Remuneration

This remuneration statement outlines Kemira’s decision-making procedures and most important principles concerning the remuneration of the Board of Directors, CEO and other Management Board members. The Remuneration Statement is updated always when there are substantial changes to the information concerning remuneration. The Remuneration Statement provides information on the remuneration paid during the previous financial period.

Remuneration Statement 2018 (.pdf)

  1. Kemira reviews its remuneration principles and practices on a regular basis. The remuneration principles are applied to all Kemira employees. Transparency, market driven reward and pay for performance are the main principles of rewarding at Kemira.

    The remuneration in Kemira consists of the following main elements:

    Base pay and benefits follows local market practices, laws and regulations.

    Short-term bonus plans aim to reward for both company and individual performance.

    Long-term share incentive plan aims to commit key employees to Kemira, and to align the objectives and interest of the shareholders and the participants in the plan.

    Non-monetary rewarding is an important part of the total remuneration. Kemira is actively developing well-being at work, as well as providing opportunities for development of own job role.

  2. The Annual General Meeting decides the remuneration of the Board of Directors for one term of office at a time.

    The Board of Directors decides the salaries, other remuneration and the terms of employment of the Managing Director, the Deputy Managing Director and the other members of the Management Board. The Personnel and Remuneration Committee of the Board assists the Board of Directors by preparing matters related to remuneration of the Managing Director, his Deputy and the other members of the Management Board and by preparing matters pertaining to the compensation programs and long-term share incentive plans of the company.

  3. According to the decisions made in the Annual General Meeting 2019, the members of the Board of Directors are paid an annual fee and a fee per meeting. The members of the Board of Directors are not eligible for the short-term bonus plan or the long-Term share incentive plan, or supplementary pension plans of Kemira Oyj.

    The annual fees are as follows:

    • the Chairman will receive EUR 92,000 per year,
    • the Vice Chairman and the Chairman of the Audit Committee EUR 55,000 per year and
    • the other members EUR 44,000 per year.

    A fee payable for each meeting of the Board and its committees are as follows:

    • EUR 600 for the members residing in Finland,
    • EUR 1,200 for the members residing elsewhere in Europe and
    • EUR 2,400 for the members residing outside Europe.

    The meeting fees are to be paid in cash. Travel expenses are reimbursed according to Kemira’ s travel policy.

    In addition, the Annual General Meeting decided that the annual fee shall 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 Kemira shares owned by the company or, if this is not possible, Kemira shares acquired from the securities market, and 60% is paid in cash. The Annual General Meeting decided that the shares will be transferred to the members of the Board of Directors within two weeks after the release of Kemira’ s interim report January 1–March 31, 2019.

    The following amounts of shares were paid on May 8, 2019 as part of the annual fee decided by the Annual General Meeting 2019:

    • the Chairman received 2,993 shares
    • the Vice Chairman and Chairman of the Audit Committee 1,789 shares
    • the other members 1,431 shares.

    There are no special terms or conditions associated with owning these shares.

  4. Remuneration of the Managing Director (President and CEO), his Deputy and the other members of the Management Board comprises a base salary, benefits and performance-based incentive plans. The incentive plans consist of an annual short-term bonus plan and a long-term share incentive plan.

    Members of Kemira Management Board who are employed by a Finnish Kemira company do not have any supplementary pension arrangements in addition to the statutory pensions. Members of Kemira Management Board who are employed by a foreign Kemira company participate in pension systems based on statutory pension arrangements and market practices in their local countries. The Kemira policy is that all new supplementary pension arrangements are defined contribution plans.

    Depending on country practices, mutual termination notice period of 1 to 6 months applies to the members of the Management Board except for the Managing Director. In addition, a severance payment of 6 to 9 months’ salary is paid to the member of the Management Board if the company terminates the employment agreement without a cause attributable to the person.

    Employment terms and conditions of the Managing Director

    Base salary
    Annual base salary is EUR 595,350 per year, including a car benefit and a mobile phone benefit.

    Short-term bonus plan
    Based on terms approved by the Board of Directors, the maximum bonus is 70 percent of the annual base salary.

    Long-term share incentive plan
    Based on the terms of the share plan, the maximum reward is determined as a number of shares and a cash portion intended to cover taxes and the tax related costs arising from the reward.

    Pension plan
    Finnish Employee’s Pension Act (TyEL), which provides pension security based on years of service and earnings as stipulated by the law. The retirement age of the Managing Director is based on the Finnish Employee’s Pension Act. No supplementary pension arrangements in addition to the statutory pension.

    Termination
    A mutual termination notice period of 6 months applies to the Managing Director. The Managing Director is entitled to a severance pay of 12 months’ salary in addition to the salary earned during the notice period, in case the company terminates his service.

    Insurances
    The Managing Director has insurances for life and permanent disability, private accident, business travel, and directors’ and officers’ liability. The Managing Director participates in the company sickness fund.

  5. Short-Term Bonus Plan for the Management

    The short-term bonus plan for the Managing Director, Deputy Managing Director and other members of the Management Board is determined based on the achievement of the Kemira Group, Segment level and role-based performance targets set by the Board of Directors for each financial year.

    Short-term bonus maximum reward 2019

    The maximum bonus for the Managing Director is 70% of the annual base salary, for the Managing Director’s Deputy 60% and for the other members of the Management Board 60 to 80% of the annual base salary.

