Remuneration

Remuneration Policy

The Remuneration Policy for the Governing Bodies of Citycon was approved by The Board of Directors in their meeting on 5 February 2020. The Policy was presented to the Annual General Meeting of shareholders (AGM) on 17 March 2020. The Remuneration Policy sets the general principles and framework of decision-making for remuneration of the Board of Directors, CEO and Deputy CEO in Citycon. The Policy has been prepared in accordance with the Limited Liability Companies Act (624/2006, as amended), the Decree of the Ministry of Finance (608/2019) and the Finnish Corporate Governance Code 2020 (cgfinland.fi/en).

The shareholders discuss the Remuneration Policy at the General Meeting of shareholders at least once every four years and whenever substantial changes are made to the Policy. The principles set out in the Remuneration Policy shall guide Citycon's remuneration of the governing bodies. Each element of remuneration shall be balanced in order to facilitate the continuous positive development of the Company, both in the short and long term. 

Remuneration Statement

Citycon Oyj’s Remuneration Statement governing the financial year 2019 has been drafted in accordance with the Finnish Corporate Governance Code 2015 (cgfinland.fi/en)  issued by the Finnish Securities Market Association. The Remuneration Statement includes the description of the decision-making procedure concerning the remuneration of the  members of the Board of Directors, the CEO, and any other executives and of the main principles of remuneration as well as the Remuneration Report which discloses the remuneration paid to the members of the Board of Directors, the CEO, and the other members of the Corporate Management Committee during the previous financial period and, for comparison, the remuneration paid during the financial period preceding the reported financial period.

From onwards the financial year 2020, Citycon will be drafting its Remuneration reporting according to the guidelines of the Finnish Corporate Governance Code 2020.

Decision-making procedure concerning the remuneration 

Decisions on the remuneration payable for Citycon Oyj’s Board members for the Board and Committee work are made annually by the company’s Annual General Meeting (AGM) as described in the Remuneration Policy. The decision is based on a proposal of annual fees and meeting fees as well as compensating travel and lodging costs, made by the Board on the recommendation of the Nomination and Remuneration Committee. The level of remuneration may vary according to the amount of work required from a Board member, taking into account the position as the Chairman or the Vice Chairman and the role in the Board committees.  

Decisions on the remuneration of the CEO and the Deputy CEO as well as other members of the Corporate Management Committee are made by Citycon’s Board of Directors in accordance with the Remuneration Policy and on the basis of a proposals prepared by the Board of Director’s Nomination and Remuneration Committee. The CEO's and the Deputy CEO’s remuneration shall consist of annual fixed base salary, variable pay components, fringe benefits and potentially other financial or non-financial benefits. Furthermore, the Board of Directors submits proposals related to remuneration at the General Meeting of shareholders on the recommendation of the Nomination and Remuneration Committee.

Principles of remuneration

Remuneration of the members of the Board of Directors 

The AGM of 2020 decided on the annual fees of the members of the Board of Directors as follows:

Annual fee in EUR

 

Chairman

160,000

Deputy Chairman/men

70,000

Other Board members

50,000

Chairmen of the Board Committees

5,000

 
In addition, the Chairmen of the meetings of the Board’s Committees shall be paid a meeting fee of EUR 800 and other Board and Committee members EUR 600 per meeting, with the exception of the Chairman of the Board, who shall be paid no meeting fees.

The AGM also decided that the members of the Board shall be compensated accrued travel and lodging expenses as well as other potential costs related to Board or Committee work.

A Board member has the possibility to choose not to accept any annual fees and/or meeting fees.

Board members’ remuneration is paid entirely in cash. 

The Board members do not have an employment or service contract with the company. Furthermore, they do not have share-based remuneration schemes, nor are they included in the company’s other incentive schemes.

Remuneration of the CEO, Deputy CEO and other executives

The objective of remuneration of the CEO and other members of the Corporate Management Committee is to promote the long-term financial success and competitiveness of the company and the favourable development of shareholder value.

The remuneration of the CEO and other members of the Corporate Management Committee consists of a fixed monetary salary, customary fringe benefits, such as a car and a mobile phone, housing and medical benefit as well as relocation cost coverage (where applicable), an annual performance bonus as well as long-term remuneration schemes where directed to the CEO and other members of the Corporate Management Committee. The CEO and members of the Corporate Management Committee may be paid separately agreed severance compensations. The severance terms of the CEO are described below. The other Corporate Management Committee members’ severance compensations typically equal 12 months’ salary. The CEO and the other members of the Corporate Management Committee do not have any individual pension arrangements, instead they are covered by the pension systems of their domiciles in accordance with local practices.

Service terms and remuneration of the CEO

The service terms of the CEO are stipulated in a written executive contract approved by the Board of Directors.

