Remuneration Information • Feb 20, 2015
Remuneration Information
Open in ViewerOpens in native device viewer
| Legal notice | 8 |
|---|---|
| Compensation of Board of Directors | 6 |
| Compensation for Management Team | 4 |
| Pensions | 4 |
| Long-term incentives | 3 |
| Short-term incentives | 3 |
| Remuneration | 3 |
Remuneration at Fortum is directed by the Group's remuneration principles and Fortum's general remuneration and benefits practices. When determining remuneration, the company's financial performance and external market data, particularly the remuneration for similar positions among peer companies, are taken into consideration. The Board of Directors approves, at the proposal of the Nomination and Remuneration Committee, the remuneration principles at the Group level and decides on the bonus targets and the remuneration of senior management (President and CEO and other members of the Fortum Executive Management Team). Remuneration of the Board of Directors is decided by the Annual General Meeting of
Fortum. Remuneration proposal is prepared by Fortum's Shareholders' Nomination Board, which is appointed in the previous Annual General Meeting.
Fortum offers a competitive compensation package for senior executives and other members of the management teams. The aim is to attract, commit and retain key resources in all countries where Fortum operates. The package offers employees a competitive base salary. In addition to a salary, relevant benefits and short-term and long-term incentive schemes – with eventual payment based on attainment of challenging performance targets decided by the Board of Directors – are also offered.
The Finnish Corporate Governance Code 2010 requires that Fortum issues a remuneration statement regarding the salaries and other remuneration paid by the company. Furthermore, the Cabinet Committee on Economic Policy, representing the State owner, issued a statement in August 2012 on the remuneration of executive management and key individuals in companies with State ownership. Fortum's remuneration principles comply both with the Finnish Corporate Governance Code 2010 and the statement issued by the Cabinet Committee.
Fortum's short-term incentive scheme (STI), i.e. bonus system, supports the realisation of the Group's financial performance targets, sustainability targets, values and structural changes. The system ensures that the performance targets of individual employees align with the targets of the division and the Group. All Fortum employees, with the exception of certain personnel groups in Poland and Russia, are covered by the system.
The Board of Directors decides on the bonus criteria – including all performance measures, target values and performance scales – for senior management. The bonuses paid to the members of senior management are dependent on the Group's financial performance – measured in 2014 by profitability and cash flow, divisional targets and success in reaching personal targets. The performance bonus criteria also include indicators related to sustainability targets. The maximum bonus for senior management is 40 % of the executive's annual salary including fringe benefits (annual salary = 12 times the salary paid in December of the year in question).
The bonuses of the division heads, all of whom are members the Fortum Executive Management Team, are determined on the basis of the division's performance and the Group's financial performance. The criteria used to assess the personal performance of the executive are agreed in the annual performance discussions held at the beginning of the year.
The Board of Directors assesses the performance of the President and CEO on a regular basis.
The purpose of Fortum's long-term incentive system (LTI), i.e. share bonus system, is to support the achievement of the Group's longterm targets by committing key individuals. The Board of Directors approves the Fortum management members and key individuals entitled to participate in the share bonus system. For the share bonus system 2014–2019 there are currently approximately one hundred participants. Participation in the
system precludes the individual from being a member in the Fortum Personnel Fund.
Fortum's share bonus system is divided into six-year share plans, within which participants have the opportunity to earn company shares. A new plan commences yearly, if the Board of Directors so decides.
Each share plan begins with a three-calendaryear period, during which participants may earn share rights if the earnings criteria set by the Board of Directors are fulfilled. For the earnings period 2014–2016 the approved key earning criteria are based on earnings per share (EPS), return for shareholders and reputation index.
After the earning period has ended and the relevant taxes and other employment-related expenses have been deducted from the gross
Fortum's Finnish senior executives participate in the Finnish TyEL pension system, which provides for a retirement benefit based on years of service and earnings in accordance with the prescribed statutory system. Under the Finnish pension system, earnings include base pay, annual bonuses and taxable fringe benefits, but gains realised from the share bonus system are not included in that definition. Finnish pension legislation offers a flexible retirement from age 63 to age 68.
Fortum's senior executives outside Finland participate in pension systems based on statutory pension arrangements and market practices in their local countries.
