Compensation

Metsä Board’s remuneration principles

Metsä Board’s remuneration is based on the following main principles, which are applicable to the statutory governing bodies of the company as well as all those employed by Metsä Board:

Ensuring sustainable and responsible business operations

Our remuneration supports the achievement of the company’s vision, strategic and operational goals as well as the goals of sustainable development. We encourage activities in line with the company’s values and interests – responsible profitability, reliability, renewal and cooperation. 

Ensuring performance and profitable growth

With remuneration, we encourage excellent performance and results in both short and long term. We remunerate our people for achieving and exceeding targets and for profitable growth and the increase of shareholder and stakeholder value.

Supporting competence development and renewal

With remuneration we support competence development and the commitment of talent. We encourage continuous improvement, renewal and the creation of conditions needed for future success. In addition to monetary remuneration, we develop personnel’s competencies and offer opportunities for career development. Our leadership is of a high quality and we encourage the personnel’s participation. 

Consistency, competitiveness and transparency 

The remuneration is fair and based on clear principles and structures. We offer competitive overall remuneration. We communicate and report on remuneration transparently and according to requirements.

 

Decision-making process concerning remuneration

The General Meeting decides on the remuneration of the Board of Directors. The Board of Directors’ Nomination and Compensation Committee presents to the Annual General Meeting proposals on the Board of Directors’ remuneration, taking into account this policy, the company’s financial standing at the time as well as the level of remuneration in other comparable companies, among other things. When necessary, the committee consults the company’s majority shareholder, which exercises a controlling interest at the General Meeting with regard to Board remuneration. 

The Board of Directors approves the salary and rewards of the CEO and the principles applicable to the remuneration of other members of the Corporate Management Team. The Board of Directors approves also the structure, target groups and principles of the company’s remuneration systems, as well as selects the performance indicators used and sets related target values. The Board of Directors’ Nomination and Compensation Committee assists the Board in matters related to the remuneration, terms of employment and rewarding of Management Team members and prepares Board decisions related to management remuneration. The CEO decides on the compensation of other Corporate Management Team members in cooperation with the Chairman of the Board and in accordance with the principles approved and guidelines given by the Board.



 

Remuneration of the Board of Directors

Remuneration of the Board members consists of a fixed annual remuneration and a meeting fee for attending meetings of the Board and its committees. Further, an additional monthly compensation is paid to the Chairman of the Audit Committee. The Board members are voluntarily TyEL-insured (Finnish statutory pension system) and travel expenses are compensated in accordance with the Metsä Board’s travel instructions.

The Annual General Meeting 2020 resolved to keep the Board’s annual remuneration unchanged:

  • the Chairman receives remuneration of EUR 95,000
  • the Vice Chairman EUR 80,000
  • other members EUR 62,500

The Annual General Meeting resolved to pay approximately one half of the remuneration in the Company's B-series shares which were acquired from public trading during 15-30 June 2020 while the other half was paid in cash. As a result the Chairman received 8,018 the Vice Chairman 6,752 and each member 5,275 B-series shares. The amount of the cash consideration corresponds to the estimated withholding tax. The transfer of the shares is restricted for a period of two years following receipt. 

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.

Remuneration of the CEO

The Board of Directors appoints and discharges the CEO and decides on the CEO’s remuneration and the other terms and conditions of the CEO’s engagement based on the Board of Directors’ Nomination and Compensation Committee’s recommendations and within the framework of the Remuneration Policy. 

By decision of the Board of Directors, the CEO is paid a fixed base salary, which is a compensation for the CEO’s responsibilities and is based on the requirements of the position, the CEO’s individual competence and performance as well as prevailing market practice. The monthly salary of CEO Mika Joukio is EUR 40,582 (January 2021). The monthly salary includes car and mobile phone benefits and an extended health, travel and accident insurance coverage.

A short and long-term reward can be paid to the CEO by decision of the Board of Directors. In 2020 the maximum level of remuneration available in the short-term incentive system is, accounting for Metsä Group’s EBIT multiplier, 75% of the fixed annual salary. The reward is based on Metsä Board’s operating result (50% weighting) and the strategic goals defined by the Board of Directors (50% weighting) as well as the realisation of Metsä Group’s EBIT multiplier. The potential reward shall be paid in March 2021.

The potential reward for the performance period 2018-2020 regarding the performance share plan 2017-2021 is based on the development of Metsä Board Group’s (50%) and Metsä Group’s (50%) return on capital employed (ROCE, %), as determined by the Board of Directors. Minimum levels have also been set for the operating result and equity ratio. The amount of reward is limited and the reward of the CEO (including both shares and cash) can be 200% of the CEO’s annual base salary at the maximum. The potential reward shall be paid in March 2021. The reward payment is followed by an approximately two-year restriction period during which the CEO is not entitled to transfer or dispose of the shares received. If the CEO terminates his service contract during the restriction period, the CEO is obliged to return the shares already earned. If the Board terminates the service contract (other than due to reasons attributable to the CEO) during the restriction period or the contract is agreed to be terminated, the CEO may keep the shares subject to the transfer restriction and the said restriction discontinues.

