Remuneration

Remuneration and financial benefits

When considering the remuneration elements, the Board’s Remuneration Committee and the Board of Directors have primarily applied principles of fairness and competitiveness, balancing of interests of shareholders, fund investors as well as employees, and promoting as well as strengthening the performance culture both short and long term.

Board of Directors

Decision-making process and main principles of remuneration

The remuneration of the members of the Board of Directors (the “Board”) is confirmed by the Annual General Meeting (the “AGM”). The Shareholder´s Nomination Board makes the proposals regarding the remuneration of the Board members to the AGM. According to the decision of the AGM 2023, the monthly fee of the Chairman of the Board of Directors is EUR 5 000 (2022: EUR 5 000), the monthly fee of the Vice Chairman is EUR 4 000 (2022: EUR 4 000), the monthly fee of the Chairman of the Audit Committee of the Board is EUR 4 000 (2022: 4 000) in case he/she does not simultaneously act as the Chairman or the Vice Chairman of the Board and the monthly fee of the members of the Board is EUR 3 250 (2022: EUR 3 250). Based on the AGM resolution, the monthly remuneration will be paid in cash. Board members are not in an employment relationship or service agreement with CapMan (except Olli Liitola who has entered into a consultancy agreement with the Company) and they are not given the opportunity to participate in CapMan’s share-based incentive program, nor does CapMan have a pension plan that they can opt to take part in.

The Chairmen of the Board and Board’s Committees are paid a meeting fee of EUR 800 per meeting (2022: EUR 800) and the members of the Board and Board’s Committees are paid meeting fee of EUR 400 per meeting (2022: EUR 400). The meeting fees are paid in cash. All members of the Board shall be reimbursed for reasonable travel expenses in accordance with the Company´s travel compensation policy.

Remuneration and other financial benefits paid to the Board members in 2022 are described in the Remuneration Report 2022.

CEO and Management Group

Decision-making process

The Board confirms the overall remuneration principles and elements covering the CEO and Management Group members on an annual basis. The Board’s Remuneration Committee, consisting of at least two independent Board members and non-executives, prepares remuneration-related matters for the Board.

Any adjustments to the CEO’s salary and other compensation can only be made with the Board’s approval. The monthly salaries of the Management Group members may be increased on the basis of a proposal by the CEO and subsequent approval by the Chairman of the Board. As of 2020, the CEO remuneration must be in compliance with the Remuneration Policy considered in the AGM of 2021. The Remuneration Policy was updated in 2023 and considered in the AGM of 2023.

Remuneration of the CEO

The CEO Pia Kåll is entitled to remuneration corresponding to a monthly salary of EUR 35 000 and fringe benefits (phone, lunch and sports benefit). Additionally, she is entitled to an additional defined contribution-based pension insurance for which the Company pays an annual premium of 10% of the participant’s annual salary. The CEO’s entitlement to a premium-free policy increases gradually after three years and after six years covers 100% of the cumulative additional pension saving. The retirement age of the CEO is 63 years.

The CEO’s remuneration does not include short-term incentives (STI). The long-term incentive scheme (LTI) for the CEO is a share-based program described in section “Share-based remuneration programmes”.

The CEO has a mutual notice period of six months, and she will be entitled to a severance pay of 12 months’ salary, if her service agreement is terminated by the Company.

The base salary, fees and other financial benefits paid to the former CEO, Joakim Frimodig, whose appointment ended on 15 March 2023, are described in the Remuneration Report 2022.

Remuneration of the Management Group members

In addition to a monthly salary and fringe benefits, certain Management Group members are entitled to an additional defined contribution-based pension insurance, for which the Company pays an annual premium equivalent to 5% of the participant’s annual salary (excluding fringe benefits). The individual’s entitlement to a premium-free policy increases gradually after three years and after six years covers 100% of the cumulative additional pension saving.

When considering the remuneration of the Company, the Board has emphasized long-term commitment of the management and decreased the amount of short-term incentives in the remuneration schemes. The CEO and the CFO are not included in the short-term incentive programs. Other Management Group members may be entitled to annual bonuses according to the Corporate Remuneration Policy approved by the Board annually. Annual bonuses are typically based on both business performance and personal/team performance.

During 2022, Management Group members (excluding the CEO) were paid a total of 2 809 303 euros as annual remuneration and other financial benefits, and 690 824 euros as bonuses. In addition to that, Management Group members were paid 21 591 euros as voluntary pension payments.

Share-based remuneration programmes

Share Plan 2020

The Board resolved in February 2020 to implement a new performance share plan (the Plan”). The Plan was established to form part of the incentive and commitment program for selected key employees of CapMan Group. The aim was to align the objectives of the shareholders and the key employees in order to increase the value of the Company in the long-term, to retain the key employees at the Company, and to offer them a competitive reward plan that is based on owning, earning and accumulating the Company´s shares.

