Remuneration

The objective of remuneration at Metso is to attract, retain and reward our people. Motivated, customer-oriented, performance-driven and innovative people are the key to success and the successful execution of our strategy.

Remuneration at Metso

We support, develop and encourage our people as individuals and as team members to perform and help Metso to achieve the set financial and operational targets and to strive for excellent performance. Total remuneration structures may vary by country and are aligned with Metso’s financial performance as well as with internal and external references. We monitor remuneration levels for similar positions among peer companies.

Board remuneration

The Annual General Meeting decides on the remuneration to the members of the Board for one term of office at a time.

According to the decision of the 2019 Annual General Meeting, the annual fees that will be paid to Board members in 2019 are:

  • Chair - EUR 120,000
  • Vice Chair - EUR 66,000
  • Other members - EUR 53,000

Additional remuneration:

  • Chair of the Audit Committee (AC) - EUR 20,000
  • Chair of the Remuneration and HR Committee (RHRC) - EUR 10,000
  • Committee members (AC) - EUR 10,000
  • Committee members (RHRC) - EUR 5,000

Meeting fees (excluding committee meetings) based on residence:

  • Nordic countries - EUR 800
  • Other European countries - EUR 1,600
  • Outside Europe - EUR 3,200

Compensation for travel expenses and daily allowances is paid in accordance with our travel policy.

Board remuneration in 2018

Based on the decision of the 2018 Annual General Meeting, 40 percent of the Board’s annual fees were used to buy Metso shares from the market. Altogether, 7,781 shares were acquired on April 30, 2018. There are no special terms or conditions associated with owning these shares.

The Board members, none of whom are employees of Metso, were paid annual remuneration and meeting fees totaling EUR 660,200 during the financial year that ended December 31, 2018. The Board members are not covered by Metso’s bonus plans, share-based incentive schemes or pension plans.

Member Position Total annual
fee (EUR) *)
Number of Metso shares
received **)
Total   shareholding
as of Dec 31, 2018 
(number of shares)
Mikael Lilius Chair 139,000 1,794 34,238
Christer Gardell Vice Chair 80,000 980 7,176
Peter Carlsson Member 58,600 731 2,310
Ozey K. Horton, Jr. Member 89,000 731 5,520
Lars Josefsson Member 67,000 800 3,833
Nina Kopola Member 73,600 869 3,949
Antti Mäkinen Member 69,400 869 869
Arja Talma Member 83,600 1,007 3,060

*) Total fee paid partly in cash, partly in shares
**) Shares were acquired on April 30, 2018

Management remuneration

Remuneration and employment terms of the President and CEO

The remuneration paid to the President and CEO is determined by the Metso Board. Metso’s President and CEO is entitled to participate in short- and long-term incentive programs. The terms and conditions of these programs are decided by the Board.

Employment terms and conditions of the President and CEO Pekka Vauramo:

Annual Salary

Total annual salary EUR 750,000 including fringe benefits.

Short-term incentive (annual performance bonus)

The annual bonus can be earned in accordance with terms approved by the Board. The maximum bonus is 75% of the total annual salary.

Long-term incentives

According to the Long-term Performance Share Plan, the maximum share allocation for the President and CEO corresponds to 150 percent of the total annual salary. The purpose of the plan is to align the interests of Metso’s management and shareholders in creating shareholder value. In addition, the President and CEO is entitled to participate in a share matching program.

Pension

The retirement age for the President and CEO is 65 years, unless otherwise to be agreed by the Company and the President and CEO. The President and CEO is entitled to participate in a supplementary defined contribution pension plan. The supplementary pension contribution is equivalent to 25% of the annual salary.

Termination of assignment

The notice period for both parties is six (6) months. Severance pay is the full monthly salary multiplied by twelve (12) if the agreement is terminated by the company.

