Remuneration

Remuneration Statement

Technopolis’ Remuneration Statement has been prepared in accordance with the Finnish Corporate Governance Code 2015 issued by the Securities Market Association. The Remuneration Statement includes the description of the procedures concerning the remuneration of the directors, the CEO, and any other executives and of the main principles of remuneration as well as the Remuneration Report which discloses the remuneration paid during the previous financial period and, for comparison, the remuneration paid during the financial period preceding the reported financial period. The Finnish Corporate Governance Code 2015 is publicly available on the website of the Securities Market Association at website of the Securities Market Association.

 

A. Decision-making Procedure Concerning the Remuneration

 

Decisions on the remuneration payable for Technopolis Plc’s Board members for Board and Committee work are made annually by the company’s Annual General Meeting (AGM) on the basis of a proposal prepared by the Shareholders’ Nomination Board.

Decisions on the remuneration of the CEO and other members of the Group Management Team are made by the Board of Directors of Technopolis’ Plc. The Board’s Remuneration and HR Committee prepares the proposals pertaining to the remuneration of the CEO and other members of the Group Management Team. The Board of Directors monitors the implementation of the remuneration schemes of the CEO and the other Group Management Team members.

 

Authorizations Granted to the Board of Directors Concerning Remuneration

The AGM held on 23 March 2017 authorized the Board to decide on the issuance of shares as well as the issuance of special rights entitling to shares. More information on the authorizations is available in the stock exchange release regarding the decisions of the Annual General Meeting 2017.

 

B. Principles of Remuneration

 

Remuneration of the Members of the Board of Directors

The General Meeting of 2017 decided that the members of the board of directors will be paid annual remuneration as follows:

EUR 55,000 to the Chairman of the Board,
EUR 31,500 to the Vice Chairman of the Board and the Chairman of the Audit Committee (in case he/she is not simultaneously acting as Chairman or Vice Chairman of the Board) and
EUR 26,250 to the other members of the Board of Directors

40% of the annual remuneration shall be paid in Technopolis Plc shares acquired on the market at a price determined in public trading. The shares will be acquired based on an acquisition program prepared by the company. If the remuneration cannot be paid in shares due to insider regulations, termination of the Board member’s term of office, or other reasons relating to the company or the member of the Board, the annual remuneration shall be paid fully in cash. Board members are not allowed to transfer any shares obtained as annual remuneration before their membership of the Board has ended.

For participation in the meetings of the Board of Directors each member of the Board of Directors shall, in addition to the annual remuneration, be paid a fee of EUR 600 and the Chairman of the Board of Directors a fee of EUR 1,200 for each Board meeting. Each member of a committee of the Board of Directors shall be paid a fee of EUR 600 and the chairmen of the committees a fee of EUR 800 for each committee meeting. For meetings held outside the country of residence of the member and provided that the member is physically present at the meeting venue, each member of the Board of Directors shall, however, be paid a fee of EUR 900 and the Chairman of the Board of Directors a fee of EUR 1,800 for each Board meeting, and each member of a committee shall be paid a fee of EUR 900 and the chairs of the committees a fee of EUR 1,200 for each committee meeting.

The travel expenses of the members of the Board of Directors and the members of the committees shall be compensated in accordance with the company’s travel policy.

The Board members do not have an employment or service contract with the company. Furthermore, they do not have share-based remuneration schemes, nor are they included in the company’s other incentive schemes.

 

Remuneration of the CEO and Other Executives

The company’s Board of Directors ratifies the principles applied to the remuneration of the personnel and incentive schemes and decides on the company’s short-term and long-term remuneration schemes. The Board is supported by the Remuneration and HR Committee whose key tasks include preparing and developing the principles pertaining to the remuneration of the personnel and the company’s remuneration schemes, as well as monitoring the transparency, expediency and competitiveness of the remuneration schemes;

The remuneration paid to the CEO and other members of the Group Management Team consists of a fixed monthly salary, fringe benefits, possibly an annual bonus paid on the basis of the company’s results and personal performance as well as the long-term share-based incentive schemes for the key employees in the company.

