By continuing to use the site, you agree to the use of cookies. You can find out more by following this link

Remuneration

Well-functioning and competitive remuneration is an essential tool for engaging competent members of the Board of Directors and executives for Valmet. The remuneration must be in proportion to the development and long-term enhancement of the value of the Company.

The objective of remuneration at Valmet is to encourage employees as individuals and as team members to achieve the set financial and operational targets and to strive for excellent performance. Remuneration is aligned with the Company’s financial performance, internal and external references and observing remuneration levels for similar positions among peer companies. Valmet’s remuneration package for key personnel and executives includes a competitive salary and benefits according to local market practices, short-term incentives based on predefined annual performance indicators and long-term incentives that align the interests of the key executives and shareholders.

Board of Directors

The following annual remuneration for the Board has been approved until Valmet’s Annual General Meeting 2018:

  • Chairman of the Board would be paid EUR 100,000
  • Vice Chairman EUR 60,000
  • the other members of the Board EUR 48,000 

Furthermore, the Annual General Meeting decided following base fees for committee work:

  • EUR 14,000 for the Chairman of the Audit Committee
  • EUR 7,000 for each member of the Audit Committee
  • EUR 6,000 for the Chairman of the Remuneration and HR Committee
  • EUR 4,000 for each member of the Remuneration and HR Committee

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.

The Annual General Meeting resolved that, 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 Oyj shares on the market at a price formed in public trading at Nasdaq Helsinki's stock exchange list and that the purchase will be carried out within two weeks from the publication of the Interim Review for the period January 1, 2017 to March 31, 2017.

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.

Management compensation in 2016

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. 

 

Share-based incentive plans

The Board of Directors decides and implements Valmet’s sharebased incentive plans, which are part of the remuneration program for management.

The purpose of the plans is to align the goals of shareholders and management to enhance the value of the Company. The plans also aim to ensure commitment of management and offers them a competitive, ownership-based reward scheme.

Any shares to be potentially rewarded are acquired through public trading, and therefore the incentive plans have no diluting effect on the share value.

Long-term incentive plan 2012–2014

Prior to the partial demerger of Metso Corporation and before Valmet Oyj was incorporated, in December 2011, the Board of Directors of Metso Corporation decided to establish a share-based incentive plan that has three performance periods, which were the calendar years 2012, 2013 and 2014. In December 2013, the Board decided to continue the share-based incentive plan approved in 2011. The plan for the 2014 performance period was targeted to 40 Valmet key executives. The reward generated is based on Valmet EBITA % and orders received growth of the services business. From the performance period 2014 a gross number of 262,980 shares were earned. The current Valmet Executive Team can receive a maximum reward of 125,482 Valmet shares. The reward from the 2014 performance period will be paid at the end of an approximately two-year vesting period in 2017, partly in company shares and partly in cash.

The reward for each performance period of the long-term incentive plan 2012–2014 may not exceed 120 percent of a participant’s annual total base salary. If a participant gives notice or a participant’s employment or service ends for reasons relating to the participant before the reward payment, no reward will be paid.

Long-term incentive plan 2015–2017

In December 2014, The Board of Directors approved a new share based incentive plan for Valmet’s key employees. The plan has three discretionary periods, which are the calendar years 2015, 2016 and 2017. The Board shall decide on the performance criteria and number of participants in the beginning of each performance period.

The reward of the plan from one discretionary period may not exceed 120 percent of the key employee’s annual base salary. As a rule, no reward is paid, if the key employee’s employment or service ends before the reward payment. 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 for the 2015 discretionary period was targeted to approximately 80 Valmet key executives including the Executive Team. The reward of the Plan from the discretionary period 2015 was based on EBITA % and Services orders received growth %. As part of the Plan members of the Valmet Executive Team had a possibility to receive a matching share reward for the discretionary period 2015 provided that he or she owned or acquired the Company’s shares up to the number determined by the Board of Directors by December 31, 2015.

