Remuneration

Remuneration and other financial benefits of the Board of Directors

Remuneration and other financial benefits of the board directors Pursuant to the Finnish Companies Act, Amer Sports’ shareholders determine the amount of compensation to be paid to members of its Board of Directors at the Annual General Meeting of shareholders. The Annual General Meeting of shareholders of Amer Sports, held on March 10, 2010, resolved that the Chairman of the Board of Directors shall be paid an annual remuneration of EUR 80,000, the Vice Chairman an annual remuneration of EUR 50,000 and other members of the Board of Directors an annual remuneration of EUR 40,000.

According to the resolution of the Annual General Meeting of shareholders of Amer Sports, 40 percent of the annual remuneration budgeted for the members of the Board of Directors, including with respect to the Chairman of the Board of Directors and the Vice Chairman, will be used to acquire Amer Sports shares for the account of each member of the Board of Directors. A member of the Board of Directors is not permitted to sell or transfer any of these shares to any third party during the term of his or her Board membership. However, this limitation is valid for a maximum of five years after the acquisition of the shares. 

Remuneration of the Board of Directors at December 31, 2009

The number of shares and share-related rights granted to a Board of Director as remuneration

On June 17, 2009, the members of the Board of Directors together received annual remuneration totaling EUR 330,000, of which EUR 198,022.60 was paid in cash. Simultaneously, the members of the Board of Directors received the following numbers of shares: Hannu Ryöppönen, 2,025 shares; Ilkka Brotherus, 2,531 shares; Martin Burkhalter, 2,025 shares; Christian Fischer, 2,025 shares; Bruno Sälzer, 2,025 shares; Anssi Vanjoki, 4,050 shares; and Pirjo Väliaho, 2,025 shares.

Remuneration of the President and CEO and other executives and total rewarding principles

The Board of Directors determines the salaries and compensation which is paid to the President and CEO and his immediate subordinates. The Compensation Committee is responsible for preparing the proposals for CEO and his immediate subordinates’ salaries and the executive’s incentive system. No separate compensation is paid to the members of the Executive Board for their participation in any management bodies. The Amer Sports total rewarding principles are closely linked to financial and personal performance. The total rewarding aim is to drive business success through total reward programs that attract, motivate, reward and retain good and high performers. Emphasis is also placed on team and individual accountability. The principles of total rewarding apply to all Amer Sports employees. The individual performance is evaluated in an annual performance discussion and is mutually agreed between the employee and the direct manager, and in case of the President and CEO, the performance is evaluated by the Board of Directors. At Amer Sports the total rewarding components are base pay, benefits, annual incentives and long-term incentives. Base pay forms the basic element of compensation and takes into account particularly the role content and demand of the role. Benefits are part of Amer Sports total rewarding and the principles follow local practices. Local practices consist of taxable and non-taxable benefits.

The purpose of Amer Sports annual incentive programs is to drive the company’s growth and profitability and to support the realization of company’s business strategy. Annual incentives reward employees for achieving business success through company’s financial targets as well as personal accomplishment through individual targets. The weighting of the financial targets of the overall target setting is higher in the executive roles. The participation in an annual incentive program is role dependant and is the most extensive incentive system in terms of personnel covered.

The long-term incentives at Amer Sports have strategic focus at Group level and concentrate on share-price development. The long-term incentives programs are governed by the Board of Directors. There are a limited number of executives and key players participating in long-term incentive programs, and all participants are nominated by the President and CEO and approved by the Board of Directors.

Long-term Remuneration Programs

Cash-based Long-term Incentive Plans

Deferred Cash Long-term Incentive 2005-2007 and 2008-2010
A deferred cash long-term incentive program seeks to elicit commitment from key executives. The program encourages the achievement of the annual targets and long-term shareholder value. Its result is tied to the three-year trend in shareholder value. The reward is payable in cash in the same currency as the salary and the payment is subject to taxes and other deductions under applicable laws. At the end of 2009, 92 members in management tasks at subsidiaries came within the scope of the program.

