Compensation system

Incentive scheme (short-term compensation plan)
Key personnel in the company (incl. management) are covered by an incentive scheme which is based on the attainment of annually set targets. In 2010, the group paid approximately 8.1 million euros as performance-related salaries and bonuses to 894 persons.

The targets and their weights set for individuals vary in accordance with their duties and status. On the whole, the targets are linked to the individuals' performance in relation to the net sales and results of the whole company or the profit centre and/or the individual concerned. The employees also have their own qualitative targets, the attainment of which is assessed separately from the financial targets. Although the targets and levels vary by person, the average target levels of management's bonuses are set to form approx. 25 percent of the total compensation.

The Board of Directors has set the targets for the Chief Executive Officer. The maximum bonus of the CEO corresponds to his monetary salary for approx. 10 months excluding fringe benefits.

The Board's Nominations and Compensation Committee has set the targets for the CEO's direct subordinates on the submission of the CEO. The targets for other key personnel have been set in the line organization under the direction of the CEO.

Option scheme (long-term compensation plan)
The Annual General Meeting held in March 2008 decided a three-year option program for long-term binding and compensation. The option programs 2006 and 2008 are described in detail in the company's internet web pages. See Option Programs

Retirement benefits
The CEO and the other members of the corporate management board are subject to statutory pension arrangements, no supplementary pension agreements.

CEO's remuneration

In year 2010, the CEO Eloholma's salary and fringe benefits amounted to a total of 277 thousand Euros and he did not earn any annual bonus for year 2010. The CEO's annual bonus is dependent on the profit of the group. 

The CEO has received 27 900 options 2006B, 34 286 options 2008A and 15 000 options 2008B.

Retirement benefits
The CEO is subject to statutory pension arrangements, no supplementary pension arrangements.

Notice period and termination payment
The CEO's employment contract prescribes a six-month period of notice which applies to both parties. The CEO's employment contract does not contain any separate conditions relating to the payment of salary during the period of notice.

Management's long-term share-based incentive plan

The Board of Directors of Affecto decided in June 2010 to establish a new share-based incentive plan, where selected members of the company's management (CEO, Nordic country managers and Baltic area manager) invest in Affecto shares through Affecto Management Oy, owned by the management. The purpose of the plan is to commit the Participants to the Company by encouraging them to acquire and hold the Company's shares, and this way increase the Company's shareholder value in the long run. Affecto Management Oy acquired 823 000 shares and financed the acquisition by the managers' own capital investments and by a 1.6 MEUR interest-bearing loan provided by Affecto. Affecto Management Oy has been consolidated to the group balance sheet. The plan will be valid until the announcement of the Affecto's Q3/2013 interim report.

Board compensation

The members of the Board of directors receive the monthly fees decided in the Annual General Meeting, 3200 eur/month for the chairman Aaro Cantell, 2500 eur/month for the vice-chairman Jukka Ruuska and 1800 eur/month for members. A fee of 250 eur is paid for participation in Committee meetings, save for meetings of the Nomination Committee. Additionally, reasonable travel costs have been paid.

The CEO's and Board members remuneration have been recognized as an expense during the financial year as follows:

The Board members have no share or share-based compensation plans. Nor are they included in other compensation schemes or pension arrangements.

Updated: 7 November 2011