From the performance period 2015 a gross number of 540,035 shares were earned. The current Valmet Executive Team received a reward corresponding to 253,903 shares. The reward of the Plan from the discretionary period 2015 was paid partly as Company shares and partly in cash in 2016. The proportion to be paid in cash is intended to cover taxes and tax-related costs arising from the reward to the key employee.

In December 2015, The Board of Directors decided to continue the share based incentive plan for Valmet’s key employees approved in December 2014. The plan for the 2016 discretionary period was targeted to approximately 80 Valmet key executives including the Executive Team. The potential reward of the plan from the discretionary period 2016 is based on Comparable EBITA % and orders received growth % of the stable business, that is, the Services and Automation business lines. As part of the Plan members of the Valmet Executive Team shall have a possibility to receive a matching share reward for the discretionary period 2016 provided that the Executive Team member owned or acquired the Company’s shares up to the number determined by the Board of Directors by December 31, 2016.

The potential rewards to be paid on the basis of the Plan 2016 are in total an approximate maximum of 757,081 shares in the Company. The current Valmet Executive Team can receive a maximum reward of 379,115 Valmet shares. The potential reward of the Plan from the discretionary period 2016 will be paid partly as Valmet shares and partly in cash in 2017. The proportion to be paid in cash is intended to cover taxes and tax-related costs arising from the reward to the key employee.

In December 2016, The Board of Directors decided to continue the share based incentive plan for Valmet’s key employees approved in December 2014. The Plan is directed to approximately 80 key employees including the Executive Team. The potential reward of the plan from the discretionary period 2017 is based on Comparable EBITA % and orders received growth % of the stable businesses, that is, the Services and Automation business lines. As part of the Plan members of the Valmet Executive Team shall have a possibility to receive a matching share reward for the discretionary period 2017 provided that Executive Team member owns or acquires the Company’s shares up to the number determined by the Board of Directors by December 31, 2017.

The potential rewards to be paid on the basis of the Plan 2017 are in total an approximate maximum of 550,000 shares in Valmet. 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.

More information on remuneration can be found in Valmet’s Corporate Governance Statement.

Long-term incentive plan 2018-2020

On December 11, 2017, Valmet's Board of Directors decided on a new long-term share-based incentive plan for Valmet's key employees. The aim of the plan is to combine the objectives of the shareholders and the key employees in order to increase the value of the Company in the long run, to commit the key employees to the Company, and to offer them a competitive reward plan based on holding the Company's shares.

The plan includes three discretionary periods, which are the calendar years 2018, 2019 and 2020. Valmet's Board of Directors shall decide on the performance criteria and targets in the beginning of each discretionary period. The potential reward from the discretionary period 2018 is based on Valmet's Comparable EBITA margin and orders received growth (%) of the stable business, that is, the Services and Automation business lines. The potential reward from the discretionary period 2018 will be paid partly in Company shares and partly in cash in 2019. The proportion to be paid in cash is intended to cover taxes and tax-related costs arising from the reward to the key employee.

Furthermore, the members of Valmet's Executive Team are recommended to own and hold an amount of Company shares equaling to their gross annual base salary (100 percent ownership recommendation).

The rewarded shares may not be transferred during the restriction period, which will end two years from the end of the discretionary period. As a rule, no reward is paid if the key employee's employment or service at Valmet ends before the reward payment. Should a key employee's employment or service end during the restriction period, he or she must, as a rule, gratuitously return the shares given as reward to the Company.

The plan is directed to a total of approximately 120 participants, of which 80 are key employees in management positions (including Executive Team members), and 40 are management talents, which is a new target group in Valmet's share based incentive plan. The total combined reward to be paid based on the plan is capped to an approximate maximum of 586,000 shares in Valmet Oyj, representing the gross reward before the deduction of taxes and tax-related costs arising from the reward.

 

Updated; Dec 12, 2017