The company’s Board of Directors confirms the remuneration and other benefits paid to the CEO and other Group Management Team members and decides on the company’s incentive schemes. The Remuneration Committee prepares proposals for the Board of Directors on the remuneration of the CEO and the rest of the Group Management Team as well as the company’s remuneration schemes.

 

Remuneration of the CEO

The fixed monthly salary of CEO Keith Silverang in 2016 is EUR 24,000. The fringe benefits comprise telephone and car benefits which are included in the monthly salary at their taxation values.

The CEO may receive annual bonus, the amount of which is determined by the board based on the extent to which the annual result targets have been reached. The maximum annual bonus corresponds 50% of the CEO’s base annual salary.

In addition, the CEO participates in the share-based incentive schemes, as described below, and may receive based on those remuneration schemes Technopolis Plc shares as follows:

  • based on earning periods 2014–2016 and 2015–2017 of the Performance Share Plan 2013–2017, the maximum amount of shares potentially still payable under the Plan is 89.196 shares (the original maximum amount of shares under the still ongoing earning periods was 70,000 shares and the original maximum amount of the total Performance Share Plan 2013–2017 was 105,000 shares),
  • based on earning periods 2016–2018 and 2017–2019 of the Performance Share Plan 2016–2020, the maximum amount of shares potentially payable under the Plan is 94,226 shares (the original maximum amount of shares under the ongoing earning periods was 82,000 shares), and
  • based on Matching Share Plan 2016, the maximum amount of shares potentially payable under the Plan is 22,982 shares (the original maximum amount of shares under Plan was 20,000 shares).

The maximum amounts are based on a revision accepted by the Board of Directors of Technopolis in order to note and eliminate the dilution of the Plans resulting from the rights issues implemented by Technopolis in 2013 and in 2016.

The CEO’s service agreement is valid for an indefinite duration. The termination notice period is 6 months, both for the company and the CEO. In addition to the monthly salary for the termination notice period, the CEO is entitled to a severance pay equaling 12 months´ fixed monthly salary.

The pension and retirement age for the CEO are determined in accordance with the applicable legislation in force regarding pension. The CEO does not have any individual pension arrangements.

 

Remuneration of the Other Group Management Team Members

In addition to their fixed monthly salaries the other members of the Group Management Team may receive annual bonus, the amount of which is determined by the board based on the extent to which the annual result targets have been reached. The maximum annual bonus corresponds 40% of the Group Management Team member’s base annual salary.

In addition, the Group Management Team members participate in the share-based incentive schemes, as described below, and may receive based on those remuneration schemes Technopolis Plc shares as follows:

  • based on earning periods 2014–2016 and 2015–2017 of the Performance Share Plan 2013–2017, the maximum amount of shares potentially still payable under the Plan is 149,085 shares (the original maximum amount of shares under the still ongoing earning periods was 117,000 shares and the original maximum amount of the total Performance Share Plan 2013–2017 was 183,500 shares),
  • based on earning periods 2016–2018 and 2017–2019 of the Performance Share Plan 2016–2020, the maximum amount of shares potentially payable under the Plan is 135,593 shares (the original maximum amount of shares under the ongoing earning periods was 118,000 shares), and
  • based on Matching Share Plan 2016, the maximum amount of shares potentially payable under the Plan is 45,964 shares (the original maximum amount of shares under Plan was 40,000 shares).

The maximum amounts are based on a revision accepted by the Board of Directors of Technopolis in order to note and eliminate the dilution of the Plans resulting from the rights issues implemented by Technopolis in 2013 and in 2016.

The pension and retirement age for the members of the Group Management Team are determined in accordance with the applicable legislation in force regarding pension. The members of the Group Management Team do not have any individual pension arrangements

 

Annual Bonuses

The short-term performance bonus system for annual bonuses based on the company’s results and personal performance covers all Technopolis employees. The maximum amount of the CEO´s annual bonus is equal to 50% of the base annual salary and the other Group Management Team members´ maximum annual bonus is equal to 40% of the base annual salary of the Group Management Team member. The maximum amounts of the other personnel’s annual bonuses are equal to 10–30% of the base annual salary depending on their personnel group.

The targets support the company strategy and annual operating plans. Performance measures include among others EBITDA, occupancy rate, customer satisfaction and progress of investments. The earnings and performance targets of the CEO and other members of the Group Management Team as well as the achievement of the targets are confirmed by the Board of Directors.

