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Rapala VMC Oyj Remuneration Information 2022
3287_rns_2022-03-02_9b5845c2-1caf-48ef-8cd9-b8913f82b629.pdf
Remuneration Information
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RAPALI®
REMUNERATION REPORT
DECEMBER 31, 2021
RAPALA VMC
REMUNERATION REPORT 2021
This Remuneration Report sets out how Rapala VMC Corporation (the "Rapala VMC" or the "Company") has in 2021 implemented its Remuneration Policy adopted at Rapala VMC's General Meeting on 26 March 2020. Report includes information concerning the remuneration of the Board of Directors and the President and CEO during the financial year (calendar year) 2021.
The Report has been reviewed by the Remuneration Committee of Rapala VMC's Board of Directors and approved by the Board of Directors. Further Rapala VMC's auditor Ernst & Young Oy has audited this Report confirming it fulfils the requirements set in law, the Decree 608/2019 of the Ministry of Finance and the Corporate Governance Code 2020 of Finnish Securities Market Association.
This report along with additional information regarding the remuneration in Rapala VMC are available on Rapala VMC's website at www.rapalavmc.com.
The Annual General Meeting 2022 makes a consultative decision as to whether it approves this Remuneration Report. In the previous Annual General Meeting 2021 74.23% of all shares and votes in the Company participated in the advisory vote and 79.77% of those voted for and 20.23% against accepting the provided Remuneration Report.
OVERVIEW OF REMUNERATION IN 2021
In line with the Remuneration Policy, remuneration in 2021 has aimed to contribute to positive development of shareholder value, enhance competitiveness and long-term financial success and the fulfilment of the Company's strategy. No temporary deviations from Remuneration Policy were applied in 2021.
As on previous years the members of the Board of Directors were paid a fixed annual fees and meeting fees. Paid fees are disclosed under "Remuneration of the Board of Directors" below.
The President and CEO's remuneration has consisted of fixed salary and a performance-based short-term incentive scheme that has had a direct link to the Company's strategy execution and financial performance. The Board of Directors resolved on the earning opportunities and performance targets for the short-term incentive at the beginning of the financial year. The performance metrics for 2021 were based on net sales, profitability, inventory, balance sheet and strategy execution. Due to the strong performance of Rapala VMC the criteria outcome in the short-term incentive plan 2021 met the target level set by the Board. In addition to the short-term incentive plan two new share-based incentive plans covering the years 2021-2023 concerning the President and CEO were established.
Fees paid for the President and CEO, the application of the performance criteria for short-term incentive plan in detail and the two share-based incentive plans are disclosed under "Remuneration of the President and CEO" below.
DEVELOPMENT OF FINANCIAL PERFORMANCE AND REMUNERATION
Rapala VMC's 2021 net sales increased by 13% and Comparable EBIT by 52% from the previous year. ROCE reached level of 16.1%.
NET SALES, EUR MILLION
ROCE %
COMPARABLE EBIT, EUR MILLION
SHARE PRICE DEVELOPMENT 2017-2021, EUR DIVIDENDS PER SHARE 0.10€ IN TOTAL
Rapala VMC Corporation
Presented below is the development of the (paid) remuneration of Board of Directors, the President and CEO along with the average remuneration of Rapala VMC's employees.
| 2021 | 2020 | 2019 | 2018 | 2017 | |
|---|---|---|---|---|---|
| Chairman | |||||
| Annual fee | 80 000 | 80 000 | 80 000 | 80 000 | 80 000 |
| Board member | |||||
| Annual fee | 30 000 | 30 000 | 30 000 | 30 000 | 30 000 |
| President and CEO | |||||
| Base salary and benefits 1) | 359 378 | 292 897 | 287 697 | 282 557 | 265 259 |
| President and CEO | |||||
| Total compensation | 589 378 | 292 897 | 421 622 | 343 712 | 323 679 |
| Rapala VMC employees 2) | |||||
| Average salary | 41 000 | 41 000 | 41 000 | 39 000 | 41 000 |
1) Including fringe benefits and supplementary pensions policies
2) Excluding Indonesia manufacturing unit, discontinued at the end of 2020
REMUNERATION OF THE BOARD OF DIRECTORS
Shareholders resolved on the Board remuneration in the Annual General Meeting of 2021 as follows:
Annual Fees
- EUR 80 000 to Chairman and
- EUR 30 000 to members.
Meeting Fees
- For Board and Committee meetings: EUR 1 000 per meeting
Board Remuneration is paid fully in cash and does not include pension payments. Members of the Board of Directors are not currently included in Rapala VMC's short- or long-term incentive programs.
