Remuneration Statement 2016

Corporate Governance Statement 2016
(Remuneration Statement on pages 13-15)
 

Decision-making order and key principles in remuneration at Stockmann

Stockmann plc’s highest decision-making body is the General Meeting of shareholders. The Annual General Meeting decides on the remuneration and other benefits to be paid to the members of the Board of Directors for their board and committee work annually. The proposal for the remuneration is prepared by the Shareholders’ Nomination Board. The Board members are not participating in the company’s incentive or share option schemes for key personnel.

The power to appoint and dismiss the company’s CEO rests with the Board of Directors, which also decides on the terms and benefits of the CEO’s service, and these are set out in writing in the CEO agreement. The Board also appoints other members of the Group’s Management Team and decides on their salaries and other benefits on the basis of proposals by the Compensation Committee.

The Board of Directors also approves each year the criteria for determining the incentive pay for the Group’s CEO and Management Team members, on the basis of proposals by the Compensation Committee. The incentive pay is determined on the basis of the Group’s financial and other objectives related to the implementation of the strategy.

Remuneration of members of the Board of Directors

The remuneration to the Board members is paid in cash or company shares. There is no restriction on the ownership period pertaining to the shares received as remuneration.

During the 2016 financial year, EUR 76 000 was paid in fixed fees to the chairman of the Board, EUR 49 000 to the vice chairman, and EUR 38 000 each to the other Board members, in accordance with the decisions of the General Meeting of 15 March 2016. About 50 per cent of the annual remuneration was paid in company shares and the rest in cash. The Chairman of the Board was paid EUR 1 000 and members of the Board of Directors were paid a meeting attendance fee of EUR 500 for each Board meeting.

The Chairman and the members of the Board Committees were also paid an attendance fee for the Committee meetings. The Chairman of the Audit Committee was paid EUR 1 000 and each member was paid EUR 700 as a meeting remuneration for each meeting of the Audit Committee, and the Chairman and each member of the Compensation Committee was paid EUR 500 as a meeting remuneration for each meeting of the Committee.
During the 2016 financial year the Board members were paid a total of EUR 221 511 (2015: EUR 210 028) in cash and 34 091 (2015: 30 411) of the company’s Series B shares as payment in shares. The value of shares was EUR 200 489 on the dates of share purchases. The total value of the remuneration was EUR 422 000 (2015: EUR 421 900).

The shareholders’ Nomination Board proposes to the Annual General Meeting on 23 March 2017 that the remuneration of the members of the Board of Directors remain at the present level.

Financial benefits pertaining to the post of CEO

Lauri Veijalainen has been Stockmann plc’s CEO since 12 September 2016 (Interim CEO 4 April–12 September 2016). Per Thelin, who was the company’s CEO since November 2014, left his position on 4 April 2016.

The CEO Per Thelin had a fixed salary with fringe benefits and a performance pay tied to the Group’s financial and other objectives related to the implementation of the strategy. The performance pay could not amount to more than 72 per cent of the fixed basic salary. The CEO was not given shares or share options as part of remuneration.

In 2016, Per Thelin was paid a fixed salary of EUR 157 219 (2015: EUR 430 516). The fixed salary consist of EUR 154 412 (2015: EUR 420 533) in cash and EUR 3 207 (2015: EUR 9 983) in fringe benefits. In addition, he was paid a performance pay of EUR 259 583 (2015: EUR 0) for the 2015 performance, EUR 65 000 for the first quarter of 2016 performance and a post-employment benefit of EUR 420 000.

Thelin’s retirement age was determined in accordance with Finnish employment pension legislation. The CEO’s pension was accrued on the basis of the Employees’ Pensions Act and a separate, voluntary defined contribution pension insurance taken out by the company. In 2016, the voluntary insurance contribution was EUR 20 999 (2015: EUR 27 988).

The remuneration of the CEO Lauri Veijalainen consists of a fixed salary which includes a fringe car benefit, as well as a performance pay system with short-term and long-term targets. The performance pay is tied to financial and other objectives related to the implementation of the strategy. The earning period for the short-term performance pay is a calendar year and the maximum pay-out is 60 per cent of the fixed base salary. The earning period for the long-term performance pay will expire at the end of 2018, and the pay-out may not exceed 50 per cent of the fixed base salary in 2018. The CEO was not given shares or share options as part of remuneration. There was no sign-on bonus.

In 2016, CEO Lauri Veijalainen was paid a fixed salary of EUR 333 388. The fixed salary consist of EUR 332 427 in cash and EUR 961 in fringe benefits.
Veijalainens pension accumulates and the retirement age is determined in accordance with Finnish employment pension legislation. The pension will accrue on the basis of the Employees’ Pensions Act.

If the company terminates the CEO agreement, the notice period will be 6 months, in addition to which the CEO will be entitled to a severance payment equivalent to 9 months’ pay. If the CEO terminates his agreement, the notice period will be 6 months.

Financial benefits pertaining to other Management Team members

For members of the Group’s Management Team other than the CEO, a total of EUR 2 205 297 was paid in fixed salaries in 2016 (2015: EUR 2 306 281). The fixed salary consists of EUR 1 718 151 in cash (2015: EUR 2 229 312) and EUR 61 250 in fringe benefits (2015: EUR 76 969). The Group Management Team members have a performance pay tied to the Group’s financial and other objectives related to the implementation of the strategy. The performance pay may amount to no more than 30 per cent of the fixed base salary. Due to the performance in 2015, performance pay of EUR 425 896 was paid in 2016 (2015: EUR 0).

On 16 March 2010, the General Meeting decided on share option schemes for key personnel as part of the incentive and commitment scheme for management. Some of the Group’s Management Team members are covered by the 2010 Key personnel share option scheme as part of Stockmann plc’s long-term incentive schemes. Subscription period for shares will end on 31 March 2017. The terms of the share option scheme are available on the company’s website stockmanngroup.com.

The retirement age of the Management Team members is 63 or 65, depending on the particular executive agreement in question. Two of the management team members have voluntary earnings-related pension insurances taken by the company as of the end of 2016. The costs of the insurances in 2016 amounted to EUR 38 733 (2015: EUR 83 670).

The notice period for the Management Team members are mostly 6 months from both sides. One Management Team member has a notice period of 3 months from the company’s side and two members have a notice period of 3 months from the director’s side. If the company terminates the agreement, the management team members are in addition entitled to a severance payment equivalent to 3 or 6 months’ pay depending on their agreement in question.