Remuneration

Remuneration at Terveystalo is based on the principles of performance, fairness and competitiveness. These remuneration principles apply to all Terveystalo employees and the purpose is to ensure that Terveystalo as an employer attracts motivated and competent professionals. Remuneration shall support the achievement of Terveystalo´s strategic goals, align management’s priorities with the interests of Terveystalo´s shareholders, encourage behavior consistent with Terveystalo’s values, and reward excellent performance.

Remuneration decision-making process

The Company’s Annual General Meeting decides on the remuneration of the members of the Board of Directors each year. The Remuneration Committee of the Board of Directors prepares remuneration-related matters and proposals regarding the CEO and the Executive team for the Board. The Board of Directors approves the remuneration of the CEO and the other Executive team members. Terveystalo’s remuneration policy describes the decision-making procedure in more detail.

Short-term incentive scheme (STI)

Terveystalo’s Board of Directors decides on the targets related to the short-term incentive schemes for the CEO and other members of the Executive Team. For 2021, the STI performance targets for the CEO were based on the Company’s adjusted EBITA and revenue, as well as NPS, productivity, eNPS and attrition targets. In addition to these measures, she STI performance targets for the other members of the Executive Team were based on business specific targets.

For 2022, the STI performance targets for the CEO and the other members of the Executive Team are based on the Company’s adjusted EBITA and revenue, as well as eNPS and business specific targets.

The maximum STI payable to the CEO is equivalent to 120 % of the annual base salary. The STI payable to the other members of the Executive Team for achieving the set targets is equivalent to five months’ salary, and the STI payable for exceeding the set targets to an exceptional extent is equivalent to at most 7.5 months’ salary.

 

Long-term incentive scheme (LTI)

The long-term incentive scheme is based on a rolling 3-year plan structure, with a new plan starting at the beginning of each year if so decided by the Board. The Board decides on the participants, performance measures and targets as well as earning opportunities on an annual basis. The purpose of the program is to align the objectives of shareholders and key personnel to increase the company's value in the long term, and to commit key personnel to implementing Terveystalo's strategy by offering them a competitive, share-based incentive program.

In February 2021, Terveystalo Plc's Board of Directors has approved a new performance period covering years 2022-2024 of the long-term share-based incentive plan for key personnel.

During the performance period 2022-2024, the performance indicators on the basis of which share rewards may be paid are absolute Total Shareholder Return (TSR) with 50 per cent weight and relative TSR (compared to the OMX HKI benchmark CAP GI index) with 50 per cent weight.

Terveystalo's Board of Directors confirms the total amount of shares earned after the end of the performance period. The share rewards that may be paid based on the 2022-2024 earning period will be paid in Terveystalo Plc shares after the end of the performance period, provided that the performance targets set for the program by the Board are achieved. The maximum number of shares to be paid based on this plan is 683,085 shares. Taxes and tax-like payments to the recipient are deducted from the share reward, after which the remaining net amount is paid to the participants in shares.

In December 2020, Terveystalo Plc's Board of Directors has decided on a new long-term share-based incentive program for key personnel. The plan replaces the previous long-term incentive program.

During the performance period 2021-2023, the performance measures on the basis of which share rewards may be paid are relative Total Shareholder Return (TSR) with 60 per cent weight, and the development of the company’s Digital footprint with 40 per cent weight, the latter measuring the implementation and transformation of the company's strategy. The transformation measure is a combination of productivity development and growth of digital service sales.

Terveystalo's Board of Directors confirms the total amount of shares earned after the end of the performance period. The shares that may be paid based on the 2021–2023 earning period will be paid in Terveystalo Plc shares after the end of the performance period, provided that the performance targets set for the program by the Board are achieved. Taxes and tax-like payments to the recipient are deducted from the share reward, after which the remaining net amount is paid to the participants in shares.

The one-off CEO-only plan is intended to cover the transition from the old long-term incentive plan to the new plan. The performance metrics are the same as in the PSP 2021-2023 except for a shorter performance period. Any share awards will be paid after the end of the performance period, provided that the performance targets are met.

