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7 Other management

The operative management of the company is based on the management organisation adopted for the company. The man- agement organisation is an important element of the corporate governance of the company. The organisation often includes a management team. The management team has no official statu- tory position but has in practice a significant role in the manage- ment system of the company.

The term “other management” refers to the members of the management team or, if the company has no management team, to the executives specified by the company.

Recommendation 41 Management organisation

The company shall describe the management organi- sation. If the company has a management team, the company shall describe the composition and duties of the management team and the areas of responsibility of its members.

The description of the management organisation should under- line the operative nature of the management activities to make a distinction between the statutory management bodies of the company.

The management team means a corporate management group or another similar body that convenes regularly. The man- agement team normally consists of executives of the operative business divisions. The principal duty of the management team is to assist the managing director.

Recommendation 42 Information on the management team

The company shall report the biographical details and holdings of the members of the management team. If the company has no management team, the company shall define the other executives whose biographical details and holdings are subject to disclosure obliga- tion.

The company must report the same biographical details and ownership information concerning the members of the manage- ment team as for the directors of the company (see Recommen- dation 19).


8 Compensation

An effective compensation system is an essential tool for imple- mentation of ownership control. The purpose of the compensa- tion system is to increase the commitment of the board, the man- aging director and other executives to promoting the interests of the company and its shareholders. In addition to basic salary, the compensation system covers among other things performance- related incentive schemes, pension schemes, rewarding in the form of shares, and share-related compensation systems.

Compensation of the directors

Recommendation 43 Fees and other benefits of the directors

The company shall report the fees and other benefits of the directors for their board and committee work dur- ing the reporting year.

The information on the fees and other benefits granted to the directors permits the shareholders to evaluate the amount of compensation in relation to the contributions of the board to promoting the interests of the company. Open communication will also facilitate comparison with the fees and other benefits paid by other companies.

Recommendation 44 Payment of the fees of the directors in shares

The shareholdings of the directors can be increased by paying the fees or part of the fees for board and com- mittee work in the form of shares of the company.

Shareholdings of the directors improve efficient ownership con- trol. A good way to increase directors’ shareholdings is to pay the fees or part of the fees for their board and committee work in the form of shares. However, the company must ensure the compliance of insider regulations.

Recommendation 45

Participation of the directors in a share-related compensation system

It is not recommended that a non-executive director should participate in a share-related compensation system.

The term “non-executive director” refers to a person who has no employment relationship with, or position in, the company. Use of share-related compensation systems to remunerate non-execu- tive directors is in principle not justified from the perspective of the interests of shareholders.

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