The salary and remuneration report is updated on a yearly basis.
Remuneration of the Board of Directors
The Annual General Meeting decides annually on the fees to be paid to the members of the Board of Directors for one term of office at a time.
The Annual General Meeting approved the following fees to the members of the Board of Directors for 2012:
Roughly 40% of the annual fee is paid in Wärtsilä shares. In addition, each member will be paid EUR 400/board meeting attended, the chairman's meeting fee being double this amount. Each member of the Nomination Committee and the Remuneration Committee will be paid EUR 500/committee meeting attended and each member of the Audit Committee will be paid EUR 1,000/committee meeting attended, the chairman's meeting fee being double these amounts.
The nine members of Wärtsilä's Board of Directors were paid altogether EUR 728,900.00 for the financial period that ended on 31 December 2012. The Board's members were not covered by the company's incentive schemes.
Fees paid to the Board of Directors in 2012 (thousands of euros)
|Attendance fees||Yearly fees||Total|
|Board of Directors||2012||2011||2012||2011||2012||2011|
|Mikael Lilius, chairman||18||15||120||120||138||135|
|Matti Vuoria, deputy chairman||8||10||90||90||98||100|
|Board of Directors, until 8 March 2012|
Fees paid in Wärtsilä shares in 2012
|Board of Directors||No. of shares|
|Mikael Lilius, chairman||1 607|
|Matti Vuoria, deputy chairman||1 205|
Remuneration of the President and CEO and the Board of Management
The remuneration paid to the President & CEO and other members of the Board of Management, and the principles underlying it, are determined by the Board of Directors. The remuneration paid to the President & CEO and to the other members of the Board of Management consists of a monthly salary and a bonus. The Board of Directors determines on a yearly basis the terms for the bonus payment. The bonus payments for the President & CEO and the Board of Management are paid based on the achievement of the company's profitability targets for the financial year. The variable salary can be at most one third of the maximum total salary. Additionally, the group has a long-term incentive scheme for senior management tied to the development of the company's share price.
The President & CEO is eligible to take retirement upon reaching the age of sixty. His pension scheme is determined according to a defined contribution based system. The retirement pension contribution is a relative part of his annual salary. Remuneration paid to the President & CEO if dismissed by the company corresponds to 18 months' salary plus a six months' period of notice salary.
The optional retirement age of certain Board of Management members is sixty years. For these members, additional pension schemes are based on the retirement scheme of the national social security system to which the person in question belongs. The pension scheme is determined according to a defined benefit based system. The retirement pension is 60% of statutory earnings.
Financial benefits of President & CEO Björn Rosengren:
*) EUR 424 thousand has been reserved for long-term bonus schemes based on the share price development.
Consolidated Financial Statement, Note 28: Related party disclosures
The Board of Directors determines the incentive schemes for the President and CEO and other members of the Board of Management and the principles underlying them. The Board of Directors also decides on other possible long-term incentive schemes for senior management, unless they are by law determined by the Annual General Meeting. The Board of Management decides on bonus schemes for other directors and managers.
Short-term management incentive schemes
The Group operates a bonus scheme, which is implemented globally in all businesses. The bonus is based on the Group's profitability and agreed personal targets. Close to 1,800 directors and managers are covered by this bonus scheme.
The Group's white- and blue-collar employees are covered by various bonus or profit-based incentive schemes. These are applied in each country according to that country's legislation, or to agreements concerning profit-sharing schemes. All in all, some 60% of the company's employees are covered by the Group's bonus schemes and various other profit-related incentive schemes.
Long-term incentive scheme
The Board of Directors has decided on a long-term bonus scheme for senior management tied to the development of the company's share. The yearly bonus scheme applies to approximately 100 directors. The size of the bonus is based on the share price development during a pre-determined timeframe, and an upper limit is set for the bonus. The bonus scheme takes into account 50% of the dividends paid.
The 2009 bonus scheme came to a close at the end of 2011 and was paid in April 2012.
The 2010 bonus scheme comprises 1,606,000 bonus rights. The bonus payment is based on the share price development during a two-year period on the basis of a share price of EUR 30.01. The bonus cannot exceed EUR 7.50 per bonus right and takes into account 50% of dividends paid. The 2010 bonus scheme will be due for payment in April 2013.
The 2011 bonus scheme comprises 1,967,000 bonus rights. The bonus payment is based on the share price development during a three-year period on the basis of a share price of EUR 23.34. The bonus cannot exceed EUR 10.00 per bonus right and takes into account 50% of dividends paid. The 2011 bonus scheme will be due for payment in February 2015. Members of the Board of Management are obliged to use one third of the possible bonus payment to acquire Wärtsilä shares.