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Remuneration

This statement is a description of remuneration in Kemira Oyj made available pursuant to Recommendation 47 of the Finnish Corporate Governance Code 2010.

Financial benefits

Board of Directors

Based on the decisions of the 2012 Annual General Meeting, Board members are entitled to a yearly fee and a fee per meeting.
 
The fees are as follows:
  • the Chairman will receive 74.000 euro per year,
  • the Vice Chairman 45.000 euro per year and
  • the other members 36.000 euro per year.
A fee payable for each meeting of the Board and its committees is: 
  • 600 euro for the members residing in Finland,
  • 1.200 euro for the members residing in rest of Europe and
  • 2.400 euro for the members residing outside Europe.
The meeting fees are to be paid in cash.
 
Travel expenses are paid according to Kemira's travel policy. 
 
In addition, the AGM decided that the annual fee be paid as a combination of the company's shares and cash in such a manner that 40% of the annual fee is paid with the company's shares owned by the company or, if this is not possible, shares purchased from the market, and 60% is paid in cash. The shares will be transferred to the members of the Board of Directors and, if necessary, acquired directly on behalf of the members of the Board of Directors within two weeks from the release of Kemira's interim report January 1 - March 31, 2012.
 
The following share amounts were paid on May 6, 2011 as part of the annual fee decided by the 2011 AGM: 
  •  the Chairman received 2.394 shares,
  • the Vice Chairman 1.456 shares and
  • the other members 1.165 shares.
The Board members are not included in any of the Kemira Oyj’s share-based incentive plans.
 


Managing Director

 
Compensation of the Managing Director consists of a monthly salary, fringe benefits and performance based incentives. The performance based incentives consist of a cash bonus plan and a share-based plan.  The main principles of the performance based incentive plans are described below under section Decision-making process and main principles of remuneration.
 
The emolument of Kemira Oyj’s Managing Director Harri Kerminen during the 2011 financial period was EUR 1,409,719 including cash bonus of EUR 220,919, and EUR 533,348 in shares and cash part of the share incentive plan.
 
Managing Director Harri Kerminen retired on April 1, 2012. Wolfgang Büchele (PhD, Chemistry) was appointed Kemira Oyj's President and CEO as of April 1, 2012.
 
Managing Director Wolfgang Büchele’s base salary is EUR 680,000 per year, including free car benefit, mobile phone and holiday pay. Additionally the Managing Director has a housing benefit.
 
Managing Director Wolfgang Büchele belongs to the Finnish Employees’ Pension Act (TyEL) scheme, which provides for pension security based on years of service and earnings as stipulated by law. The Managing Director’s retirement age is 63. The Managing Director does not have a supplementary pension arrangement.
 
A twelve-month period of notice applies to both sides for the Managing Director. In addition to the salary of the notice period, the Managing Director is not entitled to a separate severance pay. 

Decision-making process and main principles of remuneration

The Board of Directors determines the Managing Director’s, his deputy’s, and the other Group Management Board members’ salaries, other remuneration, and employment terms.
 
Management compensation consists of a monthly salary, fringe benefits and performance based incentives. The Group Management Board does not have a separate supplementary pension scheme. The performance based incentives consist of a cash bonus plan and a share based plan.
 
The annual cash bonus is determined by the achievement of Group and personal performance targets for each financial year. The maximum bonus for the Managing Director is 60% of the annual gross salary for the same period and 50% for other Group Management Board members. In 2012, as regards the Group performance target, the cash bonus is determined by Group cash flow.
 
In February 2012, Kemira Board of Directors decided to establish a new share-based incentive plan that follows already terminated 2009 - 2011 plan aimed at the strategic management members for the years 2012 - 2014, as part of the company's incentive and commitment schemes. The delivery of share rewards within the plan is subject to the achievement of the performance targets set by the Board of Directors, which include both internal and external performance targets. The internal target setting is divided into three one-year performance periods: 2012, 2013, and 2014. Payment depends on achievement of the set intrinsic value targets calculated from the development of EBITDA and the development of the net debt. The program also includes a three-year external goal, which is tied to the relative total shareholder return (TSR) performance during 2012 - 2014. As a guiding principle, reward will only be paid based on excellent performance.
 
The value of the aggregate reward paid out in the course of the three-year plan may not exceed 120% of CEO's and 100% of the other participants' gross salary for the same period. The applicable taxes will be deducted from the gross earning and the remaining net value is delivered to the participants in Kemira shares.
 
Shares earned through the plan must be held for a minimum of two years following each payment. In addition, members of the Management Board must retain fifty per cent of the shares obtained under the plan until their ownership of Kemira shares based on shares obtained through the share-based incentive programs of Kemira has reached a share ownership level which in value equals at least their gross annual salary for as long as they remain participants in the plan.
 
The shares transferable under the plan comprise treasury shares or Kemira Oyj shares available in public trading.
 
In addition to the share-based incentive plan aimed at the strategic management members, Kemira has a share-based incentive plan aimed at other key personnel, in which members of the strategic management will not participate.
 
The share-based incentive plan aims to align the goals of shareholders and strategic management in order to increase the value of the company, motivate strategic management, and provide competitive shareholder-based incentives.