Remuneration

The objective of Spinnova’s remuneration is to encourage and reward the management for work that is in line with the company’s strategy at a given time and for compliance with the set rules, as well as to motivate them to strive for the success of Spinnova and foster their long-term commitment to the company’s goals.

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 will be presented in the Ccmpany’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 of the Company held on 10 May 2021 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 company entered into a consultancy agreement on 8 February 2021 with a company controlled by Harri Sundvik, a member of the company’s Board of Directors and in 29 December 2020 a consultancy agreement with a company controlled by Timo Soininen, the Chair of the Company’s Board of Directors, that will apply to services rendered from 1 January 2021. Both consultancy agreements are valid until further notice and can be terminated by either contracting party by 60 days’ notice. Under the agreements, the company has undertaken to pay a monthly fee to the companies that are parties to the agreements. The consulting services for the three months ended 31 March 2021 were EUR 18 thousand.

No annual remuneration or meeting fees were paid to the members of the Board of Directors for the financial years 2018‒2020.

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.

The salaries, remuneration and other benefits (excluding pension expenses and other incidental expenses) paid to the CEO of the company totalled EUR 133 thousand for the financial year 2020, EUR 137 thousand for the financial year 2019, and EUR 135 thousand for the financial year 2018. The monthly salary paid to the company’s CEO has been increased in June 2021.

The company offers the statutory pension cover to the CEO.

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, such as the notice period, possible severance pay and non-compete clause. The provisions are agreed corresponding to the valid market practice at the time of signing the agreement.

The Company’s CEO since 2014 has been Janne Poranen. The CEO’s contract may be terminated by the CEO with four months’ notice and by the company with six months’ notice, and the contract includes non-competition, non-recruitment and non-inducement obligations that apply while the agreement is in force and remain in force for 24 months after the termination of the contract.

The company is obligated to continue paying 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 cause defined in the contract, the company is not obligated to pay the CEO’s salary following the date of termination.

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.

In 2020, the salary, remuneration and other benefits (excluding remuneration through the stock option program) paid to the members of the Management Team (excluding the CEO) totalled EUR 274 and pension expenses EUR 43 thousand and respectively, EUR 214 thousand and EUR 39 in 2019 and EUR 149 thousand and EUR 27 thousand in 2018.  The monthly salary paid to the company’s Chief Technology Officer has been increased in June 2021. Otherwise, there have been no material changes to the remuneration of the members of the Management Team after 31 December 2020.

The notice period of the contracts of the other members of the Management Team except the CEO is 4-6 months if the employee terminates the contract and 6 months if the company terminates the contract. The company is obligated to continue paying the Management Team member’s salary for the duration of the notice period, and moreover, if the contract is terminated by the company without cause, the company shall pay a severance payment equaling up to twelve months’ salary. The company offers the statutory pension cover to the Management Team members.

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.

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.

*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

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.