Remuneration statement

1. Principles of the Remuneration of the Board of Directors and decision-making process

2. Principles of the remuneration of the CEO and other management and decision-making process

This remuneration statement of Biotie Therapies Corp. (the “Company” or “Biotie”, or together with subsidiaries the “Group”) is the statement referred to in the Finnish Corporate Governance Code 2015 for listed companies issued by the Securities Market Association on 1 October 2015.

1. Principles of the Remuneration of the Board of Directors and decision-making process

The remuneration of the members of the Board of Directors is decided by the Annual General Meeting of Biotie. Following the recent completion of the voluntary public tender offer by Acorda Therapeutics, Inc. (“Acorda”) to purchase all of the issued and outstanding Biotie shares, American Depositary Shares, stock options, share units and warrants in Biotie not owned by Biotie or any of its subsidiaries (the “Tender Offer”), Acorda holds more than 90 percent of the shares in the Company. Acorda is responsible for preparing the proposals to the General Meeting for the election and remuneration of the members of the Board of Directors.

The General Meeting held on May 3, 2016 resolved that no remuneration is payable to the members of the Board of Directors. Reasonable travel and other expenses related to Board work shall be covered by the Company.

The General Meeting held on May 26, 2015 resolved that the remuneration payable to the Chairman of the Board of Directors shall be EUR 52,000 per year, to the Vice Chairman of the Board of Directors EUR 46,000 per year and to other Board members EUR 36,000 per year. Further, annual remuneration shall be paid to the Committees of the Board of Directors: EUR 10,000 for the Chairman of the Audit Committee, EUR 8,000 for the other Audit Committee members, EUR 8,000 for the Chairman of the Nomination and Remuneration Committee and EUR 4,000 for other Nomination and Remuneration Committee members. In addition, reasonable travelling expenses in connection with the meetings shall be compensated.

In 2015 the Company did not pay remuneration for Board or Committee work in the form of company shares or rights entitling to shares.

Guido Magni, a member of the Board of Directors until May 3, 2016 held at December 31, 2015 134,592 options entitling him to shares in the Company. The options relate to the Swiss Option Plan described below in this statement and were initially issued by Synosia Therapeutics Holding AG prior to its acquisition by Biotie in February 2011. Otherwise the past or current members of the Board of Directors do not participate in the Company’s bonus and incentive schemes or be covered by voluntary insurance policies.

None of the members of the Board of Directors are in an employment relationship or have service contracts with the Company.

The total remuneration paid during 2015 to Biotie’s Directors is represented in the following table.


Board member Member of the Audit Committee Member of the Nomination & Remuneration Committee Total remuneration received 2015 EUR
William Burns
Chairman of the Board from April 3, 2014
until May 3, 2016 Board member from February 7, 2011 onwards
- Chairman 60,000

Bernd Kastler
Vice Chairman from May 29, 2015 until May 3, 2016 (Board member from November 14, 2008 onwards)

X
(Chairman until May 26, 2015)
- 50,667
Don Bailey
Board member from May 29, 2015 until May 3, 2016
Chairman from May, 29 2015   26,833
Merja Karhapää
Board member from April 15, 2010 until May 3, 2016
X - 44,000
Ismail Kola
Board member from February 7, 2011 until May 3, 2016
- X 40,000
Guido Magni
Board member from February 7, 2011 until May 3, 2016
X (until May 26, 2015) x 41,667
Mahendra Shah
Board member from May 29, 2015 until May 3, 2016
 

X
(from May 29, 2015)

23,333

2. Principles of the remuneration of the CEO and other management and decision making process

The Board is responsible for preparing the framework for the remuneration of the CEO and other executives. When considering the remuneration, bonus and incentive schemes, the Board also takes into account aligning the interests of shareholders and directors. The remuneration of the CEO and other executives comprises fixed basic salary and fringe benefits (such as rights for company car and phone), performance based bonus (short-term incentive) and pension benefits.

Biotie’s remuneration principles are closely linked to financial and personal performance. The performance may be based on terms of reference or on periodic reviews. The success of the Company and the performance of the CEO and the other executives are reviewed and examined continuously. Due to the international nature of Biotie’s business, the analysis of the compensation levels are partially done by benchmarking with other companies in the same line of business, which are located in the countries in which the Group operates, particularly the United States, and where the executives are located.

Since the aim of the total executive remuneration is to lead the business to success, the remuneration programs shall attract, motivate, reward and retain good and high performers on an international level.

Performance based bonus

The Board of Directors assesses annually the need for bonus payments to the CEO and to the members of the management team. The eventual bonuses are discretionary and the payments are subject to achieving the Company’s operational goals set by the Board of Directors for each year. The maximum bonus for the CEO and other executives is 80% of fixed annual compensation.