 

F. Scott Ball (2020)

Annual salary

EUR 625,000

Short-term incentive (annual performance bonus awarded based upon achievement of strategy-supporting individual bonus targets set annually by the Board)

Max EUR 540,000

For the financial year 2020, the performance target measures and their mutual weights, as determined by the Board of Directors, are EPRA EPS (weight 15%), net rental income growth (weight 20%), selling, general & administrative expenses management (weight 10%), progress of investments, divestments and developments (weight 30%) and discretionary (weight 25%). The Board may, however, at its discretion and based on its overall performance evaluation, adjust the performance bonus amount within the maximum bonus sum stipulated in the CEO’s service agreement.

For the purposes of calculating the bonus, the bonus year is the time period from 14 November until 13 November the following year.

The achievement of the CEO’s performance targets is evaluated annually by the Board on the basis of a proposal prepared by the Board of Director’s Nomination and Remuneration Committee.

The bonus will be payable around the time for the general meeting’s approval of the annual report.

Long-term incentive plans

The CEO is included in the CEO restricted share plan 2018-2021.

Pension and retirement age

In line with the Swedish pension legislation. No individual pension arrangements.

Term and termination of service, severance pay

F. Scott Ball started working for the company on 15 November 2018. His appointment as the CEO commences on 1 January 2019.

The CEO’s current service contract remains in force until 14 November 2021, unless earlier terminated. In the event of termination, a mutual notice period of six (6) months shall apply.

Severance pay is twelve (12) monthly base salaries if the company terminates the contract and in the event of certain corporate events twenty-four (24) monthly base salaries and benefits, including bonus.

Performance bonus scheme

Citycon has performance bonus scheme targeted to the Corporate Management Committee members, save for the CEO, and a separate performance bonus scheme covering the rest of the personnel. CEO’s performance bonus is determined on the basis of the CEO’s service agreement and the achievement of strategy-supporting individual bonus targets set annually by the Board, as described above.

In the performance bonus scheme, the remuneration of the members of the Corporate Management Committee (excl. the CEO) is based on their achievement of the performance target measures as annually determined by the Board of Directors. The performance period is one calendar year. 

For the financial year 2020, the Corporate Management Committee members' performance target measures, as determined by the Board of Directors, are confirmed in four areas: EPRA EPS, selling, general & administrative expenses management, EPRA Operating profit and personal performance targets. The target measures carry 30–40% weight, as individually determined by the Board of Directors. During a vesting period of the performance bonus scheme, the Board of Directors may, at its sole discretion, amend the terms and conditions of any remuneration plan in such a manner that no considerable unjust enrichment shall occur or even reclaim the reward, if necessary.

Following each performance period, the Board confirms, on the basis of a proposal by the Board’s Nomination and Remuneration Committee, the extent to which the performance criteria have been reached and the amount of performance bonuses to be paid to each member of the Corporate Management Committee. 

The maximum bonus amount payable based on the annual performance bonus scheme is 60–50% of the gross annual salary for each member of the Corporate Management Committee. The performance bonus of a Corporate Management Committee member is determined based on the monetary salary of the last month of the calendar year, the performance of which is the basis of the bonus. Bonuses shall be paid in March of the year following the review period.

Long-term remuneration schemes   

Decisions on Citycon’s long-term incentive schemes are made by the AGM or the Board of Directors within the scope of the authorisation it has received from the AGM and on the basis of a proposal prepared by the Board’s Nomination and Remuneration Committee. The Board’s valid authorisations can be found here.  

The aim of the long-term incentive schemes is to align the objectives of the shareholders and the key employees in order to increase the value of the company in the long term, to commit the key employees, and to offer them competitive remuneration schemes based on their earning and accumulating the company’s shares. In accordance with the remuneration clawback terms applicable in all Company’s incentive plans and set forth by the Board of Directors, any restatement of financial results may result in reclaiming the compensation paid based on the financial results that have been materially restated. The Board may also in its discretion to scale back short-term and long-term incentives.

Citycon has the following long-term incentive schemes currently in use for the Group’s key personnel, including the CEO and other Corporate Management Committee members: the CEO restricted share plan 2018-2021; the performance share plan 2020–2022;  the matching share plan 2018–2020 as well as the restricted share plans 2020–2022; 2018–2020, and 2015.

The long-term incentive plan targeted at the CEO

CEO Restricted Share Plan 2018–2021

The CEO restricted share plan 2018-2021 includes three vesting periods ending on 15 November 2019, 2020 or 2021. The plan is directed to F. Scott Ball.

The rewards to be paid on the basis of the plan correspond to the value of a total of 120,000 Citycon shares including also the cash proportion to be used for taxes and tax-related costs. The rewards from the plan will be paid in three equal instalments.  No reward shall be paid to the CEO, if the CEO terminates his director contract before the reward payment.  Upon reward payment, the Board shall have the right to resolve that the company pays the reward fully or partly in cash, on the basis of the trade volume weighted average quotation of the Share on Nasdaq Helsinki Ltd of the calendar month preceding the reward payment date. The company shall withhold and pay taxes from the cash proportion of the reward according to law in force. Should the reward be paid fully in cash,  the Board shall have the right to obligate the CEO to acquire shares with the amount of the paid net reward. 

