5/10/2022

Remuneration

Remuneration Policy

The company’s Board of Directors has approved the remuneration policy for the governing bodies, which applies to the remuneration of the Board and the President & CEO. The remuneration policy was presented to the Annual General Meeting in 2020. The policy describes the main principles, the decision-making procedure and the main terms of the remuneration for the Board and the President & CEO.

Remuneration Policy

Remuneration Report 2021

The Remuneration Report describes the remuneration of Kemira Governing Bodies, i.e., the Board of Directors (the “Board”), the President and CEO (the “CEO”) and the Deputy CEO of Kemira Oyj, for the financial year 2021.

Remuneration Report 2021

Key principles of remuneration

The remuneration at Kemira is designed to drive the company’s long-term financial success, business strategy and positive development of the shareholder value.

Kemira’s key remuneration principles are:

  • Pay-for-performance is Kemira’s main principle in remuneration. Kemira acknowledges and rewards for good performance and achievements. Kemira strives to establish a clear link between company and employee performance and success.
  • Competitive, market driven remuneration ensures that Kemira can attract, motivate and retain the best employees for Kemira. Kemira regularly benchmarks its remuneration against relevant geographic and industry market.
  • Effective communication of remuneration principles and programs ensures transparency both internally and externally. Reward principles and programs are communicated to employees and external stakeholders.
  • Compliance with local laws and Kemira’s internal remuneration approval principles is a prerequisite for remuneration at Kemira. Kemira has implemented internal controls to ensure compliance.

These key remuneration principles are applied to the President & CEO, the operative management as well as to all Kemira employees.

Decision-making procedure concerning the remuneration

The General Meeting decides on the remuneration of the Board. The Nomination Board, consisting of the representatives of the four largest shareholders of Kemira Oyj, prepares annually a proposal for the next General Meeting concerning the composition and remuneration of the Board.

The Board decides the salaries, other remuneration, and the terms of service of the President & CEO, the deputy CEO and the management board, based on the proposal by the Personnel and Remuneration Committee. The Board may delegate its decision-making authority to the Committee. To avoid conflicts of interest, the majority of the Committee members must be independent of the company, and the President & CEO or any member of the Management Board of Kemira may not be a member of the Committee. The President & CEO is not involved in the decision-making process of his or her remuneration.

Incentive plans involving a share issue, an issue of option rights or special rights entitling one to shares must be based on a share issue approval by the General Meeting or an authorization by the General Meeting to the Board to decide on the share issue.

Remuneration of the Board of Directors

According to the decisions made in the Annual General Meeting 2022, 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 Chair will receive EUR 110,000 per year,
  • the Vice Chair and the Chair of the Audit Committee EUR 65,000 per year and
  • the other members EUR 50,000 per year.

A fee payable for each meeting of the Board and the Board Committees will be paid based on the method and place of the meeting as follows:

  • EUR 600 for participating remotely or in the member’s country of residence
  • EUR 1,200 for a meeting on the same continent, and
  • EUR 2,400 for a meeting to be held in a different continent than the member’s country of the residence.

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, 2022. There are no special terms or conditions associated with owning these shares.

The following amounts of shares were paid on May 10, 2022 as part of the annual fee decided by the Annual General Meeting 2022:

  • the Chair received 3,696 shares
  • the Vice Chair and Chair of the Audit Committee 2,184 shares
  • the other members 1,680 shares.

Remuneration of the President & CEO and the Deputy CEO

Remuneration of the President & CEO 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, insurances and a supplementary pension.

Employment terms

Base salary and benefits

President & CEO

The annual base salary is EUR 619.405 including car and mobile phone benefit.

Deputy CEO

The annual base salary was EUR 191.825 including car and mobile phone benefit. No remuneration is paid to the Deputy CEO based on CEO substitution.

Supplementary pension

President & CEO

The supplementary pension is defined as 20% of annual base salary. The retirement age of the President & CEO is 63 years.

Deputy CEO

No supplementary pension was offered to the Deputy CEO.

Short-term incentives (STI)

President & CEO

Performance period 2022: The maximum STI opportunity is 70% of the annual base salary. The performance criteria are determined on the basis of the operative cash flow after investing activities, operative EBIT in EUR, Organic Revenue Growth in EUR, safety related KPI’s of Kemira Group, and role based targets.

Performance period 2021: The maximum STI opportunity is 70% of the annual base salary. The performance criteria were determined on the basis of the operative cash flow after investing activities, operative EBIT in EUR, Organic Revenue Growth in EUR, safety related KPI’s of Kemira Group, and role based targets.

Deputy CEO

Performance period 2022: The maximum STI opportunity is 60% of the annual base salary. The performance criteria are determined on the basis of the operative cash flow after investing activities, operative EBIT in EUR, Organic Revenue Growth in EUR, safety related KPI’s of Kemira Group, and role based targets.

Performance period 2021: The maximum STI opportunity is 60% of the annual base salary. The performance criteria were determined on the basis of the operative cash flow after investing activities, operative EBIT in EUR, Organic Revenue Growth in EUR, safety related KPI’s of Kemira Group, and role based targets.