FEES PAID TO THE BOARD MEMBERS DURING CALENDAR YEAR 2021
| MEMBER OF THE BOARD | FIXED FEES | MEETING FEES | TOTAL |
|---|---|---|---|
| Louis D'alançon (Chairman) | 80 000 | 16 000 | 96 000 |
| Jorma Kasslin | 30 000 | 15 000 | 45 000 |
| Emmanuel Viellard | 30 000 | 16 000 | 46 000 |
| Marc Speeckaert | 30 000 | 16 000 | 46 000 |
| Julia Aubertin | 30 000 | 15 000 | 45 000 |
| Vesa Luhtanen | 30 000 | 14 000 | 44 000 |
REMUNERATION OF THE PRESIDENT AND CEO
Application of Performance Criteria in 2021
In 2021, the President and CEO Nicolas Cederström Warchalowski was offered a performance-based short-term incentive. The short-term incentive scheme may be based on the result of the Group or other criteria decided by the Board. The objective of the long-term incentive scheme is to encourage the President and CEO to manage the Company over a long period of time in order to achieve the targets and strategy set by the Company, promoting the Company's long-term financial success and competitiveness.
For short-term incentive 2021, net sales, profitability, inventory, balance sheet and strategy execution were set as the performance criteria, and the maximum earning opportunity for the President and CEO was set at EUR 240 000. Based on the criteria achievement, the total outcome of the short-term incentive in 2021 did lead to an full earned reward of EUR 240 000. The reward is due payment in 2022.
The President and CEO's Share-Based Incentives in 2021
Two new share-based incentive plans have been established in 2021 covering the President and CEO. The aim of the plans is to align the objectives of the shareholders and the plan participants for increasing the value of the company in the long-term, to retain the participants at the company and to offer them competitive incentive schemes that are based on earning and accumulating shares.
Matching Share Plan 2021-2023 for the President and CEO
The President and CEO's Matching Share Plan 2021-2023 consists of one matching period, covering the financial years of 2021-2023. President and CEO is given an opportunity to receive matching shares for his personal investment in Rapala VMC shares. The reward based on the plan will be paid after the end of the matching period. The reward will be paid partly in Rapala VMC shares and
partly in cash. The reward to be paid correspond to the value of a maximum total of 28 800 Rapala VMC shares, including also the proportion to be paid in cash.
Performance Share Plan 2021-2023 for Key Employees
The key employees' Performance Share Plan includes one three-year performance period, covering the financial years 2021-2023. The rewards to be paid on the basis of the plan correspond to the value of an approximate maximum total of 800 000 Rapala VMC shares including also the proportion to be paid in cash. The potential rewards from the performance period 2021-2023 will be paid partly in the Company's shares and partly in cash in 2024.
The potential reward from the performance period will be based on the Rapala VMC's financial performance criteria and the Company's share price criterion which will be measured during 2023. The financial performance criteria for the performance period are the Rapala VMC group product sales, the Company's comparable earnings before interest and taxes (comparable EBIT) and the Rapala VMC's average working capital ratio in 2023.
Allocation of the potential rewards for the President and CEO correspond to the value of an approximate maximum total of 120 000 Rapala VMC shares also including the proportion to be paid in cash.
REMUNERATION PAID TO THE PRESIDENT AND CEO IN 2021
| BASE SALARY | FRINGE BENEFITS | ADDITIONAL PENSION PAYMENT | SHORT-TERM INCENTIVE | LONG-TERM INCENTIVE | TOTAL PAID COMPENSATION | |
|---|---|---|---|---|---|---|
| PROPORTIONAL SHARE | 295 520 € | 20 035 € | 43 823 € | 230 000 €^{1)} | 0 € | 589 378 € |
| 58%^{2)} | - | - | 42% | 0% |
1) Earned EUR 240 000 in 2021, paid in 2022
2) Including Base Salary and Fringe Benefits
SHARE BASED INCENTIVES DURING THE PERIOD 1.1.2021 - 31.12.2021
| PERFORMANCE PERIOD | GRANT DATE | GRANT DATE SHARE PRICE, EUR | EARNINGS CRITERIA | CRITERIA OUTCOME (OUT OF MAX LEVEL) | PAYMENT DATE | PAYMENT METHOD |
|---|---|---|---|---|---|---|
| FY 2021-2023 | 1 April 2021 | 7.12 | Total share return, the Group product sales, EBIT margin in 2023, the Group's average working capital ratio in 2023 | To be confirmed spring 2024 | Spring 2024 | Cash and equity |
| FY 2021-2023 | 25 February 2021 | 6.56 | Continued employment | To be confirmed spring 2024 | Spring 2024 | Cash and equity |