Remuneration

Remuneration

remuneration report 2023

REMUNERATION REPORT 2022

REMUNERATION REPORT 2021

Spinnova’s remuneration supports achieving strategic targets, profitability, and increased shareholder value.

Well-functioning and competitive remuneration is an essential tool for engaging competent directors and executives for the company. This, in turn, contributes to the financial success of the company, and the implementation of good corporate governance.

Spinnova’s Remuneration Policy was presented in the Company’s Annual General Meeting in 2022, and following that at least every fourth year and always if significant changes are proposed to it. A report on the remuneration will be annually presented in the Spinnova’s Annual General Meeting, starting from the Annual General Meeting of 2022.

REMUNERATION OF THE BOARD OF DIRECTORS

Decisions concerning the remuneration of the Board of Directors are made by the General Meeting for a single term of office at a time based on a proposal of the Board.

The remuneration of the Board of Directors can consist of one or more components. The Board of Directors can, for instance, be paid an annual or a monthly fee as well as a meeting fee for board meetings or committee and governing body meetings.

In addition to the board fees, the Board members may be compensated for travelling expenses and/or other costs directly incurred by the board work as decided by the general meeting. Board members may also be compensated with a long-term stock option plan in order to align the interests of board members, Company and shareholders.

Remuneration paid to the Board members can be paid in cash and/or shares partially or in full. Decisions concerning the distribution of the Company’s shares, stock options, or other special rights entitling to shares shall be made in the General Meeting or by the Board of the Company pursuant to an authorisation from the General Meeting.  For more information on current long-term incentive programs, see section “Current Long-Term Incentive Programs”. The members of the Company’s Board are not eligible for short-term incentive plans paid in cash based on their position as a member of the Board.

The Annual General Meeting held on 4 May 2023 resolved that the remuneration of the Board of Directors would be a fixed monthly fee of EUR 2 000 for each Board Member. No separate meeting fees or committee member fees is to be paid.

Remuneration for the Board in 2023

The Annual General Meeting of the Company held on 5 May 2022 resolved on the remuneration of the Board of Directors. Pursuant to the resolution, a monthly fee of EUR 2 000 will be paid to each member of the Board of Directors. No separate meeting fees nor fees of committee members are paid.

The remuneration paid or due to the members of the Board of Directors followed the decision of the Annual General meeting and totalled EUR 111 714 (2022: 100 000). Julio Ramundo, Gert Kronerand Vinicius Nonino opted not to receive the monthly fee payable to the Board members in 2023.

 Please read more about Board’s remuneration in the Remuneration report.

Consultancy agreements

The Company entered into a consultancy agreement on 8 February 2021 with a company controlled by Harri Sundvik (deputy Chair of the Board).

The consultancy services totalled EUR 45 000 (2022: 73 000) for the financial year ending 31 December 2023.

REMUNERATION OF THE CEO

The Company’s Board of Directors determines the salary, remuneration and other benefits received by the CEO of the Company.

The CEO’s remuneration is primarily comprised of a monthly salary, employee benefits, and variable bonuses as well as possible long-term incentive schemes and commitment programmes, the use of which is at the sole discretion of the Board of Directors. In addition, the CEO can be granted a separate, reasonable supplementary pension arrangement or other possible benefits to ensure that a competent CEO is committed to the Company’s development.

The fixed salary will be confirmed in the managing director agreement. A part of the salary can be replaced with a housing benefit or a car benefit. The CEO’s professional competence and responsibilities as well as the general salary level in similar positions will be taken into account when determining the CEO’s fixed salary.

The variable bonus is bound to the financial success of the Company as well as the achievement of the Company’s strategic goals. The Company’s Board of Directors will determine the accumulation criteria for the variable bonus as well as the goals set for each criterion at the beginning of each accumulation period, and it will assess the fulfilment of the bonus at the end of the accumulation period in connection with the CEO’s annual performance evaluation. The criteria defined by the Board may consider matters such as the Company’s commercial progress, turnover, operating profit, stability of customers, efficiency of operations, employee satisfaction, the progress of product development, and product-group specific growth. 

