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Remuneration principles
Remuneration of the Board of Directors
Remuneration of the President and CEO
Remuneration of other executives
Share-based Incentive Plan
Management remunerations total in 2011

Remuneration principles

The aims of the remuneration system for Orion Corporation’s Board of Directors and executive management are to enhance the Company’s competitiveness and long-term financial success, to achieve the Company’s targets and strategy, and to increase shareholder value.

Remuneration of the Board of Directors

According to the decision by the Annual General Meeting of 2011 concerning the annual fees for the term of office of the Board of Directors, the Chairman shall receive EUR 72,000, the Vice Chairman shall receive EUR 49,000 and the other members shall receive EUR 36,000 each. As a fee for each meeting attended, the Chairman shall receive EUR 1,200, the Vice Chairman shall receive EUR 900 and the other Board members shall receive EUR 600 each. The aforementioned meeting fees shall also be paid to the Chairmen and to the members of the committees established by the Board.

Of the aforementioned annual fees, 60% was paid in cash and 40% in Orion Corporation B shares, which were acquired for the members during 4–8 April 2011 from the NASDAQ OMX Helsinki stock exchange in amounts corresponding to EUR 28,800 for the Chairman, EUR 19,600 for the Vice Chairman and EUR 14,400 for each of the other Board members. The part of the annual fees paid in cash corresponds to the approximate sum necessary for the payment of the income taxes on the fees, and was paid on 20 April 2011. The annual fees encompass the full term of office of the Board of Directors. There are no particular rules relating to ownership of the shares received by the members of the Board of Directors as fees.

Annual fees paid to the members of the Board of Directors for 31 March 2011 – AGM 2012

The figures comprise the fees for the Board meetings and the Committee meetings.

Up-to-date information on the holdings in Orion of the members of the Board of Directors is available in the Insider Register, at www.orion.fi/insider-register.

The shareholdings in Orion of the Board of Directors as on 31 December 2011 are presented here >> 

Remuneration of the President and CEO and the Company's other executives

Remuneration of the President and CEO

The remuneration of the President and CEO is decided by the Board of Directors. His remuneration comprises a monthly salary, a performance-based bonus and a share-based incentive plan. The performance-based bonuses and the share-based incentive plan are based on predefined targets that are confirmed annually by the Board of Directors. The criteria for performance and results are set so that they promote short-term and long-term financial success. The Board of Directors annually evaluates the performance and financial results against the criteria.

The performance-based bonus of the President and CEO can be no more than seven (7) months’ salary. The upper limits of the share-based incentive plan are determined as described below, under 'Share-based incentive plan’.

If the service contract of the President and CEO is terminated on the Company’s initiative, the notice period is 6 months. If the service contract is terminated on the initiative of the President and CEO, the notice period is 6 months, unless otherwise agreed. The service ends at the end of the notice period. If the service contract is terminated either on the Company’s initiative or on the initiative of the President and CEO because of a breach of contract by the Company, the President and CEO will be compensated with a total sum corresponding to the monetary salary for 18 months, unless otherwise agreed. No such separate compensation will be paid if the President and CEO resigns at his own request for reasons other than a breach of contract by the Company.

The salary, fees, fringe benefits and performance-based bonuses paid to the President and CEO in 2011 totalled EUR 1,076,378 (EUR 817,566 in 2010), comprising EUR 416,400 (392,520) in salary and fringe benefits, and EUR 659,978 (425,046) in performance-based bonuses for 2010. EUR 234,483 (116,941) of the total bonuses consists of the value of the 14,000 (7,100) Orion Corporation B shares received by the President and CEO on 1 March 2011 as part of the Company’s long-term share-based incentive plan.  The price per share of these shares was EUR 16.7488 (16.4705), the volume-weighted average quotation of the B share on 1 March 2011.

The retirement age of the President and CEO has been agreed to be 60 years, the target level of the pension being 60%. The pension is based on a defined benefit plan.