The annual bonus performance and achievement of earnings and performance targets are set by the board of directors is evaluated on annual basis and the amount of the annual bonus is determined based on the extent to which the targets have been reached during the financial period. The annual bonus is paid in February following the financial period.

The company has the right to retroactively amend the amount of the annual bonus and claim a refund of the annual bonus, if the reward recipient receives a fee based on the annual bonus system that subsequently turns out to be incorrectly paid due to intent or gross negligence by the reward recipient.

According to the decision of the persons who are entitled to Annual Bonuses, a part of the Annual Bonus can be paid into the Personnel Fund established by the personnel of Technopolis Plc. The Personnel Fund invests the main part of its funds to the shares of Technopolis Plc in accordance with a pre-decided the trading program.

Share-based Incentive Plans

In addition to the short-term performance bonus scheme, Technopolis operates share-based incentive plans decided by the company’s Board of Directors and intended for the Group’s management and other key persons. The aim of these incentive plans is to support implementation of the company’s strategy, align the goals of shareholders and key personnel to increase the value of the company, and commit key personnel by means of a reward plan based on share ownership.

 

Performance Share Plan 20132017

Performance Share Plan 2013–2017 includes three three-year earning periods which constitute of the calendar years 2013–2015, 2014–2016 and 2015–2017. The maximum amount of shares potentially still payable under the Plan is 662,610 shares (the original maximum amount of shares under the still ongoing earning periods was 520,000 shares and the original maximum amount of the total Performance Share Plan was 780,000 shares). The maximum amounts are based on a revision accepted by the Board of Directors of Technopolis in order to note and eliminate the dilution of the Plans resulting from the rights issues implemented by Technopolis in 2013 and in 2016.

The rewards from the Performance Share Plan will be paid partly in the company’s shares and partly in cash after the end of each earning period in years 2016, 2017 and 2018, by end of April. The cash proportion is intended to cover taxes and tax-related costs incurred to the participant due to the reward. The cash amount corresponds at maximum to the value of all shares conveyed at the time of registration.

Under the Performance Share Plan the earning criteria have been determined separately for different personnel groups. The earning criteria are weighted and for the CEO, other Group Management Team members and named key employees working in the Group functions consist the total shareholder return growth (50% weight) and the operating result calculated in accordance with the EPRA (European Public Real Estate Association) guidelines. The key employees working in the business units, the earning criteria consists of the unit EDITBA growth (50% weight) and the unit financial occupancy rate growth (50% weight).

The Board of Directors decides annually on the key employees to be covered by the incentive scheme, the earning criteria and set objectives as well as the maximum number of shares transferred. After the end of each earning period, the Board of Directors confirms the results of the earning criteria and the number of shares granted based on them. The Board of Directors annually confirms the number of shares to be granted by the end of April following the earning period.

The Performance Share Plan includes the restriction to assign the shares during the restriction period, which commences at the payment of the reward and ends on 30 April 2017 for the shares earned for the 2013–2015 earning period, on 30 April 2018 for the shares earned for the 2014–2016 earning period and 30 April 2019 for the shares earned for the 2015–2017 earning period.

Should a Group Company or a key person give notice of termination or terminate an employment contract, a service contract or another contractual relationship of a key person, during the restriction period, a key person shall return the shares given as reward back to the company. The Board of Directors may, however, in these cases, decide that a key person is entitled to keep all or a part of the securities, which are subject to the returning obligation.

Should a key person in accordance with this Plan receive a reward, which is subsequently proven to have been incorrectly paid for a reason assignable to the key person, the Board of Directors has the right to amend the amount of the reward afterwards and, in this respect, oblige the key person to repay to the company such amount to be reduced from the original reward paid.

The terms and conditions of the Performance Share Plan 20132017 can be found here.

 

Performance Share Plan 20162020

Performance Share Plan 2016–2020 includes three three-year earning periods which constitute of the calendar years 2016–2018, 2017–2019 and 2018–2010. Under the Plan the key personnel has the opportunity to earn a maximum of 896,316 shares (before the adjustment a maximum of 780,000 shares). The maximum amount is based on a revision of the Performance Share Plans of the company accepted by the Board of Directors of Technopolis in order to note and eliminate the dilution of the plan resulting from the issuance of new shares against payment in 2016.

