Remuneration

Remuneration

The remuneration of Terrafame’s management is based on a fixed base salary, in addition to which short-term and long-term incentive schemes have been established for the Management Team and certain key people, such as heads of department in production.

Decision-making order

Terrafame’s management consists of the Board of Directors and the Management Team. Terrafame’s Annual General Meeting decides on the fees paid to the members of the Board and its possible committees. The Board decides on the CEO’s salary, other remuneration and targets related to remuneration, as well as compensation paid on the termination of the employment relationship. Based on a proposal by the CEO, the Board decides on the remuneration of the members of the Management Team and the targets related to their remuneration in accordance with the one-over-one principle.

More information about the remuneration of the Board of Directors and the CEO is provided in the 2020 Remuneration Report and the remuneration policy.

Short-term incentive (STI) scheme for the management and other key people

Targets related to Terrafame’s production development, financial performance and safety serve as indicators in the incentive scheme. In addition, personal goals are set for each person covered by performance-based remuneration.

The targets of the incentive scheme have been selected so that their achievement significantly supports the company’s long-term development and success.

Long-term incentive (LTI) scheme for the management and other key people

In February 2019, Terrafame’s Board of Directors decided to establish a long-term incentive scheme for the company’s management and other key people. The targets set for the scheme are related to production and financial profitability. Their purpose is to support Terrafame’s development and success and the achievement of its strategic goals over the long term.

The scheme consists of individual performance-based programmes starting yearly. Each programme includes a three-year performance period and the payment of any rewards in cash after the performance period. The start of each individual programme is subject to a separate decision by the Board of Directors.

The first programme (LTI 2019–2021) within the scheme started at the beginning of 2019, and any rewards will be paid in the spring of 2022, provided that the performance targets set by the Board of Directors are achieved.

The second programme (LTI 2020-2022) within the scheme started at the beginning of 2020, and any rewards will be paid in the spring of 2023, provided that the performance targets set by the Board of Directors are achieved.

Terrafame’s long-term incentive scheme complies with the guidelines issued by the state as a shareholder.

Remuneration of the other members of the Management Team

Salary
Fixed monthly salary
The members of the Management 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 Management Team is a sum corresponding to three (3) months’ salary.
The members of the Management Team are also covered by the company’s long-term incentive scheme.

Pension
The retirement age of the members of the Management 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 Management 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 Management 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 2020 calendar year were paid to the Management Team, excluding the CEO, as follows:

Salaries and fees of the other members of the
Management Team
   2020    2019
Fixed base salary    1 038 833*     961 557 
Performance bonuses    137 198     153 699 
Total    1 176 031*     1 115 256 

* The Management Team, excluding the CEO, had 9 members until 18 June 2020. It had 8 members from 18 June 2020 to 9 August 2020, and has had 9 members since 1 September 2020.

The salaries and fees paid to the Management Team, excluding the CEO, totalled EUR 1,176,031 (1,115,256) in 2020. The performance-based bonus for 2019 was EUR 137,198 (153,699), which is around 14% (17%) of the 2019 salary.