Remuneration of the President and CEO in 2021

The President and CEO’s contract and remuneration principles

As a rule, the same remuneration principles and practices regarding fringe benefits, for example, apply to the President and CEO, as well as to other employees. Considering the specific complexity and responsibility related to the position, certain other benefits, such as pension benefits, can be offered to the President and CEO. The company’s Board of Directors decides on the remuneration paid to the President and CEO, the content and targets of the performance bonus and ultimately the payment of the remuneration.

The President and CEO’s annual remuneration consists of a fixed monthly salary, fringe benefits and short-term incentives (i.e. the performance bonus). The short-term performance bonus is paid annually, and it is based on targets relating to operations and results set annually by the Board of Directors. In addition, the President and CEO participates in the company’s long-term share-based incentive scheme and other long-term incentive schemes. The elements of remuneration are presented below.

Juho Nummela has been the company’s President and CEO since 1 June 2008. Under the contract signed between the company and the President and CEO, both parties may terminate the contract with a period of notice of six month. If the company terminates the contract, the company will pay a remuneration equalling 12 months’ salary in addition to the salary and other benefits that have been determined for the period of notice. The contract will end without any period of notice when the President and CEO retires.

The President and CEO can retire at the age of 60 years, with the pension being determined according to the Employees Pensions Act. The President and CEO’s additional pension benefit is determined in accordance with the valid policy decided on by the company’s Board of Directors. When the President and CEO’s contract ends, the additional pension benefit will accrue in accordance with the policy valid at the time, also during the period of notice.

The President and CEO’s fixed remuneration and short-term incentives

During the 2021 financial period, the remuneration paid to Juho Nummela, Ponsse’s President and CEO, consisted of a fixed basic salary, fringe benefits and a performance bonus linked to the achievement of business targets. As a rule, the President and CEO belongs to the general annual bonus scheme of Ponsse’s Management Team, and no personal targets deviating from the Management Team’s performance targets have been set for the President and CEO.

During the 2021 financial period, the President and CEO was paid a performance bonus for the achievement of the targets set for 2020 in accordance with the Board of Directors’ assessment and decision. The targets set for the performance bonus paid to the President and CEO based on the 2020 financial period were based on indicators related to the efficiency of working capital (weighted value 70%) and the company’s profitability (weighted value 30%) [8]. The annual performance bonus cannot exceed 50% of the salary paid in the previous year. In 2021, a total performance bonus of EUR 93,303.00 was paid based on the achievement of the targets of the 2020 bonus scheme, representing 39% of the maximum amount of the performance bonus.

Correspondingly, the President and CEO belonged to the general bonus scheme of Ponsse’s Management Team during the 2021 financial period, in which the targets set for the performance bonus were based on indicators related to the efficiency of working capital (weighted value 70%) and the company’s profitability (weighted value 30%) [8], as in the previous year. The annual performance bonus cannot exceed 50% of the salary paid in the previous year. The performance bonus to be paid on the basis of the 2021 financial period is based on the Board of Directors’ assessment and decision regarding the achievement of the targets set for 2021, and it is expected to be paid to the President and CEO in March 2022.  Based on the 2021 performance bonus scheme, a total bonus of EUR 205,312 will be paid to the President and CEO, representing 87% of the maximum amount of the performance bonus.

Long-term remuneration of the President and CEO

During the 2021 financial period, the long-term remuneration of the President and CEO consisted of the share-based incentive scheme established in 2018 for the Group’s key employees, and its restriction period ended on 12 December 2021. Long-term incentives issued before 2021 have not included any earning criteria. They have included a restriction period, meaning that they have been engaging incentives. Participation in the scheme required that the President and CEO owned a certain number of shares as determined by the Board of Directors or acquired them from the market or through the company’s directed share issue. Receiving the remuneration was linked to an existing employment relationship at the time of payment.

In December 2018, the scheme’s remuneration was paid partly in company shares and partly in cash. The monetary component covered taxes and tax-like fees arising from the bonuses for the President and CEO. The shares given as bonuses could not be transferred during the restriction period ended on 12 December 2021.

Ponsse Plc’s Board of Directors has decided on a new performance-based shareholding scheme for the President and CEO. However, it was not implemented during the financial period due to the company’s ongoing business arrangements and the resulting insider restrictions.

The company has a group pension insurance arrangement, which is a long-term incentive scheme. The company pays an annual premium to the President and CEO, amounting to 45% of the annual earnings of the policyholder on which their statutory pension is based. The additional payment-based pension cost of the group pension insurance arrangement was EUR 257,986. The lowest possible retirement age under the group pension insurance arrangement is 60 years. The arrangement allows for the company to determine its payment plan and validity.

 

Remuneration paid to the President and CEO during the 2021 financial period

 

	Period	Salary EUR	Fringe benefits[5] EUR	Short-term incentive schemes (performance bonuses)EUR	Long-term incentives schemes[6] EUR	Other benefits[7]	Total remuneration paid EUR
Juho Nummela, President and CEO	1 January – 31 December 2021	505,200.00	12,720.00	93,303.00	0	257,986.00	869,209.00
Remuneration percentage		58%	1%	11%	0%	0%	100%

 

The fixed annual salary paid to the President and CEO in 2021 accounted for 58% of total remuneration, while the short- and long-term incentives made up 11%.