Fees of the Supervisory Board and the Board of Directors
Metsäliitto Cooperative’s Supervisory Board
Pursuant to a decision of the Representative Council, the Chairman and Deputy Chairman of the Supervisory Board are paid a fixed monthly remuneration and a meeting fee. The other members only receive a meeting fee. The members are entitled to travel compensation according to Metsä Group’s travel rules.
In accordance with the resolution of the representative council meeting in the spring of 2011, the monthly remuneration of the Chairman of the Supervisory Board is EUR 3,400 and of the Deputy Chairman EUR 1 500. In addition, a meeting fee of EUR 600 is paid for the members of the Supervisory Board from each meeting.
In 2011, the Chairman was paid a total of EUR 56,600 and the the Deputy Chairman a total of EUR 20 000 in salaries and meeting fees. The other members were paid EUR 600 per
meeting, totalling EUR 80,300. Members of the Supervisory Board were paid a total of EUR 156,900 in salaries and fees in 2011.
Metsäliitto Cooperative’s Board of Directors
Pursuant to the Supervisory Board’s decision, each member of the Board of Directors is paid a fixed monthly remuneration and a meeting fee. The meeting fee is also paid for committee meetings. The members are entitled to travel compensation according to Metsä
Group’s travel rules.
In 2011, the monthly remuneration of the Chairman of the Board of Directors was EUR 5,800 and the meeting fee EUR 600 per meeting. The Chairman was paid a total of 85,440 in salaries and meeting fees. The monthly remuneration of the other members was EUR 3,200 and the meeting fee EUR 600 per meeting in 2011. The other members were paid a total of EUR 337,050 in salaries and meeting fees. The President and CEO is not paid a salary or remuneration for acting in the Board of Directors. Members of the Board of Directors were paid a total of EUR 422,490 in salaries and fees in 2011.
Rewarding of the acting management
The purpose of the reward system of Metsä Group's acting management is to reward the management in a just and competitive manner for the performance of Metsä Group and realising the strategy and development of the business operations. The Board of Directors of Metsäliitto Cooperative decides on the remuneration and other financial benefits of the Group President and CEO and members of the Group's Executive Management Team employed by Metsäliitto Cooperative, and the principles of the profit pay system based on the preparation of the Compensation Committee. All the Metsä Group companies comply with the same reward principles, but the remuneration criteria are separately decided on by each subsidiary's Board of Directors.
The reward system comprises a fixed monthly salary, a bonus determined on the basis of the task's effect on earnings, the management's pension benefits and a share compensation system.
Short-term incentives
Salary and severance pay of the President and CEO
The CEO’s monthly salary with fringe benefits is EUR 81,962. The monthly salary includes housing, car, chauffeur and other minor benefits.
Pursuant to the President and CEO’s contract, the Board of Directors may decide that
the President and CEO receives a bonus based on the profit, cash flow and personal performance, corresponding to six (6) months’ salary.
The companies in Metsä Group paid the President and CEO a total of EUR 2,813,700
in salaries, fees and other benefits in 2011. The salary with fringe benefits paid by
Metsäliitto Cooperative amounted to EUR 1,027,766, and the bonus and share reward to
EUR 1,674,521. The other Group companies paid the President and CEO a total of EUR
111,412 in salaries, fees and other benefits.
The term of notice of the President and CEO is six (6) months. When the contract of
the President and CEO is terminated by the Board, the President and CEO is entitled to
a severance pay corresponding to 24 months’ total salary. No severance compensation is
paid if the contract is terminated by the President and CEO.
Salaries and fees of other management
The maximum bonus paid to members of the Group Executive Management Team employed by Metsäliitto Cooperative can vary, according to the task's effect on earnings, between the amounts corresponding to the person's 0–6 months' wages. The criteria of the profit pay system are the earnings requirements of the Group level and of its own area of responsibility.
The companies in the Metsä Group paid members of the Executive Management Team
(excluding the President and CEO) a total of EUR 3,626,964 in salaries and fees in 2011.
Long-term incentives
Share ownership system for the Executive Management Team
A part of the members of the Metsä Group Executive Management Team have established
a company named Metsäliitto Management Oy. Mika Joukio and Timo Karinen from the
Group Executive Management Team are not participants in Metsäliitto Management. Through the company, the management has invested EUR 3,850,000 of their own funds in
Metsä Board Corporation’s B shares. In addition, some of the investments of the company
in Metsä Board’s B shares have been financed by a loan granted by Metsäliitto Cooperative.
The management themselves shoulder the ownership risk for the investment they make
in the system. The purpose of the system is to encourage members of the Executive Management Team to acquire and own Metsä Board’s B shares and, through this, to increase the shareholder value of Metsäl Group in the long term and support the achievement of the Group’s strategic objectives.
