Remuneration policy at a glance
According to the Remuneration Policy for Governing Bodies of Wärtsilä (the “Remuneration Policy” or “Policy”), remuneration at Wärtsilä shall follow ’Pay for Performance’ principles of being responsive, transparent, competitive, and aligning relevant interests. These principles are used for structuring the reward approach throughout the organisation, and are designed to align employee rewards with the interests of the company and its shareholders.
Remuneration for the Board of Directors (the “Board”) consists of annual fees for Board membership, attendance fees, and committee fees. Fees vary based on position, workload, and responsibility. Annual fees are paid in shares and cash, attendance and committee fees in cash. The Annual General Meeting (“AGM”) decides on the fees for each term of office.
Remuneration of the Chief Executive Officer (the “CEO”) consists of a base salary, pension, and benefits as well as short- and long-term incentives. The objective is to have a good balance of rewarding elements, and to guarantee a market competitive level of fixed remuneration. This is supplemented with short- and longterm incentive schemes aimed at driving company performance and providing an appropriate reward.
The Board may deviate from the Policy in extraordinary circumstances.
At this year's Annual General Meeting on March 4, 2021, the remuneration policy was voted on in an advisory manner. The result was recorded in the minutes as follows: 284,212,096 votes were cast in favor of the Board's proposal, corresponding to 84.69% of the votes cast. 36,142,209 votes were cast against the Board's proposal, corresponding to 10.77% of the votes cast.
2020 Remuneration at a glance
The Board fees approved for 2020 were the same as in 2019, and the Board’s remuneration remained unchanged.
Total remuneration paid for the CEO in 2020 decreased from 2019. Financial results for the year 2020 were reasonable given the circumstances, resulting in a short-term incentive scheme (“STI”) payment for the year. The 2018-2020 long-term incentive scheme (“LTI”) did not result in pay-outs.
The original STI 2020 was re-launched with updated full-year targets in order to focus on critical business priorities given the exceptional circumstances due to the COVID-19 pandemic. All targets and performance measures were the same for all employees participating in the STI. The maximum incentive opportunity was 50% of the original level. All participants earned 37.5% of the original maximum opportunity. Payments will be made during 2021 accordingly.
The Company took proactive actions due to the COVID-19 pandemic. Actions affecting employee remuneration included temporarily reducing labour costs by reducing working hours, and initiating temporary layoffs. The fixed salaries of the CEO and the Board of Management were temporarily cut by 20% during Q2, and the resulting savings were donated to charity to support efforts aimed at combatting the impacts of the COVID-19 pandemic.