 

Remuneration for Executive Team members

The Board’s Remuneration and HR Committee decides on the compensation and benefits of the other Executive Team members based on the President and CEO’s proposal. The total remuneration comprises a total annual salary, customary fringe benefits, pension as well as short- and long-term incentives.

Participation in variable compensation programs is based on the respective terms and conditions of the program. The Remuneration and HR Committee evaluates the achievement of the targets for the Executive Team members other than the President and CEO.

 

Management remuneration in 2018 

Metso’s current President and CEO, Pekka Vauramo, has been in the position since November 1, 2018. Eeva Sipilä acted as interim President and CEO between February 3 and October 31, 2018, after Nico Delvaux left his duties on February 2, 2018.

Total remuneration of the President and CEO’s and the Interim President and CEO amounted to EUR 819,238 during 2018 and the remuneration of other Executive Team members amounted to a total of EUR 2,571,251. The tables below include the bonuses paid to the Executive Team, including the President and CEO’s and the Interim President and CEO, amounting to a total of EUR 664,138.

Executive Team benefits also include a supplementary defined contribution pension plan. In 2018, pension insurance premium payments totaled EUR 273,372.

EUR Salary Paid performance
bonus
Fringe benefits Share-based
payment
Total
President and CEO Pekka Vauramo *) 120,073 - 4,927 - 125,000
Interim President and CEO Eeva Sipilä **) 382,817 84,240 180 - 467,237
President and CEO Nico Delvaux ***) 66,428 157,500 3,073   227,001
Other Executive Team members 2,122,015 422,398 26,838 - 2,571,251
Total 2,691,333 664,138 35,018 0 3,390,489

*) President and CEO between November 1 – December 31, 2018
**) Interim President and CEO between February 3 – October 31, 2018
***) President and CEO between January 1 – February 2, 2018

 

Incentive programs at Metso

Short-term incentives

The short-term incentive plan, Metso Bonus, covers approximately 7,000 employees globally, including the Executive team. The Board approves the Group level terms and targets for the Metso Bonus annually. In addition, the Board annually sets and approves the President and CEO’s short-term incentive plan.

The Metso Bonus payout, if any, is mainly based on the achievement of predefined financial targets. For 2018, the financial targets were cash flow, orders received, and operative value added for the Metso Group or Business Area in question. In addition to the financial targets, individual, team and business bonus performance targets are used.

Maximum Metso Bonus payout, % of total annual salary:

 Maximum Bonus payout  
President and CEO 75%
Other Executive Team members 40-60%
Other Metso employees 40% (at highest, maximum varies based on role)

 

In addition to the Metso Bonus, local productivity plans are designed to drive and support the performance of various production units. Targets for local productivity plans are mainly based on productivity, quality and safety KPIs. Local mandatory bonus plans are defined by local legislative requirements and are typically profit-sharing plans. According to Metso’s Performance and Reward Policy, an employee can participate in a one bonus plan at a time.

Long-term incentives

The Board decides on and implements Metso’s long-term incentive plans. The purpose of these plans is to align the interests of the management and Metso’s shareholders. The plans also aim to ensure long-term commitment of management and to offer them a competitive reward scheme.

Any shares to be potentially rewarded in these incentive plans are acquired through public trading, and therefore have no diluting effect on the share value. Share repurchase and share issue authorizations are obtained from the Annual General Meeting. Current valid authorizations are presented on our website at www.metso.com/board. There are no options outstanding or available from any of Metso’s prior option programs.

Metso has a share ownership recommendation policy for the members of the Executive Team including President and CEO. In accordance with this policy, at least 50% of the share rewards (net shares after deduction of the applicable payroll tax) received by these individuals under the Performance Share Plans shall be retained until the share ownership of the individual Metso participant amounts to his/her annual gross base salary.

If the participant’s employment or service ends for reasons relating to the participant before the reward payment, no reward will be paid from the long-term incentive plans.

