Remuneration

Remuneration Statement

Updated on April 26, 2019 after CEO transition

This description on remuneration outlines the Group's decision-making procedures and main principles concerning the remuneration of the Board of Directors (Board), the President and Chief Executive Officer (President and CEO) and other Global Executive Team (GET) members. The Remuneration Statement is updated always when there are substantial changes to the information concerning remuneration. The Remuneration Report providing information on the remuneration paid during the previous financial period is included in the Company's Remuneration Statement and is also available as a separate document.

The decision-making process in remuneration related matters 

Board of Directors add_circle_outline

Decision-making procedure concerning remuneration

The Annual General Meeting (AGM) decides annually on the remuneration payable to the members of the Board of Directors and its Committees as well as on related remuneration principles and on the principles for compensating the expenses of the Board members. The Nomination Committee prepares a proposal to the AGM on the same.

Main principles of remuneration

The remuneration of the Board members consists of annual compensation and meeting fees paid for each meeting attended. The AGM on April 25, 2019 decided on the following remuneration:

Annual compensation 2019

  EUR
Chairman 120,000
Vice-Chairman 68,000
Members 57,000

 

Meeting fees for each Board meeting attended 2019

  EUR
Chairman 1,500
Members 1,500

 

Meeting fees for each Committee meeting attended 2019

  EUR
Chairman of the Audit Committee 3,000
Chairman of the Human Resources Committee 1,750
Chairman of the Nomination Committee 1,750
Members 1,500

 

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

None of the Board members is employed by the Company or any other Group Company or acts as an advisor for the Company and, thus, Board members are not eligible for any employment relationship related salaries, remuneration or financial or other benefits not related to the Board work nor are they eligible for any pension scheme. Board members do not receive Company shares as remuneration and they are not participants in Company’s share-based incentive plans.

President and Chief Executive Officer add_circle_outline

This section is related to the remuneration of the President and CEO, Charles Héaulmé.

Decision-making procedure concerning remuneration

Remuneration and benefits payable to the President and CEO is determined by the Board on an annual basis. The Board also makes decisions concerning any potential compensation payable to the President and CEO upon the termination of employment. Prior to the relevant Board meeting, the matter is always deliberated by the Human Resources Committee.

General

The remuneration of the President and CEO is based on Group level remuneration principles, but local laws and market practices are taken into account when applying these principles. The remuneration consists of a non-variable annual base salary, benefits and an annually determined short-term incentive. In addition, the President and CEO is a participant in the long-term incentive arrangement consisting of individual performance share plans.

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 800,000. 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 financial performance of the Group. The weighting of the financial objectives is 100% for the President and CEO. The following indicators are applied when setting financial objectives: earnings per share (EPS) before taxes and return on investment (ROI). The above-mentioned criteria are selected to promote the Group’s financial 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 100% of the non-variable annual base salary.

Performance share plans

Performance share plans function as long-term incentives for the President and CEO. 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 performance share plans with earnings year 2016 or later and based on which incentives may be paid out in 2017 or later have been illustrated below.

A cash payment equivalent to taxes and tax-like charges arising to the key personnel from the reward may be granted as part of the remuneration. 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. The ownership requirement applies until termination of employment or service.

The President and CEO has been nominated to participate in the following performance share plans:

  • Performance Share Plan 2017-2019
  • Performance Share Plan 2018-2020

Other key terms

The President and CEO is entitled to a sign-in bonus as follows:

  • First part of the sign-in bonus is paid in 2019 upon joining. The sign-in bonus is 15 000 Huhtamaki shares (net amount). In addition, the Company will process a cash payment to cover taxes and tax related payments. A lock-in period of 12 months will apply.
  • Second part of the sign-in bonus, 15 000 Huhtamaki shares (net amount), is paid in 2021, subject to reaching EBIT target for 2020, set by the Board. lf the payment is made, the Company will in addition process a cash payment to cover taxes and tax related payments. A lock-in period of 12 months will apply.

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 280,000 pa gross.

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.

Global Executive Team add_circle_outline

This section concerns the remuneration of the Global Executive Team members, excluding the President CEO.

Decision-making procedure concerning remuneration

Remuneration and benefits payable to the GET members are determined by the Board on an annual basis. The Board also makes decisions concerning any potential compensation payable to the GET members upon the termination of such person’s employment. Prior to the relevant Board meeting, the matter is always deliberated by the Human Resources Committee.

General

The remuneration of the GET members is based on Group level remuneration principles, but local laws and market practices are taken into account when applying these principles. The remuneration consists of a non-variable annual base salary, benefits and an annually determined short-term incentive. In addition, the GET members are participants in the long-term incentive arrangement consisting of individual performance share plans.

The criteria for the remuneration of the GET members 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.

Short-term incentives

The short-term incentives for the GET members are based on the financial performance of the Group and the achievement of 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 weighting of the financial objectives is 80% or 90% and the weighting of the personal objectives is correspondingly 20% or 10% for the GET members. The following indicators are applied when setting financial objectives: earnings per share (EPS) before taxes and return on investment (ROI). In addition, for the GET members having a business segment responsibility also operating cash flow (OCF) and value added (VA) of the business segment in question are relevant indicators. The above-mentioned criteria are selected to promote the Group’s financial 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 incentives for the GET members varies depending on the position between 50–75% of the non-variable annual base salary. According to the established principles of the Group, the GET members having a business segment responsibility are not paid any short-term incentives (including any incentives based on personal objectives) if the criteria for financial performance of the relevant business segment is not achieved.

Performance share plans

Performance share plans function as long-term incentives for the 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 performance share plans with earnings year 2016 or later and based on which incentives may be paid out in 2017 or later have been illustrated below.

A cash payment equivalent to taxes and tax-like charges arising to the key personnel from the reward may be granted as part of the remuneration. GET members 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. The ownership requirement applies until termination of employment or service.

Other key terms

Most of the GET members belong to the pension systems of their respective country of residence in force at the time. Six GET members belong to the national employee pension system in Finland, one GET member belongs to corresponding pension system in the United States, and one GET member arranges the pension coverage himself with the company contributing towards the pension through monthly cash payments. 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.

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.

Authorizations relating to remuneration add_circle_outline

The AGM on April 25, 2019 decided in accordance with the proposal of the Board that the Board shall be authorized to resolve on the issuance of shares and the issuance of options and other 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 Board resolves on all the terms and conditions of the issuance of shares and special rights entitling to shares and may deviate from the shareholders’ pre-emptive subscription rights (directed issue). The authorization remains in force until the end of the next AGM, however, no longer than until June 30, 2020.

During 2019 the Board has decided, based on the authorization, to transfer in total 15,000 of the Company’s own shares as part of the Company’s performance share plan (directed issue).

Remuneration Report add_circle_outline

The Remuneration Report providing information on the remuneration paid during the previous financial period is included in the Company's Remuneration Statement and is also available as a separate document.