In addition to the statutory pensions, the members of the Fortum Executive Management Team have supplementary pension arrangements. The Group policy is that all new supplementary pension arrangements are defined contribution plans. The retirement age for Fortum's President and CEO is 63 and for the other members of the Fortum Executive Management Team 60-65. For the President and CEO and some members of the Fortum Executive Management Team, the maximum pension can be 60 % of the pensionable salary, with the pension insured by an insurance company and for some members, the maximum is 66 % of the pensionable salary, with the pension provided by Fortum's Pension Fund.
The table below includes the salaries and fringe benefits, short-term bonus- and longterm share bonus payments to the President and CEO and the Fortum Executive Management Team during the year. Shortterm bonus (STI) payments are based on the previous year's targets and achieved results. Long-term share bonus (LTI) includes the shares delivered during the year. The table also includes payments made to
supplementary pension arrangements for the President and CEO and the Fortum Executive Management Team.
For the Fortum Executive Management Team members, the lock-up period may be shortened to one year on an individual basis if the value of the aggregate ownership of Fortum shares corresponds to a minimum of the annual base salary. For other participants, the share bonus systems lock-up period is changed to one year from Plan 2013–2018 onwards.
The maximum value of shares, before taxation, to be delivered to a participant after the earning period cannot exceed the participant's annual salary.
Fortum's current long-term incentive system is in line with the statement on the remuneration of executive management and key individuals in companies with State ownership and the Finnish Corporate Governance Code 2010 for listed companies. PCA Corporate Finance, an independent Finnish financial advisor, has been consulted in matters related to remuneration.
| Thousands of euros | Salaries and fringe benefits 2014 |
Salaries and fringe benefits 2013 |
Short term bonus 2014 |
Short term bonus 2013 |
Long term bonus 2014 |
Long term bonus 2013 |
Voluntary pensions 2014 |
Voluntary pensions 2013 |
Total 2014 |
Total 2013 |
|---|---|---|---|---|---|---|---|---|---|---|
| President and CEO | 1,005 | 1) 795 |
38 | 18 | 549 | 971 | 255 | 249 | 1,847 | 2,033 |
| Other Executive Management | ||||||||||
| team members 2) | 3,321 | 2,860 | 453 | 137 | 1,509 | 1,508 | 578 | 453 | 5,861 | 4,958 |
| Total | 4,326 | 3,655 | 491 | 155 | 2,058 | 2,479 | 833 | 702 | 7,708 | 6,991 |
1) Amount is impacted by the sick leave during 2013.
2) Former CFO Markus Rauramo was granted a recruitment bonus in 2012 that was paid in three installments of EUR 33,334 in 2012, 2013 and 2014. In addition former CFO Rauramo was paid EUR 80,000 compensation in 2013 for assuming duties of the President and CEO during March-November 2013.
The STI and LTI bonus payments to the Executive Management Team, including the President and CEO, amounted to a total of EUR 2,549 thousand (2013: 2,634), which corresponds to 0.83 % (2013: 0.77 %) of the total compensation in the Fortum Group.
and CEO during Tapio Kuula's sick leave in December 2014, did not receive any compensation for these additional duties in 2014.
CEO and other Fortum Executive Management Team members under the longterm incentive plans.
Timo Karttinen, who assumed the responsibility for the duties of the President
| Number of shares delivered to the | ||
|---|---|---|
| management |
The following table shows the number of Fortum shares delivered to the President and
| Number of shares | 2014 2) | 2013 |
|---|---|---|
| Tapio Kuula | 15,187 | 35,152 |
| Helena Aatinen | 909 | 519 |
| Alexander Chuvaev 1) | 13,793 | 35,783 |
| Mikael Frisk | 6,463 | 10,079 |
| Esa Hyvärinen (member of the FEM from 1 March 2014) | 1,382 | n/a |
| Timo Karttinen | 6,639 | 9,563 |
| Kari Kautinen (member of the FEM from 1 March 2014) | 1,739 | n/a |
| Per Langer | 5,517 | 8,550 |
| Markus Rauramo | 1,679 | 756 |
| Matti Ruotsala | 3,463 | 12,395 |
| Sirpa-Helena Sormunen (member of the FEM from 1 September 2014) | 0 | n/a |
| Tiina Tuomela (member of the FEM from 1 March 2014) | 1,156 | n/a |
| Kaarina Ståhlberg (member of the FEM until 31 March 2014) | 210 | n/a |
1) Share rights will be paid in cash instead of shares after the three-year lock-up period due to local legislation
2) Share delivery based on share plans 2008-2012 and 2011-2016.
