Board of Directors’ Fees
According to the Finnish Companies Act, the Annual General Meeting of Shareholders decides on the fees payable to the members of the Company’s Board of Directors.
On 25 April 2023, in the Annual General Meeting of Sitowise it was decided to maintain the Board of Directors’ remunerations unchanged. The remuneration of the Chairman of the Board is EUR 4,750 per month and the remuneration of other members of the Board is EUR 2,250 per month. In addition, an attendance allowance of EUR 1,000 will be paid for each meeting to the Chairperson of the Board and the Chairpersons of the Committees. An attendance allowance of EUR 400 will be paid for each meeting to the other members of the Board. The Board members’ travel expenses will be compensated according to the company’s travel guidance.
Remuneration of the CEO and Members of Management Team
The Board of Directors decides on the remuneration and its terms of the CEO and the members of the management team. The remuneration of the management team and the CEO consists of a monthly salary, customary fringe benefits and incentives as in force from time to time.
The pension benefits of the Company’s CEO and the other members of the management team are determined in accordance with law and customary practice. The Company has not taken out additional pension insurance policies for the CEO or management team. The retirement age of the CEO of the parent company is 64 years and six months.
The period of notice of the CEO is six (6) months for both parties. Besides salary for the period of notice, the CEO is not entitled to a separate severance payment upon resigning. If the Company terminates the CEO’s employment due to a reason other than the CEO’s severe misconduct, crime or similar reason, the CEO is, in addition to salary for the sixmonth period of notice, entitled to compensation amounting to a maximum of six (6) months’ salary, provided that the CEO has not entered into an employment or service relationship with a third party during the said period.
Shortterm Incentive Plan
Sitowise has a short-term incentive program in place, the purpose of which is to incentivize the employees in contributing towards achieving the strategic goals of Sitowise, reward the employees for reaching the targets and to increase the commitment of the employees. The short-term incentive program is divided in two parts: (i) performance bonus system and (ii) one-off rewards. All employees in Finland are part of the short-term incentive program.
The shortterm incentive of the CEO and members of the management team is decided on by the Company’s Board of Directors. The shortterm incentive is comprised of an annual performance bonus. The Board of Directors annually confirms the conditions and reward criteria based on which performance bonuses are paid to the management team. Any performance bonus is based on reaching the set financial objectives, such as EBITDA or other objectives, at the level of the Group and/or the business unit concerned. In addition to these, members of the management team may have personal or teamspecific objectives.
Long-term Incentive Plans
Stock option plan 2021
In March 2021, the Board of Directors of the company decided on the establishment of a new long-term incentive scheme. The target group of the option program includes the CEO and members of Sitowise's management team, and about 300 other Sitowise's key employees that are specifically invited to participate in the scheme. The goal of the scheme is to encourage Sitowise's key employees towards long-term shareholding in the company by requiring investment in the shares in order ti receive options. In addition, the options are used to encourage the key employees in the target group towards long-term efforts in order to increase shareholder value and to retain the key employees.
Under the option program, a maximum of 1,463,400 options will be issued, each of which will give the right to subscribe for one new or treasury share. The options will be issued by the shareholders' unanimous decision on March 3, 2021, based on the authorization given to the board.
The option program has 636,750 class A options and 826,650 class B options. Class A options have a three-year vesting period and class B options have a four-year vesting period. The subscription of shares with class A options takes place between April 1, 2024–March 31, 2025, and with class B options between April 1, 2024–March 31, 2026. The subscription price of shares subscribed with options is EUR 6 for class A options, and for class B options the subscription price of the share in the initial public offering, minus the dividends and capital returns paid annually.
Class A and B options can be divided into so-called matching options and performance options. In order to receive matching options, the recipient of the options must own shares or subscribe for shares in the personnel issue as many as matching options have been allocated to him. The shares must be held until the subscription period for shares covered by options begins. The number of allocated matching options is a total of 923,400 on the date of this listing prospectus. With performance options, the share threshold return requirement related to the start of the share's subscription period is higher than with matching options.
In addition, a member of the management team belonging to the option program must purchase shares with 50 percent of the net income received from the options, until the value of his share ownership in the company corresponds to the total value of his annual salary. This number of shares must be owned as long as the member of the management team continues.
The options are forfeited and transferred back to the company free of charge if the option holder resigns or the option holder's employment or business relationship is terminated before the start of the subscription period for the shares covered by the options. Under certain conditions, the board has the option to decide that the option holder may still keep part of the options.
Performance-based, long-term incentive plan 2023 - 2025
The Board of Directors of Sitowise Group Plc ("Sitowise" or “Company”) has resolved to establish a new performance-based, long-term incentive plan (Performance Share Plan 2023-2025) ("PSP 2023-2025") which is targeted for the Group Management Team members in the first phase. The Board of Directors has also resolved on a restricted share plan (Restricted Share Plan 2023-2025) ("RSP 2023-2025"), which is intended as a supplementary share-based long-term incentive plan for separately nominated key persons of Sitowise and its group companies in special situations.
The program consIsts of annually commencing individual three-year plans. The commencement of each individual plan and its terms, the length of the performance or retention period within the plan, the performance criteria, the eligible participants thereof and the earning opportunity is subject to a separate decision of the company’s Board of Directors in each case.
The purpose of the plans is to align the interests of the management and key personnel with the interests of the shareholders and thereby increase the shareholder value in the long term, and to commit the management and key personnel to achieving Sitowise's strategic goals. Additionally, the purpose is to commit Sitowise's key resources to the company by offering competitive long-term incentive plans.
