The short-term remuneration of the top management consists of salary, fringe benefits and a possible annual bonus based on performance. Long-term remuneration of the top management consists of a share-based incentive scheme. The Executive Team members’ bonus based on performance is no more than 50 percent of annual basic salary. The bonus based performance percentage is not limited in the CEO’s contract of employment. 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.
Basware informed about a new share-based incentive plan for the Basware Group key personnel for 2012-2014 on February 17, 2012. The company has been in the transition from a software company to a service company. During the transition process, meeting the profit targets has been slower than expected. Because of this, the Board of Directors of Basware Corporation updated the share-based incentive plan for the key personnel to continue until the end of 2015 on February 15, 2013. The terms of the incentive plan remained the same with the exception of adding one earning period to the plan:
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 shareholding in the company. Accordingly, 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 four earning periods, calendar years 2012, 2013, 2014, and 2015. The system comprises annual earning periods 2012, 2013, 2014, and 2015 and fixed earning period 2013-2015. Members of Basware Executive Team may be allocated additional shares without consideration against shareholding during the earning period 2012-2015.
The Board of Directors decides on the earnings criteria and related targets separately for each annual earning period at the beginning of the earning period. There are employment-related conditions for eligibility for reward payment. The reward for the fixed earning period 2013-2015 is based on Basware Corporation's earnings per share (EPS). The target group of the fixed earning period 2013-2015 includes the members of the Basware Executive Team.
The shares to be allocated at the target level will continue to correspond at the current share price to the approximate amount of 275.000 Basware Corporation shares (including also the proportion to be paid in cash) and totalling 412.500 at the maximum. The possible shares to be allocated will consist of own shares held by the company or acquired in public trading through NASDAQ OMX Helsinki Ltd.