Remuneration

The decision-making process on remuneration

Pursuant to the Companies Act, Outotec Oyj’s shareholders determine the amount of remuneration for members of Board of Directors and for Committee work at the Annual General Meeting. The proposal for the remuneration is prepared by the Nomination Board in accordance with its Charter.  

The remuneration of the President and CEO as well as of the Executive Board members is decided by the Board of Directors. The proposals for the remuneration are prepared by the Human Capital Committee of the Board of Directors in accordance with its Charter.

Outotec’s Board of Directors has approved and Outotec has adopted a compensation policy covering the remuneration principles for its employees.

Compensation Policy

Outotec has adopted a compensation policy reflecting the following principles:

  • The total compensation package should closely align the interests of Outotec, its shareholders, and all employees of Outotec
  • A significant proportion of total compensation should be based on the company’s operating performance in the short- and long-term, and on each employee’s individual performance
  • In order to attract and retain highly competent professionals, the total compensation package of employees with key competence and a high level of individual performance should be competitive compared to relevant labor market compensation


The total compensation may include the following components:

  1. Base salary

  2. Short-term incentives

    • Outotec’s global annual bonus system; or

    • Project bonus; or

    • Sales Incentive

  3. Long-term incentives

    • Share incentive plan, share options or comparable system for selected employees

    • Share saving plan or comparable for all personnel

  4. Rewards for innovation

  5. Compensation during foreign assignments

  6. Ad-hoc rewarding for extraordinary achievements

  7. Temporary increased responsibility allowance

  8. Pension and life insurance benefits

The compensation policy was approved in 21 November, 2011 and updated on 20 December, 2016 by the Board of Directors.

Short-term incentives

At Outotec, annual bonuses are determined on the basis of attainment of the company’s financial targets, as well as targets set for the employees or units concerned. Personal targets usually add up to one third of an individual’s total annual bonus opportunities. As a general rule, the maximum bonus percentage ranges from 10 to 50 percent of the employee’s annual salary, depending on the job grade or the position of the employee, and is 60 percent for the CEO. The annual bonus program covers almost all personnel of Outotec. Project bonus or sales incentive may be used instead of annual bonus in selected delivery projects or respectively for sales personnel. Board of Director’s decided that bonuses were not paid from 2016.
Board of Directors decided to divide 2017 annual bonus plan to Q1/2017 and Q2–Q4/2017 bonus plans. Q1/2017 bonus plan was based on Outotec level bonus targets on adjusted EBIT, order intake and fixed costs. The Board of Directors approved the total achievement of 56.25% of the maximum result. The bonuses were paid in May and June 2017 with total costs of EUR 7.1 million. Board of Director’s confirmed that bonuses were not paid from Q2–Q4/2017 bonus plan.

Long-term incentives

Share-based Incentive Program 2016–2018

Outotec’s Board of Directors decided on February 29, 2016 to adopt a Share-based Incentive Program for the company’s key personnel for years 2016–2018. The Board of Directors determines annually the maximum number of allocated shares, the participants, the length of earning period (1-3 years), the amount of the maximum reward for each individual, the earning criteria and the targets established for them.  A precondition for the Executive Board members for being eligible for the Share-based Incentive Program was that s/he also participates in Outotec’s O’Share Employee Share Savings Plan.

Earning period 2018

The Board of Directors set targets for Outotec adjusted EBIT and free cash flow. The Board of Directors approved allocations to key personnel including CEO and Executive board members. On 1 April 2018, the total number of participants are 69 employees with maximum reward of 636,000 Outotec shares and cash portion to cover taxes and tax-related payments.

Earning period 2017

The Board of Directors approved the total achievement of 21.16% of the maximum reward based on the performance criteria of Outotec adjusted EBIT and free cash flow. A total reward of 157,502 shares and cash portion to cover taxes and tax-related payments will be paid to 94 participants including CEO and Executive board members in May 2018.

Earning period 2016

Outotec’s Board of Directors decided that no shares were paid for the 2016 earning period, because the targets were not reached.

 

O’Share Employee Share Savings Plan

Outotec’s Board of Directors decided on September 25, 2012, to launch an O’Share Employee Share Savings Plan for Outotec employees globally. The plan commenced from January 1, 2013, with the first savings period being one calendar year.

Outotec employees can save a portion of their salary for purchasing Outotec shares. To each participant in the savings period, Outotec pays one free share for two acquired shares after the designated holding period of approximately three years. Free shares are taxable income for the recipient and will be paid partly in Outotec shares and partly in cash. The cash proportion is intended for covering taxes and tax-related payments.

On September 27, 2017 the Board of Directors decided to continue the plan also in 2018. The following savings periods are subject to a separate Board decision.

The total savings of employees have been capped to EUR 6 million in 2015, 2016, 2017 and to EUR 4 million in 2018. Globally approximately 20% of the employees are participating in Employee Share Savings Plan.

Free Shares – Savings period 2014

A total of 126,472 Outotec shares and cash portion to cover taxes and tax-related payments were paid to 1,223 participants on May 16, 2017 based on the 2014 savings period with a cost of approximately EUR 1.3 million, which is booked for the financial periods 2014–2017.

Free Shares – Savings period 2013

A total of 233,160 Outotec shares and cash portion to cover taxes and tax-related payments were paid to 1,417 participants on May 16, 2016 based on the 2013 savings period with a cost of approximately EUR 1,5 million, which is booked for the financial periods 2013–2016.

Remuneration for members of the Board of Directors

The Annual General Meeting 2018 confirmed the annual remunerations to the Board members as follows: Chairman EUR 72,000 and other Board members EUR 36,000 each, Vice Chairman and Chairman of the Audit and Risk Committee in addition EUR 12,000 each, and each Board member EUR 600 for attendance at each Board and Committee meeting as well as reimbursement for direct costs arising from Board work. 60% of the remuneration will be paid as cash and 40% as Outotec shares in amounts corresponding to EUR 28,800 for Chairman and EUR 14,400 for other Board members, and EUR 19,200 for Vice Chairman and Chairman of the Audit and Risk Committee.

