Updated: 21.3.2012
ShareCorporate governance
Remuneration
Decision-making process and main principles of remuneration
Sanoma's Annual General Meeting (AGM) determines remuneration of the members of the Board of Directors and Board committees. The remuneration and fringe benefits (total salary), bonuses and pension benefits payable to the President and CEO and Executive Management Group (EMG) members as well as stock options granted for senior executives are approved by the Board of Directors, in accordance with the Human Resources Committee's proposal.
President and CEO and EMG members do not receive separate remuneration for their management group membership or other internal management positions, such as Board memberships in the Group companies.
Bonuses (short-term incentive plans)
The bonuses are determined on the basis of achieving financial and non-financial objectives set annually. The weighting of the objectives and the maximum amount of the bonus vary according to the position of the person in question. Part of the Group also maintains a personnel profit-sharing system, annual payments from which are based on yearly operational results. Bonus and profit-sharing systems involve approximately 12,000 employees.
Bonuses are paid in March following the year of determination. The maximum bonus for the President and CEO is 7 month's total salary, and for other EMG members it is 6 month's total salary.
The bonus criteria in the short-term incentive plan 2012 are based on achieving Group’s financial targets of earnings per share, result, cash flow as well as objectives related to supporting a higher performance culture and One Sanoma projects.
Stock Option Schemes (long-term incentive plans)
Sanoma has adopted stock option schemes as part of the Group's incentive and commitment programme for the key personnel. The conditions and the issuance are decided on by the Sanoma Board of Directors as authorised by the AGM. Currently there are six different stock option schemes underway; involving a total of approximately 300 key employees of the Group. The subscription period of each stock option scheme begins about three years after the granting and runs for three years. If the option holder's employment with Sanoma ends before the subscription period begins, the stock options will be returned to the Company.
The President and CEO and EMG members are part of Sanoma’s stock option schemes. Starting from Stock Option Scheme 2009, an obligation to own Company shares has been included in the granting of 35%−50% of the stock options to the President and CEO and EMG members. In order to be entitled to the granted stock options, President and CEO and EMG members must own the amount of Company shares that is determined by the Board of Directors. Information on stock options held by Sanoma’s President and CEO and other members of the EMG are presented in Note 31 of the Financial Statements. Daily updated information about their holdings is presented in the Insiders section.
Remuneration of the President and CEO and EMG members
The remuneration of the President and CEO and other EMG members are decided on by Sanoma’s Board of Directors. In addition to the total salary, the remuneration also comprises bonuses, stock options and pension benefits.
President and CEO Harri-Pekka Kaukonen started in his position as of 1 January 2011. In 2011, he was paid a total salary of EUR 606,303. No bonuses were paid to the President and CEO in year 2011. Other members of the EMG received EUR 2.5 million (2010: EUR 2.4 million) including bonuses as per the short-term incentive plan. In 2011, the bonus criteria in the short-term incentive plan were based on achieving Group’s objectives of organic growth, result and cash flow as well as objectives related to supporting innovations and growth opportunities in the Group. An itemised statement on remuneration paid can be found in Note 31 of the Financial Statements. More detailed information on the management's relationships and connections to the Sanoma Group is provided in Note 30.
Stock options granted to the EMG members in the financial year 2011 are presented in Note 31 of the Financial Statements. Daily updated information about the holdings of the President and CEO and other members of the EMG are presented in the Insiders section at the Sanoma.com website.
Stock options granted to the EMG members in the financial year 2011 is presented in Financial Statements for 2011 in note 20. Daily updated information about the holdings of the President and CEO and other members of the EMG are presented in the Insiders section.
Sanoma's new President and CEO as of 1 January 2011 is Harri-Pekka Kaukonen. The grounds for his remuneration are largely the same as with his predecessor. The Board of Directors has decided to grant Harri-Pekka Kaukonen stock options as follows: 41,000 stock options 2008 and 60,000 stock options 2010.
The notice period and severance package of the President and CEO
The President and CEO Harri-Pekka Kaukonen's period of notice is six months either from his or the Group’s part and his severance payment equals 12 month's salary in addition to the salary for the notice period, unless the agreement is terminated because of gross negligence of the President and CEO. The severance pay is accompanied by a fixed-term non-competition clause.
Pension benefits for the President and CEO and EMG members
Sanoma has a host of different pension arrangements to cover the pension security of its personnel. The additional pension benefits of the President and CEO and other EMG members are currently based on defined contribution. Contracts made prior to 2009 are based on defined benefit. According to his executive contract, Harri-Pekka Kaukonen will retire at the age of 63, and the additional pension benefit contribution amounts to 20% of his salary subject to statutory pension cover. The retirement age of other EMG members is 60–63 years. The pensions of the EMG members who are under the defined benefit plan, together with the statutory pension cover in Finland, amount to 60% of their average salary from the last ten full calendar years.
Hannu Syrjänen, who served as the Sanoma’s President and CEO until 31 December 2010, retired in 2011 as he turned 60 years old. His pension benefits are based on defined benefit and, together with the statutory pension cover in Finland, amount to 60% of his average salary from the last ten full calendar years.
Board remuneration
The AGM of 2011 confirmed the following monthly remuneration for the Board of Directors:
- Chairman: EUR 8,500
- Vice chairman: EUR 6,500
- Members: EUR 5,500.
A sum of EUR 1,000 per meeting is paid to committee members. In addition, a sum of EUR 1,000 per Board meeting is paid for members whose place of residence is outside of Finland. A sum of EUR 2,000 for each Committee meeting is paid for each Chairman of the Board's Committee and the members whose place of residence is outside of Finland. Board Members' travel expenses that are related to the Board meetings are reimbursed according to the Travel Policy of the Company.
Remuneration of the members of the Board of Directors and Board committees are paid as monetary compensation. In 2011, a total of EUR 0.8 million (2010: EUR 0.7 million) was paid in remuneration to the Board of Directors. Details of individual remuneration are presented in Note 31 of the Financial Statements. The members of the Board of Directors do not hold stock options. Details of their shareholding are presented in the Insiders section.
