Remuneration

Other remuneration information

Decision-making procedures and main principles of remuneration

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 principles concerning the Board of Directors

The remuneration of the members of the Board of Directors is decided on by the Annual General Meeting of the shareholders. The remuneration recommendation to be presented in the invitation to the Annual General Meeting is prepared by the Nomination Committee. The Board of Directors’ remuneration is for work carried out within the Board and its committees.

Remuneration of the Board of Directors in 2021

According to the decision by the AGM 2021, the remunerations of the Board of Directors are as follows: 
As an annual fee, the Chairman shall receive EUR 90,000, the Vice Chairman shall receive EUR 55,000 and the other members shall receive EUR 45,000 each. However, if a member of the Board acts as the Chairman of the Audit Committee or the R&D Committee, her/his annual fee is EUR 55,000. As a fee for each meeting attended, the Chairman shall receive EUR 1,200, the Vice Chairman shall receive EUR 900 and the other members shall receive EUR 600 each. The travel expenses of all Board members shall be paid in accordance with previously adopted practice. The aforementioned fees shall also be paid to the Chairmen and to the members of the committees established by the Board, for each committee meeting attended.

Of the annual fee, 60% shall be paid in cash and 40% in Orion Corporation B-shares, which shall be acquired to the members during 28 April - 4 May 2021 from the stock exchange in amounts corresponding to EUR 36,000 for the Chairman, EUR 22,000 for the Vice Chairman and for the board members acting as the Chairmen of the Audit Committee and the R&D Committee and EUR 18,000 for each of the other members. The part of the annual fee that is to be paid in cash corresponds to the approximate sum necessary for the payment of the income taxes on the fees and shall be paid no later than 31 May 2021. 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.

In addition, the AGM decided that the Company shall pay the transfer tax related to the part of the annual fee of the Board of Directors paid in shares. 

Remuneration principles concerning the President and CEO

The remuneration of the President and CEO is based on the remuneration policy approved by the Annual General Meeting 2020 in accordance with the Board of Directors’ proposal. The remuneration of the President and CEO is decided by the Board of Directors. The Remuneration Committee of the Board of Directors is responsible for preparing the remuneration. The remuneration of the President and CEO consists of a monthly salary with fringe benefits, an annual performance-based bonus (STI) and long-term share-based incentive plans (LTI). In addition, the President and CEO has a supplementary pension benefit. The use of a share-based incentive scheme as part of the President and CEO’s remuneration is in principle in the interest of the company and its shareholders because it merges the objectives of the shareholders and the President and CEO to promote the company’s strategy and its long-term financial success. The President and CEO’s variable remuneration components (an annual performance-based bonus and long-term incentive plan) are based on predefined targets that are confirmed annually by the Board of Directors. The targets are set so that they promote implementation of the company’s strategy and its financial success over the short and long terms. The Board of Directors assess and confirms the achievement of the objectives annually, or in case of earning periods longer than a year, at the end of each earning period.

Timo Lappalainen's fixed annual salary including fringe benefits is EUR 522,540.

The annual performance-based bonus of the President and CEO for 2021 can be no more than ten (10) months’ salary. The criteria and upper limits of the share-based incentive plans in force for key persons of the Group are determined as described in section Share-based incentive plans. In the case of the President and CEO, the principle of owning the company's shares is that his shareholding in the company corresponds to at least his fixed gross annual salary.

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 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 principles concerning 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. For the other executive management, the President and CEO and the Remuneration Committee of the Board of Directors are responsible for preparing the remuneration. The remuneration system for these persons comprises a monthly salary including fringe benefits, an annual performance-based bonus (STI) and long-term share-based incentive plans (LTI). An annual performance-based bonus and long-term incentive plan are based on predefined targets that are confirmed annually by the Board of Directors. The targets are set so that they promote implementation of the company’s strategy and its financial success over the short and long terms. The Board of Directors assess and confirms the achievement of the objectives annually, or in case of earning periods longer than a year, at the end of each earning period.

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 plans in force for key persons of the Group are determined as described in section Share-based incentive plans. If an employment agreement of any of the other members of the Executive Management Board is terminated by the member of the Executive Management Board, the notice period is two months. If the employment agreement is terminated by the employer, the notice period is six months. In addition, the members of the Executive Management Board have the right to a severance pay of six months salary if the employer terminates the employment agreement.

The pensions of the other members of the Executive Management Board are determined by the Employees Pensions Act (TyEL). 

Remuneration of other executives in 2020

The salaries, fees, fringe benefits and performance-based bonuses paid for 2020 to the members of
the Executive Management Board, excluding the President and CEO, totalled EUR 4,854,763 (3,284,289) comprising EUR 1,597,264 (1,778,961) in salaries and fringe benefits and EUR 3,257,499 (1,505,329) in performance-based bonuses. The total number of Executive Management Board members was 7 (8) at year end 2020, including also the President and CEO.