Remuneration and service contract of the CEO

The Board of Directors appoints the CEO and decides on his salary, benefits and the terms and conditions of his contract.

The CEO contract may be terminated by the Company with a six month notice period and by the CEO with a three month notice period. If the Company terminates the contract with the CEO, the CEO is, in addition to his salary during the notice period, entitled to a severance pay corresponding to 12 months of salary. The Company has also entered into a letter agreement with the CEO, which provide for enhanced severance, including six months’ base salary and a pro rata bonus payment in the event that he is made redundant within one year of the change of control.

Based on achieving pre-agreed operative and strategic targets in 2015 the CEO was eligible for a success bonus of EUR 253,791.

The Board of Directors has resolved that the CEO of the Company must keep 25% of the net return from the Stock Option Plan 2011, the Stock Option Plan 2014 and the Stock Option Plan 2016 in Biotie shares, unless such 25% of net return would be higher than his twelve (12) month gross salary; in such case, the amount of net return to be kept will be the twelve (12) month gross salary equivalent. Such shares must be held as long as the CEO’s service in a group company continues. The Board of Directors may, for very weighty reasons, permit exceptions to this ownership obligation.

Since Biotie’s CEO’s retirement age has not been determined in the CEO contract, the Company is not committed to any lowered retirement age.

Employment contracts of the senior management

The contracts for the other members of the senior management team provide that they may be terminated by the Company with the payment of six to nine months’ pay and benefits in lieu of notice.

Similarly as with the CEO, the letter agreements entered into by the Company provide also for enhanced severance for the senior management team members beyond their existing entitlements, including six months’ base salary and a pro rata bonus payment in the event that a member of the senior management is made redundant within one year of the change of control.

Pension benefits

The Company has committed, as a part of the terms of employment of the CEO and other executives, to make certain contributions to voluntary, payment based retirement insurance policies. In 2015 EUR 39,918 of such contributions were made. The management team members not residing in Finland are not covered by any statutory Finnish pension system.

Long term incentives

Due to the completion of the Tender Offer, the Company does not currently have any outstanding remuneration schemes that are based on shares, options, or other special rights entitling to shares and the below information concerns remuneration schemes in force prior to the completion of the Tender Offer.

The General Meeting held on May 26, 2015 authorized the Board of Directors of to issue shares, options and other special rights, in one or several issues, representing no more than 95,000,000 new shares in the aggregate and the authorization was partly used for the 2016 Plan (see below) and the Equity Incentive Plan 2011. The authorization is in force until June 30, 2016.

Link to the stock exchange release from January 5, 2016

2016 Plan

The Board of Directors approved on January 4, 2016 a share-based incentive plan, the Stock Option Plan 2016 (the 2016 Plan), for the Group’s employees for awards to be made in the period 2016 to 2017. The 2016 Plan is intended to form part of the remuneration, incentive and commitment program for the employees and to support the hiring of new employees as the Group increases the number of its employees to ensure that the currently planned clinical trials are conducted effectively and efficiently. The incentives support the attainment of the targets established by the Group and the implementation of the Group's strategy, as well as the Group's long-term productivity. The 2016 Plan also reflects the competitive environment in which the Group operates, particularly in the United States of America, and are an important tool in enabling the Group to attract and retain the right quality employees.

As a result of the implementation of the 2016 Plan, there will be no further awards made under the 2014 Plans, so there will be no awards made under tranches 2014E or 2014F under the 2014 Plans.

The maximum total number of stock options that may be issued is 80,000,000 and they entitle their owners to subscribe for a maximum total of 80,000,000 new shares in the Company or existing shares held by the Company. The Board of Directors will decide on the distribution of the stock options. The stock options will be issued at no cost. The stock options will be divided into several tranches so that stock options that have equal exercise price and exercise period will form one tranche. The maximum number of stock options that may be issued during each of the calendar years 2016 and 2017 is the lower of 40,000,000 shares and four per cent of the total number of outstanding shares in the Company at the beginning of the relevant calendar year.

The share subscription price, for all stock options, will be the fair market value of the Company’s shares as determined based on the closing price of the Company’s shares on Nasdaq Helsinki Ltd on the date on which the tranche of stock options has been issued. The shares must be paid upon subscription. The share subscription price will be credited to the reserve for invested unrestricted equity of the Company.

