The Board of Directors appoints and discharges the President and CEO and decides on the President and CEO's remuneration and the other terms and conditions of the President and CEO's engagement. By decision of the Board of Directors, the President and CEO is paid a fixed base salary, which is a compensation for the President and CEO's responsibilities and is based on the requirements of the position, the President and CEO's individual's competence and performance as well as prevailing market practice. The monthly salary of the President and CEO Ilkka Hämälä is EUR 71,811 (April 2024). The monthly salary includes a company housing, car and phone benefit, extended health, travel and accident insurance coverage as well as other minor fringe benefits.
A short and long-term incentive can be paid to the President and CEO by decision of the Board of Directors. In 2024 the maximum level of remuneration available in the short-term incentive scheme is, accounting for Metsä Group's EBIT multiplier 93.75% of the fixed annual salary. The reward is based on Metsä Group's operating result (50% weighting) and the strategic goals defined by the Board of Directors, including sustainability targets (50% weighting) as well as the realisation of Metsä Group's EBIT multiplier. The potential reward shall be paid in March 2025.
The potential reward for the performance period 2022–2024 regarding the long-term performance plan 2020-2024 is based on the development of Metsä Group's return on capital employed (ROCE, %) as determined by the Board of Directors. Minimum levels have also been set for earnings before interest and taxes as well as the equity ratio. The Board of Directors is entitled to reduce the rewards fully or partly if defined earnings or equity ratio criteria are not met, or if the reward should exceed the maximum reward limit defined for the President and CEO. In addition to the outcome of the performance criteria the basis for the reward is a synthetic share value of which is determined based on Metsä Group's total value. On maximum level the reward potential of the President and CEO is 250% of the President and CEO’s annual base salary (the reward limit is 325% of the President and CEO’s annual base salary). The potential reward shall be paid in cash after the restriction period (in March 2026 at the latest) and it shall include taxes and other possible expenses. Should the President and CEO’s service terminate during the performance or restriction period, the President and CEO shall principally lose the right to reward.
The terms and conditions of the President and CEO Ilkka Hämälä's service contract are defined in writing in the President and CEO's contract, the terms of which have been confirmed by the Board of Directors. The period of notice pursuant to the contract is 12 months. If the service contract is terminated by the company, Hämälä is entitled to severance pay corresponding to 12 month salary. No severance compensation is paid if the contract is terminated by Hämälä himself.
Hämälä falls within the scope of the Employees Pensions Act. It provides pension security based on the period of service and earned income as provided in the Act. Hämälä is also covered by a supplementary defined benefit pension insurance, where he has already reached the retirement age of 62 years in 2023, as defined in the supplementary pension scheme.
According to the supplementary pension insurance the Hämälä's maximum level of pension is 60% of the total salary under the Employees Pensions Act, calculated on the basis of the five-year period preceding retirement. In case Hämälä's service with Metsä Group terminates before his retirement age, he is entitled to a free policy.
Remuneration of the President and CEO in 2024
In 2023 the maximum level of remuneration available in the short-term incentive scheme was, accounting for Metsä Group's EBIT multiplier 93.75% of the fixed annual salary. The reward was based on Metsä Group's operating result (50% weighting) and the strategic goals defined by the Board of Directors (50% weighting) as well as the realisation of Metsä Group's EBIT multiplier. The short-term incentive of EUR 200,595 based on performance in 2023 was paid to the President and CEO in March 2024.
The reward for the performance period 2020–2022 regarding the long-term performance scheme 2020-2024 was based on the development of Metsä Group's return on capital employed (ROCE, %) as determined by the Board of Directors. Minimum levels had also been set for the operating result and equity ratio. The realisation of the performance period 2020-2022 was 100%. The amount of the bonus was determined based on the value of Metsä Group's synthetic share. The President and CEO was paid a reward of EUR 2,379,205 in cash after the restriction period in March 2024.
Remuneration of the President and CEO in 2023
In 2022 the maximum level of remuneration available in the short-term incentive scheme was, accounting for Metsä Group's EBIT multiplier 93.75% of the fixed annual salary. The reward was based on Metsä Group's operating result (50% weighting) and the strategic goals defined by the Board of Directors (50% weighting) as well as the realisation of Metsä Group's EBIT multiplier. The short-term incentive of EUR 650,032 based on performance in 2022 was paid to the President and CEO in March 2023.
Any rewards in Metsä Group’s long-term incentive system based on synthetic shares, which has been in force since 2020, will be paid after the restriction period. Therefore, no rewards were paid from Metsä Group’s long-term incentive system in 2023. The first payment from the incentive system based on synthetic shares will be made in 2024 for the 2020–2022
performance period.
The President and CEO has already reached the retirement age of 62 years in 2023, as defined in the supplementary pension scheme. Therefore, insurance premiums contributing to the supplementary pension are no longer paid to the supplementary pension arrangement. After the retirement age, the supplementary pension arrangement may incur index increase fees. In 2023, the index increase fee was EUR 417,934.