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Recommendation 46

Information on shares and share-related rights granted to the directors

The company shall report the number of shares and share-related rights granted to the directors in com- pensation during the reporting year.

The company must report the number of shares granted to direc- tors in compensation in the same way as other fees and benefits are reported. If a director participates in share-related compensa- tion systems also the share-related compensation granted on the basis of such systems shall be reported.

Compensation of the managing director and other executives

Recommendation 47

Compensation system and the relating decision-making procedure

The company shall describe the criteria and deci- sion-making procedure concerning the compensa- tion system covering the managing director and other executives.

The information on the compensation system permits the share- holders to evaluate the incentive effect of the system from the perspective of enhancing the performance and shareholder value of the company. Transparency of the compensation systems promotes the creation of systems that are more competitive and motivating and contributing to achieving of targets. The information to be reported includes among other things the total number of shares and share-related rights granted to the manag- ing director and other executives.

The company must specify the body that determines the compensation of the managing director and other executives. It is generally appropriate that the body that appointed the person also decides on the compensation. The preparation of compensa- tion matters can be delegated to the compensation committee of the board (see recommendation 34).

Recommendation 48 Information on service contracts

The company shall report the economic benefits based on the service contracts of the managing director and a full-time chairman of the board:

  • salaries and other benefits granted during the reporting year

  • shares and share-related rights granted by way of compensation

  • retirement age and criteria for determination of pension

  • terms and conditions of the period of notice, salary for the period of notice and other possible compen- sation payable on the basis of termination.

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Due to the significant position of the managing director and a possible full-time board chairman, it is important to give the shareholders detailed information on their economic benefits. The information permits the shareholders to evaluate the amount and substance of the compensation of the managing director and the full-time board chairman in relation to the achievement of their set objectives. Open communication also facilitates com- parison with the benefits granted to the management of other companies.

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