Elisa AGM has approved this Remuneration Policy on 2 April 2020.
This is the Elisa Group´s (hereinafter Elisa) remuneration policy,
which complies with legislation and the Finnish Corporate Governance
Code. This policy sets out the principles for remuneration of the Board
of Directors, the Managing Director and a potential Deputy Managing
Director (hereinafter Managing Director).
Remuneration promotes Elisa’s business strategy, long-term financial
success and favourable development of shareholder value when it is fair,
competitive, enhances commitment and supports Elisa´s objectives.
Remuneration of Elisa´s personnel is based on a total remuneration,
which may among other things include both variable and fixed components
of remuneration as well as personnel benefits. The personnel is mainly
subject to a performance-based remuneration scheme. In addition is
Elisa´s personnel, as a rule, part of a long-term remuneration scheme,
such as a personnel fund or a share-based remuneration scheme.
The terms and conditions of employment relationships of other
employees, particularly with respect to remuneration, have been taken
into account in this remuneration policy in such a way that the Managing
Director´s remuneration is more focused on variable components of
remuneration than the average of other employees. The aim of variable
remuneration is to steer the Managing Director and the personnel towards
the same objectives. Although the Board of Directors is not covered by
the same overall remuneration as the personnel, the purpose of the
remuneration of the board is also to steer activities towards the same
long-term objectives of the company. The remuneration of the personnel,
the Managing Director and the Board of Directors is regularly evaluated
in relation to general market practices for persons acting in equivalent
2. Description of the Decision-Making Process
Preparation and Approval
The remuneration policy and any possible substantial changes to it
are prepared by the People and Compensation Committee of the Board of
Directors of Elisa or by another equivalent governing body, to which
preparation of remuneration matters is addressed (hereinafter Personnel
and Remuneration Committee). The People and Compensation Committee
hears the Shareholders’ Nomination Board on the remuneration policy
related to the Board of Directors.
The Board of Directors reviews and presents to the General Meeting
the remuneration policy and any substantial changes to it whenever
necessary, but at least every four (4) years. The General Meeting makes
an advisory resolution on the remuneration policy, expressing whether it
supports the presented policy. The shareholders cannot propose changes
to the remuneration policy. If a majority of the general meeting opposes
the presented remuneration policy, a revised policy must be presented
no later than at the next Annual General Meeting. In such a case, the
decision on remuneration of the Board of Directors and the Managing
Director, shall be based on the initial remuneration policy presented to
the General Meeting until the revised remuneration policy has been
considered at the general meeting.
The People and Compensation Committee of the Board of Directors of
Elisa annually monitors the implementation of the remuneration policy
and where necessary presents to the Board of Directors the measures
for ensuring its implementation. To enable shareholders to evaluate the
implementation of the remuneration policy at Elisa, the Board of
Directors annually presents to the Annual General Meeting a remuneration
report prepared by the People and Compensation Committee. The
General Meeting decides on the approval of the remuneration report. The
decision is advisory.
On basis of a proposal prepared by the Shareholders’ Nomination
Board, the General Meeting annually decides on the remuneration of the
Directors. The decision on the remuneration of Directors is based on the
remuneration policy presented to the General Meeting.
The Board of Directors of Elisa decides on the remuneration of the
Managing Director in accordance with the remuneration policy. Where
necessary, the People and Compensation Committee prepares matters
relating to remuneration with the assistance of independent external
experts. Decisions concerning distribution of shares, options, or other
special rights entitling one to shares shall be made in the General
Meeting or by the company’s Board of Directors pursuant to an
authorization from the General Meeting. When shares, options, or other
special rights entitling one to shares are issued to Directors or to the
Managing Director as part of their remuneration, this must take place
within the limits of the remuneration policy.
Conflicts of interest
Issues on conflicts of interest regarding remuneration have been
taken into account. The Shareholders’ Nomination Board, consisting of
representatives of the biggest shareholders and established by the
General Meeting of Elisa, makes a proposal to the General Meeting on
the remuneration of the Board of Directors. The Chair of Elisa´s Board
of Directors, who also is a member of the Nomination Board, will not
participate in the consideration of the Board of Directors' remuneration
proposal at the meeting of the Shareholders´ Nomination Board. The
General Meeting decides on the remuneration of the Board of Directors.
The Remuneration of the Managing Director is prepared by the
People and Compensation Committee and decided by the Board of
Directors of Elisa. The Managing Director is not a member of those
bodies and not involved in the decision-making process regarding his or
3. Description of the Remuneration of the Board of Directors
The remuneration of the Board of Directors can consist of one or more
components. The Directors can for example be paid an annual or a
monthly fee as well as a meeting fee for board meetings or committee and
governing body meetings. The fees to be paid to Directors can be paid
in cash and/or partially or entirely in shares or other financial
instruments. In its decision, the General Meeting may require that the
rewards to be paid in cash must be used entirely or partially in order
to acquire Elisa´s shares. The General Meeting can also decide on the
grounds for determining other kinds of remuneration.
