I Remuneration Policy

The Remuneration of the governing bodies of Citycon is based on Citycon’s Remuneration Policy, approved on 2 August 2021 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 2023 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 2023 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 and other executives of the Management Committee

Decisions on the remuneration of the 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.

CEO COMPENSATION STRUCTURE AND SERVICE TERMS
F. Scott Ball 
Annual salaryEUR 660,000
(to be adjusted according CPI in 2023 and 2024)
Short-term incentive (annual performance bonus awarded based upon achievement of strategy-supporting individual bonus targets set annually by the Board)

50-100% of the annual salary

The performance targets to be annually determined by the Board of Directors.

For the purposes of calculating the bonus, the bonus year is the time period from 15 November until 14 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 plansThe CEO is included CEO Restricted Share Plan 2021–2025 and  Stock Option Plan 2022.
Pension and retirement ageIn 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 January 2025, 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 and in the event of certain corporate events twenty-four (24) monthly base salaries and benefits, including bonus. If the CEO is relieved from the CEO position, the bonus and the vesting of granted shares under any long-term incentives will be prorated until such date of relief. 

The long-term incentive plans targeted at the CEO:

CEO Restricted Share Plan 2021–2025

The CEO restricted share plan 2021-2025 includes three vesting periods ending on 15 January 2023, 2024 or 2025. 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 570,000 Citycon shares. The rewards from the plan will be paid in three equal instalments.  All paid shares shall be subject to a lock-up undertaking by the CEO until 14 January 2025 unless the CEO agreement is terminated prior to such date. Should the CEO be relieved from the CEO position before the reward payment, the CEO shall be entitled to the allocated reward prorated until such date of relief. 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 2021-2025 are materially in line with the terms and conditions of the company’s restricted share plan 2020-2022, found  here.

Stock Option Plan 2022

The Stock Option Plan directed at the Chief Executive Officer F. Scott Ball. The aim is to align the objectives of the shareholders and the CEO in order to increase the long-term value of the company, to retain the CEO at Citycon, and to offer him a competitive reward plan.

The number of stock options issued is 2,111,111 and they are issued gratuitously. The stock options entitle their owners to subscribe for a maximum total of 2,111,111 new shares in the Company or existing shares held by the Company. Of the stock options, 527,778 are marked with the symbol 2022A, 527,778 are marked with the symbol 2022B, 527,778 are marked with the symbol 2022C and 527,777 are marked with the symbol 2022D.

The share subscription price for shares subscribed by virtue of the stock options is EUR 7.38 per share. The share subscription price will be credited to the reserve for the company’s invested unrestricted equity.

The Share subscription period for stock options is,

for stock options 2022A, 31 January 2022 – 31 December 2025
for stock options 2022B, 31 January 2023 – 31 December 2025

for stock options 2022C, 31 January 2024 – 31 December 2025
for stock options 2022D, 31 January 2025 – 31 December 2025.

The terms and conditions of the Stock Option Plan can be 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 2023, the Corporate Management Committee members' performance target measures are confirmed in six areas: operating operational profit, direct EPRA EPS, general & administrative expenses management, valuations, disposals and personal performance targets. The target measures carry 10–30% 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% 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 2022 (excluding the CEO)Total
Annual salaries (EUR)1 059 114
Fringe benefits (EUR)183 200
Performance Bonuses for the previous year (EUR)313 351
Long-term incentives shares, gross (pcs)42 264

Long-term incentive plans targeted at the management committee (excluding the CEO):

CFO Performance Share Plan 2024-2026

The CFO Performance Share Plan 2024-2026 consists of three performance periods, covering the financial years 2024, 2024–2025 and 2024–2026 respectively. 

In the plan, the CFO has an opportunity to earn Citycon Oyj’s shares based on performance. The performance criteria of the plan are tied to the participant achieving the strategic individual criteria. The potential rewards from the plan will be paid after the end of each performance period. The value of the rewards to be paid on the basis of the plan corresponds to a maximum total of 30,000 shares of Citycon Oyj, including also the proportion to be paid in cash.

The potential reward will be paid partly in Citycon Oyj’s shares and partly in cash. The cash proportion of the reward is intended to cover taxes and statutory social security contributions arising from the reward to the CFO. As a rule, no reward will be paid if the CFO’s employment contract terminates before the reward payment.

The purpose of the plan is to align the interests of the company’s shareholders and the new CFO to increase the company’s value in the long-term, to retain the CFO at the company and to offer them a competitive incentive plan based on earning and accumulating the company’s shares.

Performance Share Plan 2023–2025

The Performance Share Plan 2023–2025 is directed at the members of the Corporate Management Committee, excluding the CEO.

The plan includes three (3) three (3) year performance periods, spanning from March 2023, 2024 and 2025 until the end of February 2026, 2027 and 2028, 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 new performance share plan shall correspond to the value of an approximate maximum total of 180,000 Citycon Oyj shares including any cash proportion for taxes and tax-related costs.

The Board of Directors has resolved on the four participants for the first performance period (March 2023–February 2026) and the individual performance criteria based on their strategic areas of responsibilities. The rewards to be paid based on the first performance period correspond to the value of an approximate maximum total of 60,000 shares.

Matching Share Plan 2022—2024

The Matching Share Plan 2022—2024 includes three matching periods, financial years 2022—2023, 2023—2024, 2024—2025. The prerequisite for participation in this 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 (the “Share Ownership Prerequisite”). 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 Matching Share Plan 2022–2024 is directed to the members of the Corporate Management Committee of Citycon Oyj (excluding the CEO). The net rewards to be paid on the basis of this plan from the matching period 2022—2023 correspond to the value of an approximate maximum total of 16,100 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 2022—2023 will be paid in 2024.

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.

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

 

Restricted Share Plan 2023–2025

The Restricted Share Plan 2023—2025 is directed to selected key employees, excluding the CEO and other members of the Corporate Management Committee.

The rewards from the plan may be allocated in 2023—2025. The reward 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 vesting period. A vesting period will last 24 to 36 months from a reward allocation.

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 a possible cash proportion to be used for taxes and tax-related costs.

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 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.

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 Policy