The share subscription periods, which will apply separately for each employee, for each tranche shall start one year after the date of issue. The share subscription period for all tranches of stock options will end ten years after the start of the calendar year in which the 2016 Plan was first approved by the Board. The subscription period for each tranche of stock options is, however, restricted as follows: 25 per cent of the award will vest one year after the issue of the stock options; and the remaining 75 per cent of the award will vest evenly at the start of each month for the thereafter following period of three years. Should a stock option owner´s employment or service in a Group Company terminate, such person will: forfeit without compensation all stock options for which the relevant share subscription period has not begun, unless otherwise approved by the Board of Directors; or have a period of 90 days in which to subscribe for shares for which the relevant share subscription has begun or otherwise forfeit such stock options.

The Board of Directors may decide on any amendments and specifications to the terms and conditions of the stock options which are not considered as essential, as well as on all other matters related to the stock options.

READ MORE

2014 Plans

The Board of Directors approved on January 2014 two share-based incentive plans for the Group employees for awards to be made in the period 2014 to 2016 to follow-on from the incentive plans under which awards have been made in respect of the period 2011 to 2013; the Stock Option Plan 2014 for its European employees and the Equity Incentive Plan 2014 for its US employees (together the 2014 Plans). The 2014 Plans are intended to form part of the remuneration, incentive and commitment program for the employees and to support the hiring of new employees as the Group increases the number of its employees to ensure that the currently planned clinical trials are conducted effectively and efficiently. The incentives support the attainment of the targets established by the Group and the implementation of the Group's strategy, as well as the Group's long-term productivity. The 2014 Plans also reflect the competitive environment in which the Group operates, particularly in the United States of America, and are an important tool in enabling the Group to attract and retain the right quality employees.

Stock Option Plan 2014

Based on the terms and conditions of the Stock Option Plan 2014, the maximum total number of stock options that may be issued is 10,337,500, of which 4,320,000 relate to the Senior Management team only and are subject to separate conditions as described below; they entitle their owners to subscribe for a maximum total of 10,337,500 new shares in the Company or existing shares held by the Company. The Board of Directors will decide on the distribution of the stock options. The stock options will be issued at no cost. The stock options are divided into seven (7) tranches, of which 468,125 will be marked as 2014A, 1,404,375 will be marked as 2014B, 518,125 will be marked as 2014C, 1,554,375 will be marked as 2014D, 518,125 will be marked as 2014E, 1,554,375 will be marked as 2014F and 4,320,000 will be marked as 2014M.

The maximum of 4,320,000 stock options that may be granted to the Senior Management team in 2014 are subject to there being a growth in the Company’s share price of at least 100% over the three year period from January 1, 2014 to December, 31 2016. If the growth in the share price over this period is 35% or lower none of these options will be available to the Senior Management team; there is then a straight line increase in the amount available to Senior Management of nil at 35% share price growth to a maximum 4,320,000 at 100% share price growth.

The share subscription price will, for all stock options, be EUR 0.01 per share. The justification for the determination of the share subscription price is to achieve instant and efficient commitment of the Group employees to the company and to combine the objectives of the shareholders and the employees. The shares must be paid upon subscription. The share subscription price will be credited to the reserve for invested unrestricted equity of the Company.

Based on the terms and conditions, the awards will be made in 2014 for stock options 2014A, 2014B and 2014M; 2015 for stock options 2014C and 2014D; and 2016 for stock options 2014E and 2014F. The share subscription periods will be, for stock option 2014A, January 1, 2016 - February, 28 2017; for stock option 2014B January 1, 2017 - February 28, 2018; for stock option 2014C, January 1, 2017 - February 28, 2018; for stock option 2014D January 1, 2018 - February 28, 2019; for stock option 2014E, January 1, 2018 - February 28, 2019; for stock option 2014F January 1, 2019 - February 28, 2020; and for stock option 2014M January 1, 2017 - February 28, 2018. Should a stock option owner´s employment or service in a Group Company terminate, such person will, forfeit without compensation, all stock options for which the relevant share subscription period has not begun, unless otherwise approved by the Board of Directors.

The Board of Directors may decide on any amendments and specifications to the terms and conditions of the stock options which are not considered as essential, as well as on all other matters related to the stock options.

As a result of the implementation of the 2016 Plan on January, 4 2016, there will be no further awards made under the Stock Option Plan 2014, so there will be no awards made under tranches 2014E or 2014F under the Stock Option Plan 2014.

Equity Incentive Plan 2014

Based on the terms and conditions of the Equity Incentive Plan 2014, the maximum number of share units that may be granted and the number of corresponding shares to be delivered on the basis of the plan will be a total of 14,002,500 shares, of which 2,520,000 relate to the Senior Management team only are subject to separate conditions as described below.

