The objective of remuneration at Metso Outotec is to attract, retain and reward our people. Motivated, customer-oriented, performance-driven and innovative people are the key to success and the successful execution of our strategy.
Remuneration at Metso Outotec
At Metso Outotec we support, develop and encourage our people as individuals and as team members to perform and help us to achieve our vision and targets through successful execution of our strategy. This can be accomplished with excellent performance of our motivated, innovative and customer-oriented people. Total remuneration structures may vary by country and are aligned with the interests of Metso Outotec and with internal and external references. We monitor remuneration levels for similar positions among peer companies.
Remuneration policy
Remuneration policy for Metso Outotec, approved in Outotec’s Annual General Meeting on March 11, 2020, describes remuneration principles and framework for the President and CEO and for the members of the Board of Directors of Metso Outotec. The remuneration policy will also be applied to any deputy CEO should such deputy be appointed.
Remuneration policy is in line with Metso Outotec’s remuneration principles, Finnish Corporate Governance Code 2020 issued by Finnish Securities Market Association, and the requirements set forth by the amended EU Shareholders’ Rights Directive, which has been implemented in Finland mainly into the Limited Liability Companies Act, Securities Markets Act, Decree of the Ministry of Finance.
Remuneration policy is available here.
Board remuneration
Board remuneration
The Annual General Meeting decides on the remuneration to the members of the Metso Outotec Board for one term of office at a time.
The Annual General Meeting 2020 confirmed the annual remunerations to the Board members as follows:
- Chair - EUR 150,000
- Vice Chair - EUR 80,000
- Other members - EUR 65,000
Additional annual remuneration:
- Chair of the Audit Committee (AC) - EUR 23,000
- Chair of the Remuneration and HR Committee (RHRC) - EUR 10,000
- Committee members (AC) - EUR 12,000
- Committee members (RHRC) - EUR 5,000
The annual fees shall be paid to the Board members of Metso Outotec in proportion to the actual length of their term of office.
Meeting fees (excluding committee meetings) based on residence:
- Nordic countries - EUR 900
- Other European countries - EUR 1,800
- Outside Europe - EUR 2,700
Board members shall be reimbursed direct costs arising from board work.
Board remuneration in 2019
As s a condition for the remuneration, 60% of the annual remuneration was paid in cash and 40% in the form of Outotec Oyj shares.
|
Fees paid to the Board of Directors, thousand EUR |
2019 |
2018 |
|
Alahuhta Matti, Chairman |
88.8 |
84 |
|
Pearce Ian W., Vice Chairman |
64.2 |
46.8 |
|
Cawén Klaus |
53.4 |
47.4 |
|
Hämäläinen Anu (as of March 14, 2019) |
61.8 |
|
|
Korhonen Anja |
51 |
58.2 |
|
de Mora Hanne (as of March 27, 2018) |
51.6 |
43.8 |
|
Nolåker Patrik |
51.6 |
48 |
|
Sarajärvi Teija (as of March 14, 2019) |
49.8 |
|
|
Ailasmaa Eija (until March 14, 2019) |
3 |
48 |
|
Ritakallio Timo, Vice Chairman (until March 14, 2019) |
3 |
59.4 |
Remuneration details of Metso’s Board of Directors from 2019 is available in Metso’s 2019 Annual Report.
Management remuneration
Management remuneration
Remuneration and employment terms of Metso Outotec’s President and CEO
The remuneration paid to the President and CEO is determined by the Metso Outotec Board. Metso Outotec’s President and CEO is entitled to participate in short- and long-term incentive programs. The terms and conditions of these programs are decided by the Board.
