Remuneration of the CEO
The Board of Directors appoints and discharges the CEO and decides on the CEO’s remuneration and the other terms and conditions of the CEO’s engagement based on the Board of Directors’ Nomination and HR Committee’s recommendations and within the framework of the Remuneration Policy.
By decision of the Board of Directors, the CEO is paid a fixed base salary, which is a compensation for the CEO’s responsibilities and is based on the requirements of the position, the CEO’s individual competence and performance as well as prevailing market practice. The monthly salary of CEO Mika Joukio is EUR 42,628 (April 2022). The monthly salary includes car and mobile phone benefits and an extended health, travel and accident insurance coverage.
A short and long-term reward can be paid to the CEO by decision of the Board of Directors. In 2022 the maximum level of remuneration available in the short-term incentive system is, accounting for Metsä Group’s EBIT multiplier, 75% of the fixed annual salary. The reward is based on Metsä Board’s operating result (50% weighting) and the strategic targets defined by the Board of Directors, including sustainability targets (50% weighting) as well as the realisation of Metsä Group’s EBIT multiplier. The potential reward shall be paid in March 2023.
The potential reward for the performance period 2020–2022 regarding the performance share plan 2020–2024 is based on the development of Metsä Board Group’s (50%) and Metsä Group’s (50%) return on capital employed (ROCE, %), as determined by the Board of Directors. The Board of Directors is entitled to reduce the rewards fully or partly if defined earnings or equity ratio criteria are not met, or if the reward should exceed the maximum reward limit defined for the CEO. On maximum level the reward potential of the CEO is 210% of the CEO’s annual base salary (the reward limit is 270% of the CEO’s annual base salary). The reward consists of a proportion to be paid in Metsä Board Corporation’s series B shares and a cash proportion. The cash proportion refers to an amount used to cover the taxes to be withheld from the reward. The proportion paid in shares refers to the net reward after the withholding of taxes and other expenses payable for the reward. The potential reward shall be paid in March 2023. The reward payment is followed by an approximately two-year restriction period, during which the CEO is not allowed to sell or otherwise transfer the shares received. Should the CEO’s service terminate during the performance or restriction period, the CEO shall principally lose the right to reward.
The Board can discharge the CEO without a specific reason. The CEO can also resign from his assignment. The mutual term of notice is six months. The Board may, however, decide to discharge the CEO without a period of notice. When the service contract of the CEO is terminated by the Board, the CEO is entitled to receive a severance pay equal to the CEO’s 12-month salary.
The CEO is covered by the Finnish Employees’ Pensions Act, which provides for a pension compensation based on service years and earnings. CEO Mika Joukio is also entitled to the supplementary defined benefit pension insurance, with a retirement age of 62. According to the supplementary pension insurance the maximum level of pension is 60% of the CEO’s total salary under the Employees’ Pensions Act, calculated on the basis of a five-year-period preceding the moment of retirement. In case the CEO’s service with the Company terminates before his retirement, the CEO is entitled to a free policy.
Remuneration of the CEO in 2022
In 2021 the maximum level of remuneration available in the short-term incentive system was, accounting for Metsä Group’s EBIT multiplier, 75% of the fixed annual salary. The reward was based on Metsä Board’s operating result (50% weighting) and the strategic targets defined by the Board of Directors, including sustainability targets (50% weighting) as well as the realisation of Metsä Group’s EBIT multiplier. The short-term incentive of EUR 327,155 based on performance in 2021 was paid to the CEO in March 2022.
The reward for the performance period 2019–2021 regarding the performance share plan 2017–2021 was based on the development of Metsä Board Group’s (50%) and Metsä Group’s (50%) return on capital employed (ROCE, %), as determined by the Board of Directors. Minimum levels had also been set for the operating result and equity ratio. The realisation of the performance period 2019–2021 was 70,0% based on which the CEO received 52,500 Metsä Board Corporation’s series B shares in March 2022. The long-term incentive paid to the CEO regarding the performance period 2019–2021 was EUR 954,226 in total. The amount of reward was limited. The reward of the CEO (including both shares and cash) can be 200% of the CEO’s annual base salary at the maximum. The reward payment is followed by an approximately two-year restriction period during which the CEO is not entitled to transfer or dispose of the shares received.
Remuneration of the CEO in 2021
The base salary, including fringe benefits, paid to the CEO in 2021 was EUR 518,981 in total.
In 2020 the maximum level of remuneration available in the short-term incentive system was, accounting for Metsä Group’s EBIT multiplier, 75% of the fixed annual salary. The reward was based on Metsä Board’s operating result (50% weighting) and the strategic goals defined by the Board of Directors (50% weighting) as well as the realisation of Metsä Group’s EBIT multiplier. The short-term incentive of EUR 135,341 based on performance in 2020 was paid to the CEO in March 2021.
The reward for the performance period 2018–2020 regarding the performance share plan 2017–2021 was based on the development of Metsä Board Group’s (50%) and Metsä Group’s (50%) return on capital employed (ROCE, %), as determined by the Board of Directors. Minimum levels had also been set for the operating result and equity ratio. The realisation of the performance period 2018–2020 was 59,0% based on which the CEO received 44,250 Metsä Board Corporation’s series B shares in March 2021. The long-term incentive paid to the CEO regarding the performance period 2018–2020 was EUR 874,336 in total. The amount of reward was limited. The reward of the CEO (including both shares and cash) can be 200% of the CEO’s annual base salary at the maximum. The reward payment is followed by an approximately two-year restriction period during which the CEO is not entitled to transfer or dispose of the shares received.
A total of EUR 7,902 of deferred long-term incentive for the performance period 2015–2017 was paid to the CEO in April 2021 in accordance with the terms and conditions of the performance share plan.
The CEO is covered by the supplementary defined benefit pension arrangement. In 2021 the payment of the supplementary defined benefit pension arrangement was EUR 402,967. In addition, the CEO was paid a special reward of EUR 30,000 in 2021 for a project related to the divestment of a 30% share in the Husum pulp mill to Norra Skog.