Remuneration

Main principles of remuneration

Board of Directors       

The AGM 2019 resolved to continue to pay the following monthly remuneration to members of the Board:

  • EUR 8,500 to Chairman
  • EUR 6,500 to Vice Chairman and
  • EUR 5,500 to members.

The meeting fees are:

  • For Board members who reside outside Finland: EUR 1,000 / Board meeting where the member was present;
  • For the Chairmen of Board’s Committees: EUR 2,000 / Committee meeting participated;
  • For Committee members who reside outside Finland: EUR 2,000 / Committee meeting where the member was present and EUR 1,000 / Committee meeting participated; and
  • For Committee members who reside in Finland: EUR 1,000 / Committee meeting participated.

The President and CEO or a person serving the company under a full time employment or service agreement receives no fee for Board membership.

The President and CEO and members of the EMT

The remuneration of the President and CEO and member of the EMT consists of the total salary, short term incentives, performance shares, restricted shares and pension benefits. The Board aims to have a substantial part of the total remuneration dependent on the performance of the company.

In the short-term incentive (STI) plan, the key principles are that the financial and non-financial targets are tailored to each executive’s areas of influence. The STI is at maximum 150% of reward at the target level value and the payment is subject to reaching threshold Group EBIT.

In the Performance Share Plans (a long-term incentive, LTI), the performance is measured based on the criteria set by the Board for each plan. The LTI is at maximum 150% of the reward on target level. The plan is based on a one year performance followed by two-year vesting period and share delivery is conditional upon continued employment until the moment of transferring shares or a good leaver ground.

The HR committee commissions regular benchmarks of the remuneration of the Board and the EMT against its Finnish and European peers.

Short-term incentive plans

The short-term incentives are determined on the basis of achieving financial and non-financial objectives set annually. The weighting of the objectives and the maximum amount of the incentives vary according to the position of the person in question. Short-term incentives are paid in April following the year of determination.

The criteria in the short-term incentive plan in 2017 were based on achieving financial targets of operational EBIT, free cash flow, net sales as well as objectives related to Sanoma’s employee satisfaction objective.

In 2018 the short-term incentive for the President and CEO is 66.7% of her salary at target level and 100% at maximum level. For other EMG members, the short-term incentive varies from 40% to 50% of salary at target level and from 60% to 75% at maximum level. The criteria in the short-term incentive plan for 2018 are based on achieving financial targets of operational EBIT (earnings before interest and taxes), free cash flow and net sales as well as Sanoma’s employee satisfaction objective.

Long-term share based incentives

The share-based incentive plans introduced at Sanoma offer the Group’s management an opportunity to receive Sanoma shares after a vesting period of two to three years, provided that the conditions set for receiving the shares are met.

Performance Share Plans

The Board approved on 7 February 2013 a share-based long-term incentive programme (Performance Share Plan, PSP) to be offered to executives and managers of Sanoma Corporation and its subsidiaries.

PSP 2019-2021 was introduced on 5 February 2019. The performance measures for the plan are based on performance targets for the adjusted free cash flow and operational earnings per share in 2019. The share rewards payable, subject to the achievement of the performance measures, will be delivered to the participants in the spring 2022, and are subject to meeting the continuous employment or good leaver ground conditions at the time of the payment.

PSP 2018–2020 was introduced on 8 February 2018. The performance measures for the plan were based on performance targets for the adjusted free cash flow and operational earnings per share in 2018. The performance measures were reached at close to maximum level i.e. 141% of the number of shares at target level will be delivered to the participants in the spring 2021 subject to meeting the continuous employment or good leaver ground conditions at the time of the payment.

PSP 2017–2019 was introduced on 7 February 2017. The performance measures for the plan were based on performance targets for the adjusted free cash flow and operational earnings per share in 2017. The performance measures were reached at the maximum level i.e. 150% of the shares at target level will be delivered to the participants in the spring 2020 subject to meeting the continuous employment or good leaver ground conditions at the time of the payment.

PSP 2016-2018 was introduced on 9 February 2016. The performance measures for the plan were based on performance targets for the adjusted free cash flow and operational earnings per share in 2016. The performance measures were reached at the maximum level i.e. 150% of the shares at target level will be delivered to the participants in the spring 2019 subject to meeting the continuous employment or good leaver ground conditions at the time of the payment.

Shares conditionally granted to the CEO and members of the EMT under the PSP are subject to share ownership requirement that is determined by the Board in accordance with the HR Committee’s proposal. Until the required shareholding is achieved, the CEO and the members of the EMT are required to hold, and not to sell, at least 50% of performance shares received.

Restricted Share Plans

Sanoma has adopted a Restricted Share Plan (RSP) in 2014 to be offered to executives and managers of Sanoma Corporation and its subsidiaries. The conditions and the issuance of the restricted shares are decided on by the Board in accordance with the HR Committee’s proposal.

The Board approved on 5 February 2019 the establishment of RSP 2019-2021. The shares vest over a 3-year period of 2019-2021 and will be delivered in 2022 subject to meeting the service condition.

RSP 2016-2018 was introduced on 9 February 2016. The plan is divided in two vesting periods. 50% of the restricted shares vested over a 2-year period of 2016-2017and were delivered in 2018. 50% of the restricted shares vest over a 3-year period of 2016-2018 and will be delivered in 2019 subject to meeting the service condition.

RSP 2017-2018 was introduced on 7 February 2017. Restricted shares vest over a 2-year period of 2017-2018 and will be delivered in 2019.

The possible rewards under the RSPs are paid as a combination of shares and cash. The cash component is dedicated to cover the taxes and tax-related costs related to restricted shares.

Shares conditionally granted to the CEO and members of the EMT under the RSP are subject to share ownership requirement that is determined by the Board in accordance with the HR Committee’s proposal. Until the required shareholding is achieved, the CEO and members of the EMT are required to hold, and not sell, at least 50% of performance shares received.

Decision-making procedures concerning remuneration

Board of Directors              

Sanoma’s Annual General Meeting (AGM) determines the remuneration of the members of the Board of Directors (Board) and Board committees. The HR Committee prepares the proposal on the Board members remuneration to the AGM.

The President and CEO

The remuneration and fringe benefits (total salary), short term incentives and pension benefits of the President and CEO and members of the Executive Management Team (EMT) as well as long-term incentives granted for Sanoma’s senior executives are prepared by the HR Committee and approved by the Board.

The President and CEO and EMT members do not receive separate remuneration for their management group membership or other internal management positions, such as Board memberships in the Group companies.

Authorisations related to remuneration

The AGM held on 22 March 2018 authorised the Board of Directors to decide on the repurchase a maximum of 16,000,000 of the Company’s own shares (approximately 9.8% of all shares of the Company) in one or several instalments. Own shares shall be repurchased with funds from the Company’s unrestricted shareholders’ equity, and the repurchases shall reduce funds available for distribution of profits. The authorisation will be valid until 30 June 2019 and it terminates the corresponding authorisation granted by the AGM 2017.

The shares shall be repurchased to develop the Company’s capital structure, to carry out or finance potential corporate acquisitions or other business arrangements, to be used as a part of the Company’s incentive programme or to be otherwise conveyed further, retained as treasury shares, or cancelled.

Remuneration Statement 2018