Remuneration of the CEO

On April 1, 2018, the annual base salary of the CEO Markku Teräsvasara is EUR 630,000 including holiday pay and fringe benefits in accordance with Outotec policy. In addition to the base salary, the CEO is entitled to an annual bonus that is maximum 60% of his base salary. Annual targets for the bonus are related to the financial performance of the company and are decided annually by the Board of Directors.

The CEO participates in Outotec’s Long-term share-based Incentive Program. From the earnings period 2018, the CEO is entitled to receive the maximum of 63 000 Outotec shares and a cash portion to cover taxes and tax-related payments. The payable amount depends on how the annual performance criteria set by the Board of Directors are met. The CEO is required to participate to O’Share Employee Share Savings Plan in order to be eligible for Long-term share based Incentive Program.

From the earnings period 2017, the Board of Directors approved the total achievement of 21.16% of the maximum reward based on the performance criteria of Outotec adjusted EBIT and free cash flow. A total reward of 13,331 shares and cash portion to cover taxes and tax-related payments will be paid to the CEO in May 2018. 

The CEO participates in the O’Share Employee Share Savings Plan. According to the terms of the plan he can receive one share (including taxes) for each two shares purchased with his savings. The maximum savings amount is 5% of the base salary.

Remuneration of the Executive Board Members

The Executive Board includes eight (8) members in addition to the CEO. On 1 April 2018, the annual base salaries of the Executive Board, excluding the CEO, are EUR 1,923,729 in total including holiday pay and fringe benefits in accordance with Outotec policy. In addition to the base salary, the Executive Board members are entitled to an annual bonus that is maximum 40–50% of the base salary depending on the role. Annual targets for the bonus are related to the financial performance of the company and are decided annually by the Board of Directors.

The Executive Board members participate Outotec’s Long-term share-based Incentive Program. From earnings period 2018 Executive Board members are entitled to receive maximum 168,000 Outotec shares and cash portion to cover taxes and tax-related payments. The payable amount depends on how the annual performance criteria set by the Board of Directors are met. The Executive Board members are required to participate to O’Share Employee Share Savings Plan to be eligible for Long-term share based Incentive Program.

From earnings period 2017, the Board of Directors approved the total achievement of 21.16% of the maximum reward based on the performance criteria of Outotec adjusted EBIT and free cash flow. A total reward of 55,656 shares will be paid to Executive Board members excluding CEO in May 2018.

The Executive Board members participate in O’Share Employee Share Savings Plan. According to the terms of the plan, an Executive Board member can receive one share (including taxes) for each two shares purchased with his/her savings. The maximum savings amount is 5% of the base salary.

The notice period for members of the Executive Board vary from 6 to 12 months depending on the terms of the service or employment agreement. The pension benefits of are based on statutory pension arrangements, which are enforced in the country that the person is employed.

The remuneration terms may also include a sign-in and/or retention bonus based on two-year restriction period, agreed reasonable relocations costs to Finland, or allowances and reasonable relocations costs for expatriates based on the Outotec global mobility policy.  

Fees paid to the Board of Directors, EUR 2017 2016
Alahuhta Matti, Chairman 89,400 82,200
Ritakallio Timo, Vice Chairman 62,400 58,200
Ailasmaa Eija 52,800 45,600
Cawén Klaus  51,000 46,200
Korhonen Anja 63,000 58,200
Nolåker Patrik 50,400 40,800
Pearce Ian W.  49,227 45,618
Zabludowicz Poju (until March 30.2017) 5,400 43,200

Remuneration for the CEO and EB members

Remuneration paid to the CEO and Executive Board members in 2017, EUR Wages Benefits Bonuses Share based benefits Total

CEO Markku Teräsvasara*) 

595,415 37,116 50,625 0 683,156
Other Executive Board**) 1,707,075 110,011 103,121 14,128 1,934,335

*) Benefits include reasonable relocation costs related to the move from Sweden to Finland.
**) Remuneration paid for the time when holding duties as Executive Board member.
**) A member of Executive Board was assigned temporarily abroad in 2017. The benefits include compensation of costs related to these foreign assignments for example accommodation and car lease.
**) Wages include compensation for unused vacation amounting to EUR 25,714.

Remuneration paid to the CEO and Executive Board members in 2016, EUR Wages Benefits Bonuses Share based benefits Total
CEO Pertti Korhonen (until June 22, 2016)*) 1,666,986 12,185 0 11,485 1,690,656
Acting CEO Jari Ålgars
(from June 22 to October 1, 2016)
122,435 6,000 0 0 128,435
CEO Markku Teräsvasara
(since October 1, 2016)**)
145,978 29,434 0 0 175,412
Other Executive Board***) 2,064,876 129,354 0 224,003 2,418,233

*) Wages include salaries for notice period, compensation for unused vacation and severance payment amounting to EUR 1,397,817.60. Share-based benefits consist of Employee O’Share Share Savings Plan’s Free Shares payment amounting to EUR 11,485.
**) Benefits include reasonable relocation costs related to the move from Sweden to Finland.
***) Remuneration paid for the time when holding duties as Executive Board member.
***) Wages include salaries for notice period, compensation for unused vacation and severance payments amounting to EUR 554,504.17.
***) Share-based benefits include payments based on employment agreement amounting to EUR 204,465.92.
***) Two members of Executive Board were assigned temporarily abroad in 2016. The benefits include compensation of costs related to these foreign assignments, for example accommodation and car lease.