Remuneration of the members of the Board of Directors

The Annual General Meeting 2017 resolved to increase the annual remuneration of the members of the Board of Directors by approximately 8 per cent. Thus, the Chairman receives an annual remuneration of EUR 95,000, the Vice Chairman EUR 80,000 and members EUR 62,500. Approximately one half of the remuneration was decided to be paid in the Company's B-series shares that were acquired from public trading on 4 April 2016. As a result, the Chairman received 7,964, the Vice Chairman 6,706 and each Board member 5,239 B-series shares. The amount of the cash consideration corresponds to the estimated withholding tax. In addition, the Annual General Meeting resolved to pay to the members a remuneration of EUR 700 per each attended Board and committee meeting. Further, the Annual General Meeting decided that an additional monthly compensation of EUR 800 be paid to the Chairman of the Audit Committee.

Principles of compensation of operative management

The purpose of the management's compensation system is to compensate the management in a fair and competitive way for a successful and profitable implementation of the Company's strategy. The objective of remuneration is also to encourage management in the development of the Company strategy and business to thereby act for the benefit of the Company in the long run.

The Board approves the salary and compensation of the CEO and the principles applied in the compensation of other Corporate Management Team members. The Board further approves the structures and basis as well applicable measures for the Company's remuneration and incentive schemes. The Nomination and Compensation Committee assists the Board in matters relating to management remuneration, conditions of employment and engagement of management members as well as prepares Board decisions relating to management remuneration. The CEO acting in cooperation with the Chairman of the Board decides on matters related to the compensation of other senior management members in accordance with the principles approved and guidance issued by the Board.

Remuneration of the CEO

The monthly salary of CEO Mika Joukio is EUR 40,277. The salary includes car and phone benefits as well as an extended cover for travel and accident. In addition, the Board may, in accordance with the managing director's service agreement, decide that the CEO receives bonus pay based on his overall performance and corresponding to his seven-month salary. In 2016, CEO Joukio received a total of EUR 1,173,861 in salary, bonuses and other benefits, of which EUR 498,301 was fixed compensation and EUR 229,849  was short-term bonus pay and EUR 445,711 was share based remuneration.

Remuneration of other Corporate Management Team members

Also other Corporate Management Team members have written employment contracts. In 2016, other Corporate Management Team members received a total of EUR 2,460,712 in salary and bonuses of which EUR 1,093,384 was fixed salaries and benefits (car and mobile phone) and EUR 439,657 was short-term bonus pay and EUR 927,671 was share based remuneration. The members of the Corporate Management Team are entitled to a bonus pay corresponding to a maximum of their respective 6-month salaries. The bonus pay is defined and decided by the Board and was in the financial years 2014-2016 based on the Company's operating results (EBIT) and cash flow, results and other targets set for the functions as well as on personal targets.

Share Based Remuneration

In December 2010, the Board of Directors approved the current share-based incentive plan. The aim of the plan is to combine the objectives of shareholders and executives in order to increase the value of the company, to commit the executives to perform the mutual strategy, and to offer them a competitive reward plan based on share ownership. The plan consists of three consecutive three-year earnings periods, namely calendar years 2011–2013, 2012–2014 and 2013–2015. At the beginning of each period, the Board of Directors decided on the earnings criteria and defined performance targets. The potential reward from the plan for each of the earnings periods is based on Metsä Board Group’s equity ratio at the end of the period as well as the development of return on capital employed (ROCE) and earnings before interest and taxes (EBIT) during each earnings period. Each earnings period is followed by a two-year restriction period during which a participant is not entitled to transfer or dispose of the shares.

The Board decided in December 2013 to continue the share-based incentive scheme for  management. The aim of the plan is to combine the objectives of shareholders and executives in order to increase the value of the company, to commit the executives to perform the mutual strategy, and to offer them a competitive reward plan based on share ownership. The plan consists of three consecutive three year earnings periods, namely calendar years 2014–2016, 2015–2017 and 2016–2018. At the beginning of each period, the Board of Directors decided on the earnings criteria and defined performance targets. The potential reward from the plan for each of the earnings periods is based partly on Metsä Board Group’s equity ratio at the end of the period as well as the development of return on capital employed (ROCE) and operating results (EBIT) and partly based on corresponding indicators for Metsä Group, as determined by the Board. Each earnings period is followed by a two-year restriction period during which a participant is not entitled to transfer or dispose of the shares. The potential reward for the earnings period 2014-2016 will be paid in 2017 and is at the start of the period a maximum of 378,335 B-series shares. The potential reward for the earnings period 2015-2017 will be paid in 2018 and is at the start of the period a maximum of 265,000 B-series shares. The potential reward for the earnings period 2016-2018 will be paid in 2019 and is at the start of the period a maximum of 243,750 B-series shares. The amount of the annually paid reward may be limited. Changes in participants such as the appointment of a new CEO in the fall of 2014 and changes to management team members in January 2015 do have an effect on the maximum number of shares available.

The Board confirmed in January 2014 that the result for the earnings period 2011–2013 was 45 per cent, based on which 125,750 B-series shares were paid to participants in the spring of 2014. Similarly, the Board confirmed in February 2015 that the result for the earnings period 2012-2014 was 33,5 per cent, based on which 62,533 B-series shares were paid to participants in February 2015. CEO Helander was not entitled to any shares since his service relationship with the company ended during the earnings period. Mr Joukio was entitled to 4,653 shares for the time period August 1 through December 31, 2014.  The Board of Directors confirmed in February 2016 that the result for the earnings period 2013-2015 was 74,4 per cent, based on which the total of 160,074 B-series shares were paid to participants. Of these 36,187 shares were paid to CEO Joukio. Finally the Board confirmed in February 2017 that the result for the earnings period 2014-2016 was 111,6 per cent (taking into account the preset EBIT multiplier) entitling participants to earn a total of 259,162 B-shares, of which 92,598 shares to CEO Joukio. The proportion to be paid in cash covers taxes and other tax-related costs.


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