Share-Based Incentive Plans

Restricted Stock Plan 2007

On January 14, 2007, the Board of Directors resolved to establish a share-based incentive plan for Amer Sports’ key employees. In order to participate in the plan, each key employee was required to purchase shares up to the amount corresponding to one-half of the reward that was allocated to him/her. The plan’s rewards were paid in 2008 partially as shares and partially in cash. The cash payment covered taxes and tax-related costs arising from the reward. Of the shares rewarded to employees under the plan, 25 percent were transferable as of April 2010, 25 percent will be as of April 2011, and 50 percent as of April 2012. The rewards from the share-based incentive plan correspond to a maximum value of approximately 400,000 shares. At the end of 2009, 22 key employees were covered by the share-based incentive plan and they have originally received in total 102,800 shares.

On March 3, 2009, the Board of Directors decided to transfer the shares used for the Group’s key personnel’s share-based incentive plan to its fully-owned subsidiary, Amer Sports International Oy for allocation to key employees in the future. As at financial year end, Amer Sports International Oy owned 334,900 shares including the shares that have been returned to Amer Sports International Oy during 2009, by persons who no longer participate in the plan, are taken into account. Of the shares owned by Amer Sports International Oy, 89,900 shares are available for allocation to key employees at the end of 2009.

The terms and conditions of the share-based incentive plan do not contain any provisions regarding the impact of the offering on the plan. On September 17, 2009, the Board of Directors of the company resolved to supplement the terms and conditions of the share-based incentive plan to the effect that the subscription rights that will be allocated for the shares rewarded under the plan will be released from the transfer restriction. In addition, the Board of Directors of the company resolved that such released subscription rights shall be used to subscribe for offer shares by the participants of the plan and that the company will pay to the participants of the plan, as a salary, an amount corresponding to the subscription price for such offer shares together with any tax obligations arising as a result of the payment. The offer shares subscribed for in the offering are subject to the transfer restrictions on the same terms as shares that have already been re-awarded under the plan. To the extent the subscription of offer shares is not possible due to legal restrictions, subscription rights received on the basis of shares that have been re-awarded under the plan are released from the transfer restriction on sale by participants of the plan. Those participants of the plan who were not able to subscribe for offer shares in connection with the offering due to legal restrictions, were re-awarded such additional amounts of shares as is necessary to keep them in an equal position with the other participants of the plan. Such amounts have been determined by the Board of Directors of the company and Amer Sports International Oy has transferred the shares to such participants of the plan. There were 60,236 additional shares subscribed to the plan participants in connection to the recent rights offering and 7,300 shares were transferred to those participants who were not able to subscribe to shares due to legal restrictions.

Performance Share Plan 2010

On February 4, 2010, the Board of Directors of Amer Sports Corporation approved a new share-based incentive plan for the Group key personnel. The aim of the new plan is to combine the objectives of the shareholders and the key personnel in order to increase the value of the Company, to commit the key personnel to the Company, and to offer them competitive reward plans based on holding the Company shares. The plan rewards the key personnel for short-term financial success and at the same time for long-term shareholder value and commitment.

The new Performance Share Plan includes six earning periods, calendar years 2010, 2011 and 2012 and calendar years 2010—2012, 2011—2013 and 2012—2014. The Board of Directors of the Company will decide on the earnings criteria and on targets to be established for them for each earning period at the beginning of each earning period. The potential reward from the Plan for the earning period 2010 will be based on the Group’s  Earnings before Interest and Taxes (EBIT) and the potential reward for the earning period 2010—2012 will be based on the Group’s Total Shareholder Return (TSR).

Key Personnel must acquire the Company shares as a prerequisite for participation in the plan and for receipt of the reward on the basis of the plan. Key personnel will be entitled to receive shares as reward for fulfilling such prerequisite.