This Plan consists of a performance period based on which the selected key employees, i.e. the participants may earn CapMan’s shares as reward based on the key employee´s personal investment into CapMan’s shares and performance requirements established by the Board. The Performance Period commenced on 1 April 2020 and ended on 31 March 2023.

The prerequisite for reward payment in the Plan is that a participant allocates previously owned freely transferable CapMan’s shares or acquires CapMan’s shares, in compliance with the insider regulations, up to the number and by the date and in the manner informed by the Board in advance (the “Share Ownership Prerequisite”). A participant must hold CapMan’s shares subject to the Share Ownership Prerequisite until the reward payment.

The performance criterion for the Performance Period is based on the Total Shareholder Return of CapMan’s shares (TSR) during the Performance Period. The Plan also includes one- and two-year vesting periods. From the Performance Period, a participant shall receive, as a gross reward, a maximum of four and a half (4.5) CapMan’s shares for each one (1) CapMan’s share subject to the Share Ownership Prerequisite and to the achievement of the required TSR performance levels.

CapMan’s shares given as reward on the basis of the Plan may not be sold, transferred, pledged or otherwise assigned during the lock-up period established for the CapMan’s shares. The lock-up period shall begin from reward payment and end on 30 April 2024.

As a rule, a participant must hold a minimum of 25 per cent of the gross CapMan’s shares issued as a reward on the basis of the Plan, until the participant´s shareholding in the Company in total corresponds to the value of the participant´s annual salary, and the participant´s employment or service in the CapMan Group continues.

The target group of the Plan consists of approximately 20 people, including the members of the Management Group and the CEO. The rewards to be paid based on the performance period amount up to a maximum of approximately 4.5 million CapMan’s shares, indicating a maximum dilution of 3.0 %.

Share Plan 2022-2025

The Board resolved in February 2022 to establish a new Performance Share Plan 2022-2025 (the “New Plan”) for CapMan Group management, as well as selected Group key employees. The participants are committed to shareholder value creation by investing a significant amount into the CapMan Plc share, which is the prerequisite for the participation in the Plan. In addition, the aim of the new long-term incentive plan is to align remuneration with CapMan’s sustainability agenda, to retain the Plan participants at the Company’s service, and to offer them a competitive reward plan based on owning, earning and accumulating the Company’s shares.

The New Plan includes three performance periods. The performance periods will commence on 1 April 2022 and end on 31 March 2023, 2024, and 2025, respectively. The participants may earn a performance-based reward from each of the performance periods and a matching reward from the 2022-2025 period.

The prerequisite for receiving a reward from the New Plan is that a participant acquires Company shares or allocates previously owned Company shares to the New Plan up to the number determined by the Board of Directors. The performance-based reward from the New Plan is based on the Company share’s Total Shareholder Return (TSR), the achievement of sustainability-linked targets, and on a participant’s employment or service upon reward payment. The sustainability-linked targets are to be set by CapMan Plc’s board by the end of March 2023.

The rewards from the New Plan will be paid in the Company’s shares in 2024, 2025, and 2026. The Board of Directors shall resolve whether new shares or existing shares held by the Company are given as reward. As a general rule, no reward will be paid, if a participant’s employment or service ends before the reward payment. The shares paid as reward may not be transferred during the lock-up periods established for the shares. The lock-up periods will end in April 2025, 2026, and 2027.

The target group of the New Plan consists of approximately 20 people, including the members of the Management Group. The rewards to be paid on the basis of the performance periods amount up to a maximum of approximately 4.5 million CapMan Plc shares, indicating a dilution of less than 3.0 per cent.

As a general rule, a participant must hold a minimum of 25 per cent of the shares given on the basis of the New Plan, until the participant’s shareholding in the company corresponds to the amount of the participant’s fixed annual gross salary and for as long as the participant’s employment or service in a Group company continues.

To facilitate participants’ investment into the New Plan, CapMan Plc’s Board of Directors decided on the early payment of the vested reward shares from the 2020 Share Plan. The payment took place after the vesting point on 13 April 2022. The number of shares to be issued depends on the achieved TSR at the vesting point. The maximum potential number of shares issued is 2.9 million. The reward shares shall be subject to transfer restrictions until the end of April 2024. Irrespective of the early payment, the plan remained in force until the end of its performance period on 31 March 2023 in line with the original terms. The issuance of shares for the reward payment was completed by using the existing share issue authorisation given by the 2022 Annual General Meeting.

Stock option programmes

CapMan’s latest stock option programme is from 2016. The subscription period of the last stock options of 2016 ended on 30 April 2021. New stock options are not granted under the option programme as the programme has been replaced by a share-based remuneration programme described above.