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.
Remuneration Policy (.pdf)
Remuneration Statement 2019
This remuneration statement describes Kemira’s remuneration principles and the remuneration of the Board of Directors and the operative management, i.e., the President & CEO, the Deputy CEO and the other members of the Management Board in 2019. The remuneration statement has been prepared in accordance with the Finnish Corporate Governance Code 2015.
Remuneration Statement 2019 (.pdf)
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.
The General Meeting decides on the remuneration of the Board of Directors. 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 of Directors decides the salaries, other remuneration and the terms of employment of the President & CEO, the Deputy CEO 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 President & CEO, his Deputy and the other members of the Management Board.
According to the decisions made in the Annual General Meeting 2020, 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, 2020.
The following amounts of shares were paid on May 8, 2020 as part of the annual fee decided by the Annual General Meeting 2020:
- the Chairman received 3,365 shares
- the Vice Chairman and Chairman of the Audit Committee 2,012 shares
- the other members 1,609 shares.
There are no special terms or conditions associated with owning these shares.
Remuneration of the President & CEO, 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. No remuneration is paid to the Deputy CEO based on CEO substitution.
Employment terms of the President & CEO
Base salary and benefits
Annual base salary is EUR 595,350 per year, including a car benefit and a mobile phone benefit.
The President & CEO is entitled to insurances such as life and permanent disability, private accident, business travel, and directors’ and officers’ liability. The President & CEO participates in the company sickness fund.
The retirement age of the President & CEO is 63 years. The President & CEO is entitled to a supplementary defined contribution pension plan. The supplementary pension is defined as 20% of the annual base salary.
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.
A mutual termination notice period of 6 months applies to the President & CEO. The President & CEO 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.
Main employment terms of the Management Board and Deputy CEO
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.
Except the President & CEO members of the 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 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.
Members of the Management Board are eligible for short- and long-term incentive 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 President & CEO. 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.
Short-Term Bonus Plan for the Management
The objective of the short-term bonus plans is to drive the annual objectives and priorities of the company, ensuring alignment with the company strategy and the shareholders’ interests.
The short-term bonus plan for the President & CEO, and other 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.
Short-term bonus maximum reward 2020
The maximum bonus for the President & CEO is 70% of the annual base salary, for the Deputy CEO 60% and for the other members of the Management Board 60 to 80% of the annual base salary.
Short-term bonus criteria 2020
In 2020, 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 2020 earning period will be paid in February 2021.
Long-terms share incentive plans
The objective of the long-term share incentive plans is to combine the interests of the shareholders and the President & CEO, and the other members of the Management Board in order to increase the value of Kemira and to commit the President & CEO, and the other members of the Management Board to Kemira.
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 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 is Kemira Group´s Intrinsic Value, and the potential reward will be paid out in 2020. For the performance period 2019-2021, the performance criterion is Kemira Group´s average Intrinsic Value 2019-2021, and the potential reward will be paid out in 2022.
- During the performance periods 2019 and 2019-2021, the long-term share incentive plan is 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.
- For the performance period 2020, the performance criterion will be Kemira Group´s Intrinsic Value, and the potential reward will be paid out in 2021. For the performance period 2020-2022, the performance criterion will be Kemira Group´s average Intrinsic Value 2020-2022 and Kemira Group´s Organic Growth 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.
- Intrinsic Value is defined as: operative EBITDA * 8 – net debt
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.
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.
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 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.
More information on long-term share incentive plans can be found in the Remuneration Statements.