Remuneration Statement

A. Decision-making procedure

Elisa's General Meeting of Shareholders annually decides on the remuneration of Board members on the basis of the proposal prepared by the shareholders' nomination board. 

The salaries and other remuneration of the CEO and other members of the Executive Board, as well as their long-term incentive plans, are decided by the Board of Directors. The Board of Directors also decides on the short-term incentive plan for the CEO. In addition, the Board decides on the maximum limits of the short-term incentive plan for the Executive Board. The People and Compensation Committee prepares the aforementioned matters to be decided by the Board with the assistance of independent external experts, as necessary. The CEO decides on the targets for the short-term incentive plan for the Executive Board.

On 12 April 2018, Elisa's General Meeting of Shareholders authorised the Board to decide on a share issue and the issue of special rights giving entitlement to shares, and the General Meeting on 3 April 2019 authorised the Board to decide on the acquisition of the company's own shares. The share issue authorisation is valid until 30 June 2020 and share acquisition authorisation until 30 June 2020. The Board may also use them for remuneration.

B. Main principles of remuneration 

Remuneration of Board members

Board members are paid annual remuneration fee and meeting remuneration fees for attending Board and committee meetings. After the publication of the first- and third-quarter results, 40 per cent of the monthly remuneration fees are used to purchase Elisa shares in the name of the members of the Board, and Elisa covers any transfer tax. At the Annual General Meeting of 2019, it was decided to pay the following remuneration fees to Board members:

  • - annual remuneration fee for the Chairman of EUR 120,000 
  • - annual remuneration fee for the Deputy Chairman and of the Audit Committee of EUR 80,000 
  • - annual remuneration fee for the members of EUR 65,000 
  • - meeting remuneration fee of EUR 700 per meeting for each participant.

Elisa's shareholders' nomination board requires that members of the Board have shareholdings in the company. 

The Chairman of the Board of Directors is not paid any remuneration fees for attending the meetings of Elisa's shareholders' nomination board. 

Remuneration of the CEO and the Executive Board
 
Chief Executive Officer

Annual salary

The total salary of the CEO consists of a fixed monetary salary and taxable benefits. The fixed salary totals EUR 647,071 per year (not including bonus holiday pay), Additional holiday pay is paid. The taxable fringe benefits total EUR 12,929 per year. The total remuneration of the CEO includes also short- and long-term incentive bonuses.

Short- and long-term incentive plans

The CEO is paid a performance-based bonus based on financial targets set by the company's Board of Directors. The target period of this short-term incentive plan is six months, and any bonuses are paid every six months.

The long-term incentive plan of the CEO consists of share-based incentive plans. The key targets of the currently valid share-based incentive plan are described in the section 'Share-based incentive plans for key personnel'. The maximum bonus limits are described in Table 1.  

Pensions and terms and conditions related to contract termination

According to the CEO's contract, the contractual relationship with the CEO ends with a pension when he turns 60 years of age. The supplementary pension is based on a defined contribution plan. Elisa's CEO is entitled to a paid-up pension. The increase in statutory retirement age is compensated by a decision of the Board of Directors.

The period of notice for the CEO is six months from Elisa's side and three months from the CEO's side. Should the contract be terminated by Elisa, the CEO is entitled to receive a severance payment that equals the total salary of 24 months minus his salary for the period of notice.

Other members of Elisa’s Executive Board

Annual salary

Members of the Executive Board are paid a total salary that includes a fixed monetary salary and taxable benefits. In addition, members of the Executive Board fall within the scope of the short- and long-term incentive plans. The fixed monetary salary of members of the Executive Board totals EUR 1,966,125 per year. Additional holiday pay is paid. The taxable fringe benefits total EUR 65,429 per year (the figures do not include the CEO's salary and taxable fringe benefits).

Short- and long-term incentive plans

As a short-term incentive for Elisa's Executive Board, Elisa pays a performance-based bonus, which is based on achieving the financial and operational targets in the scorecards of Elisa and its units. The target period is six months, and any performance-based bonus is paid every six months. 

Elisa's Executive Board also falls within the scope of the company's long-term incentive plan, i.e. the share-based incentive plan (see 'Share-based incentive plans for key personnel'). The maximum limits for bonuses are stated in Table 1.  

Pensions and terms and conditions related to contract termination

The contractual relationship with the company of members who started on Elisa's Executive Board before 2013 will terminate when the member turns 62 years of age, except the deputy CEO, whose contractual relationship will terminate when he turns 63 years 9 months age. These members have a defined contribution supplementary pension plan concluded with a pension insurance company, which includes a paid-up pension. The right to a pension will start when the contractual relationship with the company ends.