Employment terms and conditions of Metso Outotec’s President and CEO Pekka Vauramo:
|
Annual Salary |
Total annual salary EUR 842,000 including fringe benefits. |
|
Short-term incentive (annual performance bonus) |
The annual bonus can be earned in accordance with terms approved by the Board. The maximum bonus is 100% of the total annual salary. |
|
Long-term incentives |
According to the Long-term Performance Share Plan, the maximum share allocation for the President and CEO corresponds to 200% of the total annual salary. The purpose of the plan is to align the interests of Metso Outotec’s management and shareholders in creating shareholder value. In addition, the President and CEO is entitled to participate in a share matching program. |
|
Pension |
It has been agreed that Mr. Pekka Vauramo will continue as the President and CEO of Metso Outotec until the end of 2023. The President and CEO is entitled to participate in a supplementary defined contribution pension plan. The supplementary pension contribution is equivalent to 25% of the annual salary. |
|
Termination of assignment |
The notice period for both parties is six (6) months. Severance pay is the full monthly salary multiplied by twelve (12) if the agreement is terminated by the company. |
Remuneration for Executive Team members
The Board’s Remuneration and HR Committee decides on the compensation and benefits of the other Executive Team members based on the President and CEO’s proposal. The total remuneration comprises a total annual salary, customary fringe benefits, pension as well as short- and long-term incentives.
Participation in variable compensation programs is based on the respective terms and conditions of the program. The Remuneration and HR Committee evaluates the achievement of the targets for the Executive Team members other than the President and CEO. Metso Outotec’s Executive Team benefits also include a supplementary defined contribution pension plan.
Outotec’s management remuneration in 2019
Total remuneration of Outotec’s President and CEO amounted to EUR 636,822 during 2019. The remuneration of other Executive Board members amounted to a total of EUR 2,324,288. The tables below include the bonuses paid to the Executive Board, including the President and CEO, amounting to a total of EUR 35,576.
The remuneration of the Executive Board is included for the time when holding duties as Executive Board member. The remuneration includes compensation of costs related to foreign assignments and in 2019 also notice period of one Executive Board member.
|
EUR |
Salary |
Fringe Benefits |
Bonuses |
Share based benefits |
Total |
|
CEO Markku Teräsvasara |
619,365 |
14,956 |
- |
2,501 |
636,822 |
|
Other Executive Board |
2,155, 603 |
105,626 |
35,576 |
27,483 |
2,324,288 |
Remuneration details of Metso’s Executive team for 2019 is available in Metso’s 2019 Annual Report.
Incentive programs at Metso Outotec
Incentive programs at Metso Outotec
Short-term incentives
The short-term incentive plan, Metso Outotec Bonus, covers approximately 9,000 employees globally, including the Executive Team. The Board approves the Group-level terms and targets for the Metso Outotec Bonus annually. In addition, the Board annually sets and approves the President and CEO’s short-term incentive plan.
The Bonus payout, if any, is mainly based on the achievement of predefined financial targets. In addition to the financial targets, individual, team and business bonus performance targets are used.
Maximum Metso Outotec Bonus payout, % of total annual salary:
|
Maximum Bonus Payout for 2020 |
|
|
President and CEO |
100% |
|
Other Executive Team members |
60% |
|
Other Metso Outotec employees |
50% (at highest, maximum varies based on role) |
In addition to the Metso Outotec Bonus, local productivity plans are designed to drive and support the performance of various production units. Targets for local productivity plans are mainly based on productivity, quality and safety KPIs. Local mandatory bonus plans are defined by local legislative requirements and are typically profit-sharing plans. An employee can participate in one bonus plan at a time.
Long-term incentives
The Board decides on and implements Metso Outotec’s long-term incentive plans. The purpose of these plans is to align the interests of operative management and shareholders. The plans also aim to ensure long-term commitment of management and to offer them a competitive reward scheme.
Any shares to be potentially rewarded in these incentive plans are acquired through public trading, and therefore have no diluting effect on the share value. Share repurchase- and share issue authorizations are obtained from the Annual General Meeting. Current valid authorizations are presented on our website at www.mogroup.com/investors. There are no options outstanding or available from any of prior option programs.
The company applies a share ownership recommendation policy for the members of the Executive Team and for the President and CEO. In accordance with this policy, at least 50 percent of the share rewards (net shares after deduction of the applicable payroll tax) received by these individuals under the performance-based share plans shall be retained until the share ownership of the individual participant amounts to his/her annual gross base salary.
If the participant’s employment or service ends for reasons relating to the participant before the reward payment, no reward will be paid from the long-term incentive plans.
Long-term incentive plans at Metso Outotec
On July 1, 2020, Metso Outotec announced new share-based long-term incentive programs for the Company’s management and selected key employees. The programs include a Performance Share Plan (also “PSP”) for the top management, a Deferred Share Plan (also “DSP”) for other senior management and selected key employees and a Restricted Share Plan (also “RSP”) as a complementary structure for specific situations.
