Remuneration

For more information on remuneration, please see our Corporate Governance Statement.

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 based on the achievement of the company’s annual financial targets. In addition to the company level financial targets, business specific, individual and team performance targets are used.

Individual and team targets represent at maximum 40% of an individual’s total annual bonus opportunity. As a general rule, the maximum bonus percentage ranges from 10 to 40 percent of the employee’s annual salary, depending on the job grade or the position of the employee. The annual bonus program covers almost all Outotec’s personnel. Project bonus or sales incentive may be used instead of annual bonus in selected delivery and sales roles and/or projects.

In 2018, the key performance indicators of the annual bonus plan were Outotec adjusted EBIT, order intake, sales and cash flow. No bonus was paid from the annual bonus plan as the company performance did not reach the set threshold.

 

Long-term incentives

Share-based Incentive Program 2019–2021

Outotec’s Board of Directors decided on December 11, 2018 to adopt a Share-based Incentive Program for the company’s key personnel for years 2019–2021. 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 2019

The Board of Directors set targets for Outotec EBIT and free cash flow. The Board of Directors approved allocations to key personnel including CEO and Executive board members on February 7, 2019. The total number of participants are 73 employees with maximum reward of 656 250 Outotec Oyj shares and cash portion to cover taxes and tax-related payments.

Share-based Incentive Program 2016–2018

Earning period 2018

Outotec’s Board of Directors decided that no shares are paid for the 2018 earning period, because the targets were not reached.

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 are 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 20, 2018 the Board of Directors decided to continue the plan also in 2019. 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 and 2019. Globally approximately 20% of the employees are participating in Employee Share Savings Plan.

Free Shares – Savings period 2015

A total of 166 571 Outotec Oyj shares and cash portion to cover taxes and tax-related payments were paid to 966 participants on May 16, 2018 based on the 2015 savings period with a cost of approximately EUR 1,5 million, which is booked for the financial periods 2015–2018.

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 2019 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 annual remuneration will be paid in cash and 40% in the form of Outotec Oyj shares, in amounts corresponding to EUR 28,800 for the Chairman, EUR 19,200 for the Vice Chairman of the Board and the Chairman of the Audit and Risk Committee each, and EUR 14,400 for each of the other members of the Board of Directors.

 

Remuneration and employment terms of the CEO

The remuneration paid to the President and CEO is determined by the Outotec’s Board of directors. Current remuneration and employment terms and conditions of the CEO Markku Teräsvasara are:

Annual Salary

The CEO’s total annual salary EUR 640,080 including holiday pay and fringe benefits in accordance with Outotec policy.

Short-term incentive (annual bonus)

The CEO has annual bonus maximum of 60% of base salary. Annual targets for the bonus are related to the financial performance and development of the company and are decided annually by the Board of Directors.

Long-term incentives

The CEO participates in Outotec’s Long-term share-based Incentive Program. From the earnings period 2019, the CEO is entitled to receive the maximum of 63 000 Outotec Oyj 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.

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 CEO’s base salary.

Pension

The CEO’s earliest retirement age and pension benefits are determined by valid statutory Finnish pension legislation. The CEO is not entitled to supplementary pension benefits.

Termination of assignment

The service contract of the CEO can be terminated by the company without notice period and by the CEO with 6 months’ notice period. If the company terminates the service contract, the CEO will be compensated with a total severance pay corresponding to the base salary of 12 months payable as monthly instalments or lump sum payment. No such separate compensation will be paid if the company terminates the service contract because of the substantial breach of contract by the CEO, comparable to reasons mentioned in chapter 8 section 1 of the Employment Contracts Act.

Upon resignation by his own request and if the company decides to use the non-compete clause, the CEO is entitled to a compensation for the non-compete period. Compensation is equal to 6 months’ base salary.

 

Remuneration and employment terms of the Executive Board

The remuneration paid to the Executive Board members is determined by the Outotec’s Board of Directors. Current remuneration and employment terms and conditions of the Executive Board members are:

Annual Salary

Fixed monthly salary including holiday pay and fringe benefits in accordance with Outotec policy.

Short-term incentive (annual bonus)

The Executive Board members are entitled to an annual bonus that is maximum 50% of the base salary. Annual targets for the bonus are related to the financial performance and development of the company and are decided annually by the Board of Directors.

Long-term incentives

The Executive Board members participate in Outotec’s Long-term Share-based Incentive Program. From the earnings period 2019 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 in O’Share Employee Share Savings Plan to be eligible for Long-term Share-based Incentive Program.

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 after two year’s restriction period. The maximum savings amount is 5% of the base salary.

Pension

The pension benefits of are based on statutory pension arrangements, which are enforced in the country where the person is employed.

Termination of assignment

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 remuneration terms of Executive Board members may also include a sign-in and/or retention bonus or allowances and reasonable relocations costs for expatriates based on the Outotec global mobility policy.

 

Remuneration paid in 2018

The remuneration terms of Executive Board members may also include a sign-in and/or retention bonus or allowances and reasonable relocations costs for expatriates based on the Outotec global mobility policy. 

Fees paid to the Board of Directors, EUR 2018 2017
Alahuhta Matti, Chairman 84 000 89,400
Ritakallio Timo, Vice Chairman 59 400 62,400
Ailasmaa Eija 48 000 52,800
Cawén Klaus  47 400 51,000
Korhonen Anja 58 200 63,000
de Mora Hanne (27.3.2018 alkaen) 43 800 -
Nolåker Patrik 48 000 50,400
Pearce Ian W.  46 800 49,227
Zabludowicz Poju (until March 30.2017) - 5,400

 

Remuneration paid to the CEO and Executive Board members in 2018, EUR Wages Benefits Bonuses Share based benefits Total

CEO Markku Teräsvasara

612 927 16 508 - 231 249 860 684
Other Executive Board *) 1 922 871 130 190 80 000 1 089 427 3 222 488

*) A member of Executive Board was assigned temporarily abroad in 2018. The benefits include compensation of costs related to these foreign assignments for example accommodation and car lease.

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.