The period of notice for members of the Executive Board is six months from Elisa's side and three months from the member's side. Should the contract be terminated by Elisa, the member of the Executive Board has the right to receive an amount corresponding to nine months' total salary from Elisa.

Table 1. Maximum limits for the bonuses under the short- and long-term incentive plans.

  Short-term incentive plan Long-term incentive plans

 

   
 

Performance-based bonus scheme 2019 %*

Share-based incentive plan 2014,
shares (max)
Earnings period 2016-2018

Share-based incentive plan 2014,
shares (max)
Earnings period 2017-2019

Share-based incentive plan 2018-2022,
shares (max)
Earnings period 2018-2020

Share-based incentive plan 2018-2022,
shares (max)
Earnings period 2019-2021

CEO 90% 42,000 45,000 39,650 39,000
Other members of the Executive Board 67%** 125,000 150,000 134,350 128,350

* The maximum limits are presented as percentages of the fixed earnings for the target period
**Average for the other members of the Executive Board

Share-based incentive plans for key personnel

Restricted share-based incentive plan 2019–2025

On 30 January 2019, the Board of Directors of Elisa Corporation approved a a Restricted Share Plan 2019 is to align the objectives of the shareholders and key employees in order to increase the value of the company in the long-term, and to retain key employees at the company, and to offer them a competitive reward plan that is based on receiving the company’s shares.

The Restricted Share Plan is directed only to selected key employees in the Elisa. The vesting periods will last for 12 to 36 months. The prerequisite for reward payment is that a key employee’s employment or service is in force on the reward payment date. The rewards to be paid on the basis of the plan in 2019–2025 will amount to a maximum total of 500.000 Elisa shares including also the proportion to be paid in cash. No rewards have been allocated from the plan so far.

Share-based incentive plan 2018–2022

On 14 December 2017, the Board of Directors of Elisa Corporation approved a share-based incentive plan for the Group’s key employees. The aim of the new plan is to align the objectives of the shareholders and the key employees in order to increase the value of the Company in the long term, to keep the key employees at the Company, and to offer them a competitive reward plan that is based on earning and accumulating the Company’s shares. The Performance Share Plan is directed at approximately 200 people, including the members of the Corporate Executive Board.

The Performance Share Plan includes three 3-year performance periods: the calendar years 2018–2020, 2019–2021 and 2020–2022. The Board of Directors of the company will resolve on the Plan’s performance criteria and required performance levels for each criterion at the beginning of a performance period.

The potential reward of the plan from the performance period 2018–2020 will be based on the Group’s earnings per share (EPS), on the new business development and on other essential goals. The rewards to be paid on the basis of the performance period correspond to the value of a maximum total of 550,000 Elisa Corporation shares (including the proportion to be paid in cash). The potential reward will be paid partly in the company’s shares and partly in cash in 2021. The cash proportion is intended to cover taxes and tax-related costs arising from the reward to the participant. As a rule, no reward will be paid if a participant’s employment or service ends before the reward payment.

The rewards to be paid on the basis of the performance period 2019–2021 correspond to the value of a maximum total of 536,000 Elisa Corporation shares (including also the proportion to be paid in cash). The potential reward on the basis the performance period 2019–2021 will be paid partly in the Company’s shares and partly in cash in 2022. The potential reward will be based on the Group’s earnings per share (EPS), on the new business development and on other essential goals. The Performance Share Plan is directed to a maximum of 200 people.

The CEO of the Company and members of the Corporate Executive Board must hold a minimum of 50 per cent of the net shares given on the basis of the plan until the CEO’s total shareholding in the company corresponds to the value of his annual salary and the member’s total shareholding in the company corresponds to the value of half of his or her annual salary.

Share-based incentive plan 2014

On 11 December 2014, Elisa’s Board of Directors decided to implement two new, share-based incentive plans for key personnel in the Elisa Group. The plans are designed to align the goals of shareholders and key personnel in increasing the value of the company, to secure the commitment of key employees to the company, and to offer them a competitive compensation plan that is based on holding shares in the company. The target group of the incentive plan covers no more than 200 employees.

There are three 3-year earnings periods in the share-based incentive plan, the calendar years of 2015–2017, 2016–2018 and 2017–2019. Elisa's Board of Directors will decide on the plan's performance criteria and their targets at the beginning of each earnings period.

Rewards from the plan from the earnings period 2015–2017 and any rewards from the earnings periods 2016–2018 and 2017-2019 will be based on EPS, the revenues of new business operations and on other essential goals.

The rewards paid through the incentive plan for the earnings period 2015–2017 equalled the value of 481,229 shares in Elisa (including the portion payable in cash). The rewards for the 2015–2017 earnings period was paid in February 2018, partly in company shares and partly in cash.