The Board of Directors will decide on a case by case basis the possible long-term incentives and commitment programmes that will be granted to the CEO. Any bonuses paid to the CEO on the basis of the variable bonus scheme as well as on the basis of the long-term incentive schemes and commitment programmes can be paid in cash and/or shares partially or in full.

Remuneration for the CEO in 2023

CEO, during 1 January – 21 April, Kim Poulsen’s 2023 fixed monthly salaries including statutory pension totalled EUR 86 196 in 2023. Interim CEO, during 21 April – 10 December, Ben Selby’s fixed monthly salaries including statutory pension totalled EUR 198 727 in 2023. CEO, during 11 December – 31 December, Tuomas Oijala’s 2023 fixed monthly salaries including statutory pension totalled EUR 21 206 in 2023.

In 2023, the criteria for Spinnova’s bonus programme, which was also the basis for the CEO’s variable short term incentive, focused on the company’s key priorities, and consisted of targets in the following strategic areas, with the applicable weightings; Achieving technology sales in the wood fibre raw material space (40%), Ensuring commercial readiness of the fibre product (20%), Commercializing leather based fibre and technology (15%), Achieving a proof of concept in other raw materials than wood and leather (15%) and Ensuring a safe working environment (10%).

The pay out structure for the annual bonus was based on setting three key KPIs for each individual target. Depending on the achievement level of these targets, the total annual bonus would be between zero- and three-months’ salary. Spinnova’s entire personnel shared the same annual targets along with the same bonus structure. In 2023 Spinnova set up a personnel fund. Annual bonuses are paid either as cash or to the personnel fund.

Based on the 2023 bonus targets, interim CEO during 21 April – 10 December, Ben Selby earned a bonus of EUR 11 323, including statutory pension contributions. CEO Tuomas Oijala commenced work on 11 December 2023, and earned a bonus of EUR 1 592  and a signing bonus of EUR 29 385 including statutory pension contributions. Bonuses earned in 2023 were paid in February 2024.

REMUNERATION PAID TO CEO KIM POULSEN 1 JANUARY – 21 APRIL 2023 (EUR)*

REMUNERATION PAID TO DEPUTY CEO JUHA SALMELA 1 JANUARY – 21 MARCH 2023 (EUR)*

REMUNERATION PAID TO INTERIM CEO* AND DEPUTY CEO** BEN SELBY 21 APRIL – 10 DECEMBER 2023 (EUR)***

REMUNERATION PAID TO CEO TUOMAS OIJALA 11 DECEMBER – 31 DECEMBER 2023 (EUR)^*

KEY PROVISIONS APPLIED TO THE CEO’S EMPLOYMENT

The Company’s CEO is appointed by the Board of Directors.

The managing director agreement sets out the key provisions that apply to the CEO’s employment. The provisions are agreed corresponding to the valid market practice at the time of signing the agreement.

The CEO’s contract may be terminated by the CEO with six months’ notice and by the Company with six months’ notice. The Company is obliged to pay the CEO’s salary for the duration of the notice period. Moreover, if the CEO’s contract is terminated by the Company without cause, the Company shall pay a severance payment to the CEO corresponding to the CEO’s salary for twelve months. If the CEO’s contract is terminated by the Company for a cause defined in the contract, the Company is not obligated to pay the CEO’s salary following the date of termination.

The contract includes non-competition, non-recruitment and non-inducement obligations that apply while the agreement is in force and remain in force for 12 months after the termination of the contract.

The Company does not offer a supplementary pension plan.

Interim CEO Ben Selby worked under his existing CFO contract with adjusted salary and benefits during the interim period 21 April 2023 – 10 December 2023.

REMUNERATION OF THE OTHER MANAGEMENT TEAM MEMBERS

The Board of Directors decides on the remuneration of the members of the Management Team and the grounds for remuneration in accordance with the Company’s approved remuneration policy. The remuneration of the members of the Management Team consists of a fixed salary and a separate variable salary component (operational bonuses) and long-term stock-based incentives. The Company’s Board of Directors decides on the incentive bonus annually. Operational bonuses for the Management Team are paid based on the achievement of the targets set for the financial year.

