Statement on Digia Management Emoluments

This management emolument statement sets forth a summary of the financial benefits, remuneration system and thereto related decision-making pertaining to Board members and operative management of Digia Plc.

Board Emoluments

 

The Shareholders' Meeting decides on emoluments payable to the Board of Directors and grounds for the compensation of expenses. The 2010 AGM decided to pay monthly emoluments of EUR 2,000 to Board members, EUR 3,000 to the Vice Chairman and EUR 5,000 to the Chairman for their work on the Board. In addition, the AGM approved EUR 400 in fees per Board or committee meeting for all Board members. Moreover, the Shareholders' Meeting decided that standard and reasonable costs resulting from work on the Board would be reimbursed against invoice.

In the 2010 financial year, a total of EUR 248,800 was paid in emoluments to the members of the Board of Directors for their work on the Board, as follows:

Pertti Kyttälä  EUR 64,400  
Martti Mehtälä  EUR 41,600  
Robert Ingman  EUR 24,400  
Kari Karvinen  EUR 31,200  
Pekka Sivonen  EUR 25,200  
Tommi Uhari  EUR 24,800  
Marjatta Virtanen  EUR 26,000  
Heikki Mäkijärvi  EUR 5,600  
Jari Pasanen  EUR 5,600  

 
 
All emoluments were monetary. The company does not grant stock options or share-based remuneration for work on the Board.

Emoluments of the CEO and other management

 

Summary of the CEO remuneration system

 

The Board of Directors decides on the CEO's salary, and other remuneration and benefits.

CEO Juha Varelius' remuneration package comprises a monthly salary in accordance with his director agreement and the bonus possibly payable pursuant to two share incentive schemes.

CEO's regular monthly salary is based on a target salary model comprising a fixed and variable parts. According to said model the remuneration finally payable to the CEO is linked to the company's profitability and revenue targets set by the Board for each quarter respectively. In the event the set targets are not met, the agreed target salary will be reduced accordingly by a maximum of 15 percent variable part. On the other hand, exceeding the set targets will lead to remuneration above the target level.

CEO's share-based remuneration plans were decided by the Board pursuant to authority given by the AGM in Autumn 2009 and in Spring 2010.

The scheme decided in Autumn 2009 covers the earning periods of 2009 and 2010, entitling the CEO to a maximum bonus equal to the value of 80,000 company shares for each earning period respectively.The bonus will begin to accrue progressively when the EPS amounts to EUR 0.41, entitling the CEO to a value of 20,000 shares. The maximum bonus will become payable if the EPS amounts to EUR 0.69 for the earning period.

The scheme decided in Spring 2010 has four earning periods, which are years 2010–2013. Earning criteria will be the earning per share (EPS) value reached and growth in net sales compared to the budgeted net sales during the respective earning period as to be annually specified by the Board in more detail. The maximum total bonus payable for the CEO under the scheme amounts to the value of 20,000 shares in the earning period 2010 and to the value of 100,000 shares in 2011–2013 respectively. Regarding year 2010 the minimum bonus (5,000 shares) requires an EPS of EUR 0.41 and the maximum bonus will become payable if the EPS amounts to EUR 0.69 or a minimum of EUR 0.615 if the company's budgeted revenues are being exceeded by 15 per cent.

Under said schemes the CEO will, based on the results of financial year 2010, be paid with a total bonus equal to the value of 67,750 company shares during the financial year 2011.

All bonuses payable under both of said schemes will be paid in a 50/50 combination of shares and cash after the adoption of the financial statements following the close of the respective earning period. The cash payment is used primarily to cover taxes and other applicable fees and levies incurred from the bonus payment. The schemes include no lock-up periods designed to restrict the disposal of shares already granted to the CEO.

CEO Financial benefits and main terms of service

 

In 2010 the CEO was paid EUR 515,413 in salary and benefits, of which salary and fringe benefits account for EUR 305,713 and bonuses for EUR 209,700.

The company may terminate the CEO's service contract with six months' notice. Upon such termination, he will receive remuneration for the notice period plus severance pay equalling 12 months' salary. The CEO's retirement age is as stipulated by law, and he has no supplementary pension agreement with the company.

Summary of the remuneration system of other management

 

Based on a proposal submitted by the CEO, the Board of Directors decides on the salary, other remuneration and other benefits to be paid to members of the Group Management Team (GMT).

GMT members' total remuneration package comprises a monthly salary and the bonus possibly payable pursuant to two share incentive schemes.

As with the CEO's pay, the Management Team members' pay is based on a target salary model, where 85 per cent of the salary is fixed and a 15 per cent portion is linked to the company's profitability and revenue targets set by the Board for each quarter respectively.

In addition to the monthly salary the GMT members will receive, in each January of years 2010–2013 respectively, a bonus decided by the Board in 2009 based on the results of said accounting period. The bonus amounting to an aggregate total value of 85,000 shares will be paid in four equal slots assuming that the recipient is still employed by the company on each payment date.

Moreover, the GMT members accompany the CEO in the share incentive scheme decided by the Board in Spring 2010 and covering the earning periods of 2010–2013 where the earning criteria will be the earning per share (EPS) value reached and growth in net sales compared to the budgeted net sales during the respective earning period as to be annually specified by the Board in more detail. The maximum total bonus payable for the GMT members in aggregate under the scheme amounts to the value of 20,000 shares in the earning period 2010 and to the value of 100,000 shares in 2011–2013 respectively. Regarding year 2010 the minimum bonus (5,000 shares in aggregate) requires an EPS of EUR 0.41 and the maximum bonus will become payable if the EPS amounts to EUR 0.69 or a minimum of EUR 0.615 if the company's budgeted revenues are being exceeded by 15 per cent. Under said schemes the GMT members will, based on the results of financial year 2010, be paid with a aggregate total bonus equal to the value of 13,750 company shares during the financial year 2011.

All bonuses payable under both of said schemes will be paid in a 50/50 combination of shares and cash. The cash payment is used primarily to cover taxes and other applicable fees and levies incurred from the bonus payment. The schemes include no lock-up periods designed to restrict the disposal of shares already granted to the GMT members.

Each Management Team members' retirement age is stipulated by law, and no member has a supplementary pension agreement with the company.