The Board can discharge the CEO without a specific reason. The CEO can also resign from his assignment. The mutual term of notice is six months. The Board may, however, decide to discharge the CEO without a period of notice. When the service contract of the CEO is terminated by the Board, the CEO is entitled to receive a severance pay equal to the CEO’s 12-month salary.

The CEO is covered by the Finnish Employees’ Pensions Act, which provides for a pension compensation based on service years and earnings. CEO Mika Joukio is also entitled to the supplementary defined benefit pension insurance, with a retirement age of 62. According to the supplementary pension insurance the maximum level of pension is 60 per cent of the CEO’s total salary under the Employees’ Pensions Act, calculated on the basis of a five-year-period preceding the moment of retirement. In case the CEO’s service with the Company terminates before his retirement, the CEO is entitled to a free policy.


Remuneration of other Corporate Management Team

The CEO decides on the compensation of other Corporate Management Team members in cooperation with the Board Chairman and in accordance with the principles approved and guidelines given by the Board.

A fixed base salary is paid to the other Corporate Management Team members. Base salary is a compensation for the executive’s responsibilities and is based on the requirements of the position, the executive’s individual competence and performance as well as prevailing market practice. Base salary may include car and mobile phone benefits and an extended health, travel and accident insurance coverage.

A short and long-term incentive can be paid to the other Corporate Management Team members by decision of the Board of Directors. In 2020 the maximum level of remuneration available in the short-term incentive system is, accounting for Metsä Group’s EBIT multiplier, 50% or 62,5% of the fixed annual salary. The reward is based on Metsä Board’s operating result (30% or 50% weighting) and the targets of the own responsibility area (50% or 70% weighting) as well as the realisation of Metsä Group’s EBIT multiplier. The potential reward shall be paid in March 2021.

The potential reward for the performance period 2018-2020 regarding the performance share plan 2017-2021 is based on the development of Metsä Board Group’s (50%) and Metsä Group’s (50%) return on capital employed (ROCE, %), as determined by the Board of Directors. Minimum levels have also been set for the operating result and equity ratio. The amount of reward is limited and the reward of the other Corporate Management Team members (including both shares and cash) can be 100% of the executive’s annual base salary at the maximum. The potential reward shall be paid in March 2021. The reward payment is followed by an approximately two-year restriction period during which executives are not entitled to transfer or dispose of the shares received. If an executive terminates their employment contract during the restriction period, the executive is obliged to return the shares already earned. If the Company terminates the employment contract (other than due to reasons attributable to the executive) during the restriction period or the contract is agreed to be terminated, the executive may keep the shares subject to the transfer restriction and the said restriction discontinues.

The period of notice of other Corporate Management Team members is six months. Termination of employment due to reasons not attributable to the executive entitles members of the Corporate Management Team to receive, as a rule, severance pay equal to their six (6) month salary. Other Corporate Management Team members have no extraordinary pension arrangements which would deviate from applicable pension legislation.

Remuneration of other Corporate Management Team in 2020 (in euros)

Base salary and fringe benefits (a company car and phone benefit, extended insurance coverage)
​Short-term incentive (concerns performance in 2019)
Long-term incentive (concerns the performance period 2017-2019)
​Deferred long-term incentive
​Total
Other Corporate Management Team
​1,119,876
​124,373 ​771,943445,6202,461,802
2019 1,116,592
​361,728
​ 641,564
​527,526
​2,647,410

 

The short-term incentive paid in 2020 to other Corporate Management Team members was based on performance in 2019. The maximum level of remuneration available in the short-term incentive system was, accounting for Metsä Group’s EBIT multiplier, 50% or 62,5% of the fixed annual salary. The reward was based on Metsä Board’s operating result (30% or 50% weighting) and the targets of the own responsibility area (50% or 70% weighting) as well as the realisation of Metsä Group’s EBIT multiplier. The reward was paid in March 2020.

The reward paid in 2020 from the long-term incentive system concerned the performance period 2017-2019 of the performance share plan 2017-2021. The paid long-term incentive was based on the development of Metsä Board Group’s (50%) and Metsä Group’s (50%) return on capital employed (ROCE, %), as determined by the Board of Directors. Minimum levels had also been set for the operating result and equity ratio. The realisation of the performance period 2017–2019 was 75.1%.The amount of reward is limited and the reward of the other Corporate Management Team members (including both shares and cash) can be 100% of the executive’s annual base salary at the maximum. The long-term incentive paid in March 2020 is followed by a restriction period of approximately two years, during which the executive may not transfer or dispose of their shares.