The maximum of 2,520,000 share units that may be granted to the Senior Management team in 2014 are subject to there being a growth in the Company’s share price of at least 100% over the three year period from January 1, 2014 to December 31, 2016. If the growth in the share price over this period is 35% or lower none of these share units will be available to the Senior Management team; there is then a straight line increase in the amount available to Senior Management of nil at 35% share price growth to a maximum 2,520,000 at 100% share price growth.

The share subscription price for all share units is the amount of euros corresponding to USD 0.01, in round numbers, and thus EUR 0.01 per share. The justification for the determination of the share subscription price is to achieve instant and efficient commitment of the Group employees to the company and to combine the objectives of the shareholders and the employees. The shares must be paid prior to delivery. The share subscription price will be credited to the reserve for invested unrestricted equity of the Company.

Based on the terms and conditions, the equity incentive plan includes three consecutive discretionary periods, calendar years 2014, 2015 and 2016. Each discretionary period is followed by subscription periods of: January 5, 2016 until January 31, 2016 for tranche 2014A (representing 25% of the share units awarded for the discretionary period 2014); January 5, 2017 until January 31, 2017 for tranche 2014B (representing the remaining share units awarded for the discretionary period 2014); January 5, 2017 until January 31, 2017 for tranche 2014C (representing 25% of the share units awarded for the discretionary period 2015); January 5, 2018 until January 31, 2018 for tranche 2014D (representing the remaining share units awarded for the discretionary period 2015); January 5, 2018 until January 31, 2018 for tranche 2014E (representing 25% of the share units awarded for the discretionary period 2016); January 5, 2019 until January 31, 2019 for tranche 2014F (representing the remaining share units awarded for the discretionary period 2016); and January 5, 2017 until January, 31 2017 for tranche 2014M (representing the awards to Senior Management in discretionary period 2014), after which Company's shares will be delivered to employees after each subscription period on a date set by the Board.  Should an employee´s employment or service in a Group Company end before the commencement of a subscription period, the share units associated with such subscription period will be forfeited, unless otherwise approved by the Board of Directors.

The Board of Directors may decide on any amendments and specifications to the terms and conditions of the share units which are not considered as essential, as well as on all other matters related to the share units.

As a result of the implementation of the 2016 Plan on January, 4 2016, there will be no further awards made under the Equity Incentive Plan 2014, so there will be no awards made under tranches 2014E or 2014F under the Equity Incentive Plan 2014.

The Board of Directors resolved that the members of the Senior Management team must keep at least 25 per cent of the net return from each of the 2014 Plans in Biotie shares, until a member's share ownership in total reaches the minimum share ownership level established by the Board of Directors. Such shares must be held as long as a member's employment or service in a Group company continues. The Board of Directors may, for particularly weighty reasons, permit exceptions to these ownership obligations.

The Board of Directors of Biotie Therapies Corp. has Approved Three Year Incentive Plans for Employees (Stock Exchange Release, 3 January 2014)

2011 Plans

The Board of Directors approved in December 2011 two share-based incentive plans for the Group employees for awards to be made in the period 2011 to 2013; a stock option plan for mainly its European employees and an equity incentive plan for mainly its US employees (together the 2011 Plans). The 2011 Plans are intended to form part of the incentive and commitment program for the employees. The incentives support the attainment of the targets established by the Company and the implementation of the Company's strategy, as well as the Company's long-term productivity.

Stock Option Plan 2011

The maximum total number of stock options issued is 7,401,000, and they entitle their owners to subscribe for a maximum total of 7,401,000 new shares in the company or existing shares held by the company. The Board of Directors will decide on the distribution of the stock options.  The stock options will be issued at no cost. The stock options are divided into three (3) tranches, of which 2,467,000 will be marked as 2011A, 2,467,000 will be marked as 2011B and 2,467,000 will be marked as 2011C.

According to the terms and conditions for the stock options, fifty (50) per cent of the maximum number of stock options will be granted to the Group employees based on the fulfilment of targets determined each year by the Board of Directors, and the other fifty (50) per cent of the stock options will be granted without reference to the strategic and operational targets.

The share subscription price will, for all stock options, be EUR 0.01 per share. The justification for the determination of the share subscription price is to achieve instant and efficient commitment of the Group employees to the company and to combine the objectives of the shareholders and the employees. The shares must be paid upon subscription. The share subscription price will be credited to the reserve for invested unrestricted equity of the Company.

The share subscription period will be, for stock options 2011A, January 1, 2014 - February 28, 2015; for stock options 2011B January 1, 2015 - February 29, 2016; and for stock options 2011C January 1, 2016 - February 28, 2017. Should a stock option owner´s employment or service in a Group Company terminate, such person will, forfeit without compensation, all stock options for which the relevant share subscription period has not begun.

