Proha complies with the Finnish Corporate Governance Code published by the Securities Market Association with the following exception:

Recommendation 14: The majority of the Board is not independent of the company. Of the four Board members, independent of the company and its significant shareholders are the chairman Hannu Vaajoensuu and the vice chairman Antti Manninen.

There are no separate committees of the Proha Board, because the size of the Group's operations and the Board does not necessitate the preparation of matters in smaller groups than the composition of the Board.

Remuneration and other benefits of the Board of Directors

The Annual General Meeting on March 17, 2009, decided that the Chairman of the Board be paid EUR 30,000 and  Board members be paid EUR 20,000 for the period, which lasts until the next Annual General Meeting in 2011. The renumeration will be paid quarterly. The AGM decided that each Board member, who, at the time of election, is employed by or affliaited with the Proha Group, is paid a fee of EUR 300 for each meeting. The travel expenses are reimbursed according to actual costs.

The Annual General Meeting decided that the number of board members be four (4).

CEO

Ilkka Toivola started as the CEO effective November 16, 2009. Mr. Toivola’s bio and professional experience are available at this link.

The Board decides on the service terms and conditions of the CEO, specified in writing. The service terms and conditions of the current CEO, Ilkka Toivola, consist of a EUR 150,000 annual salary, performance-based bonus as decided by the Board, car and phone benefits, and a life insurance. The contract includes pension benefits pursuant to the Employees’ Pensions Act (TyEL). The contract does not specify the CEO’s retirement age. Should the company decide to give notice, the CEO is entitled to severance pay in addition to the salary for the period of notice. Had the company given notice before December 31, 2010, the severance pay would have been equivalent of 6 months’ fixed salary. As of January 1, 2011, the severance pay is equivalent of 9 months’ salary.

The CEO’s bonus is based on the company’s, or its individual units’, performance and profitability or the successful completion of organizational measures. These objectives are specified half-annually. The CEO’s bonus in 2010 may not exceed EUR 112,500 over 12 months.

In accordance with the CEO’s terms of contract, the CEO has been granted:

- On January 15, 2010, 100,000 option rights under the 2007 C-series option plan (marking price EUR 0.37).

- On May 27, 2010, 400,000 option rights under the 2010 A-series option plan (marking price EUR 0.33).

Renumeration of Proha Executive Team

The Executive Team’s remuneration consists of total salary (including salary in money and fringe benefits, i.e. car and phone) as well as long- and short-term incentives. Short-term incentives include a possible semi-annually bonus that is based on performance and decided by the Board. Long-term incentives include the company’s option plans, to which all members of the Executive Team are entitled. The Board decides on the option plans. Proha currently grants option rights under its 2007C and 2010 option plans. Proha has not taken out any additional pension insurance for the members of its Executive Team.

The Board approves semi-annually the terms and criteria of the Executive Team’s short-term incentives (or bonuses), which are paid semi-annually. The possible bonuses are based on financial targets, such as results before interest and tax (EBITA) and achieving sales on either Group and/or business unit level. In addition to this, there can be either individual or team objectives. Excluding the CEO, the annual short-term incentives are 20-50% of the base salary for the Executive Team members.

In 2010, the total salaries and benefits of the Executive Team members were EUR 862,000, excluding the company CEO. Performance bonuses totaled EUR 127,000.
Auditors

The Annual General Meeting on March 17, 2010, elected Ernst & Young Oy to continue as the company's auditor, with Ulla Nykky, APA, as the auditor in charge.

Proha Group's audit fees (EUR 1,000)

Year 2008 information

Year 2009 information

Updated on Oct 26, 2010