How to reward start-ups within big organizations

© Tieto Corporation

Tieto is the leading Nordic software and services company

1968

Projects annually

Employing

3000

1.5Serving Nordic clients since

1500Around

clients

Turnover of approximately

13000experts globally,in close to

20 countries

Servingcustomers in over

85

€ billion

countries worldwide

Investments in technology and services more than

100€ million*per year

*incl. capital expenditure and operational costs

© Tieto Corporation

We are actively investing in growth areas

3

Tieto internal start-upsCustomer Experience

Management

New data-driven businesses

Internetof Things

Lifecare

Security services

Cloud

© Tieto Corporation

Start-up compensation philosophy

44

Build attitude: innovation, risk-taking, agility and self-drive

Be a team/Create entrepreneurship: Passionate about the mission and work together on start-up success

Focus on financials: Rapid market share gain and cash generation

Define identity: Focus on the future – business model, brand building

© Tieto Corporation

Compensation Components

5

Lower Base SalaryBase Salary

Gro

wth

Bet

pro

gram

sTi

eto

prog

ram

s

No STIShort Term Incentive

Start-up LTILong Term Incentive

Strong recognition culture incl. Milestone Award Recognition

No formal structureJob Architecture

Local benefits aligned with market practiceBenefits

© Tieto Corporation

Start-up LTI principles

6

• LTI plan has a three year measurement period

• A portion of the additional accretive Growth Bet profit is pooled for LTI annually. The portion (payout %) is decided separately for each Growth Bet.

• The pooled amount is calculated separately for each year. Total amount at the end of the measurement period is called LTI Pool.

• Each participant has a share of the LTI Pool. Participant’s share is confirmed when joining the LTI plan.

• The shares for all the participants can sum up to max 100%

• Maximum cap for LTI payout is defined for each participant. The cap is based on gross base salary and role.

• The LTI is paid out after end of three year measurement period. The participant must be employed by Tieto at the time of payment.

LTI Pool

Participant 215%

Participant 110%

© Tieto Corporation

Lessons learnedBuy-in from the start-up head is critical• Ensures that right communication messages are shared and

builds commitment within the team

Involve the team in planning• Builds the commitment and you may get great new ideas

Be flexible and agile• Be ready to change the plan if it does not work

For long term plans ensure commitment from top management• Use long term plans only if management is willing to invest on

the start-up long term

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