Remuneration

I Remuneration Policy

The Remuneration of the governing bodies of Citycon is based on Citycon’s Remuneration Policy, approved on 17 March 2020 by the advisory resolution of the Annual General Meeting. The Remuneration Policy sets the general principles and framework of decision-making for remuneration of the Board of Directors, Chief Executive Officer (CEO) and Deputy CEO at 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 issued by the Finnish Securities Market Association (cgfinland.fi/en).

The shareholders discuss the Remuneration Policy at the General Meeting 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.

II Remuneration Report

The Remuneration Report describes the implementation of Citycon’s Remuneration Policy by presenting the remuneration and other financial benefits paid to the Board of Directors, CEO and Deputy CEO during each financial year. Remuneration Report governing the financial year 2020 has been prepared in accordance with the Finnish Corporate Governance Code 2020 (cgfinland.fi/en) and the provisions of the Limited Liability Companies Act (624/2006, as amended) as well as the Finnish Securities Market Act.

The Nomination and Remuneration Committee of the Board has drafted the report for the Board of Directors’ review and it will be presented to the Company’s Annual General Meeting each year. The Remuneration Report will be issued each year with Citycon’s financial statements, management report and the Corporate Governance Statement and it will be available on Citycon’s website for 10 years thereafter.

III Remuneration of the members of the Board of Directors

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.

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. Board members’ remuneration is paid entirely in cash. A Board member has the possibility to choose not to accept any annual fees and/or meeting fees.

The AGM has 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.

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.

IV Decision-making on the remuneration of the CEO, Deputy CEO and other executives of the Management Committee

Decisions on the remuneration of the CEO and the Deputy CEO as well as other members of the Corporate Management Committee are made by the 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.

V Remuneration and service terms of the CEO

The CEO's remuneration consists of annual fixed base salary, fringe benefits and  variable pay components, including annual performance bonus scheme and long-term incentive plans, and potentially other financial or non-financial benefits. The CEO does not have any individual pension arrangements, instead he is covered by the statutory pension systems of Sweden in accordance with local practices. 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 in the below table.

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

 

F. Scott Ball 

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 2021, 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%), progress of sustainability key metrics (weight 5%), and discretionary (weight 20%). 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 commenced 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.

  
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. 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.

VI Remuneration of the members of the Corporate Management Committee

The remuneration of the members of the Corporate Management Committee consists of a fixed monetary salary, individually agreed customary fringe benefits (such as a mobile phone, a car and 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 members of the Corporate Management Committee. The members of the Corporate Management Committee may be paid separately agreed severance compensations, typically equaling 6-12 months’ salary. The Corporate Management Committee members do not have any individual pension arrangements, instead they are covered by the pension systems of their domiciles in accordance with local practices.

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 equals each financial year.  For the financial year 2021, the Corporate Management Committee members' performance target measures 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.

BENEFITS OF THE MEMBERS OF THE CORPORATE MANAGEMENT COMMITTEE 2020 (excluding the CEO) Total                                 
Annual salaries (EUR) 941 363     
Fringe benefits (EUR) 140 048
Performance Bonuses for the previous year (EUR) 334 748 
Long-term incentives shares (pcs)  24 429


Long-term incentive plans targeted at the Management Committee (excluding the CEO)

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 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 two first performance periods 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 20182020

The matching share plan 2018–2020 includes three matching periods, calendar years 2018–2019, 2019–2020, 2020–2021. 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. The rewards from the first two matching periods (2018–2019, 2019–2020) amount to 26,499 shares in total and in addition, a cash portion to cover tases and tax-related costs was included.

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

Other long-term incentive plans targeted at the Key Personnel of Citycon

Restricted Share Plan 20202022

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 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 20182020

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 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.

Long-term Incentive Plans expired during the year 2020- Performance Share Plan 2015 and Restricted Share Plan 2015

The Performance Share Plan 2015 was directed to selected key employees, including members of the Corporate Management Committee. The plan included three performance periods, calendar years 2015–2017, 2016–2018 and 2017–2019. The performance criterion for all three performance periods was total shareholder return of Citycon’s share (TSR). The rewards paid in 2020 based on the final performance period 2017–2019, corresponded to the total of 6,688 shares, including cash proportion to be used for taxes and related costs.

The Restricted Share Plan 2015 was directed to selected key employees, including members of the Corporate Management Committee. The rewards from the Restricted Share Plan 2015 were allocated during 2015–2018. The rewards were based on a valid employment or service contract of a key employee upon the reward payment and paid after the end of a two-year or a three-year individual vesting period. In 2020 a total of 39,259 shares vested based on the Restricted Share Plan 2015,  part of which were paid in January 2021. The aforementioned reward shares included cash proportion to be used for tax and tax-related costs.

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

Share holdings of the CEO and other executives

The share 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 2020
Remuneration Report 2019
Remuneration Report 2018
Remuneration Report 2017
Remuneration Report 2016 and Addition to the Remuneration Report 2016

Remuneration Policy (approved in 2020)