Remuneration

Last updated: April 8, 2024

Remuneration 

The AGM on April 29, 2020 approved the Remuneration Policy for the Company’s Governing Bodies presented to it.

Huhtamäki Oyj’s Remuneration Policy for the Governing Bodies

The Remuneration Report providing information on the remuneration paid during the previous financial period is available as a separate document.

Decision-making procedure in remuneration related matters

The decision-making procedure in remuneration related matters follows principles aimed at ensuring the prevention and the management of conflicts of interest. The remuneration of a governing body is generally decided on by another corporate body responsible for the appointment of the said governing body. The Company complies with its Code of Conduct, the Finnish Companies Act, other applicable laws and regulations as well as the Finnish Corporate Governance Code adopted by the Securities Market Association which stipulate governance procedures and rules for the avoidance of conflicts of interest. The decision-making process described below aims at guaranteeing that the decisions are fair and unbiased.

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Board of Directors add_circle_outline

The General Meeting decides on the remuneration payable to Board members. Subject to as in each case is decided by the General Meeting, the remuneration of the Board members may consist of annual compensation and meeting fees paid for each meeting attended. The annual fee may either solely comprise a cash payment or may be split into a component paid in shares of the Company and in cash. Additional or higher compensation may be paid to Board members based on various grounds, such as (but not limited to) the role as the Chair or Vice Chair of the Board or as the Chair, Vice Chair or member of a Committee established by the Board, or specific tasks designated to individual Board members, or the geographical location of the meeting. The Board members may be granted a mobile phone benefit. Traveling expenses of the Board members are compensated in accordance with the Company policy.

None of the Board members shall be employed by the Company or any company belonging to the Company’s group or acts as an advisor thereof. Thus, Board members are not eligible for any employment relationship related salaries, remuneration or financial or other benefits not related to their position as a Board member nor are they eligible for any pension scheme. The Board members shall not participate in the same remuneration or incentive plans with the executive management and other personnel in order to safeguard the Board members’ independence in the performance of their duties.

The AGM on April 25, 2024 confirmed that the following remuneration will be paid to the members of the Board of Directors:

Annual compensation 2024

  EUR
Chair 175,000
Vice-Chair 82,000
Members 67,000
   
Chair of the Audit Committee 16,500
Members of the Audit Committee 5,700
Chair of the Human resources committee 10,000
Members of the Human resources committee 4,000

 

Meeting fees for each Board ad Committee meeting attended 2024

  EUR
Chair 1,500
Members 1,500

 

Traveling expenses of the Board members are compensated in accordance with the Company policy. In addition, the Chair of the Board has a mobile phone benefit.

The Shareholders’ Nomination Board recommends all members of the Board of Directors to own shares of Huhtamäki Oyj.

President and Chief Executive Officer & Global Executive Team add_circle_outline

General

The remuneration of the President and CEO may consist of a non-variable annual base salary, benefits and annually determined short-term incentive plans. In addition, the President and CEO may be nominated as a participant in long-term incentive plans. Local laws and market practices are taken into account when applying the group level remuneration principles to the President and CEO’s remuneration.

The criteria for the remuneration of the President and CEO are reviewed and the results of such reviews are regularly reported to the Human Resources Committee and the Board. The reviews aim to follow the impact of the remuneration criteria on reaching the Group’s long-term financial targets.

Non-variable annual base salary and benefits

The non-variable annual base salary of the President and CEO is EUR 890,400. In addition, the President and CEO has the following benefits:

  • Car benefit
  • Housing benefit
  • Support for child’s education
  • Support for insurance premiums

Short-term incentives

The short-term incentives for the President and CEO are based on the business performance of the Group. The short-term incentives for the other GET members are based on the business performance of the Group and the achievement of possible personal objectives. The short-term incentives for the GET members having a business segment responsibility are also determined based on the financial performance of the business segment in question.

The following criteria are applied when setting business objectives: adjusted EBIT, free cash flow (FCF) and Huhtamaki Global Sustainability and Safety Index (GSSI). In addition, for the GET members having a business segment responsibility also adjusted EBIT and operating cash flow (OCF) of the business segment in question are relevant criteria. The above-mentioned criteria are selected to promote the Group’s strategic business targets and success on a short- and a long-term basis.