A total of EUR 445,620 of deferred long-term incentives from previous performance periods were paid to other Corporate Management Team members in 2020 in accordance with the terms and conditions of the performance share plan and the decision of the Board of Directors.

 

Long-term remuneration


Performance share plan 2017-2021

The Board of Directors has resolved in January 2017 to continue the performance share plan for management. The purpose of the plan is to align the objectives of shareholders and executives in order to increase the value of Metsä Board, 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 performance periods, which are calendar years 2017–2019, 2018–2020 and 2019– 2021. At the beginning of each performance period, the Board decides on the performance criteria and defines performance targets. The potential reward from the plan for the performance periods is based on the development of Metsä Board Group’s (50%) and Metsä Group’s (50%) return on capital employed (ROCE, %), as determined by the Board of Directors. Minimum levels have also been set for the operating result and equity ratio.

The potential reward shall be mainly paid in the spring following the end of the performance period. The amount of the reward is limited. If the reward would exceed the executive’s annual salary (or in case of the CEO, the CEO’s annual salary multiplied by two), the exceeding part is not paid. A performance period is followed by an approximately two-year restriction period during which an executive is not entitled to transfer or dispose of the shares received. If an executive terminates their employment or service contract during the restriction period, the executive is obliged to return the shares already earned. If the Company terminates the employment or service contract (other than due to reasons attributable to the executive) during the restriction period or the contract is agreed to be terminated, the executive may keep the shares subject to the transfer restriction and the said restriction discontinues. 

The potential reward is paid in Metsä Board Corporation’s series B shares. On top the Company pays in money an amount covering the applicable withholding tax and related payments resulting from the reward to an executive. The plan covers Corporate Management Team members as well as other key employees of Metsä Board.

 

​performance period* ​2017-2019
​Target group
​Corporate Management Team members as well as other key employees of Metsä Board, total 15 executives
​Reward limit
​The CEO: 200% of the annual base salary at the maximum
Other Corporate Management Team: 100% of the annual base salary at the maximum
​Performance criteria
​ROCE 1)
​Realisation of performance period, %​75,1
​Year of payment of reward
​2020
​Restriction period
​2 years
​Share price on date of transfer (in euros)
​4,86
​Number of shares delivered
Total 172,709 shares of which
the proportion of the CEO 56,325 
and other Corporate Management Team 75,079

 

*Information is based on the situation at the time of the reward payment.

 

PERFORMANCE PERIOD ​2018-2020
Target group
​Corporate Management Team members as well as other key employees of Metsä Board, total
17 executives
(December 2020)
​Reward limit
The CEO: 200% of the annual base salary at the maximum
Other Corporate Management Team: 100% of the annual base salary at the maximum
​Performance criteria
​ROCE 1)
​Year of payment of reward
​2021
​Restriction period
​2 years
​Number of shares allocated (net)
Up to 248,855 shares (December 2020)

 

 

​performance period ​2019-2021
​Target group
Corporate Management Team members as well as other key employees of Metsä Board, total 22 executives (December 2020)
​Reward limit
The CEO: 200% of the annual base salary at the maximum
Other Corporate Management Team: 100% of the annual base salary at the maximum
​Performance criteria
​ROCE 1)
​Year of payment of reward
​2022
​Restriction period
​2 years
​Number of shares allocated (net)
Up to 279,132 shares (December 2020)

 

1)The three-year average ROCE of Metsä Board Group (50%) and Metsä Group (50%). Minimum values have also been set for equity ratio and operating result.


Performance share plan 2020-2024

The Board of Directors of Metsä Board has resolved in January 2020 to continue the performance share plan directed to group executives. The purpose of the plan is to align the objectives of the shareholders and executives in order to increase the value of Metsä Board, to commit the executives to perform the mutual strategy and to offer them a competitive reward plan based on share ownership. The plan 2020–2024 consists of three performance periods, which are calendar years 2020–2022, 2021–2023 and 2022–2024. 

The Board of Directors determines the performance criteria and related target levels at the beginning of each performance period. Reaching the targets set for the performance criteria shall determine the proportion of the maximum reward payable to the executives. The potential rewards for the performance periods 2020–2022 and 2021-2023 are based on the development of Metsä Board Group’s (50%) and Metsä Group’s (50%) return on capital employed (ROCE, %), as determined by the Board of Directors. The Board of Directors is entitled to reduce the rewards fully or partly if defined earnings or equity ratio criteria are not met, or if the reward should exceed the maximum reward limit defined for each executive individually. On maximum level the reward potential of the CEO is 210% of the CEO’s annual base salary and the reward potential of other Corporate Management Team members is 100% of executive’s annual base salary. In addition, the reward limit has been set and the reward of the CEO can be 270% of the CEO’s annual base salary at the maximum and the reward of other Corporate Management Team members 130% of their annual base salary at the maximum. 