Performance Share Plan
PSP 2023-2025 is the first performance-based plan from the program and it commences at the beginning of 2023. PSP 2023-2025 comprises a three-year performance period followed by a possible reward payment. The performance targets applied to PSP 2023-2025 are the relative total shareholder return (TSR) and cumulative reported EBITA 2023-2025.
The possible rewards under PSP 2023-2025 will be paid after the end of the performance period and the completion of the financial statements in the spring of 2026, provided that the performance targets set by the Board of Directors are achieved. As a main rule no reward is paid to an individual participant whose employment or service relationship ends or has ended before the delivery of the reward.
The possible reward is paid, according to the Board of Directors’ choice, either in Sitowise’s shares, in cash, or in a combination of these. Cash portion of the reward is intended to cover the taxes and related statutory payments arising from the paid reward. The Group Management Team member are entitled to participate in the PSP 2023-2025 plan. The intention of the company is to broaden the participant pool to approximately 50 key persons in the next plans which are decided separately.
If the performance targets set for PSP 2023-2025 are achieved in full, the total amount of rewards to be paid based on the plan corresponds to a maximum of 232,000 of the company's shares and the plan’s total value is approximately EUR 1.0 million, estimated based on the average share price on the trading day preceding this release. The total amount of rewards means their gross amount before the withholding of the applicable payroll tax.
The realized value of the plan may differ from this estimate depending on the share price development and the degree in which the performance targets set for the plan are achieved.
Restricted Share Plan
RSP 2023-2025 is the first restricted plan from the program and it commences at the beginning of 2023. RSP 2023-2025 comprises a retention period of three years followed by a possible reward payment. The Company can grant fixed share rewards to individually selected key persons during the retention period.
The possible reward under RSP 2023-2025 is paid, according to the Board of Directors’ choice, either in Sitowise’s shares, in cash, or in a combination of these. Cash portion of the reward is intended to cover the taxes and related statutory payments arising from the paid reward. The possible rewards under RSP 2023-2025 will be paid after the completion of the financial statements in the spring of 2026. As a main rule no reward is paid to an individual participant whose employment or service relationship ends or has ended before the delivery of the reward.
The purpose of RSP 2023-2025 is to act as a supplementary share-based long-term incentive plan for separately selected Sitowise’s key persons in special situations.
The total amount of rewards payable under RSP 2023-2025 corresponds to a maximum of 40,000 of the Company's shares and the plan’s total value is approximately EUR 0.2 million, estimated based on the average share price on the trading day preceding this release. The total amount of rewards means their gross amount before the withholding of the applicable payroll tax.
The materialised value of the plan may deviate from this estimate, depending on the share price development and the amount of share grants made based on the plan.
According to the Company’s share ownership rules, each member of the Company's management team and the CEO is expected to accumulate and, after achieving this, hold an amount of the Company's shares equal to his/her fixed gross annual salary. A member of the management team is expected to use 50 percent of the net reward received under the plan to accumulate his/her share ownership until his/her share ownership meets the level recommended above. Accumulation of share ownership takes place either by maintaining the ownership to the rewards received in the form of shares or by acquiring shares with a cash reward received under the plan.
Remuneration of the Management Team in 2022
As of 31.12.2022, the Company's Management Team consisted of nine people: CEO, four Business Directors, CFO, CIO, Communications, Marketing and Sustainability, and Senior Vice President, Human Resources. More information about senior management can be found on the company's website https://www.sitowise.com/investors/governance/management-team
Sitowise’s Board of Directors decides on the salary, incentive schemes and related targets of the members of the Group Management Team based on the preparation of the Personnel Committee.
As a rule, the remuneration of the Group's Management Team is subject to the same remuneration principles and practices (e.g. with regard to pension and fringe benefits) as to employees. The remuneration of the Group Management Team consists of a fixed base salary, fringe benefits, a short-term performance bonus and long-term performance-based bonuses. The retirement age of the members of the Group Management Team is statutory. In addition, some of the members of the Group Management Team are covered by country-specific group pension plans. Fringe benefits include ordinary benefits in accordance with the Company's policy, such as telephone and car benefits.
The maximum amount of the annual performance bonus (STI) for the members of the Group Management Team is 25–60 per cent of the fixed annual salary in 2022. In Finland, Sitowise offers its personnel the opportunity to utilise the funding option in the personnel fund in the payment of incentives. In 2022, the short-term incentive targets were mainly based on the Group's or the Group's and business unit's adjusted EBITDA, organic growth and the use of the sustainability tool. In 2023, the maximum amounts of the short-term incentives (STI) are the same and the targets are mainly based on the Group's or the Group's and business unit's adjusted EBITDA, organic growth and strategy execution.
The members of the Company's Management Team are part of two long-term incentive plans and, in addition, one business director has his own special long-term incentive related to growth. The incentive plans are described in more detail in the section: Long-term incentive plans. The members of the Management Team must accumulate their shareholdings at the level of the net salary for the year. 50% of the long-term incentive should be used for this until the target is achieved. In 2022, there was no payment due for long-term performance-based bonuses.
Notice periods and compensation:
The notice periods for the members of the Management Team vary between 3-6 months. No separate compensation for resignation has been agreed.
Remuneration paid to the Group Management Team* in 2022 (EUR)
1 243 811
Short-term performance bonuses
Long-term performance bonuses
Other financial benefits
1 492 117
*Does not include CEO's salary information