Labor practices and total rewards

Commitment to Fair Labor Practices

Wärtsilä complies with local and international legislation, regulations and agreements concerning fair and ethical labour practices. We strive to create a work environment that respects the rights and dignity of all employees, promotes their well-being, and upholds the highest standards of integrity. Wärtsilä applies European Union directives, local acts of cooperation in the companies and corporations, collective agreements, and equivalent regulations concerning consultation and local bargaining. We have active dialogue with workers’ representatives on the working conditions overall.

• We are committed to ensuring that our employees have a healthy work-life balance. To this end, we reduce overtime and excessive working hours whenever possible.
• We will establish and enforce maximum working hours in accordance with local labour laws and international standards to safeguard the health and well-being of our employees. Working hours and overtime management is set and monitored according to the local regulations.
• We recognize the importance of rest and recuperation. Annual leave and related pay are set according to the local regulations.
• In the event of organizational changes, we will provide consultation or notice periods to affected employees according to the local regulations, ensuring transparency and fairness in the process.

Total Rewards Philosophy in Wärtsilä

Total rewards philosophy in Wärtsilä provides an overall framework within which remuneration policies, programs, and practices are developed. Wärtsilä has stated in the ‘Remuneration Policy for Governing Bodies of Wärtsilä’ that the following underlying remuneration principles shall be applicable for all employees across all businesses and countries:

1. Performance based

   • Wärtsilä rewards for individual, team, and company performance.
   • We reinforce high performance culture: Our variable remuneration programs are designed to drive performance and reward employees for company and individual performance, as well as attract, motivate, and retain employees.
   • We trust in individual and team accountability, continuous performance dialogue and improvement.
   • We promote pay for performance differentiation: Employees’ performance is considered both in merit increase and variable pay decisions. Our remuneration elements are market competitive in the markets in which we compete for talent.
   • For our executive population majority of the remuneration opportunity is depending on performance-based incentives.

2. Responsive

   • Wärtsilä’s reward plans are responsive to changing business requirements.
   • Our remuneration decisions promote Wärtsilä’s long-term financial success, competitiveness and favorable development of shareholder value.
   • In addition to financial performance metrics, our variable remuneration programs support sustainability targets and can include social and environmental (ESG) performance metrics for the executives and for the wider workforce.

3. Fair and transparent

   • Wärtsilä’s rewarding principles and plans are simple, transparent, and easy to understand.
   • We follow our diversity and inclusion (D&I) principles to ensure internal pay equity, commit to non-discrimination and set pay levels and remuneration programs independently of race, ethnic or national origin, gender, sexual orientation, family status, creed, disability, age, religion or other profession of faith, political beliefs, or other characteristics that are not relevant for employment. The gender pay equity is constantly monitored.
   • We follow and comply with the local minimum pay regulation, as well as with all regulatory and statutory requirements.
   • Our remuneration programs are driven ethically and with integrity with clear communication, and with the intention that the programs are understood by employees.
   • Our remuneration programs are harmonized across businesses in all locations.

4. Competitive

   • Wärtsilä’s remuneration programs strive to be competitive compared to relevant markets to be able to attract, retain and motivate top global talent.
   • Our market definition can vary by function, position, level in the organization (e.g. executives and wider workforce) and by geography.
   • We conduct external market benchmarking and follow remuneration levels for similar positions among peer companies and in general industry to ensued adequate wages.

5. Aligning relevant interests

   • Our variable remuneration programs provide strong alignment with the interests of our employees and shareholders.
   • Our remuneration decisions are considering our diverse global footprint, and our total remuneration structures may vary by geography.
   • At the individual level the remuneration reflects the requirements of the position, individual responsibilities as well as needed skills, experience, and knowledge.
   • Our remuneration governance is arranged according to good corporate governance practices.

Attracting and retaining a diverse group of employees is fundamental to the success of the company’s mission. Consequently, Wärtsilä provides a comprehensive total rewards framework including fixed and variable pay, benefits, and other competitive programs and services which are designed to attract, retain, reward, and motivate employees’ commitment and performance. We aim to benchmark all programs within the total rewards framework regularly against global, regional and local relevant markets to ensure attractiveness and competitiveness.

The company also commits that remuneration programs will be administered in a way which is compliant, fair, and consistent, and following our diversity and inclusion principles. Sustainability is at the core of purpose and strategy in Wärtsilä. Consequently, sustainability strategy and targets are embedded in the overall design and development of rewarding practices and remuneration programs.