Neova’s principles for the remuneration of the company’s governing bodies, i.e., the Supervisory Board, the Board of Directors, and the CEO, are defined in the remuneration policy for governing bodies (the “Remuneration Policy”). This report presents the remuneration of the Supervisory Board, the Board of Directors, and the CEO. In addition, this report presents remuneration terms for other management. This report has been prepared based on the Finnish Corporate Governance Code 2020 (the “Code”) issued by the Securities Markets Association and, the Prime Minister’s office’s guidelines for state owned companies.
CEO’s remuneration consists of fixed annual salary including fringe benefits, short term, and long-term incentive programs (STI and LTI) and pension plan.
Decision-making procedure concerning remuneration
Neova Oy’s Annual General Meeting appoints the members of the Supervisory Board and resolves on their compensation annually. The Annual General meeting also appoints the members of the Board of Directors and resolves on their compensation annually based on the recommendation of the Shareholders’ Nomination Board.
Based on the proposal of the Personnel Committee of the Board of Directors, the Board of Directors decides on the CEO’s base salary and other benefits, which shall be in line with the company’s remuneration policy.
Neova’s Board of Directors also decides on the basic salary and other benefits of the Group Management Team as well as their short-term and long-term incentive schemes based on a proposal issued by the Board’s Personnel Committee.
Neova’s Board of Directors approves the Remuneration Policy that defines key remuneration principles for the Supervisory Board, Board of Directors and the CEO, among other things. The Remuneration Policy is subject to advisory vote by the Annual General Meeting.
Key remuneration principles and fees paid to the members of the Supervisory Board and Board of Directors
The fees payable to the members of the Supervisory Board and Board of Directors were approved by the Annual General Meeting on 26 March 2024.
The Supervisory Board
The fees paid to the members of the Supervisory Board are paid entirely in cash. The term of the members ends at the conclusion of the next Annual General Meeting. The members of Neova’s Supervisory Board are not included in incentive schemes, and they are not in an employment relationship with Neova.
The Chairman of the Supervisory Board is paid a meeting fee of EUR 800, the Vice Chairman EUR 600, and the other members EUR 500 per meeting. No changes to the fees have been made during 2023.
The Board of Directors
The fees paid to the members of the Board of Directors are paid entirely in cash. The term of the members ends at the conclusion of the next Annual General Meeting. The members of Neova’s Board of Directors are not included in any incentive schemes, and they are not in an employment relationship with Neova.
The Chairman of the Board of Directors is paid EUR 2,750, the Vice Chairman EUR 1,900, and the other members EUR 1,750 per month. At the Annual General Meeting held on 29.3.2023, it was decided to increase.
A meeting fee of 600 euros is paid to each member of the board of directors for meetings, and in addition, board members who live elsewhere than in Finland are paid an additional meeting fee of 600 euros for attendance meetings held in Finland. The meeting fee is paid for the meetings of the board and its committees and working groups. Members of the board of directors of the subsidiaries employed by Neova are not paid separately for their membership.
Key remuneration principles of CEO and other management
In accordance with the Remuneration Policy approved by the Board of Directors dealt with at the Annual General Meeting, the fixed salary of the CEO and the members of other management is defined as a total monthly salary that includes fringe benefits. They are also included in short-term and long-term incentive programs.
A fixed monthly salary refers to an individual’s total monthly salary determined based on the level of competence required for the position as well as the individual’s experience and performance.
The Group CEO and other management may be eligible for a car benefit, mobile phone benefit and medical insurance as part of their total remuneration.
Neova’s Board of Directors decides annually or within any other timeline as may be the case for any given program on the performance indicators and targets for the short-term and long-term incentive schemes of the CEO, other management and any other individual or unit as may be relevant. They are aimed at supporting the achievement of the company’s strategic targets, including sustainability.
The incentive bonuses are paid in cash in accordance with the payment schedule of the incentive program in question. The bonuses paid under the various incentive schemes cannot under any circumstances exceed 80% of the fixed annual salary. Based on a proposal by the CEO, the Board of Directors decides on the achievement of the targets set relative to the performance indicators and the amount of remuneration.
