Remunaration statement

Board of directors
Management group
Auditors

 

REMUNERATION OF BOARD MEMBERS

The Annual General Meeting decides on the remuneration of the members of the Board of Directors.

The Annual General Meeting held on 5 April 2018 decided on the following remunerations for Board service until the next AGM:

Remuneration paid to the BOD

2018

2017

Chairman of the Board, annually

64 000

48 000

Member of the Board, annually

32 000

32 000

Attendance allowance

See below

-

Out of the annual remuneration to be paid to the Board members, 40 per cent of the total gross remuneration amount will be used to purchase Teleste Corporation’s shares for the Board members through trading on regulated market organized by Nasdaq Helsinki Ltd, and the rest will be paid in cash. If committees of the Board of Directors are established for the Company, the following meeting fees will be paid: chairman EUR 600 and each member EUR 400 per meeting of the committee.

On 5 April 2018, Teleste’s Board of Directors established an audit committee. The audit committee convenes at least four times a year. The audit committee consists of Jannica Fagerholm (Chair), Pertti Ervi and Kai Telanne (members).

Salaries, remuneration and fringe benefits paid to the Board of Directors in 2018 were as follows:

Board

EUR

Out of which in company shares

Additional information

Pertti Ervi

65 200

3 832

 

Jannica Fagerholm

33 800

1 916

 

Timo Luukkainen

32 000

1 916

 

Timo Miettinen

32 000

1 916

 

Heikki Mäkijärvi

32 000

1 916

Member of the Board as of 5 April 2018

Kai Telanne

33 200

1 916

 

Ownership by management and members of the governing bodies on 31 December 2018

On the balance sheet date, the CEO and Members of the Board owned 167,397 (148,089) Teleste Corporation shares equal to 0.88% (0.78%) of all shares and votes.

The CEO and the Board members did not have subscription rights based on stock options.

On the balance sheet date, the members of the Management Group or entities under their control excluding the CEO owned 43,063 (53,686) Teleste Corporation shares equal to 0.23% (0.28%) of all shares and votes.

PRESIDENT AND CEO

The company’s Board of Directors decides on the salary, remuneration and other benefits received by the CEO.

Salary, remuneration and fringe benefits paid to Teleste’s CEO in 2018 totalled EUR 489,996. In addition, there was an additional pension payment of EUR 94,231 and capital redemption payment of EUR 71,500 in the financial year.

Salary, remuneration and other fringe benefits paid in 2018 to the CEO of Teleste Corporation:

Remuneration paid to the CEO

2018

2017

Base salary

367 277.40

367 105.40

Fringe benefits

13 988.00

14 179.00

Short-term incentives

21 107.80

83 586.89

Long-term incentives (share based)

87 622.80

0

Total

489 996.00

464 871.29

Additional pension payment

94 231.00

94 985.10

The contractual retirement age of CEO Jukka Rinnevaara is 60 years. CEO’s contract includes defined contribution supplementary pension. The CEO’s pension plan is arranged through group pension insurance and a capital redemption policy. The payment level of the group pension is 25 per cent of basic pay, excluding bonuses. Payment under the capital redemption policy is subject to the same adjustment procedure as the CEO’s basic pay excluding bonuses.

The contract of CEO Rinnevaara specifies that his term of notice is six (6) months in case the CEO decides to withdraw, and eighteen (18) months should the contract be terminated by the company. Upon termination of the CEO’s contract by the company, the CEO will be paid a compensation corresponding to eighteen (18) months of service without benefits.

MANAGEMENT GROUP

The Board of Directors decides on the management’s incentive and remuneration systems on the basis of the CEO’s proposal.

The salary of all Management Group members consists of a fixed basic salary and a performance-based bonus. The amount of performance-based bonus depends on the performance of the company and the business area in question, as well as the achievement of other key operative objectives.

The Management Group including the CEO has a group pension plan and payment is based on the annual pay of the insured person, excluding bonuses. The payment is 25 per cent of the above pay.    

Remuneration paid to the Management Group, incl. CEO

2018

2017

Base salary

1 158 360.60

1 516 127,66

Fringe benefits

46 631.00

98 647,68

Short-term incentives

99 158.80

309 196,89

Long-term incentives, share based

294 172.93

0

Total

1 598 323.33

1 923 972,23

Group pension payment

297 910.00

198 062,60

On 31 December 2018, Teleste did not have any running stock option programmes, and the CEO, the members of the Management Group or their controlled entities did not hold any Teleste options or other share-based entitlements.

 

In 2018, Teleste was not involved in any related party transactions that would have been of material importance for Teleste and deviated from normal business or been carried out on other than ordinary market terms.

SHARE-BASED INCENTIVE PROGRAMME LTI 2015

On 5 February 2015, Teleste’s Board of Directors decided on the establishment of a new long-term share-based incentive programme to be offered to Teleste’s key employees (hereafter ‘LTI 2015’). The objective of LTI 2015 is to align the key employees’ interests with those of Teleste’s shareholders by creating a long-term equity interest for the key employees and, consequently, to increase the company’s value in the long term and to drive a performance culture, retain key employees and offer the key employees a competitive compensation for excellent performance.

