Remuneration of the Board of Directors

The Annual General Meeting (AGM) decides on the remuneration payable to the Board Members. Subject to as in each case decided by the AGM the Board remuneration may consist of the elements described below.

The remuneration of the Board Members may consist of a fixed fee for the term of office and meeting fees paid for each meeting attended. The fees may vary based on e.g. specific role or position in the Board or its committees, specific tasks designated to individual Board Members or the geographical location of the meeting. The fees are paid in cash. Travel expenses of independent Board Members are compensated in accordance with Company policy.

The Board Members have no share incentive plans, share-based compensation plans or pension plans. In order to safeguard the Board Members’ independence in the performance of their duties, they are also excluded from the remuneration plans and incentive schemes of the executive management and other personnel.

In accordance with the above and subject to as in each case decided by the AGM there shall be no variable remuneration paid to the Board Members or any performance-based compensation. None of the above-described remuneration elements which may become payable to Board Members are regarded as variable remuneration.

The AGM of 2022 decided to keep the Board's remuneration unchanged. The Chairman of the Board is paid an annual fee of EUR 72,000. The annual remuneration of a member of the Board is EUR 36,000. The Chairman and members of the Board are also paid a meeting fee of EUR 600 based on meeting attendance.

Remuneration of CEO

The remuneration of the CEO aims at providing competitive rewards in line with market practice within the confines of the company's Remuneration Policy. The fixed compensation elements consist of the fixed base salary and fringe benefits. Incentives as variable compensation elements emphasize pay-for-performance and the achievement of Terrafame’s short- and long-term goals thus aligning the interests of the CEO with the interest of Terrafame’s shareholders. 

Since 2016, the CEO of Terrafame has been DI Joni Lukkaroinen. The CEO's employment is valid until further notice. The CEO’s fixed base salary is EUR 27,280 per month as of 1 March 2022. The CEO does not have any fringe benefits other than mobile phone, opportunity to charge an electric car in the workplace and internet connection at home.

CEO Joni Lukkaroinen's short-term performance based performance fee will have a target reward of 20 per cent and a maximum remuneration opportunity of 40 per cent of total fixed annual salary.

The CEO is involved in the company's three-year rolling long-term incentive scheme, in which the following programs have been initiated:

• The first program of the scheme, LTI 2019-2021, began at the beginning of 2019 and any rewards due under it will be paid in spring 2022.
•  The second programme of the scheme, LTI 2020-2022, began in early 2020 and any rewards due under it will be paid in spring 2023.
•  The system's third program, LTI 2021-2023, began at the beginning of 2021, and any rewards due under it will be paid in spring 2024.
•  The fourth programme of the scheme, LTI 2022-2024, began from the beginning of 2022 and any premiums under it will be paid in spring 2025.

Payment of commissions requires that performance goals set by the Board of Directors for programs are met and the Board approves payment of the commission. Performance goals for LTI programmes are production and financial profitability objectives designed to support the development and success of Terrafame and the long-term achievement of its strategic objectives.

CEO's pension, retirement age and redundancy pay

The retirement age and pension of a CEO are determined by the statutory pension. The CEO does not have a defined contribution or other similar supplementary pension plan.

The CEO's notice period is up to six months. The CEO's resignation pay, which includes the pay and severance pay for the notice period, may in full be equivalent to up to six months' salary.

Remuneration based on existing short- and long-term incentive programs shall take into account the CEO getting rid of the conditions leading to it. If the CEO retires or the employment ends at the Company's initiative, the CEO may be eligible for or part of remuneration based on the same long- and short-term incentive programs. The payment of premiums is decided by the government based on the rules of that incentive scheme. If the CEO terminates the service relationship on his own initiative, as a rule, no remuneration is paid.

Remuneration of the other members of the Leadership Team

Salary

Fixed monthly salary.

The members of the Leadership Team do not have any fringe benefits other than mobile phone and internet services

Performance bonuses

The maximum amount of performance bonuses for the members of the Leadership Team is a sum corresponding to three (3) months’ salary.

The members of the Leadership Team are also covered by the company’s long-term incentive scheme

Pension

The retirement age of the members of the Leadership Team is determined in accordance with the pension laws, and the amount of their pension is determined in line with the employer’s pension insurance (TyEL).

The members of the Leadership Team are not covered by a contribution-based pension plan or any other additional pension plans.

Conditions for termination of employment

The members of the Management Team have a notice period of three months or in accordance with the Employment Contracts Act.

If the employer terminates the contract, the maximum amount of compensation corresponds to three months’ salary. No other compensation is paid based on the termination of employment.

Incentive schemes

The other members of the Leadership Team are covered by Terrafame’s incentive schemes in accordance with their current terms and conditions.

Fees and other benefits

Salaries and fees for the 2021 calendar year were paid to the Leadership Team, excluding the CEO, as follows:

The salaries and fees paid to the Leadership Team, excluding the CEO, totalled EUR 1,072,219 (1,176,031) in 2021. The performance-based bonus for 2020 was EUR 78,406 (137,198), which is around 8% (14%) of the 2020 salary.