Performance and Restricted Share Plans

The commencement of each new Performance Share Plan (PSP) and Restricted Share Plan (RSP) and the earnings criteria for each new PSP plan will be subject to a separate decision by the Board. The PSP consists of an annually commencing plan, each with a three-year earning period, and the complementary RSP consists of an annually commencing plan, each with a three-year vesting period. The possible rewards are paid partly in Metso’s shares and partly in cash.

The potential share reward payable under the PSP 2019–2021 is based on the total shareholder return of Metso’s share during 2019–2021. The plan covers a total of 11 employees, including the President and CEO, Executive Team members and selected key management nominated by the Board. The PSP 2019–2021 will comprise a maximum of 190,000 reward shares (gross before deduction of the applicable payroll tax).

According to the Board’s decision, the maximum number of shares that may be allocated and delivered within the RSP 2019–2021 totals 60,000 reward shares (gross before deduction of the applicable payroll tax). The Remuneration and HR Committee approves nominations for the RSP plan based on the President and CEO’s proposal. The delivery of the Performance Share Plan 2015–2017 was due in spring 2018.  However, no shares were delivered in 2018, as the total shareholder return target was not met.

Status of the ongoing Performance Share Plans as of December 31, 2018

Performance Share Plans PSP 2016-2018 PSP 2017-2019 PSP 2018-2020
Current   number of participants 83 91 11
Maximum   number of   gross shares to be paid *)      
- CEO  - - 26,016
- Other executive team 59,600 76,800 109,400
- Other participants 307,588 258,786 4,000
Total   maximum number   of gross shares to be paid *) 367,188 335,586 139,416
Performance criteria Total shareholder return (TSR) of   Metso’s share during 2016–2018 Total shareholder return (TSR)   of Metso’s share during 2017–2019 Total shareholder return (TSR)   of Metso’s share during 2018–2020
Share delivery year 2019 2020 2021

*) Maximum number of gross shares, taxes included, payable if the performance criteria is achieved in full

 

Status of the ongoing Restricted Share Plans as of December 31, 2018

Restricted Share Plans RSP 2016-2018 RSP 2017-2019 RSP 2018-2020
Current number of participants 0 5 1
Number of gross shares nominated *)      
- Other executive team  - 12,500 15,000
- Other participants - 3,400 -
Total number of gross shares nominated - 15,900 15,000
Share delivery year 2019 2020 2021

*) Maximum number of gross shares, taxes included

 

Deferred Share Unit Plan

Deferred Share Unit Plan is a long-term share value-based incentive plan that aligns and rewards the employee’s performance and Metso  share value development during a performance period. The 2019–2021 plan consists of approximately 140 key employees and is payable after three years of the program commencing if the terms of payment are met.

Any potential rewards from DSUP 2019–2021 will be paid in 2022. The maximum amount of rewards payable based on the plan for the years 2019–2021, based on the average price of the Metso share on February 4, 2019, is approximately EUR 9 million (gross before the deduction of applicable payroll tax). The final value of this individual plan will depend both on the achievement of the performance targets set by the Board of Directors for 2019 and the development of Metso’s share price during 2020–2021. Metso Executive Team members aren’t eligible to participate in DSUP plan.

 

Status of the ongoing Deferred Share Unit Plan as of December 31, 2018

Deferred Share Unit Plan  DSUP 2018–2020
Current number of participants  115
Possible payout year 2021

Matching Share Plan

Metso has one active Matching Share Plan for President and CEO Vauramo. According to the Matching Share Plan, President and CEO Vauramo is entitled to receive in total 18,750 gross shares on the condition that he has personally invested into 7,500 Metso shares.

The matching shares will be delivered in three equal installments and are subject to fulfill the performance criterion adjusted EBITA for each installment. President and CEO is not entitled to any matching share delivery if his service relationship as the Managing Director of Metso is terminated or a notice regarding its termination is delivered.

More information about the plans can be read from our Corporate Governance Statement 2018.