    Short-term bonus criteria 2019

    In 2019, performance targets are determined on the basis of the operative cash flow after investing activities, operative EBITDA margin and euros, safety related KPI’s of Kemira Group, and role-based targets. The reward from the 2019 earning period will be paid in February 2020.

    Long-Term Share Incentive Plan 2019-2023

    In December 2018, the Board of Directors of Kemira Oyj decided to establish a long-term share incentive plan for the years 2019 – 2023 directed to a group of key employees in Kemira. The aim of the plan is to combine the objectives of the shareholders and the persons participating in the plan in order to increase the value of Kemira, to commit the participants to Kemira, and to offer them a competitive reward plan based on earning Kemira’s shares.

    The long-term share incentive plan includes altogether two one-year performance periods, being years 2019 and 2020, and three three-year performance periods; years 2019 -2021, 2020-2022 and 2021-2023. This structure enables a gradual shift from the current one-year performance period to a three-year performance period. The three-year performance periods are considered to better support the purpose of the plan in alignment with the shareholder interests and the implementation of the long-term goals of Kemira.

    The Personnel and Remuneration Committee received advice for the planning work of the long-term share incentive plan from external incentive advisor.

    Performance periods 2019 and 2019-2021

    During the performance periods 2019 and 2019-2021, the long-term share incentive plan is directed to approx. 90 people. The rewards to be paid on the basis of the performance periods 2019 and 2019-2021 will amount up to a maximum total of 643,500 Kemira Oyj shares. The potential reward of the plan from the performance period 2019 will be based on Kemira Group’s Intrinsic Value and paid out in 2020. The potential reward of the plan from the performance period 2019-2021 will be based on Kemira Group´s average Intrinsic Value 2019-2021 and paid out in 2022.

    Long-term share incentive plan main terms and conditions 2019-2023

    Earning periods and criteria
    The long-term share incentive plan includes two one-year performance periods; years 2019 and 2020 and three three-year performance periods; years 2019-2021, 2020-2022 and 2021-2023.

    The Board of Directors of Kemira decides on the plan’s performance criteria and on the required performance levels for each criterion at the beginning of each performance period. The Board of Directors of Kemira shall decide on the plan’s participants and share allocations in the beginning of each performance period.

    Rewards
    The potential reward is paid partly in Kemira’s shares and partly in cash. The cash portion is intended to cover the taxes and tax-related costs arising from the reward to the participant.

    Restriction period
    For the one-year performance periods (2019 and 2020), the shares paid as reward may not be transferred during the restriction period, which will end two years from the end of the performance period. No restriction period applies to the three-year performance periods.

    Employment conditions
    As a rule, no reward will be paid, if a participant’s employment or service ends before the reward payment. Should a participant’s employment or service end during the restriction period, as a rule, he or she must gratuitously return the shares given as reward.

    Clawback
    Clawback provisions apply to plan rewards in exceptional circumstances, such as misconduct or misstatement of financial results.

    Share ownership recommendation
    The Board recommends that a member of the Management Board shall hold at least 50 per cent of the number of shares given on the basis of this plan also after the end of the restriction period, until his or her shareholding in total corresponds to the value of his or her annual gross salary.

    Long-term share incentive plan 2018

    On February 7, 2018 the Board of Directors of Kemira Oyj resolved to continue the long-term share incentive plan directed to a group of key employees in Kemira for the performance period 2018. The aim of the plan is to combine the objectives of the shareholders and the persons participating in the plan in order to increase the value of Kemira, to commit the participants to Kemira, and to offer them a competitive reward plan based on earning Kemira’s shares. The Personnel and Remuneration Committee received advice for the planning work of the long-term share incentive plan from external incentive advisor.

    The long-term share incentive plan 2018 includes one performance period, the year 2018. The potential reward is based on the Kemira Group´s Intrinsic Value. The potential reward is paid partly in Kemira´s shares and partly in cash in 2019. The potential reward to be paid in spring 2019 is at maximum 484,000 Kemira Oyj shares and additionally a cash portion intended to cover taxes and tax related costs. The plan was directed to 78 people in 2018.

    Long-term share incentive plan main terms and conditions 2018

    Earning periods and criteria
    The long-term share incentive plan includes four performance periods: calendar years 2015, 2016, 2017 and 2018. The Board of Directors of Kemira decided on the plan’s performance criteria and on the required performance levels for each criterion at the beginning of each performance period.

    Rewards
    The potential reward is paid partly in Kemira’s shares and partly in cash. The cash portion is intended to cover the taxes and tax-related costs arising from the reward to the participant.

    Restriction period
    The shares paid as reward may not be transferred during the restriction period, which will end two years from the end of the performance period.

    Employment conditions
    As a rule, no reward will be paid, if a participant’s employment or service ends before the reward payment. Should a participant’s employment or service end during the restriction period, as a rule, he or she must gratuitously return the shares given as reward.

    Clawback
    Clawback provisions apply to plan rewards in exceptional circumstances, such as misconduct or misstatement of financial results.

    Share ownership guidelines
    The Board of Directors recommends that a member of the Management Board will own such number of Kemira’s shares that the total value of his or her shareholding corresponds to the value of his or her annual gross salary as long as the membership continues. If this recommendation is not yet fulfilled, the Board of Directors recommends that a member of the Management Board will hold 50 per cent of the number of shares given on the basis of this plan also after the end of the restriction period, as long as his or her shareholding in total corresponds to the value of his or her annual gross salary.

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