| Salary and fringe benefits |
EUR 81,530 /month, including free car allowance and phone allowances as fringe benefits. |
|---|---|
| Short-term incentive system (bonus) * |
The bonus can be earned annually based on the criteria approved by the Board of Directors. The maximum level is 40% of the annual salary including fringe benefits. |
| Long-term incentive system (share bonus) * |
According to Fortum management's current share bonus system. The maximum value of shares (before taxation) cannot exceed the annual salary of the President and CEO. |
| Pension | Retirement age is 63. The President and CEO's supplementary pension is a defined contribution pension plan, and the annual contribution is 25% of the annual salary. The annual salary consists of the base salary, fringe benefits and bonus. If the President and CEO's contract is terminated before retirement age, he is entitled to retain the funds that have accrued in the pension fund. |
| Termination of Contract |
The notice period for both parties is six months. If the company terminates the contract, the President and CEO is entitled to the salary of the notice period and to severance pay equal to 18 months' salary. |
*) Annual bonus payments (short- and long-term) cannot exceed 120% of annual salary. Annual salary = 12 times the salary paid in December of the year in question.
The following table includes the compensation paid for the Board of Directors during 2014 and 2013. The amounts include fixed yearly fees and meeting fees.
| Board service | Board service | |||
|---|---|---|---|---|
| Thousands of euros | 2014 | 2014 | 2013 | 2013 |
| Board Members at 31 December 2014 | ||||
| Sari Baldauf, Chairman | 83 | 1 Jan - 31 Dec | 84 | 1 Jan - 31 Dec |
| Kim Ignatius, Deputy Chairman 1) | 67 | 1 Jan - 31 Dec | 67 | 1 Jan - 31 Dec |
| Minoo Akhtarzand | 57 | 1 Jan - 31 Dec | 58 | 1 Jan - 31 Dec |
| Heinz-Werner Binzel | 60 | 1 Jan - 31 Dec | 60 | 1 Jan - 31 Dec |
| Ilona Ervasti-Vaintola | 48 | 1 Jan - 31 Dec | 49 | 1 Jan - 31 Dec |
| Christian Ramm-Schmidt 2) | 53 | 1 Jan - 31 Dec | 66 | 1 Jan - 31 Dec |
| Petteri Taalas | 37 | 8 Apr - 31 Dec | - | - |
| Jyrki Talvitie | 53 | 8 Apr - 31 Dec | - | - |
| Former Board Members | ||||
| Joshua Larson | 19 | 1 Jan - 8 Apr | 71 | 1 Jan - 31 Dec |
1) Deputy Chairman from 8 April 2014
2) Deputy Chairman until 8 April 2014
Board members are not in an employment relationship or service contract with Fortum, and they are not given the opportunity to participate in Fortum's bonus or share bonus systems, nor does Fortum have a pension plan that they can opt to take part in. The
compensation of the Board members is not tied to the sustainability performance of the Group.
The Annual General Meeting on 8 April 2014 confirmed the following annual fees for the members of the Board of Directors:
| Thousands of euros/year | 2014 | 2013 |
|---|---|---|
| Chairman | 75 | 75 |
| Deputy Chairman | 57 | 57 |
| Chairman of the Audit and Risk Committee 1) | 57 | 57 |
| Members | 40 | 40 |
1) if not Chairman or Deputy Chairman simultaneously
Every member of the Board of Directors receives a fixed yearly fee and a meeting fee. The meeting fee of 600 euro is also paid for committee meetings and is paid in double to a member who lives outside Finland in Europe and in triple to a member who lives outside Europe. The members are entitled to travel
expense compensation in accordance with the company's travel policy.
The use of the website of Fortum Corporation and its subsidiaries (together "FORTUM") requires following the terms of use set forth below. You are not allowed to use FORTUM´S website if you do not agree to follow these terms of use.
