Record season for Nordhaven Incentive Services

16 may 2018

Winter season 2017 – 2018 was excellent for Nordhaven’s long-term incentive plan design and implementation services. We continued to grow in serving the large as well as mid-size stock exchange listed companies and introduced new services and products.

During our record season we have worked on a variety of projects. We advised Altia in connection with its IPO, F-Secure in design of all employee share plan and HK Scan in renewal of its LTI plan structures. Additionally, we have advised i.a. Ahlstrom-Munksjö, Amer Sports, Fortum, Metso, Pihlajalinna, SSH and Teleste as the companies have been developing their compensation practices. We have also advised several privately held companies with their share-based incentives.

Following the Nordhaven approach, the new incentive schemes have been designed and tailored based on the clients’ needs. The structures and performance criteria have been designed to support the achievement of the clients’ strategic targets and the increase of shareholder value.

In addition to designing new incentive plans, Nordhaven provides services relating to target setting, review and analysis of ongoing long-term incentive plans. Customers using our continuous services include, among others, Alma Media, Finnair, Huhtamäki, Metso, Neste, Tieto, UPM and Wärtsilä.

As part of the projects we support our clients in the communication of their long-term incentive plans. Clear, visual and up-to-date communication to plan participants is a crucial part of successful plan implementation.

Increased transparency requirements

We advise listed companies on preparing for the upcoming revision of the Shareholders’ Rights Directive. Once the national implementation of the Directive realizes during the next two years, the new regulations thereunder will be applied in annual general meetings beginning from 2020 and 2021 respectively. Due to the revision of the Directive the transparency and content requirements of remuneration planning and reporting will increase. Companies need to ensure that their remuneration policy and reporting are in line with the requirements of the Directive.

The Directive will have an impact on decision-making on incentive plans in two ways. Firstly, the Directive requires that the remuneration policy is presented in the annual general meeting at least every four years and the remuneration report must be presented annually. Secondly, the institutional investors must formulate an engagement policy where they take a stand on remuneration principles. Based on the experience from the Great Britain, it is likely that the reconciliation of the institutional investors’ remuneration views will require a substantial amount of additional preparation from the companies.

As the remuneration policy and report will be dealt with in the annual general meeting, the proxy advisors and their position on remuneration will become more important as well.

Nordhaven estimates that due to the revision of the Directive, the long-term incentive plan earning periods will become longer for those who have not yet moved to three-year plan periods and the performance measures will be evaluated even more critically than before. Simultaneously, the requirements for simplifying the long-term incentive plan structures are likely to increase.

Board compensation

The new regulation will have an impact on the preparation and arguments for Board compensation as well. The preparation of the Board compensation will as a process resemble that of executive compensation more than before. Thus, we have broadened our services to also cover Board compensation, including benchmark data for Board fees in Finland and in Sweden. Our approach to Board compensation is analytical and comprehensive.

 

For further information, please contact:
Tapio Tolvanen, +358 40 533 9474, tapio.tolvanen@nordhaven.com
Antti Heikkilä, +358 40 551 9299, antti.heikkila@nordhaven.com
Marju Simpanen, +358 40 541 6983, marju.simpanen@nordhaven.com

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