Valmet’s Remuneration Principles

Remuneration at all levels of the organization is built on the following principles

Decision-making process

All remuneration-related decisions require grandparent approval. In other words, the remuneration of an employee must always be approved by the manager’s manager. The decision-making process for the remuneration of the Board of Directors and the President and CEO is summarized in the chart below. 

Remuneration Policy     Remuneration Report

The General Meeting decides on the remuneration of the members of the Board of Directors and the Board’s Committees for one term of office at a time. The preparation of the election and remuneration of the members of the Board of Directors is delegated to Valmet’s Nomination Board which submits its proposals to the Board of Directors. In the preparatory work the Nomination Board may also use external experts to determine the level of remuneration. In accordance with its charter, the Nomination Board presents its proposals and reports on its activities to the General Meeting. More detailed information describing the procedures used for the preparatory work relating to the remuneration is available here.

Remuneration of the members of the Board of Directors consists of an annual fee and a fee per meeting. Furthermore, an additional annual fee is paid to the members of the Board’s committees. In addition, Board member’s travel expenses and daily allowances are compensated in accordance with Valmet’s travel expense policy. The personnel representative of the Board of Directors is entitled to a meeting fee for those meetings they have been invited to attend and have attended.

The following annual remuneration for the Board has been approved until Valmet’s Annual General Meeting 2026:

• Chairman of the Board EUR 155,000
• Vice Chairman EUR 85,500
• the other members of the Board EUR 68,000 

Furthermore, the Annual General Meeting 2025 decided the following base fees for committee work:

• EUR 16,700 for the Chairman of the Audit Committee
• EUR 7,300 for each member of the Audit Committee
• EUR 8,500 for the Chairman of the Remuneration and HR Committee
• EUR 4,200 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, following meeting fees will be paid for the meetings attended:

• EUR 750 to the members of the Board who reside in the Nordic countries
• EUR 1,500 to the members of the Board who reside elsewhere in Europe
• EUR 3,000 to the members of the Board who reside outside of Europe

For meetings in which a Board member participates via remote connection, including the meetings of the committees of the Board of Directors, a meeting fee of EUR 750 shall be paid to Board members. Furthermore, a meeting fee of EUR 1,500 shall be paid to Board members for a Board travel meeting.

The Annual General Meeting resolved that, as a condition for the annual remuneration, the members of the Board of Directors are obliged, directly based on the Annual General Meeting’s resolution, to use 40 percent of the fixed annual remuneration for purchasing Valmet shares at a price formed on a regulated market on the official list of Nasdaq Helsinki Ltd stock exchange, and that the purchase will be carried out within two weeks from the publication of the Interim Review for the period January 1 to March 31, 2025.

The Board of Directors decides on the remuneration, benefits and other terms of employment of the President and CEO based on the preparatory work by the People and Remuneration Comittee and in accordance with the guidelines set forth in this Remuneration Policy presented to the General Meeting. External market data is used to support the process according to our remuneration principles. The Board determines the total remuneration elements of the President and CEO based on market benchmarking and other relevant information available.

The remuneration of the President and CEO is comprised of the total salary (monthly base salary and customary fringe benefits, such as a car and a mobile phone, in accordance with local legislation and market practice), short- and long-term incentives, pension benefits and customary insurances. The fixed annual base salary of the President and CEO in 2024 is EUR 900,000. The maximum relative proportion of the variable pay elements of the President and CEO is 2–3 times the fixed salary.

Long-term incentive plan, Performance Share Plan

In December 2020, the Board of Directors of Valmet Oyj approved a long-term share-based incentive plan, the Performance Share Plan, for Valmet's Executive Team members. The plan includes a three-year performance period parallel to a one-year performance period. Valmet's Board of Directors decides on the predefined performance measures and targets in the beginning of each performance period.

The potentially earned share reward represents a gross reward from which the applicable payroll tax is withheld, and the remaining net balance is paid to the key employee in shares.

* Valmet's President and CEO, Thomas Hinnerskov, has an allocation of 61,037 shares in restricted share pool. A precondition for the payment of the share reward based on the restricted pool is that the employment relationship of Thomas Hinnerskov with Valmet continues until the payment date of the reward, which is in March 2027.

Shares in long-term incentive plan PSP (Performance Share Plan) 2024-2026 have also been allocated to Thomas Hinnerskov in 2024, with rewards from these plans will be paid to participants in spring 2027.

Performance share plan

The Performance Share Plan includes a recommendation for the members of Valmet's Executive Team to own and hold an amount of Company shares equaling their gross annual base salary (100 percent ownership recommendation). Management shareholding can be found here.

Other remuneration elements

Additional pension benefit in the form of a defined contribution pension plan, 20% of base salary.

The remuneration of the President and CEO for 2024 was decided in August 2023 in conjunction with his resignation. The Board of Directors decided to increase the fixed annual base salary of the President and CEO to 900,000 EUR as of January 2024 and to continue salary payments until July 2025. The Company will make a severance payment of 1,125,000 EUR to the President and CEO on July 1, 2025. The President and CEO is considered a good leaver for the purposes of long- and short-term incentives and retains the rights to all earned incentives, as well as future incentives for the performance period 2024–2026. Supplementary pension payments will continue until the end of the year 2024.

The Board’s People and Remuneration Comittee decides on the compensation and benefits of the other Executive Team members than President and CEO based on the President and CEO’s proposal and general principles approved by the Board.

The remuneration of the Executive Team members comprises a fixed base salary (including monthly salary and taxable benefits, such as a car and a mobile phone according to local market practice), short-term and long-term incentives and a supplementary pension plan.

Long-term incentive plan, Performance Share Plan 

In December 2020, the Board of Directors of Valmet Oyj approved a long-term share-based incentive plan, the Performance Share Plan, for Valmet's Executive Team members. The plan includes a three-year performance period parallel to a one-year performance period. Valmet's Board of Directors decides on the predefined performance measures and targets in the beginning of each performance period.

The potentially earned share reward represents a gross reward from which the applicable payroll tax is withheld, and the remaining net balance is paid to the key employee in shares.

PERFORMANCE SHARE PLAN

The Performance Share Plan includes a recommendation for the members of Valmet's Executive Team to own and hold an amount of Company shares equaling their gross annual base salary (100 percent ownership recommendation). Management shareholding can be found here.

OTHER REMUNERATION ELEMENTS

Notice period for the Executive Team members is six months for both parties. If the company terminates the agreement, there is an additional severance pay equaling six times the last total monthly salary.

Additional pension benefit in the form of a defined contribution pension plan equaling 15-20% of base salary depending on role.

REMUNERATION IN 2024