Objectives for the short-term incentives are set and the achievement is evaluated annually. Possible incentive payments are typically made in March following the annual earnings period January-December. The payment of the incentive is subject to the person being employed by the Group and not having resigned by the time of the payment. The maximum amount of the short-term incentive for the President and CEO is the amount corresponding to 150% of the annual base salary. Of this maximum amount of the short-term incentive, 80% is based on financial targets and 20% is based on non-financial targets linked to Huhtamaki Global Sustainability and Safety Index. The maximum amount of the short-term incentives for other GET members varies depending on the position between 80–100% of the annual base salary. 

In addition to above, the Board of Directors may decide on other short-term incentive plans for the President and CEO and other GET members. These plans are usually done on retention purposes and are aligned with existing short-term incentives. The short-term incentive for the President and CEO for 2023 amounted to EUR 780,451 and it will be paid in March 2024.

Performance share plans

Performance share plans function as long-term incentives for the President and CEO and other GET members. On March 12, 2010 the Board decided on establishing a Performance Share Arrangement to form a part of the long-term incentive and retention program for the key personnel of the Company and its subsidiaries. The Performance Share Arrangement offers a possibility to earn the Company shares as remuneration for achieving established targets.

The Arrangement consists of annually commencing individual three-year performance share plans. A possible reward shall be paid during the calendar year following each three-year plan. Commencement of each three-year plan will be separately decided by the Board. The Company’s ongoing performance share plans have been illustrated below.

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GET members, including the President and CEO, that are participants to a performance share plan shall hold at least half (50%) of the shares received until he/she holds shares received from the performance share plans corresponding in aggregate to the value of his/her annual gross base salary (3 times annual gross base salary for the President and CEO). The ownership requirement applies until termination of employment or service.

The maximum value of the reward payable to the participants based on each performance share plan starting from the Performance Share Plan 2021-2023 is limited by a cap linked to Company’s share price development.

President and CEO has been granted shares under the following ongoing performance share plans:

Long-term incentive plan Earning opportunity

Performance Share Plan 2021-2023

62,000 shares (gross)

Performance Share Plan 2022-2024

62,000 shares (gross)

Performance Share Plan 2023-2025

62,000 shares (gross)

Applicable taxes are withheld from the gross reward.

Other GET members (excluding the President and CEO) have been granted shares under following ongoing performance share plans:

Long-term incentive plan

Earning opportunity in total for other GET members, than the President and CEO
Performance Share Plan 2021-2023 124,000 shares (gross)
Performance Share Plan 2022-2024 147,500 shares (gross)

Performance Share Plan 2023-2025

163,000 shares (gross)

Restricted Share Plan

As part of the long-term incentive and retention program for the key personnel of Huhtamaki, the Board of Directors of the Company decided on February 10, 2021 on establishing a restricted share arrangement as a share-based long-term incentive arrangement (Restricted Share Arrangement). The aim of the restricted share arrangement is to retain, motivate and reward selected key employees in order to increase the shareholder value in the long term.

The restricted share arrangement consists of individual share plans. The commencement of each plan will be separately decided by the Board of Directors. Each plan comprises of three consecutive calendar years.

Share rewards will be paid in shares of the Company. No reward will be paid if the participant's employment or service ends before the payment of the reward. Further, in case Huhtamaki Group’s adjusted EBIT margin in the result release preceding the payment of the rewards is under 8%, no shares will be paid. The members of the Global Executive Team shall retain at least 50% of the shares received until the value of their share ownership in the Company corresponds to their annual gross base salary (3 times annual gross base salary for the President and CEO).

The maximum value of the reward payable to the participants based on the restricted share arrangement is limited by a cap linked to Company’s share price development.

President and CEO has not been granted shares from the ongoing restricted share arrangements. Other GET members (excluding the President and CEO) have been granted the following total number of restricted shares that are payable in 2024, 2025 and 2026:

Restricted Share Plan 2021-2023

12,000 shares (gross)

Restricted Share Plan 2022-2024

2,000 shares (gross)

Restricted Share Plan 2023-2025

2,000 shares (gross)

Applicable taxes are withheld from the gross reward.