If the level of performance entitling to the maximum awards based is reached, the total maximum amount of share awards to be paid under the PSP and Bridge plan is 700,600 shares (gross amount before deduction of applicable taxes).

The purpose of the Restricted Share Plan is to act as a supplementary structure for separately selected key personnel of Terveystalo in special situations. The persons invited to the plan are granted share rewards consisting of fixed number of shares with a 3-year restriction period until the end of the program, after which the granted share reward will be paid provided that the participant's employment with Terveystalo continues.

Each 3-year plan is a subject to Board approval. The Board decides on the participants and earning opportunities on an annual basis. The total value of the share awards to be paid under each plan is maximum 10 % of the value of the PSP share award.

Remuneration of the Board of Directors

Terveystalo’s Annual General Meeting, held on March 25, 2021, resolved in accordance with the proposal of the Shareholders’ Nomination Board that the Chair of the Board of Directors be paid an annual remuneration of EUR 85,000, the Vice Chair an annual remuneration of EUR 50,500, the members an annual remuneration of EUR 40,250, and the Chair of the Audit Committee EUR 50,500. In addition, an attendance fee of EUR 625 will be paid for members of the Board of Directors and Committee members residing in Finland, EUR 1,300 for members residing elsewhere in Europe, and EUR 2,600 for members residing outside of Europe for each Board and Committee meeting that they attend. For Board and Committee meetings that are held by telephone or other electronic means, the attendance fee is EUR 625. Travel costs are reimbursed based on the company’s travel policy. The annual remuneration of the Board is paid as a combination of company shares (40%) and cash (60%). The Company will reimburse the transaction costs and capital transfer tax related to trading. Attendance fees are paid in cash.

Remuneration paid during the year 2021:

Name Annual fee, total, EUR (1) Annual fee in shares, EUR Annual fee in cash, EUR Other financial benefits, EUR (2) Meeting fees, EUR In total, EUR
Kari Kauniskangas 85,000 33,993 50,464 544 16,875 101,875
Tomas von Rettig 50,500 20,189 29,988 323 18,900 69,400
Åse Aulie Michelet 40,250 16,090 23,902 257 16,925 57,175
Katri Viipola 40,250 16,090 23,902 257 16,875 57,175
Dag Andersson 40,250 16,090 23,902 257 13,800 54,050
Niko Mokkila 40,250 16,090 23,902 257 16,250 56,500
Kristian Pullola
(from 25 March, 2021)
50,500 20,189 29,988 323 10,000 60,500
Lasse Heinonen
(until 25 March, 2021)
- - - - 6,875 6,875

1) Total annual compensation consists of stock award (40%) andcash compensation (60%).
2) Other financial benefits include transfer tax fees for the annual fees paid in shares.

Remuneration of the CEO

The fixed remuneration of the CEO consists of a fixed monthly salary and fringe benefits. The total remuneration of the CEO includes short-term incentives and long-term incentives. Remuneration of the CEO, as well as other key terms applicable to the service contract, are described in more detail in Terveystalo’s remuneration report.

Remuneration paid during the year 2021:

  Fixed annual salary (including tax benefits), EUR Short-term incentives, EUR Remuneration based on long-term incentive schemes, EUR In total, EUR
Ville Iho, CEO 400,000 240,000 - 640,000

The contract of the CEO may be terminated at six months’ notice. If the Company terminates the contract, the CEO is entitled to additional severance pay equaling his or her monthly salary for 12 months.

Remuneration of the other members of the Executive Team

The fixed remuneration of the Executive team members consists of a fixed monthly salary and fringe benefits. Executive team members are also entitled to holiday bonus. The total remuneration of the Executive Team members includes short-term incentives and long-term incentives.

Remuneration paid during the year 2021:

  Other Executive Team members, in total
Fixed annual salary and benefits, thousand euros 1,796
Short-term incentives, thousand euros 386
Long-term incentives, thousand euros -
In total, thousand euros 2,182

The contract of a member of the Executive Team may be terminated at three months’ notice. If the Company terminates the employment contract of a member of the Executive Team other than the CEO, the member is entitled to additional severance pay equaling his or her monthly salary for 7.5 months.