and the terms applicable to the service contract of the CEO are made by the company’s Board of Directors within the limits of the valid remuneration policy presented to the general meeting.
The remuneration of the CEO consists of a monthly salary, employee benefits and performance-based incentive systems. The incentive systems consist of an annual short-term performance bonus scheme and long-term share incentive scheme. The CEO is also included in the option scheme. The CEO’s basic salary shall be aligned with the interest of the company and its shareholders. The basic salary shall be competitive in the labour market comparison in order to be able to induce and engage talented professionals to the company’s service. The objective is that variable fees would not exceed 100% of the fixed salary in the remuneration of the CEO.
Remuneration of the CEO consists of the following elements:
Fixed salary component: monthly salary and fringe benefits
CEO Otto-Pekka Huhtala’s fixed annual salary including fringe benefits (phone benefit) is EUR 229,440.
Short-term incentive scheme
A short-term incentive scheme intended to guide the performance of an individual and the organisation as well as to support rapid implementation of strategic projects. The CEO, like the other members of the Executive Board, is entitled to a performance bonus when predetermined criteria are met. The criteria for the performance bonus take into account:
net sales
EBITDA
customer retention
operational efficiency
personnel satisfaction
progress in product development
and product group-specific growth
In addition, the Board of Directors separately assesses the performance of the CEO in his or her task The performance bonus is determined based on a term lasting 12 months.
According to the remuneration policy, the maximum bonus is at most 50% of the fixed annual salary (gross).
Long-term performance bonus
The purpose of the long-term performance bonus is to motivate the CEO to work to increase the shareholder value in the long-term and to commit the CEO to the company. CEO Otto-Pekka Huhtala is included in the Performance Share Plan 2024-2027, the Performance Share Plan 2020-2024, as well as in the 2021, 2022 and 2023 option schemes.
Performance Share Plan 2024–2027
The performance share plan 2024–2027 consists of three performance periods. The Board of Directors resolves on the plan’s performance criteria and targets to be set for each criterion at the beginning of the performance period. The potential reward based on the plan will be paid partly in the company’s shares and partly in cash after the end of a performance period. The cash proportion is intended to cover taxes and tax-related expenses arising from the reward to a participant. As a rule, no reward is paid, if the participant’s employment or service terminates before the reward payment. The company’s Executive Board Member is obliged to hold at least half of the net number of shares paid to the member based on the plan, until the value of his or her shareholding in the company equals the value of his or her annual base salary. Such number of shares must be held as long as the membership in the Executive Board continues.
Performance Share Plan 2020–2024
The Performance Share Plan consists of three performance periods: calendar years 2020–2022, 2021–2023 and 2022–2024. The potential reward based on the plan will be paid partly in the Company’s shares and partly in cash after the end of a performance period. For the performance period 2020–2024, the rewards have been paid in 2023 and for 2021–2023 in February 2024.
The Board decides on the performance criteria for the Performance Share Plan and the targets set for each criteria at the beginning of the performance period. Each member of the Company’s Executive Board, including the CEO, is obliged to hold at least 50 per cent of the net number of shares paid to them on the basis of the plan until the value of their shareholding in the Company is equal to the value their gross annual salary. The shares must be held for as long as the person remains a member of the Executive Board.
Option schemes 2021, 2022 and 2023
The CEO is included in the Company's option schemes. Stock options are distributed free of charge as part of the Group's incentive and commitment system for key personnel. The Company currently has three valid stock option schemes: option schemes 2021, 2022 and 2023.
The terms of the option schemes, related vesting periods and holding obligation are explained under Option schemes.
Other principal terms of the CEO’s employment relationship
In line with the CEO contract, the CEO will work in the task until further notice and the period of notice applied to the contract is two months. The retirement age is determined by law. A normal pension contribution in accordance with the pension legislation is paid on the CEO’s salary. The performance bonus can at most be 50% of the fixed annual salary (gross). Otto-Pekka Huhtala's CEO contract does not include supplementary pension payments.
Remuneration of the Executive Board add
The Board of Directors appoints the other members of the Executive Board and decides on the benefits paid to the members of the Executive Board and other terms of the employment contracts in line with the remuneration policy.
Remuneration of the Executive Board consists of the following elements:
Fixed salary component: monthly salary and fringe benefits
The combined fixed annual salary including fringe benefits (company-paid phone and company car) of the members of the Executive Board (excl. the CEO) is EUR 682,286 in 2023.
Remuneration of Executive board (excl. CEO) in 2023
| Salary | 649,941 |
| Fringe benefits | 32,345 |
| Severance pay | - |
| Short term incentive scheme | 91,000 |
| Long term incentive scheme | 137,430 |
| Supplementary pension | - |
| Other taxable benefits | - |
| Total remuneration | 910,716 |
Short-term incentive scheme
The purpose of the short-term incentive scheme is to direct the performance of the individual and organisation and to support fast implementation of strategic projects. Performance targets are based on targets agreed on in advance that the Board verifies annually. The Board annually assess and verifies the achievement of targets or for performance periods longer than 12 months, at the end of each performance period.
