Board of Directors
The following remuneration for the Board has been approved until Valmet’s Annual General Meeting 2017: the Chairman of the Board would be paid EUR 100,000, the Vice Chairman and Chairman of the Audit Committee EUR 60,000 and the other members of the Board EUR 48,000 as annual remuneration. In addition, for each meeting of the Board of Directors or the committees of the Board of Directors, a fee of EUR 700 will be paid to the members of the Board that reside in the Nordic countries, a fee of EUR 1,400 will be paid to the members of the Board that reside in other European countries and a fee of EUR 2,800 will be paid to the members of the Board that reside outside Europe.
As a condition for the annual remuneration, the members of the Board of Directors be obliged, directly based on the Annual General Meeting's decision, to use 40 percent of the fixed annual remuneration for purchasing Valmet Corporation shares on the market at a price formed in public trading on the Helsinki Stock Exchange and that the purchase would have to be carried out within two weeks from the publication of the Interim Review for the period January 1 to March 31, 2016.
Chief Executive Officer and other Executive Team members
The remuneration of the President and CEO, as well as the Executive Team members, comprises a monthly total salary (including monthly salary and customary fringe benefits, such as a car and a mobile phone) a supplementary pension plan as well as both short- and long-term incentives.
The table below presents the management compensation in 2015.
The President and CEO is entitled to retire when reaching 63 years of age. All other Executive Team members belong to the pension systems of their country of residence and have a statutory retirement age. The President and CEO and some members of the Executive Team have an additional defined contribution plan.
Share-based incentive plans
Valmet’s share-based incentive plans are part of the remuneration and retention program for Valmet’s management. The aim of the plans is to align the objectives of shareholders and management to increase the value of the company, commit management to the company, and offer management a competitive reward plan based on long-term shareholding in Valmet.
Valmet has entered into an agreement with a third-party service provider concerning the administration of the share-based incentive programs for key personnel. At the end of the reporting period, the number of shares held within the administration plan was 473,617.
Long-term incentive plan 2012–2014
In December 2011, a share-based incentive plan including three performance periods, which were the calendar years 2012, 2013 and 2014 was approved.
For the 2012 performance period a gross number of 321,438 shares were earned by 31 participants. The earning criteria of the performance period 2012 were based on net sales growth of the Services business, return on capital employed (ROCE) before taxes and earnings per share (EPS). The reward was paid partly as company shares and partly in cash during 2015.
For the 2013 performance period, the performance criteria were not met and therefore no rewards will be paid for the 2013 performance period.
For the 2014 performance period, the plan was targeted at 40 persons in Valmet’s management. From the performance period 2014 a gross number of 268,003 shares were earned. The earning criteria of the performance period 2014 were based on growth in Valmet’s EBITA % and growth in Services orders received. The reward will be paid partly as company shares and partly in cash. The cash portion is dedicated to cover taxes and tax-related payments. The expense of the plan is recognized over the vesting period i.e. from the beginning of 2014 until the end of February 2017.
Long-term incentive plan 2015–2017
The Board of Directors of Valmet has decided to continue the share based incentive program for Valmet's key employees approved in December 2014. The aim of the program is to combine the objectives of the shareholders and the key employees in order to increase the value of the company, to commit the key employees to Valmet, and to offer them a competitive reward plan based on holding the company's shares.
The program approved in 2014 includes three discretionary periods, which are the calendar years 2015, 2016 and 2017. The Board of Directors of Valmet shall decide on the performance criteria and targets in the beginning of each discretionary period. The potential reward of the program from the discretionary period 2017 is based on Comparable EBITA % and orders received growth % of the stable business, that is, the Services and Automation business lines. The potential reward of the plan from the discretionary period 2017 will be paid partly as Valmet shares and partly in cash in 2018. The proportion to be paid in cash is intended to cover taxes and tax-related costs arising from the reward to the key employee. As a rule, no reward is paid, if the key employee's employment or service ends before the reward payment.
As part of the share based incentive program members of the Valmet Executive Team shall have a possibility to receive a matching share reward for the discretionary period 2017 provided that he or she owns or acquires Valmet shares up to a number determined by the Board of Directors by December 31, 2017. Reward receipt is tied to the continued employment or service of the Valmet Executive Team member upon reward payment.
The reward of the plan may not exceed 120 percent of the key employee's annual total base salary. The shares paid as reward may not be transferred during the restriction period, which will end two years from the end of the discretionary period. Should a key employee's employment or service end during the restriction period, as a rule, he or she must gratuitously return the shares given as reward to Valmet.
The plan is directed to approximately 80 key employees. The rewards to be paid on the basis of the plan are in total an approximate maximum of 550,000 shares in Valmet.
More information on remuneration can be found in Valmet’s Corporate Governance Statement.