Remuneration of other executives

The remuneration of the other members of the Group’s Executive Management Board is decided by the Board of Directors or its Chairman. The remuneration system for these persons comprises a monthly salary, a performance-based bonus and a share-based incentive plan. The performance-based bonuses and share-based incentive plan are based on predefined targets that are confirmed annually. The criteria for performance and results are set so that they promote short-term and long-term financial success. The Board of Directors annually evaluates the performance and financial results against the criteria.

The maximum performance-based bonus of a member of the Executive Management Board cannot exceed the aforementioned maximum performance-based bonus of the President and CEO. The upper limits of the share-based incentive plan are dermined as described below, under 'Share-based incentive plan’.

The salaries, fees, fringe benefits and performance-based bonuses paid to the members of the Executive Management Board, including the President and CEO, for 2011 totalled EUR 4,400,904 (4,067,499), comprising EUR 1,827,117 (1,980,104) in salaries and fringe benefits and EUR 2,573,787 (2,087,395) in performance-based bonuses.

The pensions of the other members of the Executive Management Board are determined by the Employees Pensions Act (TyEL) with the exception of one person, whose retirement age has been agreed to be 60 years, the target level of the pension being 60% of the agreed pensionable salary. A supplementary pension is based on a defined benefit plan.

Share-based incentive plan

In January 2010, the Board of Directors of Orion Corporation decided on a new share-based incentive plan for the key persons in the Orion Group. The aim of the plan is to align the interests of the owners and key persons so as to increase the value of the Company, commit the key persons to the Company and offer them a competitive remuneration plan based on holding the Company’s shares.

The share-based incentive plan has earning periods, and the Board of Directors will annually decide the beginning and duration of the earning periods in 2010, 2011 and 2012. The Board of Directors will decide the earning criteria for each period and targets to be set for them at the beginning of each earning period. Two earning periods, calendar year 2010 and calendar years 2010–2012, commenced upon implementation of the plan. Two new earning periods commenced in 2011, calendar year 2011 and calendar years 2011–2013. A prerequisite for participation in the earning periods and for receipt of remuneration based on the earning periods is that the key person holds the Company’s shares as determined by the Board of Directors. Under the plan, the potential remuneration for one-year-long earning periods is dependent on the Orion Group’s profit performance and fulfilment of the above-mentioned participation prerequisite, and for three-year-long earning periods on the total shareholder return on Orion Corporation B shares.

The remunerations based on the system are paid partly in the form of the Company’s B shares and partly in cash. The remunerations for earning period 2010 were paid in 2011.  Possible future remunerations for earning period 2011 will be paid in 2012, for period 2010–2012 in 2013 and for period 2011–2013 in 2014. The proportion to be paid in cash will be for paying taxes and tax-related costs arising from the remuneration to the key person. The value of the remuneration to be paid based on the plan during one calendar year is the key person’s gross annual salary on the date of the remuneration payment multiplied by a maximum of 1.5. Gross annual salary means total salary including fringe benefits but excluding the annual bonus and long-term incentive plan. The shares paid on the basis of earning period 2010 cannot be transferred during a restricted period that ends on 31 December 2012. The shares to be possibly paid on the basis of earning period 2011 cannot be transferred during a restricted period that ends on 31 December 2013. A key person whose employment or service in a Group company ends during the restricted period must return the shares received as remuneration to the Company without compensation.

After the restricted period, the members of the Group Executive Management Board must continue to hold 50% of the shares received through the Plan as follows: the President and CEO, until the total value of the Company’s shares held by him is equivalent to his gross annual salary, and any other member of the Group Executive Management Board, until the total value of the Company’s shares held by him or her is equivalent to half of his or her gross annual salary.

The incentive plan target group comprises approximately 30 persons. The total maximum amount of remuneration to be paid on the basis of the incentive plan is 500,000 Orion Corporation B shares and a cash payment corresponding to the value of the shares.

The shareholdings in Orion of the Members of the Executive Management Board  as on 31 December 2011 are presented here >> 

Management remunerations total in 2011

The salaries, remunerations, fringe benefits and bonuses paid to the members of the Board of Directors of Orion Corporation, the President and CEO and the other members of the Group’s Executive Management Board for 2011 totalled EUR 4,766,284 (EUR 4,431,799 for 2010).