Harvia’s remuneration principles apply to the entire personnel of the company. Key principles of remuneration at Harvia are that remuneration is transparent, market-oriented, and that it rewards good performance.
The company’s remuneration policy aims to encourage and reward the management for operating in accordance with the set strategy and rules, and to motivate them to contribute to the success of the company. Well-functioning and competitive remuneration is an essential tool for engaging competent directors and executives for the Company. This, in turn, contributes to the financial success of the Company and the implementation of good corporate governance.
Remuneration supports the execution of the company’s strategy and promotes long-term profitability and the company’s competitiveness.
Remuneration policy
Remuneration report 2022
Remuneration report 2021
Remuneration report 2020
Remuneration report 2019
Remuneration report 2018
In accordance with the Limited Liability Companies Act, the shareholders decide on the remuneration of the members of the Board of Directors in the Annual General Meeting. The task of drafting the proposal for the remuneration of the members of the Board of Directors has been assigned to the Shareholders’ Nomination Board, established following the decision of the Annual General Meeting 2020.
Harvia’s Annual General Meeting held on 7 April 2022 resolved that a monthly remuneration of the members of the Board of Directors is paid as follows: The Chair of the Board of Directors is paid EUR 4,500 and members of the Board of Directors are each paid EUR 2,500. Additionally, the Chair of the Audit Committee is paid EUR 1,300 a month and members of the Audit Committee are paid EUR 750 a month. The travel expenses of the members of the Board of Directors are compensated in accordance with the company’s travel policy.
Further, the members of Board of Directors who live outside Finland will be paid EUR 900 for each meeting if the member travels to Finland only for that meeting. When the member of Board of Directors attends the meeting by telephone or other electronic means, no fee will be paid for that meeting. No fee is paid for decisions made without convening a meeting.
Read more about remuneration of the Board of Directors in Remuneration report 2022.
The Board of Directors determines the salary, bonuses and other benefits of the CEO. The remuneration of the CEO consists of a fixed monthly salary, fringe benefits, and performance-based incentive programs. Additionally, the CEO is entitled to a supplementary pension insurance.
The CEO’s performance targets are set by the company’s Board of Directors. The performance period for the CEO’s short-term incentive program is one year. The purpose of the short-term incentive program is to support the achievement of the company’s short-term financial and strategic objectives.
The bonus payable based on the short-term incentive program for 2022 can account for a maximum of 50 percent of the CEO’s fixed salary, which was the same as in 2021. Bonus payment is based on achieving the targets set related to the Group’s consolidated adjusted operating profit as well as the personal targets.
In addition, the CEO is part of a performance bonus system that covers the entire personnel of Harvia’s companies in Finland. In the system, the performance bonus is a maximum of six percent of the annual salary, based on the achievement of certain profitability targets.
In November 2022, CEO Pajuharju announced that he will resign as CEO in May 2023. Pajuharju is entitled to the short-term performance bonus to be paid for 2022 as well as to the 2022 performance bonus.
The CEO is covered by a share-based long-term incentive program for Harvia’s CEO, Management Team and selected key personnel. The program is described below under Share-based incentive program. Due to his resignation, CEO Pajuharju is not entitled to the reward to be paid in spring 2023 for the performance period 2020–2022 of the incentive program.
Remuneration of the CEO in 2022
The CEO’s contract contains a mutual six-month period of notice, and a 12-month non-compete period upon its termination. If the company terminates the contract of employment, the CEO is entitled to a severance payment corresponding to six months’ full salary.
The CEO’s retirement age is subject to the applicable legislation. The CEO receives his supplementary pension upon turning 63 years old. Additionally, the CEO is entitled to a supplementary pension insurance. The supplementary pension agreement is a defined contribution plan. The CEO has a life insurance policy provided by Harvia, and the beneficiaries are the family members of the CEO.
The Board of Directors determines the salary, bonuses and other benefits of the other Management Team members. The remuneration of the Management Team members consists of a fixed monthly salary, fringe benefits, and performance-based incentive programs.
Under the 2022 program, the performance bonuses of Harvia’s Management Team are based on personal targets and certain profitability targets set for the financial year. The fulfilment of these conditions supports Harvia’s long-term financial success.