The terms and conditions of the CEO restricted share plan 2018-2021 are materially in line with the terms and conditions of the company’s restricted share plan 2018-2020, found here.

The long-term incentive plans targeted at the Management Committee

Performance Share Plan 2020–2022

The Performance Share Plan 2020—2022 includes three performance periods, each of them three years, spanning from March 2020, 2021 and 2022 until the end of February 2023, 2024 and 2025, respectively. The rewards payable are based on the participants achieving the strategic individual criteria set for each performance period. The plan is directed to the members of the Corporate Management Committee, excluding the CEO.

The Board of Directors shall confirm the participants, determine their individual performance criteria and the amount of maximum reward for each performance period, denominated in a gross number of Citycon shares including possible cash proportions for taxes and tax-related costs. The rewards to be paid on the basis of the performance share plan 2020—2022 shall correspond to the value of a maximum total of 150,000 Citycon Oyj shares including any cash proportion for taxes and tax-related costs.

The Board of Directors has resolved on the participants for the first performance period (March 2020–February 2023) and the individual performance criteria based on their areas of responsibilities. The rewards to be paid based on the first performance period correspond to the value of an approximate maximum total of 30,000 shares.

The terms and conditions of the performance share plan 2020—2022 can be found here.

Matching Share Plan 2018-2020

The matching share plan 2018—2020 includes three matching periods, calendar years 2018—2019, 2019—2020, 2020—2021. The plan is directed to the members of the Corporate Management Committee.

The prerequisite for participation in the plan and for reward payment is that a key employee invests in the company’s shares a pre-determined percentage of the bonus earned from the company’s performance bonus scheme during the calendar year preceding a matching period. If a key employee´s share ownership prerequisite is fulfilled and his or her employment or service is in force with a Citycon group company upon reward payment, he or she will receive free matching shares for shares subject to the share ownership prerequisite.

The rewards to be paid on the basis of the matching share plan correspond to the value of an approximate maximum total of 40,000 Citycon Oyj shares. In addition, a cash proportion is included in the reward to cover taxes and tax-related costs arising from the reward to the participant. The rewards from the matching period 2018—2019 will be paid in 2020.

The terms and conditions of the matching share plan 2018-2020 can be found here.

The long-term incentive plans targeted at the Key Personnel

Restricted Share Plan 2020–2022

The rewards from the restricted share plan 2020–2022 may be allocated in 2020–2022. The plan is directed to selected key employees outside the Corporate Management Committee.

The rewards will be based on a valid employment or service contract of a key employee upon the reward payment, and it will be paid partly in the company’s shares and partly in cash after the end of a 24 to 36 months vesting period. The company shall withhold and pay taxes and related costs from the cash proportion of the reward according to law in force.

The rewards to be paid on the basis of this plan correspond to the value of an approximate maximum total of 60,000 Citycon Oyj shares including (also including the cash proportion to be used for taxes and tax-related costs).

The terms and conditions of the restricted share plan 2020–2022 can be found  here.

Restricted Share Plan 2018-2020

The rewards from the restricted share plan 2018–2020 may be allocated in 2018–2020. The plan is directed to selected key employees.

The rewards will be based on a valid employment or service contract of a key employee upon the reward payment, and it will be paid partly in the company’s shares and partly in cash after the end of a 12 to 36 months vesting period. The company shall withhold and pay taxes and related costs from the cash proportion of the reward according to law in force.

The rewards to be paid on the basis of this plan correspond to the value of an approximate maximum total of 40,000 Citycon Oyj shares including (also including the cash proportion to be used for taxes and tax-related costs).

The terms and conditions of the restricted share plan 2018-2020 can be found  here.

Restricted Share Plan 2015    

The rewards from the restricted share plan 2015 have been allocated in 2015–2018. The plan is directed to selected key employees.

The rewards will be based on a valid employment or service contract of a key employee upon the reward payment, and it will be paid partly in the company’s shares and partly in cash after the end of a 24 to 36 months vesting period. The rewards to be paid on the basis of the plan correspond to the value of an approximate maximum total of 140,000 Citycon Oyj shares (also including the cash proportion to be used for taxes and tax-related costs). The final vesting period under the restricted share plan 2015 will end at 31.12.2020, after which the rewards will be paid during January 2021.

The terms and conditions of the restricted share plan 2015 can be found here.    

Share and stock option holdings of the CEO and other executives 

The share and stock option holdings of the CEO and other members of the Corporate Management Committee are reported annually in the Corporate Governance Statement.

The CEO’s and other Corporate Management Committee members’ transactions in Citycon shares are published through a stock exchange release and subsequently available on Citycon’s webpage.  

Remuneration Reports
Remuneration Report 2019
Remuneration Report 2018
Remuneration Report 2017
Remuneration Report 2016 and Addition to the Remuneration Report 2016
Remuneration Report 2015 and Addition to the Remuneration Report 2015