REMUNERATION

The General Meeting decides on the remuneration of the Board members and auditors. The Board of Directors decides on and approves the President and CEO's terms of employment with a written contract. The Board of Directors decides on the principles of remuneration for senior management. The Board of Directors annually approves, if appropriate, an incentive system for the Company’s employees.

The Board of Directors has decided not to set up separate committees since the scope of the Company's business and the size of the Board of Directors do not require matters to be prepared by a group smaller than the Board of Directors. Therefore, the task of preparing the remuneration of the Board of Directors has not been assigned to the nomination committee and the task of preparing the remuneration of other executives has not been assigned to the remuneration committee.

Remuneration of the Board members

In 2010, an annual remuneration of EUR 30,000 was paid to the Board members and an annual remuneration of EUR 40,000 to both the Chairman and the Vice Chairman of the Board of Directors. In addition, travel expenses are indemnified in accordance with Cencorp Corporation’s travel policy. The Board members do not have fringe benefits or other benefits outside their remuneration.

In accordance with the resolution made at the 2011 Annual General Meeting, the annual remuneration for the Chairman and the Vice Chairman of the Board is EUR 40,000, and for the members of the Board of Directors EUR 30,000.

Remuneration of the President and CEO

The Company’s President and CEO is Mats Eriksson. The period of notice on the CEO agreement is six months, both for the Company and for Mats Eriksson. Should the Company terminate Mats Eriksson’s CEO agreement and Savcor Group Oy has, prior to the termination, given up its direct and indirect control over the Company, the Company shall pay Mats Eriksson, in addition to the notice period pay, severance pay corresponding to Mats Eriksson’s monthly salary multiplied by 12. Should Mats Eriksson terminate the CEO agreement for a reason not attributable to the Company, the Company shall not be liable to pay Mats Eriksson any other compensation than the notice period pay. If the Company cancels the CEO agreement, the Company shall not be liable to pay Mats Eriksson the above-mentioned severance pay or any other compensation. Should Mats Eriksson become permanently disabled, he shall be entitled to the above-mentioned severance pay in accordance with the terms and conditions of the life insurance policy taken out by the Company for the President and CEO. Should Mats Eriksson decease while the CEO agreement is in force, Mats Eriksson’s beneficiaries shall be entitled to the above-mentioned severance pay in accordance with the terms and conditions of the life insurance policy taken out by the Company for the President and CEO. The President and CEO's pension is determined in accordance with the Employees Pensions Act.

The President and CEO’s annual salary is EUR 225,000. In 2010, a total of EUR 54,000 was paid to President and CEO Mats Eriksson as salaries, fees and fringe benefits during 1 October - 31 December 2010. No remuneration related to the bonus scheme was paid to the President and CEO in 2010. There are no option-based incentive schemes in place for the President and CEO.

The salaries, remuneration and fringe benefits paid to Hannu Timmerbacka, who acted as CEO until 30 September 2010, totaled EUR 93,620.

Remuneration of other Management Team members

The Board of Directors decides on the principles of remuneration of the members of the Management Team. The remuneration system is based on a monthly salary and an annual bonus.

In 2010, a total of EUR 488,298 was paid to other Management Team members as salaries, fees and fringe benefits. No remuneration was paid to the members of the Management Team under the bonus scheme in 2010.

The shares and options held by the Management Team can be found on the Insiders page.

Bonus schemes for employees

Cencorp has in place a salary-based bonus scheme for management and other employees based in Finland. The Board of Directors decides on the application of the bonus scheme. Depending on the job, the maximum amount payable under the bonus scheme can vary between 8 and 12 percent of the person’s regular annual salary. The amount payable to the President and CEO and other executives under the bonus scheme can be up to 15 percent of their regular annual salary.

The payment of the amount under the bonus scheme is linked to the realization of the company’s business targets and those set for the person’s field of responsibility. In 2011, the indicators used for the bonus scheme for employees based in Finland are net sales and EBITDA. In addition, indicators related to processes, personal goals and projects are used.

Cencorp’s production plants in China have introduced various remuneration schemes relating to production targets.

Share-based remuneration systems

The Company has valid share options as follows:

  • 300,000 2006A options, the subscription period for which ended on 30 April 2010.
  • 250,000 2006B options, the subscription period for which ended on 30 April 2011. The Company’s former management and Savcor Group Oy hold the options.
  • No 2006C series options have been allocated and Cencorp Group continues to hold them.
  • 1,801,400 2007A options, the subscription period for which ends on 30 September 2011. Sampo Bank Plc holds the options.
  • 8,931,000 2007A options connected to bond I/2010, the subscription period for which ends on 25 May 2015. Savcor Group Oy holds the options connected to bond I/2010.

More informationon options is available on pages 46-47 in the Annual Report 2011
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