INCENTIVE PROGRAMS

The Company has established stock option programs covering, among others, employees, and the members of the Board of Directors and the Management Team of the Company. A summary of all option programs is presented in the table below and the details for each option program are described beneath the table.

2018 Stock Option Program

The Annual General Meeting of Shareholders of the Company on 14 November 2018 resolved to authorize the Board of Directors to issue up to 50,000 stock options to key persons of the Company (the “2018 Stock Option Authorization”). In the resolution of the Board of Directors on 20 December 2018, the Company’s Board of Directors resolved to issue up to 50,000 stock options (the “2018 Stock Options”) pursuant to its authority under the 2018 Stock Option Authorization to selected current or new key persons, advisors, consultants or members of the Board of Directors of the Company for the purpose of incentivising the key resources of the Company.

Each 2018 Stock Option entitles the holder of 2018 Stock Option (a “2018 Stock Option Holder”) to 30 new shares at a subscription price of EUR 1.13 per share*. The subscription period for the 2018 Stock Options commenced on 1 January 2019 or on such other date as agreed with the recipient of the 2018 Stock Option in connection with the subscription of the 2018 Stock Options. The 2018 Stock Options vest linearly over four years from the commencement of their subscription period. The subscription period for Shares based on the 2018 Stock Options expires on 31 December 2028 at the latest. Notwithstanding the aforementioned subscription period, a 2018 Stock Option Holder shall be entitled to subscribe for Shares with all of its 2018 Stock Options within a period of time determined by the Board of Directors in connection with the potential listing of the Company’s shares. Such subscription right will lapse after the expiration of the time period set by the Board of Directors.

If a 2018 Stock Option Holder ceases to be employed by the Company or ceases to be a member of the Board of Directors of the Company, the Board of Directors shall set a period of fourteen days during which the 2018 Stock Option Holder may subscribe for Shares with those 2018 Stock Options for which the Share subscription period has commenced as at the last day of such person’s employment or membership. The 2018 Stock Option Holder shall be deemed to have transferred to the Company or a person designated by the Company free of charge those 2018 Stock Options that are not exercised during the time-period set by the Board of Directors. However, the Board of Directors may decide that the 2018 Stock Option Holder may, notwithstanding the aforesaid, keep all or some of the 2018 Stock Options.

Spinnova’s Chief Executive Officer and Board Members are not participants in the 2018 Stock Option Program. Certain members of the Management Team are participants in the 2018 Stock Option Program. Details of management share and option holdings can be found here.

*Taking into account share splits

2020 Stock Option Program

The shareholders of the Company unanimously resolved on 30 December 2020 to authorize the Board of Directors to issue up to 103,053 stock options to key persons of the Company (the “2020 Stock Option Authorization”). In the resolution of the Board of Directors on 30 December 2020, the Company’s Board of Directors resolved to issue up to 103,053 stock options (the “2020 Stock Options”) pursuant to its authority under the 2020 Stock Option Authorization to selected current or new key persons, advisors, consultants or members of the Board of Directors of the Company for the purpose of incentivising the key resources of the Company.

Each 2020 Stock Option entitles the holder of 2020 Stock Option (a “2020 Stock Option Holder”) to 30 new shares at a subscription price of EUR 2.74 per share*. The 2020 Stock Options consist of two types: A options (“2020 A Stock Options”) and B options (“2020 B Stock Options”). 2020 A Stock Options vest linearly over a period of 48 months, and vesting is accelerated in the event of a change of control or exit, but not by a listing of the Company’s shares. 2020 B Stock Options vest based on Spinnova’s pre-money valuation after a potential listing of the Company’s shares. One half of the 2020 B Stock Options vests if Spinnova’s pre-money valuation reaches more than EUR 400 million, and the remaining half vest if Spinnova’s pre-money valuation reaches more than EUR 1 billion. The subscription period for Shares based on the 2020 Stock Options expires on 31 December 2030 at the latest.

