Remuneration

Remuneration

 

Remuneration Policy (presented to the AGM on 20 March 2020)

Remuneration Statement 2019

 

Principles of remuneration and the decision-making process

Exel Composites’ remuneration principles are developed to promote the competitiveness and long-term financial success of the Company and to contribute to the development of the Company’s shareholder value. Another aim of the remuneration principles is to increase the long-term commitment of the Board, the President and CEO and the Group Management Team to promote the interests of the Company and its shareholders as well as to attract, retain and motivate key personnel globally.

To ensure the alignment of compensation with the Company’s financial targets, remuneration principles are based on predetermined and measurable performance and result criteria. Exel Composites’ remuneration components include fixed base salary, short-term performance-based bonus and a long-term performance-based reward.

The Annual General Meeting, AGM, determines annually the remuneration of the Board members on the basis of the Shareholders’ Nomination Board’s proposal.

The Board of Directors decides on the remuneration and other terms of employment of the President and CEO.
The President and CEO presents the remuneration of the other members of the Group Management Team to the Board, which approves the remuneration and the main terms of employment of the Group Management Team members.

Authorization to repurchase Company’s own shares as part of incentive program

The AGM held on 21 March 2019 authorized the Board of Directors to repurchase a maximum of 600,000 Company’s own shares. Shares may be repurchased to be used as consideration in possible acquisitions or in other arrangements that are part of the Company’s business, to finance investments, as part of the Company’s incentive program or to be retained, otherwise conveyed or cancelled by the Company. The share repurchase authorization shall be valid until 30 June 2020.

The AGM held on 21 March 2019 authorized the Board of Directors to decide on the issuance of shares and special rights entitling to shares. The amount of shares to be issued on the basis of the authorization may be a maximum of 1,189,684 new shares, which corresponds to approximately 10.0 per cent of all shares in the company, and/or a maximum of 600,000 Company’s own shares. The shares to be issued based on the authorization can be used as consideration in possible mergers and acquisitions and other business arrangements, to finance investments or as a part of the Company’s incentive program for personnel. The authorization is effective until 30 June 2022.

Remuneration of the Board of Directors

The AGM held in 2019 confirmed the following compensation for Board members for the year 2019:

  • Chairman of the Board: EUR 41,000 per annum and additionally EUR 1,500 per attended Board and committee meetings and other similar all-day Board assignments.
  • Other Board members: EUR 19,000 per annum and additionally EUR 1,000 per attended Board and committee meetings and other similar all-day Board assignments.

According to a decision of the AGM held in 2019, 60% of the yearly remuneration was paid in cash and 40% in Exel Composites Plc shares, which were acquired directly for and on behalf of the members of the Board of Directors from the stock exchange market in amounts corresponding to EUR 16,400 for the Chairman and EUR 7,600 for each of the other members. Should the term of any member of the Board of Directors come to an end for whatever reason before the next AGM, such member of the Board of Directors will have to return to the Company the remuneration or equivalent amount in cash already received but not yet earned at that point in time.

Remuneration and service contract of the President and CEO

The remuneration scheme of the President and CEO consists of a fixed monthly base salary, a performance-based bonus on an annual basis and a long-term incentive compensation.

The President and CEO’s pension is determined in accordance with the statutory Finnish employee pension scheme (TyEL) that links the benefits directly to the President and CEO’s earnings. The President and CEO’s retirement age is 63 years. The President and CEO has no separate pension agreement.

According to the employment contract, the period of notice of the President and CEO is six months and the severance pay in the case of termination by the Company corresponds to 12 months' salary.

Remuneration of the Group Management Team and performance-based bonus

Compensation for the members of the Group Management Team comprises a fixed monthly base salary and fringe benefits as well as a performance-based bonus on an annual basis and long-term incentive compensation.

The amount of the bonus and the performance criteria are annually determined by the Board of Directors of Exel Composites. The Board also evaluates whether the performance criteria have been met.

In 2019, the key financial performance criteria of the performance-based bonus were adjusted operating profit (EBIT) and gross profit. In 2019, the maximum annual bonus for the President and CEO was 50% of his annual base salary. For the other members of the Group Management Team the maximum annual bonus was 40% of their respective annual salary.