Remuneration paid in shares or other financial instruments may be
subject to restrictions or recommendations related to lock-up periods
concerning time or board membership. In its proposal the Shareholders'
Nomination board may also require that a Director is a shareholder in
If a Director has an employment relationship or a service contract
with the company, he or she will be paid a normal salary. The General
Meeting will decide on any possible compensation to be paid to him or
her for work done with the Board.
4. Description of the Remuneration of the Managing Director
The Components of Remuneration and their Relative Proportions
When deciding on the remuneration of the Managing Director the
starting point for the review is always total earnings. The total
earnings of the Managing Director may consist of fixed and variable
remuneration, the proportions of which are assessed according to the
respective business situation.
The Managing Director´s fixed total salary may include the monetary
salary and any possible taxable fringe benefits. Holidays, holiday pay,
sick leave and other similar terms and conditions may be reviewed in
accordance with the company´s standard policy. In addition, insurance
coverage and pension schemes may be agreed.
Elisa's Performance-Based Bonus Model may be used as a short-term
incentive scheme. Long-term incentive schemes may consist of both
performance-based and commitment enhancing share-based remuneration
plans. The aim of the incentive schemes is to combine the objectives of
the shareholders and the Managing Director in order to increase the
value of the company. The aim of the long-term incentive scheme is also
to commit the Managing Director to the company by offering him or her a
competitive share-based incentive plan.
Performance-based short and long-term incentives are rated at a
target level higher than a fixed salary. In share-based incentive
schemes, dimensioning occurs at the beginning of the earning period. The
actual outcome depends on the fulfillment of the earning criteria. If
the value of a share changes, the value of the reward to be paid
increases or decreases accordingly. In variable remuneration, the
weighting of a long-term incentive is higher than a short-term
incentive, as calculated on an annual basis.
Grounds for Determining any Variable Remuneration Components
In all variable remuneration schemes, the Board of Directors
determines the earning criteria of the scheme and set out the objectives
for each criteria at the beginning of the earning period and evaluates
the actual performance at the end of the earning period. The earning
criteria may include key objectives in support of the company's strategy
related to financial targets, development of business or shareholder
value, customer or employee satisfaction and quality, as well as related
to corporate responsibility. In retaining share-based remuneration
schemes, the continuation of the service contract may be the sole
earning criterion for the remuneration scheme. The objectives are
defined and their implementation evaluated on the basis of Elisa's
financial and operational reports and the results of stakeholder
In share-based remuneration schemes, the earning and restriction
periods are at least several years in total. However, the Board of
Directors may, on occasion, under special grounds, define a minimum of
one year earning and restriction period taken together.
Share-based remuneration schemes may include restrictions on the
transfer of shares under the Limited Liability Companies Act, as well as
recommendations, or contractual obligations in relation to retaining a
specific number of shares over a certain period of time.
Other Key Terms Applicable to the Service Contract
A lower retirement age than defined in the applicable legislation on
earnings-related pension may be agreed for the Managing Director. The
Managing Director may also be entitled to a defined contribution
supplementary pension as part of his/her overall salary.
The duration of the contract, the applicable notice period, possible
severance payment as well as any other termination clauses are agreed in
the Managing Director Agreement, conforming to current market practice
at the time of the conclusion of the agreement.
Terms for Deferral and Possible Clawback of Remuneration
When applying the incentive scheme, if changes in circumstances
beyond the control of the company were to result in significantly
detrimental or unreasonable effects on the company, the Board of
Directors has the right to reduce remunerations under the incentive
schemes or defer the payment to a more favourable date for the company.
The Board of Directors has the absolute right to cancel remuneration
fully or partially if it deems it necessary to amend the financial
statements of the group and this affects the amount of the remuneration
or if actions in violation of law or the company's ethical guidelines or
other unethical actions have taken place.
5. Deviations from and Amendments to the Remuneration Policy
Deviations from the Remuneration Policy
Elisa may temporarily deviate from the remuneration policy presented
to the General Meeting if such deviation is necessary to ensure Elisa´s
long-term interests and the current remuneration policy would no longer
be appropriate in the changed circumstances. Such situations include
for example, changes in the Board of Directors, change of the Managing
Director, major changes in the company´s strategy, changes in Elisa´s
remuneration decision-making process, major restructuring such as a
merger, a takeover bid, or an acquisition, as well as changes in
taxation or other regulations.
The deviation may apply to all reward components. The General Meeting
decides on deviation in respect of remuneration of the Board of
Directors and the Board of Directors of Elisa decides on deviation in
respect of the Managing Director.
Amendments to the Remuneration Policy
Substantial changes to the remuneration policy are prepared and
presented to the General Meeting in accordance with the decision-making
process described in section 2. In addition, Elisa may make changes that
are not deemed material without presenting the amended remuneration
policy to the General Meeting. Such changes include, for example,
technical changes to the decision-making process for remuneration or to
the terminology concerning remuneration. A change in legislation could
also constitute grounds to make changes to the remuneration policy that
would not be deemed material.
Elisa´s Board of Directors evaluates the need for changes in the
remuneration policy. Elisa considers on a case-by-case basis the decree
to which the drafting of the new remuneration policy is affected by the
General Meeting resolution on the previous remuneration policy, or by
the shareholder statements about the remuneration reports, given after
the adoption of the remuneration policy, presented at the General