Performance Share Plan
The Performance Share Plan consists of annually commencing individual performance share plans, each comprising a three-year performance period, followed by the payment of the potential share reward in listed shares of Metso Outotec Corporation. The commencement of each new individual Plan is subject to a separate Board approval.
The first Plan in this structure is PSP 2020–2022. The potential share rewards thereunder will be paid in the spring 2023 provided that the performance targets set by the Board of Directors for the Plan are achieved.
The performance measures based on which the potential reward under PSP 2020–2022 will be paid are the absolute total shareholder return of Metso Outotec’s share and the achievement of the synergy targets set in connection with the combination of the businesses.
Eligible to participate in PSP 2020–2022 are the members of Metso Outotec Executive Team.
If all the performance targets set for the first plan, PSP 2020–2022, are fully achieved, the aggregate maximum number of shares to be paid based on this Plan is approximately one million shares (referring to gross earning before the withholding of the applicable payroll tax).
Deferred Share Plan
The Deferred Share Plan consists of annually commencing share-based incentive plans, which comprise a performance period and approximately two-year retention period after the confirmation of the potential share reward, followed by the payment of the share reward in listed shares of Metso Outotec. . The commencement of each new individual Plan is subject to a separate Board approval.
The first Plan in this structure is DSP 2020–2022. The potential rewards thereunder will be paid in the spring 2023 provided that the performance targets set by the Board of Directors for the Plan are achieved.
The performance measures based on which the potential reward under the Deferred Share Plan is paid are based on the performance measures applied to the annual bonus plan.
Eligible to participate in DSP 2020–2022 are 180 individuals at the maximum.
If all the performance targets set for the first plan, DSP 2020–2022, are fully achieved, the aggregate maximum value of share rewards to be paid based on this Plan is approximately EUR 11 million, corresponding to approximately 2.2 million shares based on the current share value (referring to gross earning before the withholding of the applicable payroll tax).
Restricted Share Plan
The Restricted Share Plan consists of annually commencing individual restricted share plans, each comprising a retention period with a length of the individual Plan and followed by the payment of the share rewards granted within the Plan in listed shares of Metso Outotec.. The commencement of each new individual Plan is subject to a separate Board approval.
The purpose of the Restricted Share Plan is to serve as a complementary long-term retention tool for individually selected key employees of Metso Outotec in specific situations.
The first plan in this structure is RSP 2020–2022 and the share rewards potentially granted thereunder will be paid in the spring 2023.
The aggregate maximum number of shares to be paid based on RSP 2020–2022 is approximately 320,000 shares (referring to gross earning before the withholding of the applicable payroll tax).
Ongoing long-term incentive plans from Metso and Outotec
Metso Outotec will honor all long-term incentive obligations from plans and programs approved and active from Metso or Outotec. All rewards will be paid in either by Metso Outotec shares, cash or combination of the two.
Metso:
Information is available in Metso’s 2019 Annual Report.
Outotec:
Share-based Incentive Program 2019–2021
Outotec’s Board of Directors decided on December 11, 2018, to adopt a Share-based Incentive Program for the company’s key personnel for years 2019–2021. The Board of Directors determines annually the maximum number of allocated shares, the participants, the length of earning period (1-3 years), the amount of the maximum reward for each individual, the earning criteria and the targets established for them. A precondition for the Executive Board members for being eligible for the Share-based Incentive Program was that s/he also participates in Outotec’s O’Share Employee Share Savings Plan.
Earning period 2019
The Board of Directors approved the total achievement of 52.97% of the maximum reward based on the performance criteria of Outotec EBIT and free cash flow. A total reward of 326,432 shares and cash portion to cover taxes and tax-related payments will be paid according to the program terms to 68 participants including CEO and Executive board members in January 2022.
O’Share Employee Share Savings Plan
On February 5, 2020, the Board of Directors decided to discontinue the program and an early settlement of free shares in the pending O’Share 2017, 2018 and 2019 saving periods by a conveyance of existing Outotec shares held by the company. The decision was related to the expected merger of Outotec and Metso.
More information is available in Outotec’s 2019 Annual Report.