2017 | 2016 | 2015 | 2014 | 2013 | 2012
Each year, the Annual General Meeting decides on the remuneration payable to the Board members on the basis of a proposal drawn up by the Personnel and Remuneration Committee.
The Board of Directors makes decisions concerning the salary, benefits, and long-term incentives of the President and CEO as well as the rest of the management team. In addition to the President and CEO’s short-term incentive system, the Board also decides on the maximum level of the management team’s short-term incentive system. The Personnel and Remuneration Committee prepares the abovementioned matters for the Board to decide on, while using external experts when necessary. The President and CEO decides on the goals for the management team’s short-term incentive system.
In 2017, the Annual General Meeting authorized the Board of Directors to make a decision to offer no more than 25,000,000 shares through a share issue. The authorization is effective for two years from that decision. In 2017, the Annual General Meeting authorized the Board of Directors to decide on the repurchase of a maximum of 5,000,000 of the company’s own shares using funds from the Company’s unrestricted equity. This authorization is valid until the next Annual General Meeting, but however at most until October 10, 2018. The Board may also use these shares as incentives.
The Board members receive an annual fee and a meeting fee for the meetings of the Board and its committees. Travel costs are compensated for according to the company’s travel policy. 50% of the annual fee is paid in cash and 50% is paid in shares in the company that are purchased for the Board members in April following the Annual General Meeting. The company is responsible for any asset transfer tax.
The Annual General Meeting in 2017 decided on the following fees for Board members:
Board members are not included in the company’s option and share issue programs.
The Board of Directors makes decisions concerning the salary and other benefits of the President and CEO.
The compensation package includes the basic salary, fringe benefits, the performance-related short-term bonus scheme, and the share-based long-term incentives.
Hille Korhonen was appointed as the President and CEO as from June 1, 2017. The annual base salary for the CEO has been set at EUR 693,000. Before Hille Korhonen’s nomination, Andrei Pantioukhov served as the interim President and CEO from Jan 1, 2017 until May 31, 2017.
The President and CEO’s short-term performance-related bonus is based on the Group’s profitability and net sales, and it may amount to a maximum of 100% of the annual salary. The target period is one year and the bonus is paid out once per year following the performance period.
The President and CEO’s long-term incentive consists of share incentive plans. The key goals for the share incentive plans in force at any given time can be found under Long-term incentive plans for key personnel. The maximum opportunities for remuneration are set forth in Table 1.
The President and CEO Hille Korhonen’s pension and retirement age are defined in accordance with the Finnish Employees’ Pension Act (65 years). Furthermore, she is entitled to a defined contribution pension insurance where the contribution equals 20% of her fixed annual salary. The amount paid in 2017 was EUR 77,000.
The President and CEO’s period of notice is 6 months. If the agreement is terminated by the company, the President and CEO is entitled to compensation corresponding to 12 months’ salary and other benefits, in addition to the notice period’s salary.
The Board approves the salaries and benefits of managerial employees and the employee incentive scheme on the basis of a proposal by the Personnel and Remuneration Committee.
Remuneration for the management consists of a monthly base salary and fringe benefits, such as phone and car benefits, an annual bonus based on separately defined performance criteria, and a sharebased long-term incentive plan.
The annual bonus is based on the Group’s operating profit and the achievement of the KPIs set for different functions. The function specific KPIs consist of several factors including profitable growth, net sales, and the efficiency of the operative process. The maximum annual bonus corresponds to 40–50% of a person’s annual salary. The annual bonus is paid out once per year following the earning period.
The Group has a share rewards system for key personnel (see Incentive plans for key personnel) that is intended to provide long-term incentives and build commitment toward the company. The maximum limits for the remuneration are set forth in Table 1.
The salaries of the management team members (excluding the President and CEO) were in total EUR 1,951,793 in 2017, and the annual bonuses amounted to a total of EUR 604,213.
The management team members have no separate pension arrangements.
A management team member’s period of notice is 6 months when terminated by the company and 3 months when terminated by the management team member. If the employment is terminated due to a reason attributable to the company, the management team member is entitled to compensation corresponding to 12 months’ salary and other benefits.
Option scheme 2013
The Annual General Meeting held in 2013 decided on the issue of stock options as part of the Group’s incentive and commitment system for personnel. The system also covers persons employed or recruited by the Group at a later date. The Board distributed the options in the spring of 2013 (options 2013A), 2014 (2013B), and 2015 (2013C).
Share rewards system 2016
In the spring of 2016, the Board of Nokian Tyres plc decided to update the Group’s incentive schemes. The update aims to clarify and improve the schemes and to offer a competitive rewards system for all personnel.
Table 1. Maximum limits for the bonuses under the short-term and long-term incentive plans
Short-term incentive scheme
Performance based bonus scheme 2015 and 2016,%*
Share-based incentive plan 2013 (maximum)
Share-based incentive plan 2016 (maximum)
Earnings period 2015
Earnings period 2016
Earnings period 2017
President and CEO
Other management team
The purpose of Nokian Tyres’ new share-based incentive system is to harmonize the goals of the owners and key personnel in order to increase the value of the company in the long term, and to commit key personnel to the company. The share rewards system covers some 5% of the Group’s personnel, including the management team members.
The share rewards system has three one-year earnings periods for the calendar years 2016, 2017, and 2018. The company’s Board will decide separately on each earnings period for the system and set the earning criteria, and the goals for each criterion, at the beginning of the earnings period. The system’s possible reward for the earnings period of 2017 is based on the Group’s operating profit and net sales. The rewards paid for the earnings period of 2017 correspond to a maximum of 540,000 shares in Nokian Tyres plc, including the monetary reward.
The possible reward from the earnings period of 2017 will be paid in 2018, partially as shares in the company and partially as money. The monetary reward is intended to cover the taxes and tax-like charges incurred on the key person. As a rule, the reward is not paid if the key person’s employment is terminated before the reward is due. Shares that are offered as a reward cannot be handed over during the limitation period of approximately one year.
A member of the Group’s management team must own 25% of the gross total number of shares earned through the system, up to the point where the total value of their share ownership is equal to their gross annual salary. They must own this number of shares for as long as they are involved in the Group’s management team.
The remuneration paid to the Board members, the number of shares purchased, and the meeting fees for the Board and the committees are presented in the table below.
Table 2. Remuneration to the Board members in 2017 (cash basis)
Position on the Board
Shares acquired with fixed annual fee, number of shares
Share holdings of the Board, number of shares
chairman of the Personnel and Remuneration Committee
vice chairman, chairman of the Audit Committee
Table 3: Salaries and financial benefits paid to the President and CEO and the company’s other management team members in 2017 (cash basis)
Share-based bonus paid in shares, number of shares