The rejection of the general meeting is not binding, and the final decision on remuneration is made by the board of directors.
“I will add the issue to the board’s agenda without delay” Mikael SilvennoinenThe chairman of the board of Fortum promised press release published on Saturday. “The shareholders’ opposition at the general meeting and other feedback show that the previous board’s interpretation of the implementation of top management incentives does not sufficiently take into account the company’s overall situation in 2022.”
Fortum has had serious difficulties in recent months, reminded Helsingin Sanomat. It recorded a loss of around six billion euros last year due to the collapse of its natural gas-dependent subsidiary Uniper based in Düsseldorf, Germany. It also had to strengthen its solvency with a 2.35 billion euro bridge financing arrangement with the Finnish state investment company Solidium.
The bridge financing was granted on the condition that the executive management does not receive short- or long-term incentives for the years 2022 and 2023.
Fortum’s net loss was EUR 2.4 billion in 2022. However, its board presented “complete lack of sense or proportion” by interpreting the incentive limitation in such a way that the long-term incentives for the years 2020–2022 and 2021–2023 should be calculated based on the performance in 2020 and 2021 – without the loss-making year 2022.
managing director Markus Rauramo would thus have earned 28,499 shares in 2020–2021 and another 21,999 shares in 2021–2023. The value of the shares was a total of 710,000 euros on Friday.
“We do not believe that the decision corresponds to what was agreed in connection with the bridge financing”, Jukka-Pekka Ohtolaministerial assistant who represented the state at the general meeting, told Helsingin Sanomat on Friday.
Helsingin sanomat newspaper reported yesterday, that although the government interpreted the incentive restrictions in such a way that it guaranteed significant incentives for the working management, ordinary employees had to settle for significantly lower incentives than usual, despite the pressure caused by the energy crisis and the collapse of Uniper.
Jari Laitinen, Fortum’s remuneration and benefits director, told the magazine that incentives are typically based 60 percent on comparable operating profit, 10 percent on safety goals and 30 percent on individual or team performance. However, there is also a clause in the incentive criteria that cuts the incentives by 50 percent if the operating profit does not reach a certain threshold. The phrase was introduced for the first time in 2022.
The final result has been discussed in the board of directors.
“It concluded that there was no reason to change it because the incentives went according to the rules,” he said.
Fortum’s remuneration policy gives the board the authority to review the incentive criteria in circumstances where the incentives do not reflect the development of profit and share price. The board decided not to exercise its authority under the leadership of Veli-Matti Reinikkala, chairman of Fortum’s nomination and remuneration committee.
Aleksi Teivainen – HT
Source: The Nordic Page