Long-term incentives (LTI)

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.

Performance period 2019–2021 and due payment:

President & CEO

The maximum reward opportunity for the LTI 2019–2021 performance period for the CEO is 22,000 shares and cash portion intended to cover taxes and the tax related costs arising from the reward. The performance criterion is 2019–2021 Average Intrinsic Value, and the outcome of the reward was 86% reflecting 18,920 number of shares. The reward will be paid in 2022.

Deputy CEO

The maximum reward opportunity for the LTI 2019–2021 performance period for the Deputy CEO is 7,700 shares and cash portion intended to cover taxes and the tax related costs arising from the reward. The performance criterion is 2019–2021 Average Intrinsic Value, and the outcome of the reward was 86% reflecting 6,622 number of shares. The reward will be paid in 2022.

Performance period 2020 and due payment 2021:

President & CEO

The maximum reward opportunity for the LTI 2020 performance period for the CEO was 22 000 shares and a cash portion intended to cover taxes and the tax related costs arising from the reward. The performance criterion in 2020 was Intrinsic Value, the outcome of the reward was 68% reflecting 14 960 shares. The reward, including the cash portion, was paid in March 2021. 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. For the reward paid out in 2021, the restriction period will end on December 31, 2022.

Ongoing LTI Plans:

  • The maximum reward opportunity for the ongoing LTI 2020–2022 performance period for the CEO is 22.000 shares and cash portion intended to cover taxes and the tax related costs arising from the reward. The performance criteria are 2020– 2022 Average Intrinsic Value and 2020–2022 Average Organic Revenue Growth % p.a. The possible reward is paid in 2023. The 2020–2022 reward opportunity was 50% of typical annual reward opportunity due to gradual shift from one-year performance periods to three-year performance periods.
  • The maximum reward opportunity for the ongoing LTI 2021–2023 performance period for the CEO is 44.000 shares and cash portion intended to cover taxes and the tax related costs arising from the reward. The performance criteria are 2021– 2023 Average Intrinsic Value and 2021–2023 Average Organic Revenue Growth % p.a. The possible reward is paid in 2024.
  • The maximum reward opportunity for the ongoing LTI 2022–2024 performance period for the CEO is 44.000 shares and cash portion intended to cover taxes and the tax related costs arising from the reward. The performance criteria are 2022– 2024 Average Intrinsic Value and 2022–2024 Average Organic Revenue Growth % p.a. The possible reward is paid in 2025.
Deputy CEO

The maximum reward opportunity for the LTI 2020 performance period for the Deputy CEO was 7,700 shares and a cash portion intended to cover taxes and the tax related costs arising from the reward. The performance criterion in 2020 was Intrinsic Value, the outcome of the reward was 68% reflecting 5,236 number of shares. The reward, including the cash portion, was paid in March 2021. 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. For the reward paid out in 2021, the restriction period will end on December 31, 2022.

Ongoing LTI Plans:

  • The maximum reward opportunity for the ongoing LTI 2020–2022 performance period for the Deputy CEO is 7.700 shares and cash portion intended to cover taxes and the tax related costs arising from the reward. The performance criteria are 2020–2022 Average Intrinsic Value and 2020–2022 Average Organic Revenue Growth % p.a. The possible reward is paid in 2023. The 2020–2022 reward opportunity was 50% of typical annual reward opportunity due to gradual shift from one-year performance periods to three-year performance periods.
  • The maximum reward opportunity for the ongoing LTI 2021–2023 performance period for the Deputy CEO is 15.400 shares and cash portion intended to cover taxes and the tax related costs arising from the reward. The performance criteria are 2021–2023 Average Intrinsic Value and 2021–2023 Average Organic Revenue Growth % p.a. The possible reward is paid in 2024.
  • The maximum reward opportunity for the ongoing LTI 2022–2024 performance period for the Deputy CEO is 15.400 shares and cash portion intended to cover taxes and the tax related costs arising from the reward. The performance criteria are 2022–2024 Average Intrinsic Value and 2022–2024 Average Organic Revenue Growth % p.a. The possible reward is paid in 2025.

Termination

President & CEO

A mutual termination notice period of 6 months applies to the CEO. He 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.

Deputy CEO

A mutual termination notice period of 6 months applies to the Deputy CEO. He is entitled to a severance pay of 6 months’ salary in addition to the salary earned during the notice period, in case the company terminates his service.

Insurances

President & CEO

The CEO is entitled to insurances such as life and permanent disability, private accident, business travel, and directors’ and officers’ liability insurance. The CEO participates in the company sickness fund.

Deputy CEO

The Deputy CEO is entitled to insurances such as life and permanent disability, private accident, business travel, and directors’ and officers’ liability insurance. The Deputy CEO participates in the company sickness fund.

Remuneration of the Management Board

Remuneration 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.

Main employment terms of the Management Board

Short-term incentives (STI)

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

The maximum bonus for the members of the Management Board is 60% to 80% of the annual base salary.