If a 2020 Stock Option Holder ceases to be employed by the Company, a consultant of the Company or a member of the Board of Directors of the Company, the Board of Directors shall set a period of fourteen days during which the 2020 Stock Option Holder may subscribe for Shares with those 2020 Stock Options for which the share subscription period has commenced as at the last day of such person’s employment or membership. The 2020 Stock Option Holder shall be deemed to have transferred to the Company or a person designated by the Company free of charge those 2020 Stock Options that are not exercised during the time-period set by the Board of Directors. However, the Board of Directors may decide that the 2020 Stock Option Holder may, notwithstanding the aforesaid, keep all or some of the 2020 Stock Options.

*Taking into account share splits

Certain other members of the Management Team are participants in the 2020 Stock Option Program. Details of Board’s share and option holdings can be found here and the Management Teams’s share and option holdings can be found here.

2022 Stock Option Program

Based on the Company’s Annual General Meeting resolution on 10 May 2021 to authorize the Board of Directors to decide on the issuance of special rights entitling to shares, the Company’s Board of Directors decided to establish the Stock Option Program 2022 for the issuance of up to 2,500,000 stock options (“2022 Stock Options”) to the employees and other key resources of the Company and its subsidiaries. The purpose of the program is to align the goals of the company’s shareholders and personnel to increase the company’s value in the long term and to commit key personnel to the company and offer them a competitive remuneration system. The share subscription price for the 2022 Stock Options will be the trade volume weighted average quotation of the Company’s share on Nasdaq First North Growth Market Finland during a thirty-day period, which ends earliest one week and latest two days prior to the date when the Board of Directors decides to allocate such options to the option holder in question. The 2022 Stock Options can be issued by separate decision of the Company’s Board of Directors in a maximum of four batches in total.

Each 2022 Stock Option entitles its holder (a “2022 Stock Option Holder”) to subscribe for one new share. The 2022 Stock Options consist of two types: A options (“2022 A Stock Options”) and B options (“2022 B Stock Options”). 2022 A Stock Options vest over a period of 4 years, with the first 25% vesting on the first anniversary of the issuance of the options and the remaining 75% vesting will vest in six equal instalments every six months following the following the first anniversary of the issuance date.

2022 B Stock Options vest based on the Company’s share price exceeding certain thresholds.

• 20% of the 2022 B Stock Options will vest on the date when the price for the Company’s share for the first time reaches or exceeds the share subscription price multiplied by 1.4, however this threshold may not be lower than EUR 10.50.
• Another 25% of the 2022 B Stock Options will vest on the date when the price for the Company’s share for the first time reaches or exceeds the share subscription price multiplied by 1.9, however this threshold may not be lower than EUR 14.50.
•  Another 25% of the 2022 B Stock Options will vest on the date when the price for the Company’s share for the first time reaches or exceeds the share subscription price multiplied by 2.6, however this threshold may not be lower than EUR 20.00.
• The last 30% of the 2022 B Stock Options will vest on the date when the price for the Company’s share for the first time reaches or exceeds the share subscription price multiplied by 3.7, however this threshold may not be lower than EUR 28.00.

The subscription period for Shares based on the 2022 Stock Options expires on 31 December 2030 at the latest.

If a 2022 Stock Option Holder ceases to be employed by the Company, all of the 2022 Option Holder’s non-vested 2022 Stock Options as at the last day of employment or service relationship are forfeited and shall be automatically transferred to the Company without any consideration, unless otherwise decided by the Board. The 2022 Option Holder is entitled to exercise his/her vested options from the last day of employment for two months from the last day of employment or participate in a block option trade organized by the Company. Any vested 2022 Stock Options that are not exercised during the above time period are forfeited and shall be automatically transferred to the Company without any consideration, unless otherwise decided by the Board.

Founders’ Stock Option Agreements

In addition to the stock option programs established by the company, the company’s founders Janne Poranen and Juha Salmela have entered into stock option agreements with certain employees of the company in 2015 and 2017. Under these option agreements, certain employees of the company are entitled to purchase 251,160 shares in total from Janne Poranen and Juha Salmela at an exercise price of EUR 0.21 per share.