The maximum performance bonus payable to the other Management Team members for the financial year 2022 is equivalent to a maximum of two months’ full salary, and the personal target bonus is equivalent to one month’s full salary. In addition, members of the Management Team employed by Harvia Plc, Harvia Group Oy or Harvia Finland Oy are part of a performance bonus system where the performance bonus is a maximum of six percent of annual salary, based on the achievement of certain profitability targets.
The table below shows the total salaries and bonuses paid to the Management Team members, other than CEO, in 2022.
Remuneration paid to the management team members in 2022, EUR
| Fixed salaries1 | Bonuses paid for 2020 2) | Long-term incentive program 3) | Total |
| 1,177,155 | 311,259 | 1,949,319 | 3,437,733 |
1) Including fringe benefits. In September–December 2022, the Management Team was only paid a partial salary based on a voluntary decision by Harvia’s Management Team to lower the Management Team members’ salaries during said period.
2) The maximum incentive bonus for the financial year 2021 is equivalent to a two months’ full salary, and a maximum personal target bonus is equivalent to one month’s full salary.
3) Gross value of the rewards. The other management team members were paid 67,594 shares (gross), and the value of the shares on the date of payment was EUR 1,949,319. Withholding tax and possible other applicable contributions were deducted from the gross earning, and the remaining net amount was paid in shares.
The period of notice for other members of the Management Team varies between three to six months. Members of the Management Team are entitled to a salary from their period of notice. Management Team members are entitled to a statutory pension and their retirement age is determined within the framework of the work pensions system.
The Board of Directors of Harvia Plc decided on May 21, 2018 to establish a new share-based long-term incentive program. The purpose of the long-term incentive program is to support the implementation of the company’s strategy, to align the objectives of the management and the company’s shareholders to increase the value of the company, to improve the performance of the company and to strengthen the commitment of the management to the company.
The long-term incentive program consists of three performance periods of three calendar years each, 2018−2020, 2019−2021, 2020−2022, 2021−2023 and 2022−2024. The amount of the reward paid to the participants depends on achieving the predefined targets. If the targets of the incentive program are reached, the rewards will be paid in shares or in some situations in cash during the spring following the end of the given performance period.
Rewards from the performance period 2019−2021 were paid during spring 2021. The maximum number of shares to be paid based on the first performance period corresponded to 101,390 shares in Harvia Plc. This number of shares represented gross earning, from which withholding tax and possible other applicable contributions were deducted and the remaining net amount was paid in shares.
The reward of the CEO based on the long-term incentive program was paid in spring 2022. The CEO was paid 23,124 shares (gross) for the incentive program. In total, the other Management Team members and the non-Management Team members of the long-term incentive program were paid a reward equivalent to 78,266 shares (gross).
In the period 2020−2022, the program had 12 participants, and the targets for the long-term incentive program relate to the company’s total shareholder return, revenue growth and EBIT margin. The total number of shares to be paid based on the period 2020−2022 is 35,809 Harvia Plc’s shares, which does not include shares paid to the CEO. This number of shares represents gross earning, from which withholding tax and possible other applicable contributions are deducted and the remaining net amount is paid in shares.
Due to his resignation, CEO Pajuharju is not entitled to the reward to be paid in spring 2023 for the performance period 2020–2022 of the incentive program. The other members of the program will be paid in total 35,809 shares (gross).
In the period 2021–2023, the program has 15 participants at the most, and the targets for the long-term incentive program relate to the company’s total shareholder return, revenue growth and EBIT margin. The total number of shares to be paid based on the period 2021–2023 is a maximum of 33,500 Harvia Plc’s shares. Potential rewards from the period 2021−2023 will be paid out in spring 2024.
In December 2022, the Board decided on a new performance period 2022−2024 for the share-based incentive program. The targets for the performance period relate to the company’s total shareholder return, revenue growth, sustainability targets, and EBIT margin. The total number of shares to be paid based on the period 2022−2024 corresponds to a maximum of 73,600 shares in Harvia Plc. Potential rewards from the period will be paid out in the spring of 2025.
The number of shares for the periods represents gross earning, from which withholding tax and possible other applicable contributions are deducted and the remaining net amount is paid in shares. However, the company has the right to pay the reward fully in cash under certain circumstances.
