Stora Enso aims to provide a level of remuneration that motivates, encourages, attracts and retains employees of the highest calibre. To maximise the effectiveness of remuneration within Stora Enso, careful consideration is taken to ensure the remuneration elements drive the business strategy of the company and its long-term financial interests.
The Remuneration Policy describes Stora Enso’s main principles and the decision-making process of remuneration for the members of the Board, President and Chief Executive Officer (CEO) and Deputy CEO, and the remuneration elements for them.
Remuneration in the past year is described in detail in the Remuneration Report 2022. It includes the main principles of Stora Enso’s remuneration for the members of the Board of Directors, President and CEO, and Deputy CEO, its remuneration decision-making procedure; a description of Stora Enso’s current policy and details of how remuneration arrangements were implemented during year 2022.
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Remuneration of the Board is decided annually by the shareholders at the AGM or a possible extraordinary shareholders’ meeting. The remuneration of the members of the Board may depend on their respective roles as Chair, Vice Chair, and Members of the Board or its committees.
The AGM in 2023 approved the proposal by the Shareholders' Nomination Board on the annual remuneration for the Board of Directors as follows:
Chair EUR 209,000 (2022: EUR 203,000)
Vice Chair EUR 118,000 (2022: EUR 115,000)
Members EUR 81,000 (2022: EUR 79,000)
The AGM also approved the proposal that the annual remuneration for the members of the Board of Directors, be paid in Company shares and cash so that 40% will be paid in Stora Enso R shares and the rest in cash.
The AGM approved the annual remuneration for the Board committees as follows:
Financial and Audit Committee
Chair EUR 22,600 (2022: EUR 22,000)
Members EUR 15,900 (2022: EUR 15,400)
People and Culture Committee (previously Remuneration Committee)
Chair EUR 11,300 (2022: EUR 11,000)
Members EUR 6,800 (2022: EUR 6,600)
Sustainability and Ethics Committee
Chair EUR 11,300 (2022: EUR 11,000)
Members EUR 6,800 (2022: EUR 6,600)
More information about the remuneration of the Board of Directors is presented in the Remuneration Report 2022.
The total remuneration to the President and CEO consists of annual base salary, variable pay components as short-term incentives (cash) and long-term incentives (shares), long-term benefits (pension, medical and health benefits), and other benefits (car, housing, etc.).
The compensation for the new President and CEO Hans Sohlström, appointed on 18 September 2023, is presented in the table below.
| Annual base salary | EUR 1,000,000 from 18 September 2023 |
|---|---|
| Short-term incentive | As of 18 September 2023 for the next 12 + 12 months, the CEO is entitled to an STI programme with a maximum opportunity of 100% of the annual fixed salary. |
| Long-term incentive | As of 18 September 2023 there is a two-year CEO Performance Plan initiated with vesting date in Q4/2025. The CEO has the potential to receive a value corresponding to a maximum of 169,420 shares before taxes. The performance targets are related to balance sheet, capital expenditure, strategy and sustainability. The CEO is not eligible to participate in LTI 2023-25 or other potential LTI programmes starting during 2024. |
| Other benefits | All benefits are included in the annual base salary. |
| Pension | The retirement age and pension according to Finnish statutory pension plan. |
| Termination of assignment | There is a notice period of six months with a severance payment of twelve months salary on termination by the company but with no contractual payments on any change of control. |
| Share ownership guideline | The company recommends and expects the CEO and GLT members to hold Stora Enso shares at a value corresponding to at least one annual base salary. Stora Enso shares received as remuneration are therefore recommended not to be sold until this level has been reached. |
CEO's remuneration in 2022
The total remuneration for the former President and CEO Annica Bresky in 2022 amounted to EUR 3,294,000 (2,110,000), including annual base salary, customary fringe benefits (such as car and mobile phone) STI and LTI programmes, and pension. Annica Bresky left her position at Stora Enso on 18 September 2023.
