Appointed by the Board of Directors, the company's CEO is in charge of Digia's day-to-day management and administration in accordance with the instructions and regulations issued by the Board of Directors, and as defined by the Finnish Companies Act. The Managing Director may take exceptional and far-reaching measures, in view of the nature and scope of the company's activities, only if authorised by the Board of Directors. S(he) is not a member of the Board of Directors, but attends Board meetings.
The CEO's service contract defines in writing the key terms and conditions which govern his/her employment and which are approved by the Board of Directors. The Board of Directors decides the CEO's salary, other remuneration, stock options and other benefits. His/her compensation package is tied to the Group's financial results, and the performance-based bonus payable to him/her is settled as company shares, cash, or a combination of the two, as decided by the Board of Directors.
The company may terminate the CEO's service contract at six months' notice. Upon such termination, (s)he will receive remuneration for the notice period and severance pay equaling 12 months' salary. The CEO's retirement age is as stipulated by the law, and he has no separate pension agreement with the company.
Digia's Board of Directors has decided to cease using management incentives based on option rights and instead shift to use of share-based incentive systems. The CEO's current share incentive scheme agreed in 2007 has thus been terminated and replaced with a new scheme, pursuant to which:
- the CEO has been awarded with a bonus equal to the value of 100.000 company shares, said bonus having been paid in October 2009 in a 50/50 combination of shares and cash without any disposition restrictions; and
- a new share bonus system has been launched for the CEO to cover two earning periods (years 2009 and 2010), whereunder the CEO is entitled to a maximum bonus equal to the value of 80.000 company shares for each earning period depending on the earning per share (EPS) value reached during such earning period. The maximum total bonus available for the CEO under the scheme thus equals to the value of 160.000 shares. The bonus starts to accrue when the EPS amounts to 0,41 EUR (entitling the CEO to a bonus of the value of 20.000 shares) for an earning period, whereafter the bonus increases in steps so that the maximum bonus becomes payable if the EPS amounts to 0,69 EUR for the earning period. The bonus will be paid in a 50/50 combination of shares and cash, without any disposition restrictions, after the adoption of the financial statements following the close of the respective earning period. The above-mentioned scheme will be effected with the treasury shares held by the company.
During the financial year 2009 Digia paid to its CEO Juha Varelius a sum equal to EUR 846,431 in salary and benefits.