Letter from the Chairman of the Remuneration Committee
We launched our new strategy and business structure in spring 2016. During 2017, we continued strategy implementation with the view of becoming customers’ first choice for business renewal as the leading Nordic software and services company. Building on the solid achievements of past years, we will continue to accelerate innovation and growth.
Our rewarding approach
The aim of Tieto’s reward practices is to ensure that we can hire and retain top talent and offer market competitive total compensation. Also, we want to reward our employees for high performance in achieving both individual and company objectives. Tieto rewarding structures are designed to generate attraction and motivation which impact employee satisfaction and engagement. Satisfaction and engagement link directly to business results and performance.
Focus areas and remuneration activities in 2017
The Remuneration Committee agenda for 2017 focused on ensuring that the reward practices are market competitive and thus support strategy execution. Large global players, smaller local companies and start-ups with innovative niche solutions attract skilled candidates and Tieto is facing increased competition for talent. The short-term incentive levels for senior management were revised to ensure remuneration market competitiveness in global environment. The remuneration structure of President and CEO remained unchanged during 2017.
At the beginning of 2017, the Remuneration Committee approved the incentive payouts for the financial year 2016. Tieto paid out a total of EUR 18.7 million to the management and employees as short-term incentives and bonuses. The CEO and Leadership Team members received total of EUR 589 611 as paid incentives.
The share delivery from Shared-based Reward plan took place in January 2017. The President and CEO received 4 256 net shares and other Leadership Team members in total 10 760 net shares.
A new Long-Term Incentive Plan for 2017–2019 was approved by the Board of Directors in early 2017, based on the recommendation from the Remuneration Committee. The purpose of the Long-Term Incentive Plan is to ensure that the company will meet the long-term targets and to align the interests of the management and shareholders. It is also a key element in the total compensation of Tieto management, which directly links the paid compensation to the company’s success. For the 2017–2019 plan, the performance metrics were agreed to be earnings per share (30%), total shareholder return (20%) and growth (50%).
Remuneration for 2017
The short-term incentive plan for 2017 to the President and CEO was based on both the agreed financial goals and success in strategy execution. Based on performance against the targets set, bonuses earned in 2017 (payable in spring 2018) ranged from 20% to 66% of salary for the President and CEO and Leadership Team members.
Share-based program 2015–2017 included 126 participants on 31 December 2017. Final share delivery from this plan is taking place in spring 2018 following the criteria set for the plan.
Remuneration for 2018
At the end of 2017, the Remuneration Committee started preparing a new long-term incentive plan for the coming years with a continued focus on growth and profitability.
Short-term incentive measures are designed to further direct senior management focus into company profitability, growth and strategically important initiatives within own responsibility areas. Tieto continues to share its success with personnel by having each employee to participate either in performance reward (3 000 participants), achievement reward (10 000 participants) or sales incentive plans (360 participants). These plans build a solid foundation for the performance culture at Tieto.
Chairman of the Board of Directors
Chairman of the Remuneration Committee