The members of the Executive Board are entitled to the performance bonus when the predetermined criteria are met. The criteria are the same as for the CEO and they consider:
net sales
EBITDA
customer retention
operational efficiency
personnel satisfaction
progress in product development
and product group-specific growth
The performance bonus is determined based on a term lasting 12 months. The maximum amount of fees paid from the short-term incentive scheme is tied to the number of shares.
Long-term incentive schemes
The purpose of the long-term performance fee is to motivate the Executive Board to work in the long-term to increase shareholder value and further commit the Executive Board to the company. The members of the Executive Board are included in the Performance Share Plan 2024–2027 and 2020–2024. They are also included in the option schemes.
Performance Share Plan 2024–2027
The performance share plan 2024–2027 consists of three performance periods. The Board of Directors resolves on the plan’s performance criteria and targets to be set for each criterion at the beginning of the performance period. The potential reward based on the plan will be paid partly in the company’s shares and partly in cash after the end of a performance period. The cash proportion is intended to cover taxes and tax-related expenses arising from the reward to a participant. As a rule, no reward is paid, if the participant’s employment or service terminates before the reward payment. The company’s Executive Board Member is obliged to hold at least half of the net number of shares paid to the member based on the plan, until the value of his or her shareholding in the company equals the value of his or her annual base salary. Such number of shares must be held as long as the membership in the Executive Board continues.
The Performance Share Plan 2020-2024
The Performance Share Plan consists of three performance periods, covering the calendar years 2020–2022, 2021–2023 and 2022–2024. The potential reward based on the plan will be paid partly in the Company’s shares and partly in cash after the end of a performance period. Each member of the Company’s Executive Board is obliged to hold at least 50 per cent of the net number of shares paid to them on the basis of the plan until the value of his or her shareholding in the Company is equal to the value of his or her gross annual salary. These shares must be held for as long as the person remains a member of the Executive Board.
The criteria and maximum rewards of the valid share-based incentive schemes are explained under Share-based incentive schemes.
Option schemes
The members of the Executive Board are included in the option schemes. Read more about valid stock option schemes under Option schemes.
Other principal terms of the Executive Board's employment relationships
The members of the Executive Board work in their positions until further notice and the period of notice applied to the employment relationships is two months. The pensions of other members of the Executive Board are determined in accordance with the Employees’ Pensions Act (TyEL).
In addition to the statutory pension, the Company has agreed on supplementary pension insurance arrangements with its key personnel. The Board decides on payments of supplementary pension insurance arrangements. No payments have been made to supplementary pension insurance arrangements since 2015.
Share-based incentive schemes add
The Board decides on the Company’s remuneration and incentive schemes. The aim of the incentive schemes is to unify the objectives of the shareholders and key personnel to increase the Company’s value in the long term and to commit key personnel to the Company and offer them competitive remuneration systems that are based on earning Company shares.
Talenom currently has two share-based incentive schemes directed at the Group’s key personnel: The Performance Share Plan 2024–2027 and 2020–2024. The company also has valid option schemes 2021, 2022 and 2023.
Performance Share Plan 2024–2027
The performance share plan 2024–2027 consists of three performance periods. The Board of Directors resolves on the plan’s performance criteria and targets to be set for each criterion at the beginning of the performance period.
The potential reward based on the plan will be paid partly in the company’s shares and partly in cash after the end of a performance period. The cash proportion is intended to cover taxes and tax-related expenses arising from the reward to a participant. As a rule, no reward is paid, if the participant’s employment or service terminates before the reward payment.
The company’s Executive Board Member is obliged to hold at least half of the net number of shares paid to the member based on the plan, until the value of his or her shareholding in the company equals the value of his or her annual base salary. Such number of shares must be held as long as the membership in the Executive Board continues.
During the performance period 2024–2025, the reward is based on the Group’s net sales growth, development of operating profit and strategy execution.
Performance Share Plan 2020–2024
The Performance Share Plan consists of three performance periods, covering the calendar years 2020–2022, 2021–2023 and 2022–2024. The Board of Directors resolves on the plan’s performance criteria and the targets to be set for each criterion at the beginning of each performance period. The 2022–2024 vesting period was not implemented.
The potential reward based on the plan will be paid partly in the Company’s shares and partly in cash after the end of a performance period. Rewards have been paid in 2023 and 2024. The cash proportion is intended to cover taxes and tax-related expenses arising from the reward to a participant. As a rule, no reward is paid, if the participant’s employment or service ends before the reward payment.
