Remuneration

Remuneration principles

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 2021
Remuneration report 2020
Remuneration report 2019
Remuneration report 2018

Remuneration of the Board of Directors

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.

Remuneration of the Board of Directors in 2022

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 2021.

Remuneration of the CEO

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.

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 2021 can account for a maximum of 50 percent of the CEO’s fixed salary. 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.

The CEO is covered by a share-based long-term incentive program for Harvia’s CEO and Management Team. The program is described below under Share-based incentive program.

Remuneration of the CEO in 2021

Key terms of service of the CEO

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.

Remuneration of the management team members

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 2021 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 2021 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 in 2021.

Remuneration paid to the management team members in 2021, EUR

 

Fixed salaries1 Bonuses paid for 2020 2) Long-term incentive program 3) Total
1,276,254 255,721 2,569,650 4,101,625

 

1) Including fringe benefits

2) The maximum incentive bonus for the financial year 2019 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 64,370 shares (gross), and the value of the shares on the date of payment 12 May 2021 was EUR 2,569,650. 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.

Share-based incentive programs

The Board of Directors of Harvia Plc decided on May 21, 2018 to establish a new share-based long-term incentive program for the CEO and Management Team members. 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 and 2020−2022. 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 first performance period 2018−2020 were paid during spring 2021. The maximum number of shares to be paid based on the first performance period corresponded to 89,727 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 2021. The CEO was paid 25,358 shares (gross) for the incentive program. In total, the other Management Team members were paid 64,370 shares (gross).

In the period 2019−2021, the program has 13 participants at 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 2019−2021 is 92,496 Harvia Plc’s shares. 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. The CEO achieved the maximum targets for the performance period. The reward of the CEO based on the long-term incentive program, 23,124 shares (gross) in total, will be paid in the spring of 2022 in the company’s shares unless the Board of Directors decides on the payment of the complete reward in cash. The other Management Team members will be paid in total 58,700 shares (gross).

In the period 2020–2022, 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 2020–2022 is a maximum of 50,300 Harvia Plc’s shares. Potential rewards from the period 2020−2022 will be paid out in spring 2023.

In July 2021, the Board decided on a new performance period 2021−2023 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 2021−2023 corresponds to a maximum of 33,500 shares in Harvia Plc. Potential rewards from the period will be paid out in the spring of 2024.

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.