Principles for incentive scheme for President and CEO and other company management

The Board of Directors of VR-Group Ltd has confirmed the incentive scheme for Group management.  In 2013, the incentive scheme only comprised a short-term incentive scheme. The Group did not start a three-year monitoring period in the long-term incentive scheme during the year.  The Group’s Board of Directors confirms the overall criteria for the scheme and the persons included in the scheme, as well as the more detailed criteria for the incentive schemes, the threshold values, and entry, exit and other governing rules.

The rules and principles in force in the scheme at any particular time are described in the Group’s remuneration handbook, which has been reviewed by the human resources committee of the Board of Directors and is maintained by the HR unit.

The incentive scheme complies with the resolution issued by the Government on the matter. Under the terms of the scheme the Board of Directors may in exceptional circumstances amend the terms of the scheme and postpone payment of the bonus.

 

Short-term incentive scheme

The review period for the short-term incentive scheme is one (1) year. The scheme is divided into four organisational levels (L1-L4). In 2013 about 170 people belonged to the scheme. The President and CEO belongs to level L1, other members of the Board of Management and the immediate subordinates of the President and CEO in relation to head office functions to level L2 (13 persons), and other senior management to L3 (90 people).

The other people selected for the bonus scheme are in positions as supervisors or experts that have a significant impact on business operations, and they belong to level L4 (altogether 64 people).

The Group’s Board of Directors confirms each year the people to be included in the scheme.

The objectives, indexes and threshold values for the short-term incentive scheme are set each year so that there are a maximum of six indexes. The Group/unit operating profit is one index with a weighting of 60–15 % depending on the job content, and the other indexes supporting the strategy and unit targets have a weighting of 40–85 %.

The maximum potential bonuses paid for achieving targets in the short-term incentive scheme are for levels L1-L3 30 % and for level L4 25 % of the annual salary (including benefits in kind and holiday pay). The bonus for exceptionally good performance at levels L1-L3 is 50%.

VR Group has no share-based incentive schemes.

Any incentive scheme bonuses are paid in the spring of the year after the earnings year, on the basis of how annual targets have been met once the financial statement figures have been confirmed. 

 

Long-term incentive scheme

The company does not have a long-term bonus scheme and the old systems do not have unpaid bonuses.

 

Information about the terms of employment of the President and CEO

The salary paid to the President and CEO in 2013 totalled EUR 528,600 and the bonus paid to him for 2012 was EUR 41,000. The President and CEO was not given a bonus of shares or share-based rights during the year.

The retirement age (63 years) and pension for the President and CEO are in accordance with the Employees’ Pensions Act. The President and CEO has a personal supplementary pension insurance paid by the employer (annual payment in 2013 was EUR 9,604.50), that includes life insurance in case of death.

The period of notice for the President and CEO is six months, and the normal salary is paid for this period. In addition, the President and CEO is paid a redundancy bonus corresponding to 12 months’ salary if the President and CEO is dismissed by the employer.