There are no additional pension schemes for the Group Management Team members.

Long-term incentive compensation

The Group has long-term incentive programs for the President and CEO and the Group Management Team and selected key employees of the company. The aim of the programs is to combine the objectives of the shareholders and the executives in order to increase the value of the company, to commit the executives to the company and to offer the executives a competitive reward program. The Board of Directors makes the decision on the program annually.

The Group has the following long-term incentive programs:

The 2020 plan is part of a share-based long-term incentive program for the earning period 2020-2022 and is targeted at approximately 20 executives. The President and CEO and the members of the Group Management Team are included in the target group of the 2020 incentive program. The potential share-based performance reward on the adjusted operating profit (EBIT) and the total shareholder return of the company’s share (TSR). The potential share reward is payable in 2023. The maximum number of shares to be paid under this individual plan is 125,000 shares.

Stock exchange release 18 February 2020 »

The 2019 plan is part of a share-based long-term incentive program for the earning period 2019-2021 and is targeted at approximately 20 executives. The President and CEO and the members of the Group Management Team are included in the target group of the 2019 incentive program. The potential share-based performance reward on the adjusted operating profit (EBIT) and the absolute total shareholder return of the company’s share (TSR). The potential share reward is payable in 2022. The maximum number of shares to be paid under this individual plan is 196,000 shares.

Stock exchange release 15 February 2019 »

The 2018 plan is part of a share-based long-term incentive program for the earning period 2018-2020 and is targeted at approximately 15 executives. The President and CEO and the members of the Group Management Team are included in the target group of the 2018 incentive program. The potential share-based performance reward on the adjusted operating profit (EBIT) and the absolute total shareholder return of the company’s share (TSR). The potential share reward is payable in 2021. The maximum number of shares to be paid under this individual plan is 122,000 shares.

Stock exchange release 22 March 2018 »

The 2017 plan is part of a share-based long-term incentive program for the earning period 2017-2019 and is targeted at approximately 14 executives. The President and CEO and the members of the Group Management Team are included in the target group of the 2017 incentive program. The potential share-based performance reward on the operating profit (EBIT) and the absolute total shareholder return of the company’s share (TSR). The potential share reward is payable in 2020. The maximum number of shares to be paid under this individual plan is 153,700 shares.

Stock exchange release 4 May 2017 »

The 2016 program is based on a long-term monetary incentive program and is targeted at approximately 20 executives for the earning period 2016 – 2018. The President and CEO and the members of the Group Management Team are included in the target group of the 2016 incentive program. The potential long-term monetary performance reward is based on the Group’s cumulative Economic Profit and on the Group’s Total Shareholder Return (TSR). The potential reward will be paid in 2019. The maximum reward to be paid will be EUR 1 million.

Stock exchange release 19 February 2016 »
 
No reward will be paid to an executive based on the programs described above, if his or her employment or service with the Company ends before the reward payment unless the executive is leaving the Company due to retirement or unless the Board decides otherwise. The programs also include a one year lock-up period, and the restriction on leaving the Company is extended to the end of the lock-up.

The cost of all programs will be accounted for as operating expenses during the duration of the programs.

 

Remuneration report 2019

Remuneration received by the Board of Directors in 2019
(EUR thousands)

In addition, travel expenses and other out-of-pocket expenses arising from the Board work were compensated in accordance with the Company's established practice and travel rules. Exel Composites has no such incentive program by which the Company rewards the Board members with shares or option rights. The Board members are neither entitled to a short-term performance-based bonus.

Financial benefits paid to President and CEO and Group Management Team in 2019
(EUR thousands)

Financial benefits earned by President and CEO and Group Management Team in 2019
(EUR thousands)

The share ownership of the members of the Board of Directors, the President and CEO and the other Group Management Team members is presented under the section Shareholders > Managers' transactions.

 

 

Exel Composites Oyj, Vantaa head office, Mäkituvantie 5, FI-01510 Vantaa, Finland