Reward and incentive schemes
The Board of Directors of VR-Group Ltd has approved the incentive scheme for the Group management. In 2014, the incentive scheme only comprised a short-term incentive scheme. A long-term incentive scheme is, for the time being, not in use. The Group’s Board of Directors approves the overall criteria, rules and indexes for the scheme and determines the persons included in it.
The rules and principles in force in the scheme at any particular time are described in the Group’s remuneration handbook, which has been reviewed by the Personnel committee of and is maintained by the HR unit.
The incentive scheme complies with the resolution issued by the Government on the matter. Under the terms of the scheme the Board of Directors may under exceptional circumstances amend the terms of the scheme and postpone payment of the bonus.
Short-term incentive scheme
The review period for the short-term incentive scheme is one (1) year. The scheme is divided into four organizational levels (L1-L4). In 2014 about 155 people belonged to the scheme. The President and CEO belongs to level L1, other members of the Management Team and immediate subordinates of the President and CEO in relation to head office functions belongs to level L2 (13 persons) and other senior management to L3 (94 people).
The other members of the personnel included in the bonus scheme work in supervisor or expert positions that have a significant impact on the business operations. They belong to level L4 (altogether 47 people).
The Group’s Board of Directors approves each year the persons to be included in the scheme.
The objectives, indexes and threshold values for the short-term incentive scheme are set each year so that there is a maximum of six indexes. The operating profit of the Group/unit serves as the index. It is dependent on the content of the task and has a weighting of between 60 and 15%. The weighting of the other indexes supporting the strategy and unit-specific targets is between 40 and 85%.
Under the short-term incentive scheme, the proportion of the maximum reward of the annual salary (including fringe benefits and holiday bonuses), as paid on the basis of the targeted performance is as follows: Level L1−L3 30% and level L4 25%. The bonus for exceptionally good performance at level L1-L3 is 50%.
VR Group has no share-based incentive schemes.
Any incentive scheme bonuses are paid on the basis of how annual targets have been met. Possible bonuses are paid in the spring of the year after the earnings year and once the financial statement figures have been confirmed.
Information about the terms of employment of the President and CEO
The salary paid to the President and CEO in 2014 totalled EUR 541,800 and the bonus paid to him for 2013 on the basis of the short-term incentive scheme was EUR 256,487. The President and CEO was not given a bonus of shares or share-based rights during the fiscal period.
The retirement age (63 years) and pension for the President and CEO is in accordance with the Employees’ Pensions Act. The President and CEO has a personal supplementary pension insurance paid by the employer (annual payment in 2014 was EUR 9,604.50), that includes life insurance in case of death.
The period of notice for the President and CEO is six months, and normal salary is paid for this period. In addition, the President and CEO is entitled to a redundancy payment, equivalent to his 12 months’ salary if the President and CEO were to be dismissed by the employer.