Compensation

Management of compensation

In its first organizational meeting, the Board of Directors decided not to establish separate committees for 2011 as the extent of the company's operations and the size of the Board of Directors do not require matters to be prepared by a body smaller than the entire Board of Directors. Therefore, preparation of the compensation paid to the Board of Directors has not been allocated to a Nomination Committee, and the preparation of the compensation paid to the CEO and other members of the management has not been allocated to a Compensation Committee.

Board of Directors

The General Meeting decides on the remuneration paid to the Board of Directors and auditors. The Board decides on the service terms and conditions of the CEO, specified in writing. The compensation principles of the top management are decided by the Board. The Board annually approves the personnel incentive scheme.
The Annual General Meeting resolved on 17.02.11, to compensate the members of the Board according to the following:
• Members EUR 27,500 per year;
• Vice Chair EUR 32,000 per year and
• Chair EUR 55,000 per year.

However, the remuneration is not paid to those members of the Board who hold a fulltime position at Basware. In addition, all members of the Board are paid a meeting fee of EUR 340 for each meeting. The annual remuneration will be paid in the following manner: 40 percent of the gross annual remuneration of those members of the Board whose shareholding in Basware Corp. is less than 5,000 shares, will be paid in Basware shares, acquired in public trading on NASDAQ OMX Helsinki Oy. The shares will be acquired as soon as possible after the closing of the Annual General Meeting. The ownership of the shares received is associated with a two-year lock-up during Board membership. The lock-up ends with the termination of membership.

CEO

The Board decides on the service terms and conditions of the CEO, specified in writing.
Currently the CEO has
• 6 months’ period of notice and salary for the period of notice should the Company give notice, in addition to which he is entitled to severance pay equivalent of 12 months’ fixed salary,
• 6 months’ period of notice and salary for the period of notice should the person resign himself, no additional compensation is paid,
• 12-month prohibition of competition as of the termination of employment on the part of the company
• 24-month prohibition of competition as of the termination of employment on the part of the CEO
• retirement age and pension benefits pursuant to the Employees’ Pensions Act (TEL).

The short-term remuneration of the CEO is comprised of salary, fringe benefits and a possible annual bonus based on performance. The CEO’s long-term remuneration consists of a share-based incentive scheme. The bonus is determined on the basis of the attainment of goals related to the company's growth and profitability according to its strategy, and personal objectives. The Board of Directors monitors the fulfillment of the performance and result criteria of the incentive scheme twice a year and approves the bonus to be paid at each time.

A share-based incentive scheme was in use in 2009–2011. The possible reward of the share-based incentive scheme for the vesting period 2009-2011 is based on Basware Corporation's earnings per share (EPS). The bonus for the vesting period 2009 was paid in December 2011, the bonus for the vesting period 2010 will be paid in December 2012, and the bonus for the vesting period 2011 in December 2013, partially as shares in the company and partially in cash. The bonus of the share-based incentive scheme is paid two years after the end of the vesting period, and therefore no other restrictions are associated with the ownership of the shares received.

The salary of CEO Ilkka Sihvo, including benefits, totaled EUR 467,960.81 for the period January 1 – October 16, 2011. Salary in money was EUR 221,354.67 and fringe benefits totaled EUR 14,119.14.  A performance bonus of EUR 92,662.00 was paid. In December 2011, Ilkka Sihvo was granted 8,750 shares on the basis of the incentive scheme, of which 4,375 shares were conveyed to Ilkka Sihvo and EUR 69,912.50 was paid in cash to cover the withholding tax. In connection with the end of Ilkka Sihvo’s duties as CEO, a lump-sum of EUR 183,207.50 was paid in addition to the regular statutory employment-related compensation.

The salary of CEO Esa Tihilä’s for the period October 17 – December 31, 2011, including benefits, was EUR 202,920.24. Salary in money was EUR 60,512.01 and fringe benefits totaled EUR 2,583.23.  In December 2011, Esa Tihilä was granted 8,750 shares on the basis of the incentive scheme; of which 4,375 shares were conveyed to Esa Tihilä (the value of which is approximately EUR 69.912,50 based on the average share price of the payment day) and EUR 69,912.50 was paid in cash to cover the withholding tax. 

Members of the Executive Team in 2012