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 2019

As s a condition for the remuneration, 40 percent of the fixed annual remuneration is to be used for purchasing Metso’s shares. Altogether, 6,693 shares were acquired on April 29, 2019. 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 620,650 during the financial year that ended December 31, 2019. 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, 2019 
(number of shares)

Mikael Lilius

Chair

140,400

1,543

35,781

Christer Gardell

Vice Chair

81,400

688

7,864

Peter Carlsson

Member

57,500

629

2,939

Ozey K. Horton, Jr.

Member

12,800

-

1,000

Lars Josefsson

Member

68,400

688

4,521

Nina Kopola

Member

43,950

748

4,697

Antti Mäkinen

Member

73,400

748

1,617

Arja Talma

Member

82,600

866

3,926

Kari Stadigh

Member

60,200

783

10,783

*) Total fee paid partly in cash, partly in shares
**) Shares were acquired on April 29, 2019
***) Metso Board member until April 25, 2019
****) Resigned from Metso’s Board as of August 1, 2019
*****) Elected to Metso’s Board on April 25, 2019

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 825,000 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 100% 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 2019

Total remuneration of the President and CEO amounted to EUR 752,574 during 2019. The remuneration of other Executive Team members amounted to a total of EUR 3,755,660. The tables below include the bonuses paid to the Executive Team, including the President and CEO, amounting to atotal of EUR 885,588.

Executive Team benefits also include a supplementary defined contribution pension plan. In 2019, pension insurance premium payments totaled EUR 465,515 (in 2018: EUR 273,372).

EUR Salary Paid performance
bonus
Fringe benefits Share-based
payment
Total
President and CEO Pekka Vauramo 719,886 - 32,688 - 752,574
Other Executive Team members 2,201,113 885,588 27,513 641,446 3,755,660
Total 2,920,999 885,588 60,201 641,446 4,508,234

 

 

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 2019, 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 in 2019  
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 Metso’s operative 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 applies a share ownership recommendation policy for the members of the Executive Team and for the President and CEO. In accordance with this policy, at least 50 percent 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 delivery of the Performance Share Plan 2016–2018 took place in March 2019. A total of 79,040 shares were delivered to 80 key individuals.

Status of the ongoing Performance Share Plans as of December 31, 2019

Performance Share Plans PSP 2017-2019 PSP 2018-2020 PSP 2019-2021
Current   number of participants 84 9 9
Maximum   number of   gross shares to be paid *)      
- CEO  - 26,016 46,200
- Other executive team 33,000 60,000 74,400
- Other participants 273,492 19,870 13,254
Total   maximum number   of gross shares to be paid *) 306,492 105,886 133,854
Performance criteria Total shareholder return (TSR) of   Metso’s share during 2017–2019 Total shareholder return (TSR)   of Metso’s share during 2018–2020 Total shareholder return (TSR)   of Metso’s share during 2019–2021
Share delivery year 2020 2021 2022

*) 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, 2019

Restricted Share Plans RSP 2017-2019 RSP 2018-2020 RSP 2019-2021
Current number of participants 3 1 3
Number of gross shares nominated *)      
- Other executive team  - 15,000 25,000
- Other participants 14,500 - -
Total number of gross shares nominated 14,500 15,000 25,000
Share delivery year 2020 2021 2022

*) Maximum number of gross shares, taxes included

 

Deferred Share Unit Plan

Deferred Share Unit Plan (DSUP) 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 reward is payable after three years of the program commencing if the terms of payment are met. Metso Executive Team members aren’t eligible to participate in the DSUP plan.

Status of the ongoing Deferred Share Unit Plan as of December 31, 2019

Deferred Share Unit Plan  DSUP 2018–2020 DSUP 2019-2021
Current number of participants  109 124
Possible payout year 2021 2022

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 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. The President and CEO is not entitled to any matching share delivery if his service relationship as the President and CEO 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 2019.