Other key terms

The pension coverage is arranged by the President and CEO himself. The company contributes towards the pension through monthly cash payments to the President and CEO. The total cash payment is EUR 311,640 per annum gross and it is equivalent to 35% of the total annual salary.

All other GET members belong to pension systems of their country of residence in force at the time. Subject to a specific resolution by the Board, GET members may additionally be entitled to pension arrangements following local practices, which may be considered partly comparable to supplementary pension plans. Some of the GET members belong to a supplementary defined contribution pension plan. In 2023, the Company paid a total of EUR 355 thousand (2022: EUR 322 thousand) to pension arrangements of the GET members (excluding the President and CEO).

According to the Service Agreement between the Company and the President and CEO, either party may terminate the Service Agreement with six months’ prior notice. During the notice period, the President and CEO is entitled to normal salary payments. If the Company terminates the Service Agreement, the President and CEO is entitled to a termination compensation amounting to 12 months’ base salary in addition to the six months’ salary paid for the notice period. The notice periods and terms applicable to any compensation payable upon the termination of the employment of the other GET members are based on the Service Agreement between the Company and each GET member.

Remuneration of GET members (excluding the President and CEO) for financial year 2023:

Remuneration

2023 (EUR)

Non-variable annual base salary and benefits1

3,220,873

Short-term incentives2

 

Remuneration based on the performance in the year preceding the payment year

1,492,297

Long-term incentives3

 

Number of total shares received as a reward (gross)

84,113

Value of the shares (gross) at the time of the transfer

2,798,866

Total remuneration

7,512,037

1Non-variable annual base salary and benefits

2 Short-term incentives are presented in the table on the year they have been paid. The total amount of remuneration includes remuneration paid under the short-term incentive plan 2022.

3 Share-based incentives are presented in the table on the year they have been paid. The total amount of remuneration includes gross payment made in 2023 under the Performance Share Plan 2020–2022 and Restricted Share Plan 2021–2023. Applicable taxes and tax-like charges have been withheld from the gross reward and thus, the net amount of shares delivered to the GET in March 2023 was 43,561.

Sustainability in remuneration add_circle_outline

Huhtamaki Global Sustainability and Safety Index

The Huhtamaki Global Sustainability and Safety Index (GSSI) is one of the business objectives for the short-term incentives of the President and CEO, the other members of the Global Executive Team (GET) and all employees eligible to participate in the global short-term incentive plan.

The index tracks the Group’s progress towards its 2030 sustainability ambition. KPIs within the index are linked to our sustainability dashboard and relate to e.g. the share of renewable or recycled materials, the share of renewable electricity, the share of non-hazardous waste recycled, and employee safety (MTIFR and LTIFR).

In addition to having the GSSI in the business objectives of the short-term incentive plan, there is the expectation to include specific sustainability and safety related objectives in the personal objectives of short-term incentive plan if driving sustainability and/or safety performance is relevant to the role. In terms of safety, in case of a fatality during the year, the business and personal safety objectives of short-term incentive plan do not pay out for employees at the site nor in the supervisory organization above, including the CEO, the GET, and the relevant Occupational Health and Safety organization.

Authorizations relating to remuneration add_circle_outline

The AGM decided on April 25, 2024 as proposed by the Board of Directors, to authorize the Board of Directors to resolve on the issuance of shares and the issuance of special rights entitling to shares referred to in chapter 10 section 1 of the Companies Act as follows: The aggregate number of new shares to be issued may not exceed 10,000,000 shares which corresponds to approximately 9.3 percent of the current shares of the Company, and the aggregate number of own treasury shares to be transferred may not exceed 4,000,000 shares which corresponds to approximately 3.7 percent of the current shares of the Company. The authorization covers also directed issuances of shares. The authorization remains in force until the end of the next Annual General Meeting, however, no later than June 30, 2025.

Remuneration Report add_circle_outline

The Remuneration Report providing information on the remuneration paid during the previous financial period is available as a separate document.