The key principle of Lehto’s remuneration is that to support Company’s strategy, efficiency, profitability, and competitiveness. The principles behind the policy are fairness, openness and incentivisation. The remuneration in Lehto seeks to support the Company’s business strategy and facilitate its long-term financial success by committing and motivating the Company’s management to work towards supporting the Company’s objectives.
The Annual General Meeting decides on the remuneration payable for work in the Board of Directors and its Committees and determines the grounds for remuneration within the accepted Remuneration Policy.
The Annual General Meeting of 2 May 2022 decided that the remuneration of the members of the Board of Directors shall be made in Lehto Group Plc’s shares and in cash, with approximately 40 per cent of the remuneration paid in shares and the remainder in cash. The yearly remuneration paid in such manner was EUR 69,000 for the Chairman of the Board and EUR 34,500 for the Deputy Chairman and the Members of the Board of Directors. The remuneration shares are subjected to a transfer restriction so that the Members of the Board of Directors should not sell their shares during the membership or before six months has passed from the expiry of the said membership.
Would a Member of the Board of Directors have notified the Company that he/she was going to abstain from accepting the Lehto Group Plc shares, the remuneration was to be paid entirely in cash. In such case the yearly remuneration was EUR 55,200 for the Chairman of the Board of Directors and EUR 27,600 for the Deputy Chairman and members of the Board of Directors. No member of the Board of Directors made such a notification.
Furthermore, an attendance allowance of EUR 750 was to be paid to the members of the Board of Directors and EUR 1,500 to the Chairman of the Board of Directors for each Board meeting that they attend excluding phone or email meetings and for the Board Members who participated the Committee meetings EUR 600 to the Chairman of a Committee per meeting and EUR 400 to other members of the Committee per meeting.
The travel costs of the members of the Board of Directors were reimbursed in accordance with the Company’s travelling policies.
The members of the Board of Directors elected in the Annual General Meeting of 2022 are not in an employment relationship with the Company. The members of the Board of Directors have not been subject to any kind of additional share-based remuneration systems, taken into account that partly the remuneration of the Member of the Board of Directors has been paid in Company shares.
The remuneration that has been paid to the Members of the Board was a total of EUR 293,825 in the year 2022.
The Board of Directors determines and approves the key terms of employment of the CEO, including his/her remuneration within the accepted Remuneration Policy. Juuso Hietanen has been as the CEO full year 2022. According to the Executive Employment Agreement concluded with the CEO Juuso Hietanen, his remuneration comprises a fixed monthly salary of EUR 31,980. In 2022 the yearly salary of Juuso Hietanen was EUR 398 080. Furthermore, the CEO has an EUR 20 phone benefit and a lunch benefit pursuant to the Company policy. In accordance with the Executive Employment Agreement, Hietanen also received in 2022 Company shares as a one-off bases for amount of EUR 90,000 and EUR 100,100 was paid to Hietanen for the tax consequences of received shares. He has not been paid any other performance bonuses.
The terms of his employment are stated in a written employment agreement. The employment agreement of CEO Juuso Hietanen is in force until further notice and can be terminated by either party giving six months’ notice, for which period the CEO is entitled to receive his monthly salary and benefits. If the Company terminates Lehto’s employment agreement without a reason attributable to him, he is entitled to a remuneration corresponding to a salary of six months.
The CEO is entitled to a pension in accordance with the Employment Contracts Act and other legislation regulating pensions. The Company has not provided him with additional pension arrangements. The pension scheme is contribution-based. The CEO is not obliged to own or acquire the Company shares.
Any performance bonuses and other incentives are determined on the basis of principles defined and communicated, in advance, annually, by the Lehto Group’s Board of Directors. According to his Executive Employment Agreement, CEO Juuso Hietanen is entitled to a performance bonus, based on the goals which shall be determined by the Board of Directors on an annual basis within the accepted Remuneration Policy.
Variable pay component – long-term incentive scheme (LTI)
The long-term incentive scheme is a part of the CEO’s and key personnel’s incentive and commitment scheme of the Company. The purpose of the scheme is to combine the goals of the shareholders and key personnel of the Company in increasing the value of the Company in the long term and to secure commitment of the key personnel to the Company and to provide them a competitive remuneration scheme based on the value of the shares of the Company.
The earning period of the scheme is the bonus term and is the length of one year. Earning period is followed by a two-year commitment period. The potential remuneration is paid to the participants after the commitment period.
The remuneration of the earning period of the LTI scheme is based on the earning of the short-term incentive. The criterions of the STI scheme are the financial outcome (IFRS) of the Group / Service area / Unit and the personal or functional goals, with the emphasis decided by the Board of Directors.
After the earning period the gross remuneration of the STI scheme is transferred into Company shares in the LTI scheme. After the earning period, before the end of April, the Board of Directors confirm the gross number of Company shares which equal to the earned STI scheme remuneration.
The Board of Directors did not confirm long-term incentive scheme earning period for 2022.
Variable pay component – short-term incentive scheme (STI)
The short-term incentive scheme is a part of the management system of the Company and is based on the profit-making ability of the Company. Alongside with the CEO the scheme also covers the employees and managers of the Company that are not included in other commission or bonus schemes. The Board of Directors resolves the bonus schemes (office employees and project employees) for one bonus term at a time. With the help of the STI scheme the mutual efforts of the employees and management are directed to complete the Group’s bonus term goals and key results. The STI scheme’s goal is to increase the motivation of the personnel of the Company and the commitment to the Company.
The criterion of the profit and functionality goals of the STI scheme are based on the financial outcome (IFRS) of the Group / Service area / Unit and the personal or functional goals, with the emphasis decided by the Board of Directors. Everyone who is included in the STI scheme has a personal yearly bonus potential which is calculated in a way that the monthly salary before taxes is multiplied by the personal bonus potential which can be between 1-10 months. The bonus potential of the CEO in 2022 was his monthly salary multiplied by 10 months and the bonus potentials of the members of the Management Board varies between the amounts of 6-10 month’s salary.
The preparation and decision-making of the remuneration of the Management Board is made annually by the remuneration policies given by the Board of Directors of the Company. The criterion of the profit and functionality goals of the Management Board are set and evaluated by the CEO in the development discussions in the beginning of each year. The members of the Management Board of the Company are included into the STI and LTI schemes of the Company which have been presented above.
The members of the management board have executive employment agreements with the Company that do not include specific terms regarding notice period or termination compensation. There were no additional pension arrangements.
Management board remuneration in total: EUR 954,721
Additional benefits subject to taxation (car benefit, public transportation benefit, phone benefit): EUR 41,827
Remuneration was paid in Company shares: EUR 53,361
No variable pay components (STI and LTI) or additional pension payments.