Each member of the Company’s Executive Board is obliged to hold at least 50 per cent of the net number of shares paid to them on the basis of the plan until the value of his or her shareholding in the Company is equal to the value of his or her gross annual salary. These shares must be held for as long as the person remains a member of the Executive Board.
| Performance period 2020–2022 | Performance period 2021–2023 | |
|---|---|---|
| Basis for the reward | • consolidated operating profit, • internationalisation and growth as well as • share of net sales from valueadded services |
• consolidated net sales • operating profit and • implementation of strategic projects |
| Rewards to be paid from the performance period | The rewards correspond to the value of an approximate maximum total of 326,000 Talenom Plc shares, including also the proportion to be paid in cash. | The rewards correspond to the value of an approximate maximum total of 250,000 Talenom Plc shares, including also the proportion to be paid in cash. |
| Target group | Approximately 50 persons, including the company's Executive Board members | Approximately 85 persons, including the company's Executive Board members |
| Payment of the rewards | No later than April 2023 | No later than April 2024 |
Stock option schemes add
Stock options are distributed free of charge to key personnel employed by the Group company as part of the Group's incentive and commitment system for key personnel. The company's CEO and Executive Board members are covered by the stock option schemes. Members of the Board of Directors do not participate in the stock option schemes.
Talenom has three stock option schemes that were established in 2020, 2021 and 2023.
The subscription periods for the stock options are as follows:
- Option right 2021: 1 March 2026–28 February 2027
- Option right 2022: 1 March 2025–28 February 2026
- Option right 2023: 1 March 2026–28 February 2027
Option rights 2021:
On 20 May 2021, the Board of Directors resolved on the distribution of up to 600,000 option rights free of charge to 22 key employees of Talenom Group in accordance with the terms of Talenom Plc’s Option Rights 2021 plan. The resolution is based on an authorisation granted to the Board of Directors by the Annual General Meeting held on 3 March 2021.
The option rights will entitle their holders to subscribe to a total maximum of 600,000 new shares or shares held by the company. The shares subscribed on the basis of the Option Rights 2021 plan account for a maximum total of 1.4 per cent of all shares in the company and of the votes conferred by the shares following the potential subscription, if new shares are issued with the subscription.
The subscription period for shares subscribed using option rights is 1 March 2026–28 February 2027. The subscription price will be determined on the basis of the volume-weighted average price of the company’s shares on the issue date of the options. The subscription price for shares will be recorded in the Company’s invested unrestricted equity fund.
The terms of Talenom Plc's 2021 option rights
Option rights 2022:
On 21 March the Board of Directors has decided to distribute a maximum of 500,000 option rights free of charge to Talenom Group’s 86 key persons in line with the terms and conditions of Talenom Oyj’s 2022 Option Scheme. The decision is based on the authorization given by the Annual General Meeting to the Board of Directors on 3 March 2022.
The option rights entitle their holders to subscribe for a maximum of 500,000 new shares or shares held by the company. The shares subscribed for based on the option rights now issued will account for a maximum of 1.1 per cent of the total number of shares and votes in the company after any share subscription, if new shares are issued in the subscription.
The subscription period for the shares subscribed for with the option rights is between 1 March 2025 and 28 February 2026. The subscription price is determined based on the company’s trade-weighted average price of the day the options are issued. The subscription price is recorded in the company's reserve for invested unrestricted equity.
The terms of Talenom Plc's 2022 option rights
Option rights 2023
The Board of Directors has decided to distribute a maximum of 650,000 option rights free of charge to around 120 key persons of Talenom Group in line with the terms and conditions of Talenom Plc’s 2023 Option Scheme. The terms and conditions are attached to this release. The decision is based on the authorization given by the Annual General Meeting to the Board of Directors on 15 March 2023.
The option rights entitle their holders to subscribe for a maximum of 650,000 new shares or shares held by the company. The shares subscribed for based on the option rights now issued will account for a maximum of 1.4 per cent of the total number of shares and votes in the company after any share subscription, if new shares are issued in the subscription.
The subscription period for the shares subscribed for with the option rights is between 1 March 2026 and 28 February 2027. The subscription price is determined based on the company’s trade-weighted average price of the day the options are issued. The subscription price is recorded in the company's reserve for invested unrestricted equity.
The terms of Talenom Plc's option rights 2023
The options granted and the holdings or undistributed options of the company are divided into option categories on 31 December 2023 as follows:
| Option categories (pcs) | 2021 | 2022 | 2023 |
|---|---|---|---|
| Options given | 600,00 | 500,000 | 650,000 |
| Options exercised | 0 | 0 | 0 |
| Talenom Plc's holding or undistributed | 197,000 | 51,000 | 39,900 |
| Options given but not exercised | 403,000 | 449,000 | 610,100 |
The table below shows the shareholding and voting rights that may be exercised under the issued stock options and the effect of the options on the number of shares.
| Option categories | 2021 | 2022 | 2023 |
|---|---|---|---|
| The current subscription price of options | 13.44 | 9.09 | 7.23 |
| Total number of unexercised options | 403,000 | 449,000 | 610,100 |
| Exercised or Talenom Plc's holding or undistributed | 197,000 | 51,000 | 39,900 |
| Number of shares at 30 June 2023 | 45,577,476 | 45,577,476 | 45,577,476 |
| Number of shares if all options are converted into new shares | 45,980,476 | 46,026,476 | 46,187,576 |
| Proportion of holdings and votes if all options are converted into new shares | 0.88% | 0.98% | 1,32% |
