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 2023
Remuneration report 2022
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 2023

Harvia’s Annual General Meeting held on 20 April 2023 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.

Further, the monthly remuneration of the Board members will be paid in company shares and in cash in such a way that approximately 40 per cent of the total monthly remuneration will be paid in company shares purchased at a price determined in public trading on Nasdaq Helsinki Ltd and approximately 60 per cent will be paid in cash. The shares will be acquired within two weeks from the day following the publication of the company’s interim report for the period 1 January–31 March 2023. The company will pay any costs and transfer tax related to the purchase of company shares. In case the remuneration cannot be paid in company shares due to legal or other regulatory restrictions or due to other reasons related to the company or a member of the Board of Directors, the remuneration will be paid in cash.

A member of the Board of Directors may not transfer the shares received as remuneration for Board membership in 2023 until two years has passed since the date of transfer of the shares.

The remuneration for the members of the Audit Committee will be paid fully in cash.

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. The fee will be paid in cash. When the member of the 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.

The members of the Board of Directors are not included in Harvia’s short- or long-term incentive programs. The Board members have not received any rewards from other Harvia Group companies.

The travel expenses of the members of the Board of Directors are compensated in accordance with the company’s travel rules.

Read more about remuneration of the Board of Directors in the Remuneration report 2023.

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.

In 1 June–31 December 2023, the total monthly salary of CEO Järnefelt was EUR 251,882 including taxable benefits. If certain conditions are met, the Board of Directors may decide to increase the CEO’s fixed monthly salary to EUR 40,000 starting from 1 April 2024. The CEO is entitled to a company car in accordance with the company’s car policy as well as a company mobile phone.

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 to CEO Järnefelt based on the short-term incentive program for 2023 can account for a maximum of 50 percent of his 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 the financial year 2023, personal targets related to managing net working capital, developing the company’s capacity to make profits, and improving occupational safety. The starting date of the CEO’s service, 1 June 2023, will be taken into account in the payment of the bonus.

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 the 2023–2025 performance period of the share-based long-term incentive program for Harvia’s CEO, Management Team and selected key personnel. The number of Harvia shares payable to the CEO for the performance period can be no more than 13,835 shares (gross). The program is explained below in the section Share-based incentive program.

Read more about the remuneration of Harvia’s CEO in the Remuneration report 2023.

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.

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 2023 program, the performance bonuses of Harvia’s Management Team are based on personal targets and the Management Team’s shared profitability target 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 2023 is equivalent to three to four months’ full salary, depending on the member in question. Of the maximum amount, the weighting of personal targets is one third and that of the profitability target is two thirds.

In addition, members of the Management Team employed by Harvia Plc, Harvia Group Oy or Harvia Finland Oy are part of a personnel-wide performance bonus system where the performance bonus is a maximum of six percent of annual salary, based on the achievement of certain profitability targets.

Remuneration paid to the Management Team members in 2023, EUR

Fixed salaries1) Variable short-term performance bonuses paid for 20222) Rewards paid under the performance bonus system for 2022 Rewards paid under the long-term share-based incentive program 2020–2022 3) Total
1,337,540 55,575 39,232 454,769 1,887,116

1) Including fringe benefits.

2) For the financial year 2022, the other Management Team members were paid a maximum performance bonus corresponding to two months’ full salary, as well as a personal target bonus corresponding to one month’s full salary.

3) Gross value of the rewards. The other Management Team members were paid a total of 23,788 shares (gross), and the value of the shares on the date of payment was EUR 22.487 per share (mean price on 30 May 2023). Withholding tax and possible other applicable contributions were deducted from the gross earnings, and the remaining net amount was paid in shares.

Key terms of employment of other members of the Management Team

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 pension system. In 2023, seven members of the Management Team had a car benefit and two members had a company apartment.

Share-based incentive programs

The Board of Directors of Harvia Plc decided on 21 May 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.

For each performance period, the Board of Directors will separately decide the program participants, performance criteria and related targets, as well as the minimum, target and maximum reward potentially payable to each participant based on target attainment. The payment of rewards based on the performance criterion concerning organic growth requires that Harvia achieves a certain EBIT margin in the performance period.

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. The program has no commitment period or terms and conditions associated with the number of shareholdings.

The total number of shares for the performance 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.

Summary

Performance period Targets Gross earning, maximum total Payment date
2020–2022 Absolute total shareholder return, organic revenue growth 35,809 Spring 2023
2021–2023 Absolute total shareholder return, organic revenue growth, sustainability (sustainability strategy and metrics) 33,500 Spring 2024
2022–2024 Absolute total shareholder return, organic revenue growth, sustainability (reducing CO2 emissions) 73,600 Spring 2025
2023–2025 Absolute total shareholder return, organic revenue growth, reducing CO2 emissions 61,600 Spring 2026

The payment of rewards based on the performance criterion concerning organic revenue growth requires that Harvia achieves a certain EBIT margin in the performance period.