The reward consists of a proportion to be paid in Metsä Board Corporation’s series B shares and a cash proportion. The cash proportion refers to an amount used to cover the taxes to be withheld from the reward. The proportion paid in shares refers to the net reward after the withholding of taxes and other expenses payable for the reward. The potential reward shall be mainly paid in the spring following the end of the performance period. The performance period is followed by a two-year restriction period, during which executives are not allowed to sell or otherwise transfer the shares received. Should an executive’s employment end during the performance or restriction period, the executive shall principally lose the right to reward. 

The plan covers Corporate Management Team members as well as other key employees of Metsä Board.

 

​performance period ​2020-2022
​Target group
Corporate Management Team members as well as other key employees of Metsä Board, total 25 executives (December 2020)
​Reward limit
The CEO: 270% of the annual base salary at the maximum
Other Corporate Management Team: 130% of the annual base salary at the maximum
​Performance criteria
​ROCE 1)
​Year of payment of reward
​2023
​Restriction period
​2 years
​Number of shares allocated (gross)
Up to  590,788 shares (December 2020)

 

 

​performance period ​2021-2023
​Target group
Corporate Management Team members as well as other key employees of Metsä Board, total 25 executives (January 2021)
​Reward limit
The CEO: 270% of the annual base salary at the maximum
Other Corporate Management Team: 130% of the annual base salary at the maximum
​Performance criteria
​ROCE 1)
​Year of payment of reward
​2024
​Restriction period
​2 years
​Number of shares allocated (gross)
Up to  431,202 shares (January 2021)

 

1)The three-year average ROCE of Metsä Board Group (50%) and Metsä Group (50%). Minimum values have also been set for equity ratio and operating result.  


Restricted share plan 2017-2021

The Board of Directors of Metsä Board has resolved in January 2017 to implement the restricted share plan directed to group key employees. The purpose of the plan is to commit the key employees to perform Metsä Board Group's mutual strategy and to offer them a competitive reward plan based on share ownership as well as to align the objectives of the shareholders and key employees in order to increase the value of Metsä Board Group. The Plan offers to the key employees belonging to the target group the possibility to earn Metsä Board Corporation series B shares by meeting the set employment precondition. The Board shall determine the key employees who shall belong to the target group and their rewards.

The plan includes restriction periods, lasting for 12-36 months. The Board shall resolve on the commencement and duration of the restriction period separately for each key employee belonging to the target group. The potential reward shall be paid after the end of the restriction period and the reward consists of a proportion to be paid in shares and a cash proportion. The proportion to be given in shares means net reward after the cash proportion has been used for covering taxes arising from the reward to the key employee. The amount of the reward is limited. If the reward (including both shares and cash) would exceed the maximum reward limit set for the key employee, the exceeding part is not paid. The prerequisite for reward payment is that the key employee’s employment or service is in force and continues until the end of the restriction period.

In 2020 one key employee received the reward on the basis of the restricted share plan (total 10,000 shares).

 

Restricted share plan 2020-2024

The Board of Directors of Metsä Board has resolved in December 2019 to continue the restricted share plan directed to group key employees. The purpose of the plan is to commit the key employees to perform Metsä Board Group's mutual strategy and to offer them a competitive reward plan based on share ownership as well as to align the objectives of the shareholders and key employees in order to increase the value of Metsä Board Group. The Plan offers to the key employees belonging to the target group the possibility to earn Metsä Board Corporation series B shares by meeting the set employment precondition. The Board shall determine the key employees who shall belong to the target group and their rewards.

The plan includes restriction periods, lasting for 12-36 months. The Board shall resolve on the commencement and duration of the restriction period separately for each key employee belonging to the target group. The potential reward shall be paid after the end of the restriction period. The reward consists of a proportion to be paid in Metsä Board Corporation’s series B shares and a cash proportion. The cash proportion refers to an amount used to cover the taxes to be withheld from the reward. The proportion paid in shares refers to the net reward after the withholding of taxes and other expenses payable for the reward. The amount of the reward is limited. If the reward (share + cash proportion) would exceed the maximum reward limit set for the key employee, the exceeding part is not paid. The prerequisite for reward payment is that the key employee’s employment or service is in force and continues until the end of the restriction period.

There are no key employees nominated to the restricted share plan 2020-2024 yet.
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