The bonuses to be paid through the share-based incentive plan for the earnings period 2016–2018 will equal at most the value of around 480,000 shares in Elisa (including the portion payable in cash). Any rewards for the 2016–2018 earnings period will be paid in 2019, partly in company shares and partly in cash.

The bonuses to be paid through the share-based incentive plan for the earnings period 2017–2019 correspond to the value of an approximate maximum total of 495,664 Elisa shares (including the proportion to be paid in cash). The potential reward on the basis the performance period 2017–2019 will be paid partly in shares and partly in cash in 2020.

The cash payments are intended to cover any taxes and tax-like costs arising from the reward for the participant. As a rule, no bonus is paid if a key person's employment ends before the reward payment.

Share-based incentive commitment plan 2011

On 19 December 2011, Elisa's Board of Directors decided to implement a share-based incentive commitment plan that covers the years 2012–2018. Rewards were paid only if a key person's employment is valid when the bonus is due to be paid.

On 16 December 2016, Elisa's Board of Directors decided on earning periods for the share-based incentive commitment plan. The lock-up period of the rewards granted on the basis of the plan consisted of one-year and two-year periods. Rewards for the period equalled the value of total 10,000 shares in Elisa (including the portion payable in cash).  The share-based bonus of the first commitment period was paid in December 2017 and the second commitment in December 2018. Both were paid partly in shares and partly in cash.

C. REMUNERATION REPORT 2018

(Published 31 January 2019)

Board of Directors

The table below present the fixed annual remuneration fees decided by the Annual General Meeting on 12 April 2018, meeting remuneration fees from 2018, Elisa’s shares acquired with fixed remuneration fees, and share-holdings of the Board on 31 December 2018.

Table 2. Remuneration fees of Board members in 2018

 

  Position on the Board Fixed  remuneration fees, total, EUR* Meeting remuneration fees, EUR*** Committee meeting remuneration fees, EUR*** Total remune ration fees, EUR

Elisa's shares acquired with fixed  remuneration fees, number of shares*

 

Share-holdings of the Board on 31 Dec 2018, number of shares**
Raimo Lind Chairman

108,000

7,300

1,900

117,200

1,210

17,597

Anssi Vanjoki Deputy Chairman as of 12.4.2018

72,000

6,300

2,800

81,100

810

1,325

Clarisse Berggårdh Member

60,000

7,300

3,300

70,600

672

2,082

Petteri Koponen Member

60,000

7,300

1,400

68,700

672

3,905

Leena Niemistö Member
 

60,000

7,300 1,900

69,200

672

9,744

Seija Turunen Member,
Chair of the Audit Committee

72,000

6,600

3,300

81,900

806

2,472

Antti Vasara Member 60,000 7,300 3,300 70,600 672 1,349
Mika Vehviläinen Member until 12.4.2018   1,000 500     ****
Total  

492,000

50,400

118,400

553,300

5,514

37,744

* For the Board members appointed by the Annual General Meeting on 6 April 2017, Elisa shares have also been purchased on 24 April 2018 using the remuneration fees from October-December 2017 and January-March 2018 based on the decision of the Annual General Meeting on 6 April 2017 (Raimo Lind 605, Clarisse Berggårdh 336, Petteri Koponen 336, Leena Niemistö 336, Seija Turunen 403, Antti Vasara 336 and Mika Vehviläinen 403 shares).** Based on the number of meetings. Reward for the meetings was EUR 500 per meeting in January–March and EUR 700 per meeting in April–December.
*** Shareholdings on 31 December 2018 (including legal entities controlled). Up-to-date information on changes in the shareholdings are available on Elisa's Management Transactions releases and table on the Corporate Governance Statement.
**** Not published. Mika Vehviläinen was not a member of the Board of Directors on 31 December 2018.

CEO and the Executive Board

Table 3. Salaries and financial benefits paid to the CEO and the company's other Executive Board members in 2018

  Monetary salaries, EUR

Taxable fringe benefits, EUR

Performance-based bonuses,
EUR

Total value of the share-based bonus, EUR

Total,
EUR

Part of the share-based bonus paid in shares, number of shares
CEO

543,360

12,929

281,734

1,853,343*

2,691,366

24,524

Other members of Elisa's Executive Board

2,044,905

65,429

727,514

5,204,441**

8,084,288

69,498

Total

2,588,265

78,358

1,009,248

7,057,783

10,775,655

94,022

* According to the stock exchange prices of the assignment dates of 5 February 2018 and 17 December 2018
** According to the stock exchange price of the assignment date of 5 February 2018

The CEO's accrued supplementary pension for his 60th and 61st years of age was covered by a provision of EUR 203,961 on the balance sheet, and for the 62nd year of age with an insurance premium that equalled EUR 168,800. With regard to the Executive Board, the annual supplementary pension insurance premiums totalled EUR 149,930.