LTI 2015 consists of three annually commencing plans with three main elements: an investment in Teleste shares that is required for a key employee to be included in the LTI 2015 programme; a matching share plan with a three-year vesting period based on the above investment; and a performance matching plan with a three-year performance period.

The commencement of each plan and the inclusion of eligible participants were subject to a specific approval by Teleste’s Board of Directors.

The matching share plan includes the investment of an individual participant in Teleste’s shares and the delivery of matching shares as a long-term incentive reward against the invested shares. After the three-year vesting period, the key employee receives one matching share for each invested share free of charge.

The performance matching plan includes a three-year performance period. The potential share rewards will be delivered if the performance targets set by the Board of Directors are attained.

The performance criterion applied to the all three plans alike is the total shareholder return (TSR) of Teleste’s share in the three-year performance period. A precondition for an individual key employee’s participation in the plan was the above mentioned investment in Teleste shares. The Board of Directors approved 37 key employees as eligible to participate in the first LTI 2015 program on 2015-2017, 42 key employees to participate on 2016-2018 and 40 key employees to participate on 2017-2019.

The gross quantity of matching shares delivered under the 2015–2017 plan ending in April 2018 was 47,250 shares, and the gross quantity of performance matching shares was 39,724 shares. A net quantity of 42,771 shares were delivered to the key employees entitled to reward through a directed share issue on 6 April 2018. The maximum gross quantities of shares delivered under the 2016–2018 plan starting in 2016 are 53,600 matching shares and 214,400 performance matching shares. The maximum gross quantities of shares delivered under the 2017–2019 plan starting in 2017 are 58,300 matching shares and 233,200 performance matching shares. Applicable taxes are deducted from the gross quantities, and the remaining net quantity is delivered to the participants as Teleste shares.

SHARE-BASED INCENTIVE PROGRAMME LTI 2018  

On 7 February 2018, Teleste’s Board of Directors decided on the establishment of a new long-term share-based incentive programme to be offered to Teleste’s key employees (hereafter ‘LTI 2018’). The objective of LTI 2018 is to align the key employees’ interests with those of Teleste’s shareholders by creating a long-term equity interest for the key employees and, consequently, to increase the company’s value in the long term and to drive a performance culture, retain key employees and offer the key employees a competitive compensation for excellent performance. LTI 2018 consists of three annually commencing plans with the following main elements: an investment in Teleste shares as a precondition for the key employee’s participation in the individual plan, a matching share plan with a three-year vesting period based on the individual investment and a performance share plan with a three-year performance period.

The first plans within the programme are the matching share plan 2018–2020 and the performance share plan 2018–2020. The commencement of each new plan, its eligible participants and the matching ratio and performance targets applied to the individual plan is subject to a separate approval of Teleste’s Board of Directors in each case. The matching share plan 2018–2020 comprises the individual key employee’s investment in Teleste’s shares and the delivery of a specific number of matching shares without consideration as a share reward based on the share investment after the three-year vesting period. The matching shares are delivered according to a fixed matching ratio determined by the Board of Directors for each individual plan. The matching ratio applied to the matching share plan 2018–2020 is one matching share for each two shares invested. The maximum aggregate gross quantity of matching shares that may be delivered on the basis of the matching share plan 2018–2020 is approximately 24,400 shares The performance share plan 2018–2020 comprises a three-year performance period. The potential share rewards will be delivered if the performance targets set by the Board of Directors are achieved. The performance measure applied in the performance share plan is the total shareholder return (TSR) of Teleste share. The above investment in Teleste’s shares is the requirement for an individual key employee to be included in the plan. If all the eligible key employees participate in the plan by fulfilling the investment precondition and the performance targets set for this performance share plan are fully achieved, the maximum number of shares that may be delivered under the performance share plan 2018–2020 is approximately 292,800 shares (gross before the deduction of the applicable taxes). The Board of Directors approved 35 key employees as eligible to participate in the plans beginning in 2018.

AUDITING, REVISIONS AND REMUNERATION OF THE AUDITOR

The term of office of Teleste’s auditor expires at the closing of the first Annual General Meeting following the election.

On 5 April 2018, Teleste’s AGM elected Authorised Public Accountants KPMG Oy Ab for the company’s auditor. The principally responsible auditor is Petri Kettunen, APA.

In addition to their statutory duties, the auditors report their observations to Teleste Corporation’s Board of Directors and attend at least one Board meeting each year.

In 2018, Teleste Group’s auditing expenses totalled EUR 177,651, of which the amount of KPMG was EUR 166,651. In addition, units of KPMG have supplied Teleste Group companies with other consultation worth total EUR 14,900 and other than KPMG auditors for EUR 46,036.

 

For more detailed information see Financial Statements ”related party” section

 

Remuneration statement 2017
Remuneration statement 2016
Remuneration statement 2015
Remuneration statement 2014
Remuneration statement 2013
Remuneration statement 2012
Remuneration statement 2011
Remuneration statement 2010

 

Updated 14.3.2019