The loan granted by Metsäliitto Cooperative will be repaid in its entirety by 31 March
2014. If the validity of the system is continued one year at a time in 2013, 2014, 2015 or
2016, the loan period will be extended correspondingly. Metsäliitto Management has the
right to repay the loan prematurely at any time. Metsäliitto Management is obligated to
repay the loan prematurely by selling the Metsä Board shares it holds if the stock
exchange price of Metsä Board’s B share exceeds a certain level defined in the system
for an extended period of time.
The system will remain in force until the end of 2013 and beginning of 2014, at which
time the intention is to dismantle the system in a manner to be decided later. The system
will be extended one year at a time if, in October– November 2013, 2014, 2015 or 2016, the stock exchange price of Metsä Board’s B share is lower than the average price at which Metsäliitto Management acquired Metsä Board’s B shares it owns. The assignment of Metsä Board’s B shares owned by Metsäliitto Management is restricted during the validity of the system. As a rule, the ownership of members of the Executive Management in Metsäliitto Management will remain in force until the dismantling of the system. If a member of the Executive Management Team resigns before the dismantling of the system, he/she is repaid the funds invested, but not any potential increase in value. If the system shows a loss, a resigning member of the Executive Management Team only receives a calculated share of the capital.
As of August 2010, the share ownership system has replaced the previous share-based
incentive scheme for 2008–2010, under which the other management has continued.
Members of the Executive Management Team were not entitled to a potential share reward according to the old share-based incentivescheme for year 2010.
A total of 6,790,887 M-real’s B shares have been acquired through Metsäliitto Management, of which the President and CEO indirectly owns 1,763,867 shares and the other members of the Executive Management Team indirectly own 5,027,020 shares.
Share-based incentive scheme for executives
Share-based incentive scheme for 2011–2015: The Board of Directors has accepted a share-based incentive scheme for Metsä Group’s executives for the years 2011–2015. The first earning period which lasts three years is from 2011 to 2013. The Board of Directors of Metsäliitto Cooperative shall determine the executives who belong to the target group and their maximum rewards at the beginning of every three-year earning period. The maximum reward is expressed as a number of shares. Attaining the targets established for an earning period determines the proportion of the maximum reward that shall be paid to the executives. Any reward will be paid partially in M-real Corporation's (to be Metsä Board Corporation) shares and partially in cash. The amount paid in cash covers the taxes and tax-like charges resulting from the reward. The shares cannot be transferred during a commitment period of two (2) years. The reward will not be paid if the person's employment has terminated before the payment of the reward. In addition, any rewards that have been paid must be returned if the person's employment is terminated as a result of the person being dismissed or giving notice within two (2) years of the end of an earning period. The possible reward from the earning period of 2011–2013 is based on the development of Metsä Group’s equity ratio, return on capital employed (ROCE), and earnings before interest and taxes (EBIT). The reward from the earning period equates in value the maximum of altogether approximately 4.7 million in M-real Corporation’s B shares including the share payable in cash (including the rewards of M-real’s share-based incentive scheme).
Share-based incentive scheme for 2008–2010: The previous share-based incentive scheme for 2008–2010 offers the target group an opportunity to receive M-real Corporation's B shares as a reward for the attainment of the objectives of three (3) earning periods each comprising one (1) calendar year. The amount of reward paid from the share-based incentive scheme is tied to Metsä Group’s performance development and on its ground the reward of the scheme in 2010 is in maximum 560 000 in M-real Corporation’s B shares (including the rewards of M-real’s share-based incentive scheme).
The members of Metsäliitto Group’s Executive Management Team participating in Metsäliitto Management Oy were not entitled to the rewards of the share-based incentive
scheme for the financial period 2010. The share-based incentive scheme ended at the end of year 2010 and rewards based on it are no longer paid. The scheme has been dissolved in spring 2011.
Management pension arrangements
Members of the Group’s Executive Management Team fall within the scope of the Employees’ Pensions Act. It provides pension security based on the period of service and earned income as provided in the Act. In the Finnish earnings-related pension system, basic salary, remuneration and taxable fringe benefits are included in earned income, but not income from options and management’s share-based incentive systems.
Pension arrangements of the President and CEO
The President and CEO has a separate pension agreement with a retirement age of sixty (60), as a rule. The President and CEO’s maximum level of pension is 60% of the total salary under the Employees’ Pensions Act, calculated on the basis of the five-year period preceding retirement. In 2011, the annual contribution of the President and CEO’s benefit-based pension scheme was 77,5% of the total salary and remuneration paid by Metsä Group companies to the President and CEO. If the contract of the President and CEO should terminate before retirement age, he/she is entitled to a paid-up policy.
Management pension arrangements
The members of the Group's Executive Management Team have a separate benefit-based pension agreement with a retirement age of sixty-two (62) years. The level of pension is 60% of the total salary under the Employees’ Pensions Act, calculated on the basis of the five-year period preceding retirement. If the employment relationship with Metsä Group ends before retirement age, a member of the Executive Management Team is entitled to a paid-up policy.