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Compensation

Management of compensation

The Annual General meeting, held on March 15, 2016, decided to establish a permanent Shareholders' Nomination Board. The Nomination Board shall be responsible for preparing and presenting proposals covering the remuneration of members of the company's Board of Directors to Annual General Meeting and, where needed, to an Extraordinary General Meeting. The Board of Directors has not established a separate Compensation Committee. The compensation principles of the top management are decided by the Board.

Remuneration of the Board

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 March 15, 2016, 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.

In addition, chairmen of the Board of Directors and its committees shall receive EUR 500 per attended meeting and members of the Board of Directors and its committees shall receive EUR 400 per attended meeting. Out of the annual remuneration to be paid to the Board members, 40 per cent of total gross compensation amount will be used to purchase Basware Corporation's shares at trading on regulated market organized by Nasdaq Helsinki Ltd. However, this only concerns Board members whose ownership of Basware Corporation is less than 5,000 shares. The purchase of shares will take place as soon as possible after the decision by the General Meeting. Shares received as remuneration may not be sold or otherwise transferred during a period of two years. This restriction does not concern persons who are no longer Board members. Travel expenses of the members of the Board of Directors are reimbursed in accordance with the company's travel policy.

Remuneration of 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 (TyEL).

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.

The salary of CEO Esa Tihilä for the period January 1-September 26, 2016, including benefits, was EUR 403.216 (EUR 428.054 in 2015). Salary in money was EUR 231.275 (EUR 369.720 in 2015), including bonus payment of EUR 30.589 (EUR 30.031 in 2015) and fringe benefits of EUR 9.225 (EUR 13. in 2015). During 2016, Tihilä was granted 3.810 shares on the basis of the incentive scheme; of which 1.906 shares were conveyed to Tihilä, the value of which was approximately EUR 66.063 (EUR 44.129 in 2015) based on the average share price of the payment days, and EUR 66.063 (EUR 44.129 in 2015) was paid in cash to cover the withholding tax.

The accrued pension costs of Esa Tihilä amounted to EUR 52.000 (EUR 65.000 in 2015). The CEO's pension plan is pursuant to the employment pension legislation. 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. Esa Tihilä stepped down as CEO on September 26, 2016. The salary for the period of notice is EUR 164.000 and the severance pay EUR 328.000. In addition, Esa Tihilä will be granted 3.900 shares on the basis of the incentive scheme, paid in half cash and half shares.

Vesa Tykkyläinen was nominated as CEO on September 26, 2016. The salary of Vesa Tykkyläinen for the period September 26-December 31, 2016, including benefits, was EUR 90.060. Salary in money was EUR 86.880, including fringe benefits of EUR 3.180 and accrued pension costs of EUR 18.000. The CEO's pension plan is pursuant to the employment pension legislation.

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 per year and approves the bonus to be paid.

For the period January 1 - December 31, 2016, the members of Executive Team, excluding CEO, were paid in salaries and fringe benefits total of EUR 2.313.092 (EUR 2.019.391 in 2015). Salary in money was EUR 1.854.340 (EUR 1.758.019 in 2015) and fringe benefits totaled EUR 85.438 (EUR 84.979 in 2015). In addition, EUR 156.486 (EUR 67.663 in 2015) were paid as bonus payments and EUR 216.828 (EUR 236 437 in 2015) on the basis of the long-term incentive scheme.

Remuneration of Executive Team in 2016:

Salary Fringe benefits Bonus payments
Share-based payments In total
CEO Vesa Tykkyläinen 
(September 26 - December 31, 2016)
86.880 3.180 0 0 90.060
CEO Esa Tihilä 
(January 1 - September 26, 2016)
231.275 9.225 30.589 132.127 403.216
Other members of Executive Team
1.854.340 85.438 156.486 216.828 2.313.092
In total
2.172.495 97.843 187.075 348.955 2.806.368

Incentive schemes

The compensation principles of the top management are decided annually by the Board. The Executive Team members’ performance bonus is no more than 50 percent of annual basic salary. The performance bonus percentage is not limited in the CEO’s contract of employment. The bonus is determined on the basis of the attainment of personal objectives and goals supporting the company's growth and profitability according to its strategy. The Board of Directors monitors the fulfillment of the performance and result criteria of the incentive scheme and approves the bonus. In addition to the annual bonus based on performance, the long term remuneration of the top management consists of share-based incentive schemes, decided by the Board.

The Board of Directors resolved on March 1, 2017 to establish a new long-term incentive plan structure for the Group key employees. The aim of the new plans is to further align the objectives of shareholders and key employees, to retain key employees at the company, and to offer them competitive reward plans based on acquiring, receiving and holding the company’s shares.

The potential rewards from the incentive plans will be paid partly in Basware shares and partly in cash. The cash proportion is intended to cover taxes and tax-related costs arising from the reward to the key employee. As a rule, no reward will be paid if a key employee´s employment or service ends before the reward payment. The share plans entail a shareholding requirement for members of the Basware Executive Team and a shareholding recommendation for other participants, where a considerable number of received shares must be held for the long term.