The entire content of FORTUM'S website, such as text, graphics, names, images, figures, drawings, logos icons, recordings and software, are property of FORTUM and its associated companies, licensors and partners. Any rights not expressly granted herein are reserved. Copying, transferring, modifying, saving, publishing and distributing the content of FORTUM'S website or part thereof is prohibited without FORTUM'S prior written consent.
The use of FORTUM'S website for personal, non-commercial purposes is permitted. Documents classified as public, such as press releases, may be used for public communications if the source of the information is displayed.
FORTUM'S website and its content are provided on "as is" basis. FORTUM does not give any express or implied representation or warranty with respect to the information included in FORTUM'S website, including any representation or warranty as to the accuracy, completeness or reliability of the information. Nothing included in FORTUM'S website can be held as a binding offer or commitment of FORTUM. FORTUM reserves the right to modify these terms of use and FORTUM'S website and its content or part thereof at any time without prior notice. FORTUM does not make any representation or warranty as to the accessibility of FORTUM'S website.
FORTUM SHALL IN NO EVENT BE LIABLE FOR ANY LOSS OR DAMAGE OF WHATSOEVER NATURE INCLUDING, WITHOUT LIMITATION, INDIRECT AND CONSEQUENTIAL DAMAGE, SUCH AS LOSS OF REVENUE, LOSS OF INCOME, LOSS OF PROFIT, BUSINESS INTERRUPTION OR LOSS OF DATA, ARISING FROM THE USE OF THIS WEBSITE OR ITS CONTENT OR THE INTERRUPTION OR LOSS OF DATA, ARISING FROM THE USE OF THIS WEBSITE OR ITS CONTENT OR THE INTERRUPTION OR INAVAILABILITY OF THE SAME. NEITHER SHALL FORTUM BE LIABLE FOR ANY LOSS OR DAMAGE CAUSED DUE TO ERRORS, INTERRUPTIONS OR INAVAILABILITY OF DATA SYSTEMS OR DATA COMMUNICATIONS OR DAMAGE CAUSED DUE TO MALWARE OF VIRUSES. IF THE APPLICABLE JURISDICTION DOES NOT ALLOW THE ABOVE LIMITATION OF LIABILITY, THE LIABILITY OF FORTUM SHALL BE LIMITED TO THE GREATEST EXTENT PERMITTED BY THE APPLICABLE LAW.
The sections 'This is Fortum', 'Business', 'In society' and 'GRI' have not been audited. The sustainability reporting material presented on these sections have been provided a limited independent assurance by a third party according to the scope and standards disclosed in the Assurance Statement, which will be publish at the end of March. References to the future presented on these pages reflect Fortum's assessments at the beginning of February 2015. Materialisation of such assessments is dependent on various factors, some of which Fortum may not have an impact on, and thus the final outcome may deviate from the assessments presented. Fortum discloses its outlook statement and the risks related to the realisation of the outlook statement separately in accordance with the applicable laws and regulations under the specific sections in the Operating and Financial Review. Fortum Corporation's Financial Statements and Operating and Financial Review for 2014 and the related Auditor's Report are available on this website.
The user of FORTUM'S website is solely responsible for the accuracy and delivery of information and materials submitted to FORTUM'S website and that the user is entitled to provide FORTUM with such information or materials. The user of FORTUM'S website shall take all reasonable measures to make sure that information and materials submitted to FORTUM do not contain malware or viruses. FORTUM shall be granted with a royalty-free and unlimited right to modify, copy, publish and distribute all information and materials submitted to FORTUM'S website, either as such or as part of other materials or documentation, for any and all commercial and non-commercial use to the extent permitted by the laws of Finland.
The privacy of customers' personal information is important to FORTUM. FORTUM complies with the applicable legislation on personal data protection. User may request to have User's personal information collected by FORTUM removed or corrected at any time.
These terms of use shall be governed by the laws of Finland.
Please address all enquiries and remarks regarding these terms of use to FORTUM'S Legal Affairs, P.O. BOX 1, 00048 FORTUM, FINLAND, Tel. +358 10 4511
Building tools?
Free accounts include 100 API calls/year for testing.
Have a question? We'll get back to you promptly.