The performance criteria 2022 are determined on the basis of Group operative cash flow after investing activities, Group or Segment level operative EBIT in EUR, Group or Segment level Organic Revenue Growth in EUR, safety related KPI’s of Kemira Group, and role based targets.

The performance criteria 2021 were determined on the basis of Group operative cash flow after investing activities, Group or Segment level operative EBIT in EUR, Group or Segment level Organic Revenue Growth in EUR, safety related KPI’s of Kemira Group, and role based targets.

Long-term incentives (LTI)

The objective of the long-term share incentive plans is to combine the interests of the shareholders and the members of the Management Board in order to increase the value of Kemira and to commit the members of the Management Board to Kemira.

Termination

Depending on country practices, mutual termination notice period of 1 to 6 months applies to the members of the Management Board. 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.

Insurances

The members of the Management Board are entitled for life and permanent disability, private accident, business travel, and directors’ and officers’ liability insurances, and participate in the company sickness fund or other similar arrangement.

Pension

The Management Board members who are employed by a Finnish Kemira company do not have any supplementary pension arrangements in addition to the statutory pensions. Members of the 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.

Remuneration of the Management Board for the preceding financial year (2021)

Management Board*, EUR
Fixed annual salary (incl. taxable benefits) 1,553,372
Short-term incentive payment 757,889
Share-based incentive payment 1,260,632
Total compensation 3,571,893

* Members of the Management Board in 2021: CFO Petri Castrén, CTO Matthew R. Pixton, President Pulp and Paper Kim Poulsen, EVP Operational Excellence Esa-Matti Puputti, President Industry and Water Antti Salminen, EVP Human Resources Eeva Salonen.

Long-Term Share Incentive Plan

Long-term share incentive plan 2022-2026

Decision-making
In December 2021, the Board of Directors of Kemira Oyj decided to establish a long-term share incentive plan for the years 2022-2026 directed to a group of key employees in Kemira.

Earning periods and criteria
The long-term share incentive plan includes three three-year performance periods: years 2022-2024, 2023-2025 and 2024-2026.
In the beginning of each performance period, the Board of Directors decides on the plan’s performance criteria, the required performance levels for each criterion, and the plan’s participants and share allocations during the performance period.

  • During the performance period 2022-2024, the long-term share incentive plan is directed to approximately 90 people. The rewards potentially payable on the basis of the performance period 2022-2024 may amount up to a maximum total of 643,500 Kemira Oyj shares.
  • The performance criteria for 2022-2024 are the following: Average Intrinsic Value (2022-2024) and Average Organic Revenue Growth % p.a. (2022-2024). The possible reward is paid in 2025.

Rewards
The potential reward will be 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.

Employment
As a rule, no reward will be paid, if a participant’s employment or service ends before the reward payment.

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.

Long-term share incentive plan 2019-2023

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

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. This structure enables a gradual shift from one-year performance periods to three-year performance periods. In the beginning of each performance period, the Board of Directors decides on the plan’s performance criteria, the required performance levels for each criterion, and the plan’s participants and share allocations during the performance period.

  • For the performance period 2019, the performance criterion was Kemira Group’s Intrinsic Value, and the reward was paid out in 2020. The outcome for the 2019 performance period was 100%.
  • For the performance period 2019-2021, the performance criterion is Kemira Group’s average Intrinsic Value 2019-2021, and the potential reward is paid out in 2022. The outcome for the 2019 performance period was 86%.
  • During the performance periods 2019 and 2019-2021, the long-term share incentive plan was directed to approximately 90 people. The rewards potentially payable on the basis of the performance periods 2019 and 2019-2021 may amount up to a maximum of 643,500 Kemira Oyj shares. The outcome of the 2019 performance period was 100% and the outcome of the 2019-2021 performance period was 85%.
  • For the performance period 2020, the performance criterion was Kemira Group’s Intrinsic Value, and the reward will be paid out in 2021. The outcome for the 2020 performance period was 68%. For the performance period 2020-2022, the performance criterion are Kemira Group’s average Intrinsic Value 2020-2022 and Kemira Group’s average Organic Growth % p.a. 2020-2022, and the potential reward will be paid out in 2023.
  • During the performance periods 2020 and 2020-2022, the long-term share incentive plan is directed to approximately 90 people. The rewards potentially payable on the basis of the performance periods 2020 and 2020-2022 may amount up to a maximum total of 643,500 Kemira Oyj shares.
  • For the performance period 2021-2023, the performance criterion are Kemira Group’s average Intrinsic Value 2021-2023 and Kemira Group’s average Organic Growth % p.a. 2021-2023, and the potential reward will be paid out in 2024.
  • During the performance period 2021-2023, the long-term share incentive plan is directed to approximately 90 people. The rewards potentially payable on the basis of the performance period 2021-2023 may amount up to a maximum total of 643,500 Kemira Oyj shares.
  • Intrinsic Value is defined as: operative EBITDA * 8 – net debt

Rewards
The potential reward will be 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
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
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 to the company 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.