Compensation

Management of compensation

In its first organizational meeting, the Board of Directors decided not to establish separate committees 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 February 14, 2013, 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 was based on Basware Corporation's earnings per share (EPS). The bonus for the vesting period 2009 was paid in December 2011 and the bonus for the vesting period 2010 in December 2012. The bonus for the vesting period 2011 will be paid in December 2013. The bonuses are paid 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 Board of Directors of Basware Corporation decided on a new share-based incentive plan for the Basware Group key personnel on February 17, 2012. The aim of the plan is to combine the objectives of the shareholders and the key personnel in order to increase the value of the company, commit the key personnel to the company, and offer them a competitive reward plan based on holding the company shares. The Board of Directors encourages the Basware Executive Team members to hold shares in the company equaling the value of annual gross base salary.

The system includes three earning periods, calendar years 2012, 2013 and 2014. The system comprises annual earning periods 2012, 2013, and 2014 and fixed earning period 2012-2014. Members of Basware Executive Team may be allocated additional shares without consideration against shareholding during the earning period 2012-2014.

The Board of Directors decides on the earnings criteria and targets to be established for them separately for each annual earning period at the beginning of the earning period. There are employment-related conditions for eligibility for reward payment.

The salary of CEO Esa Tihilä’s for the period January 1– December 31, 2012, including benefits, was EUR 508.386,07. Salary in money was EUR 293.609,07 and fringe benefits totaled EUR 12.660,00.  In December 2012, Esa Tihilä was granted 7,250 shares on the basis of the incentive scheme; of which 3,625 shares were conveyed to Esa Tihilä (the value of which is approximately EUR 73.515,00 based on the average share price of the payment day) and EUR 73.515,00 was paid in cash to cover the withholding tax.

Remuneration of the Executive Team

The compensation principles of the top management are decided by the Board. The short-term remuneration of the top management consists of salary, fringe benefits and a possible annual bonus based on performance. The top management’s long-term remuneration consists of a share-based incentive scheme. The bonus based on performance is no more than 50 percent of annual basic salary. The bonus is determined on the basis of the attainment of goals supporting 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.

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 was based on Basware Corporation's earnings per share (EPS). The bonus for the vesting period 2009 was paid in December 2011 and the bonus for the vesting period 2010 in December 2012. The bonus for the vesting period 2011 will be paid in December 2013. The bonuses are paid 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.

In December 2012, members of the Executive Team were granted a total of 48 334 shares on the basis of the incentive scheme, of which 24 167 shares (in total value of EUR 490.106,76 based on the average price of the share EUR 20.28 on the payment day on December 28, 2012) were transferred to the members of the Executive Team and EUR 490.106,76 was paid in cash to cover the withholding tax.

In 2012, members of the Executive Team, excluding CEO, were paid in total EUR 1.560.515,20 in salaries and EUR 79.119,56 in fringe benefits and EUR 184.885,39 on the basis of incentive schemes.

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