| Annual base salary | Former CEO Annica Bresky: EUR 1,006,809 as of 1 April 2023 |
|---|---|
| Short-term incentive | In 2022, the CEO was entitled to an STI programme with a maximum opportunity of 100% of the annual fixed salary. Earned STI related to 2022, due to be paid in 2023, amounted to 88.1% of the annual salary, with a corresponding value of EUR 845,000. |
| Long-term incentive | The former CEO Annica Bresky participated in 2020, 2021 and 2022 share based LTI programmes. Paid LTI in 2022 related to the 2019 LTI programme amounted to 0 shares due to a 0% performance outcome of the LTI programme. The performance criteria included Economic Value Added (EVA) and Earnings per Share (EPS). The 2020 LTI programme (performance period 2020–2022) ended at year end and is due to be paid in 2023. The programme resulted in a 100% performance outcome with a corresponding value of EUR 987,0001. The performance criteria included Economic Value Added (EVA) and Earnings per Share (EPS). The vesting date for the LTI 2022 programme is 1 March 2025. The CEO has the potential to receive a value corresponding to a maximum of 65,430 shares before taxes. The performance criteria include EPS, Relative Total Shareholder Value, CO2 performance and diversity. |
| Other benefits | Benefits include holiday pay, mobile phone, car, and insurance amounting to EUR 32,000 |
| Pension | The retirement age is 65. The President and CEO’s pension plan consists of a defined contribution pension plan with contributions of 30% of pensionable salary. Pension contributions amounted to EUR 477,000 during the year. |
| Termination of assignment | There is a notice period of six months with a severance payment of twelve months salary on termination by the company but with no contractual payments on any change of control. |
| Total remuneration | Total remuneration earned (paid) in 2022 amounted to EUR 3,294,000 (2,110,000).2, 3 |
| Earned proportion of fixed to variable remuneration | The proportion of fixed compensation earned was 44% (69%), while the proportion of variable compensation earned was 56% (31%). |
| Share ownership guideline | The company recommends and expects the CEO and GLT members to hold Stora Enso shares at a value corresponding to at least one annual base salary. Stora Enso shares received as remuneration are therefore recommended not to be sold until this level has been reached. |
For more information about President and CEO remuneration in 2022, please see the Remuneration Report 2022.
2 Earned amounts include STI and LTI earned during 2022 and are due to be paid in 2023. The paid amount includes STI and LTI paid during 2022.
3 Remuneration depends on a fixed part, such as base salary, pension and other benefits, but also to a large extent on variable pay parts that may result in higher or lower total remuneration year-to-year
| Total compensation | EUR 12,178,000 in 2022 |
|---|---|
| Short term incentive (STI) programmes | In 2022, GLT members had STI programmes with up to a maximum of 70% or 80% of their annual fixed salary, payable the year after the performance period. 70% of the STI for 2022 was based on financial measures and 30% on individual key targets. |
| Long term incentive (LTI) programmes for management | At the end of 2022, the performance period for the 2020 programme ended, and will be settled in one portion after three years in March 2023, dependent on Economic Value Added (EVA) for the Stora Enso Group and Earnings Per Share (EPS) for the Stora Enso Group. The Performance Share programme resulted in a 100% performance outcome. The number of shares due for executives (GLT members at year end) from programmes that ended during 2022 amounted to 265,340 shares. During the year the 2022 programme was launched, in which the GLT members (in GLT at year end) can potentially receive a value corresponding to 242,650 shares before taxes. |
| Share ownership guideline | The company recommends and expects the CEO and GLT members to hold Stora Enso shares at a value corresponding to at least one annual base salary. Stora Enso shares received as remuneration are therefore recommended not to be sold until this level has been reached. |
| Pension | In accordance with their respective pension arrangements, GLT members may retire at sixty-five years of age with pensions consistent with local practices in their respective home countries. Contracts of employment provide for six months’ notice prior to termination with severance |