Equity Incentive Plan 2011

The maximum number of share units to be granted and the number of corresponding shares to be delivered on the basis of the plan will be a total of 4,599,000 shares. The Board of Directors will decide on the distribution of the equity incentives.

The equity incentive plan includes three consecutive discretionary periods, calendar years 2011, 2012 and 2013. Each discretionary period is followed by an approximately two year vesting period, ending on January 5, 2014, on January 5, 2015 and on January 5, 2016, after which Company's shares will be delivered to employees on the basis of the granted share units. Should an employee´s employment or service in a group company end before the end of a vesting period, the corresponding share units will gratuitously be forfeited.

According to the terms and conditions for the equity incentive plan, fifty (50) per cent of the maximum number of share units will be granted to the group employees subject to the fulfillment of targets as determined for each discretionary period by the Board of Directors, and the other fifty (50) per cent of the share units will be granted without reference to the strategic and operational targets.

Stock Exchange Release, published 7 December 2011

Swiss Option Plan

The Swiss company, Biotie Therapies AG (formerly Biotie Therapies Holding AG and Synosia Therapeutics Holding AG), acquired by Biotie in February 2011 also has a stock option plan, based on which stock options have been granted to employees, directors and consultants. In connection with the completion of the acquisition of Synosia, the option plan was amended so that instead of shares in former Synosia Therapeutics Holding AG, an aggregate maximum of 14,912,153 shares in Biotie Therapies Corp. may be subscribed based on the plan. Biotie Therapies Corp. issued 14,912,155 shares to its current subsidiary Biotie Therapies AG in connection with the acquisition to be further conveyed to the option holders when they potentially exercise their option rights in accordance with the terms and conditions of the option rights. The last day for share subscriptions based on the option rights in the Swiss option plan is December, 7 2020.

The subscription prices for the shares are as follows:

Equivalent subscription price per Biotie Therapies Corp. share Initial maximum number of Biotie Therapies Corp. shares to be subscribed based on the option rights (some shares based on the program have already been subscribed and delivered)
0.07 per share 511,583
0.08 per share 3,770,840
0.10 per share 1,449,442
0.12 per share 778,389
0.16 per share 1,570,239
0.21 per share 504,719
0.22 per share 414,991
0.24 per share 134,592
0.27 per share 812,037
0.27 per share 78,512
0.29 per share 2,049,162
0.35 per share 2,837,647
Total 14,912,153

Option programs and equity incentive plans READ MORE

The remuneration earned by the CEO and the management team in 2015 is represented in the following table:

Function Fixed basic salary Performance based bonus (based on performance in 2015) Fringe benefits Post-employment benefits 2015 Total
CEO* 318,910 253,791 14,545 - 587,246
Management team except CEO** 924,994 842,288 90,705 39,918 1,897,905
2015 total 1,243,904 1,096,079 105,250 39,918 2,485,151

* Fringe benefits include rights for a company car and phone
**Fringe benefits include phone, medical insurance and life insurance

In 2015, management was awarded 720,000 share options and 480,000 share units (720,000 share options, 1,440,000 senior management option units, 420,000 share units and 840,000 senior management share units during 2014). At the end of the fiscal year, the number of outstanding options and share units granted to management amounted to 5,459,568 options, 1,440,000 senior management option units, 2,090,000 share units and 840,000 senior management share units (at the end of year 2014: 4,099,568 options, 1,440,000 senior management option units, 1,070,000 share units and 840,000 senior management share units). The senior management option units and senior management share units that were issued under the 2014M plan are subject to a multiplier that is dependent on the growth in the Company’s share price over the three year period ending December 31, 2016 and may result in a minimum of nil options and nil share units up to a maximum of 4,320,000 options and 2,520,000 share units being awarded to senior management at the end of the period. 800,000 options were exercised and 300,000 share units were subscribed for by management team members in 2015.

The current holdings of management are provided here.

The Company has entered into letter agreements with each member of our senior management team, including the CEO, which provide that all outstanding stock options and share units held by senior management team members will vest at the transaction closing, with any senior management stock option units or senior management share units vesting as if the maximum performance had been achieved. The letter agreements further provide that any options granted to senior management team members under the stock option plan 2016 will be returned to the Company without consideration, and the Company will have the obligation to pay each senior management team member a transaction bonus equal to the gross amount of gain that he would otherwise have received had the options been acquired by the acquirer in the transaction.

Remuneration Statement 2015

Remuneration Statement 2014

Remuneration Statement 2013

Remuneration Statement 2012

Remuneration Statement 2011

Updated 25 May, 2016