The last earning period 2017 of the current share-based incentive plan 2015-2017 will be replaced by the new Performance Share Plan.

Matching Share Plan 2017-2019

The prerequisite for receiving reward on the basis of the Matching Share Plan is that a member of the Basware Executive Team acquires Basware shares. The Basware Executive Team Member will as a reward, receive matching shares for each share subject to the share ownership prerequisite after a matching period of three years. Receipt of matching shares is contingent on the continuation of employment or service upon reward payment.

The rewards to be paid in aggregate to the Basware Executive Team on the basis of the Matching Share Plan correspond to the value of a maximum total of 75,000 Basware Corporation shares (including also the proportion to be paid in cash).

The Plan as a whole entails an aggregate share ownership interest of approximately 112,500 shares for the Basware Executive Team members, via personal share acquisitions and the right to future share ownership through the Matching Share Plan.

Performance Share Plan 2017-2019

The Performance Share Plan includes three performance periods, calendar years 2017-2018, 2018-2019 and 2019-2020. The Board of Directors will resolve on the performance criteria and on the required performance levels for each criterion at the beginning of each performance period. The plan is directed to approximately 60 key employees, including the members of the Basware Executive Team.

The potential reward from the performance period 2017-2018 will be based on the company´s Total Shareholder Return (TSR) and the Group´s accumulative Cloud Revenue during 2017-2018. The rewards to be paid on the basis of the performance period 2017-2018 correspond to the value of a maximum total of 156,000 Basware Corporation shares (including also the proportion to be paid in cash).

Restricted Share Plan 2017

The Restricted Share Plan is directed to selected key contributors in Basware. The reward from the Restricted Share Plan will be paid after a vesting period of one to three years. The total rewards to be allocated on the basis of the plan will amount to a maximum of 20,000 Basware Corporation shares (including also the proportion to be paid in cash).

Share-based incentive plan for 2016-2019

The Board of Directors decided on February 2, 2016 to establish a new share-based incentive plan for 2016-2019.

The share-based incentive plan is an element of annual bonus plan for the target group and will be linked to the employee’s performance which will be measured for the full year of 2016. Each participating employee will be able to purchase Basware shares in April 2017, utilizing 25 percent of their achieved bonus reward. In the case an employee holds these purchased shares for a 2-year period, the company will provide a one-to-one match against these shares, to be paid to the employee after April 2019.

The aim of this plan is to reward performance and commit the key employees to the company whilst ensuring a competitive reward plan with a shareholding in the company. The matched shares to be distributed based on the plan in April 2019 amount at the target level to approximately 5.000 Basware Corporation shares (including also the proportion to be paid in cash).

The incentive plan including a share-based element will be directed to approximately 40 people. The possible shares to be distributed to the employees in the plan will consist of own shares held by the company or new shares acquired in public trading through Nasdaq Helsinki Ltd.

The targets for the earning period for 2016 were not reached, and therefore no payments will be made in 2016 on the basis of the incentive scheme.

Share-based incentive plan for 2015-2017

The Board of Directors of Basware Corporation decided on March 23, 2015 to establish a share-based incentive plan directed to a group of key personnel from the beginning of 2015 until the end of 2017.

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 three earning periods, calendar years 2015, 2016 and 2017. The first one thirds of the earned shared will be allocated 6 months, the second one thirds 12 months and the third one thirds 18 months after the end of the earning period. In addition, in early 2015, the members of Basware Executive Team may be allocated shares against purchased shares (11.000 in maximum) without consideration against shareholding of three years during the earning periods in 2015-2017.

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. The possible reward for the earning period 2015 is based on the revenue and operating profit growth and the total shareholder return of Basware Corporation. The shares to be allocated based on the plan for 2015-2017 at the target level amount to approximately 243.593 Basware Corporation shares (including also the proportion to be paid in cash) and total up to 313.371 shares.

The incentive plan including a share-based element will be directed to approximately 40 people. The possible shares to be distributed to the employees in the plan will consist of own shares held by the company or new shares acquired in public trading through Nasdaq Helsinki Ltd.

The first one third of the reward for the earning period 2015 was paid in June 2016, partly in shares and partly in cash. The targets for the earning period for 2016 were not reached, and therefore no payments will be made in 2016 on the basis of the incentive scheme.

Share-based incentive plan 2012-2014 & 2015

During 2012-2014 the company had a share-based incentive plan for key personnel which the Board of Directors updated to continue until the end of 2015 in 2013.

The plan comprises annual earning periods 2012, 2013, 2014, and 2015 and a fixed earning period 2013-2015. Members of Basware's 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 based on the plan at the target level amount to approximately 91.299 Basware Corporation shares (including also the proportion to be paid in cash) and total up to 130.004 shares. The possible shares to be allocated will consist of shares held by the company or acquired in public trading through Nasdaq Helsinki Ltd.

The reward for the earning period 2013 was paid in January 2016, partly in shares and partly in cash. The targets for the fixed earning period of the plan were not reached, and the plan has seized to exist. The earning period for 2015 was replaced by the new share-based incentive plan.

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