The rewards from the Performance Share Plan will be paid partly in the company’s shares and partly in cash after the end of each earning period in years 2019, 2020 and 2021, by end of May. The cash proportion is intended to cover taxes and tax-related costs incurred to the participant due to the reward. The cash amount corresponds at maximum to the value of all shares conveyed at the time of registration.

Under the Performance Share Plan the earning criteria have been determined separately for different personnel groups. The earning criteria are weighted and for the CEO, other Group Management Team members and named key employees working in the Group functions consist the total shareholder return growth (50% weight) and the operating result calculated in accordance with the EPRA (European Public Real Estate Association) guidelines. The key employees working in the business units, the earning criteria consists of the total shareholder return growth (30% weight), the unit EDITBA growth (35% weight) and the unit financial occupancy rate growth (35% weight).

The Board of Directors decides annually on the key employees to be covered by the incentive scheme, the earning criteria and set objectives as well as the maximum number of shares transferred. After the end of each earning period, the Board of Directors confirms the results of the earning criteria and the number of shares granted based on them. The Board of Directors annually confirms the number of shares to be granted by the end of May following the earning period.

The Performance Share Plan includes the restriction to assign the shares during the restriction period, which commences at the payment of the reward and ends on May 31, 2020 for the shares earned in the period 2016–2018, on May 31, 2021 for the shares earned in the period 2017–2019, and on May 31, 2022 for the shares earned in the period 2018–2020.

Should a Group Company or a key person give notice of termination or terminate an employment contract, a service contract or another contractual relationship of a key person, during the restriction period, a key person shall return the shares given as reward back to the company. The Board of Directors may, however, in these cases, decide that a key person is entitled to keep all or a part of the securities, which are subject to the returning obligation.

Should a key person in accordance with this Plan receive a reward, which is subsequently proven to have been incorrectly paid for a reason assignable to the key person, the Board of Directors has the right to amend the amount of the reward afterwards and, in this respect, oblige the key person to repay to the company such amount to be reduced from the original reward paid.

The terms and conditions of the Performance Share Plan 20162020 can be found here.

 

Matching Share Plan 2016

The Matching Share Plan includes one performance period, calendar year 2016. The prerequisite for receiving reward on the basis of this plan is that a person participating in the plan acquires company shares up to the number determined by the Board of Directors. Furthermore, payment of reward is based on participant´s employment or service upon reward payment. The total number of performance shares granted is tied to the performance of the company measured by total shareholder return. The rewards from the Matching Share Plan will be paid partly in the company’s shares and partly in cash in 2017. The cash proportion is intended to cover taxes and tax-related costs incurred to the participant due to the reward. The key personnel has the opportunity to earn a maximum of 96,675 shares under the Matching Share Plan (before the adjustment a maximum of 85,000 shares). The maximum amount is based on a revision of the Performance Share Plans of the company accepted by the Board of Directors of Technopolis in order to note and eliminate the dilution of the plan resulting from the issuance of new shares against payment in 2016. The cash amount corresponds at maximum to the value of all shares conveyed at the time of registration.

The Matching Share Plan includes the restriction to assign the shares during the restriction period, which commences at the payment of the reward and ends on June 30, 2018.

The Board shall have the right to cancel the additional performance-based reward, or recollect such paid rewards that are subject to the restriction period, fully or partly, if the Group’s financial statements have to be amended and those amendments affect the amount of such reward, or in case of any market manipulation.

The terms and conditions of the Matching Share Plan 2016 can be found here.

Recommendation Issued by the Board of Directors Regarding Share Ownership

 

The Company’s Board of Directors has given a recommendation, according to which all key persons who are part of the share-based incentive plans, should during their employment or contract with the company own Technopolis Plc’s shares worth 50% of their gross annual salary, and as regards the CEO, 100% of his/her gross annual salary.

Information on the share and option holdings of the CEO and other Group Management Team members on July 2, 2017 (before effective date of EU Regulation on Market Abuse, EU N:o 596/2014) can be found on the company’s website under Insider Holdings.

 

C. Remuneration Report

Remuneration Report 2016