Short-term variable pay
The CEO’s and other management’s short-term variable pay is based on the possibility of earning an annual incentive bonus. The amount of incentive pay depends on the achievement of the financial and operational targets set at the beginning of the financial year. Neova Group’s senior management is divided into two incentive pay groups that determine the maximum incentive pay percentage for each individual. The incentive pay group is determined based on the competence requirements of the position and its impact on the Group’s business.
At least 70% of the incentive pay is based on financial targets and the remainder on operational targets and sustainability. The payment of incentive bonuses is also subject to the achievement of a certain minimum level in terms of the financial targets.
The maximum incentive pay corresponds to 40% of the annual salary for the CEO of Neova Group and 30% of the annual salary for the members of other management.
Long-term variable pay
The CEO’s and other management’s long-term incentive scheme currently in force is a seven-year plan 2019-2023, which consists of six two-year earnings periods (2019-2020, 2020-2021, 2021-2022, 2022-2023, 2023-2024 and 2024-2025) The incentive scheme provides the participants with the opportunity to earn a monetary bonus for achieving earning criteria set separately for each earning period by the Board of Directors. The Board decides on the earning criteria and targets for each earning period. Targets consist of financial and other strategic targets, which includes sustainability target. The Board sets a starting level, target level and maximum level for the target for each earning criteria.
The maximum incentive pay corresponds to 40% of the annual salary for the CEO of Neova Group and 30% of the annual salary for the members of other management.
Pension plans
The Group CEO and the other management are, depending on the country the respective person works in, covered by a pension scheme pursuant to the Employees’ Pensions Act in Finland and Pensions fonds in Kring DC bij Centraal Beheer APF insurance plan offered to all Duch employees in the Netherlands. In addition, those members of other management whose managerial employment agreement entered into effect with Neova Oy before 23 November 2017 are entitled to a defined contribution collective supplementary pension insurance to which the employer contributes an amount equivalent to 10% of their total annual salary (12 x monthly salary), excluding bonuses, every year. The company has an agreement with a pension insurance company on said supplementary pension rights. The supplementary pension program for senior management was closed on 23 November 2017. Members of other management appointed after the aforementioned date will no longer have the right to a supplementary pension as part of their contract terms.
Terms and compensation for termination of employment
The contractual period of notice of the Group’s CEO is six months. In the event that the contract is terminated by the company, the CEO shall have the right to a lump sum compensation for termination, corresponding to the CEO’s total salary for six months.
If the CEO resigns, the period of notice is six months. Irrespective of the aforementioned provisions, the CEO’s contract shall be terminated without separate notice at the end of the month in which the CEO reaches the lower limit for old-age pension stipulated by the Employees’ Pensions Act. The lower limit of the old-age pension is defined in the minimum age limit for old-age pension is determined in accordance with the Pensions Act in force at any given time. The period of notice for the other members of the Group Management Team is three months or in the Netherlands according to local legislation, equaling to four months. In the event that their contract is terminated by the company, the members of the Group Management Team shall have the right to a lump sum compensation for termination, corresponding to their total salary for three months or four months in Netherlands. For contracts that entered into effect in Neova Oy before 2013, the compensation for termination of members of the Group Management Team corresponds to nine months’ total salary.
Options and other share-based incentive schemes
The company does not have option plans or other share-based incentive schemes.
Compensation of CEO
The Board of Directors of Neova Oy appointed Pekka Tennilä as the new CEO as of 4.12.2023. Pekka Tennilä’s fixed monthly salary is EUR 27,500 including fringe benefits.
The contract includes a short-term incentive bonus, which may not exceed 40% of the annual salary, linked to annual targets set by the Board of Directors.
The CEO may furthermore receive an incentive bonus for reaching long-term targets. The bonus is based on a seven-year plan for the years 2019-2025, which consists of six (6) two-year earnings periods. The Board of Directors decides on the earnings criteria and targets for each earnings period.
Compensation of other management is presented in Neova Group internet pages.