The potential rewards from the earning periods will be paid partly as the Company’s shares and partly in cash. The cash payment equals to taxes and tax-related costs arising from the reward to the key person. The shares paid from the earning periods 2010, 2011 and 2012 may not be transferred during the restriction periods, which will end on 31 December 2012, on 31 December 2013 and on 31 December 2014. The members of the Group Executive Board must hold 50% of the shares received on the basis of incentive plans as long as the value of the shares held by the member of the Executive Board in total corresponds to the person´s annual gross salary.

The Performance Share Plan is directed to approximately 60 people, including the members of the Group Executive Board. The amount of net rewards to be paid on the basis of the Performance Share Plan will be a maximum total of 1.000.000 Amer Sports Corporation shares.

Restricted Stock Plan 2010

On February 4, 2010, the Board of Directors of Amer Sports Corporation also approved another new share-based incentive plan for the Group key personnel. The aim of the new plan is to combine the objectives of the shareholders and the key personnel in order to increase the value of the Company, to commit the key personnel to the Company, and to offer them competitive reward plans based on holding the Company shares.

The new Restricted Stock Plan includes three earning periods, calendar years 2010, 2011 and 2012. The potential reward will be based on continuation of employment. The potential reward from the earning periods will be paid partly as the Company’s shares and partly in cash. The cash payment equals to taxes and tax-related costs arising from the reward to the key person. The shares may not be transferred during the restriction periods, which will end on 31 December 2012, 31 December 2013 and on 31 December 2014. The members of the Group Executive Board must hold 50% of the shares received on the basis of incentive plans as long as the value of the shares held by the member of the Executive Board in total corresponds to the person´s annual gross salary.

The Restricted Stock Plan is directed to approximately 30 people, including the members of the Group Executive Board. The amount of net rewards to be paid on the basis of the Restricted Stock Plan will be a maximum total of 270.000 Amer Sports Corporation shares.

Pensions

Executives in Finland participate in the standard statutory Finnish pension system called TyEL. According to the statutory pension system, base pay, taxable benefits and annual incentives form the pensionable earnings. Executive Vice President and CFO has an early retirement agreement of 60 years. Executives in other countries participate in local pension systems applicable in each country. More in the Annual Report 2009’s financial statements on pages 96–97.

President and CEO

Heikki Takala is the President and CEO of Amer Sports from April 1, 2010.The terms and conditions of the President and CEO’s employment have been approved by the Board of Directors and they are defined in a written executive agreement.

The Board of Directors determines the salaries and compensation which is paid to the President and CEO. The total annual gross salary of Amer Sports President and CEO is EUR 600.000 and he is eligible to participate in Amer Sports Corporation’s Executive Annual Incentive program. The President and CEO has received 30.000 Amer Sports shares on 1 April, 2010 and the shares are under transfer restriction until March 31, 2013. The President and CEO participates in Performance Share Plan 2010 and in Restricted Stock Plan 2010.

The President and CEO participates in the standard local statutory pension system and may retire at the age of 65.

Both the Company and the President and CEO must give six (6) months’ notice to terminate the President and CEO’s written executive agreement. Should the Company give the President and CEO notice of termination, the company must pay severance payment equal to twelve (12) months of total annual gross salary.

Salaries, benefits and incentives paid at December 31, 2009

The salaries, benefits and other compensation paid to the President and CEO and the members of the Executive Board amounted to EUR 4.1 million in 2009. In 2009, total compensation paid to the President and CEO amounted to EUR 0.9 million, of which incentives tied to profits and other objectives accounted for EUR 0.1 million. Salaries, benefits and other compensation paid to the other members of the Executive Board totaled EUR 3.2 million, of which incentives amounted to EUR 0.5 million.

Salaries, benefits and incentives paid at December 31, 2009

*) Terhi Heikknen, Jean-Marc Pambet and Bernaud Millaud were elected as EXB members on June 15, 2009, and Antti Jääskeläinen on December 1, 2009.

Shareholding and warrants at December 31, 2009