Remuneration of the president and CEO in 2023

The President and CEO’s remuneration principles

The remuneration policy provides a remuneration structure that aligns the remuneration for the President and CEO to promote long-term financial performance and to create sustainable shareholder value. 

The President and CEO’s remuneration consists of: 

• A fixed monthly salary (including fringe benefits) based on the requirements of the role and the person’s experience.  
• A short-term performance bonus which is based on targets related to operations and results set annually by the Board of Directors (paid annually).
• A long-term performance bonus which is based on growth in shareholder value and is typically paid in shares.  
• A supplementary pension benefit which is paid in addition to the statutory pension to support the recruitment and retention of the President and CEO. 

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 six-month notice period. If the company terminates the contract, the company pays 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 ends without any period of notice when the President and CEO retires.

The President and CEO may retire at the age of 60, with the pension determined in accordance with the Employees Pensions Act. 

In 2023, the President and CEO’s fixed monthly salary was EUR 41,910.00 from 1 January to 31 March 2023, and EUR 43,377.00 from 1 April to 31 December 2023. Telephone, car, and bicycle benefits were included in the salary as fringe benefits, along with other one-off personnel benefits of negligible value. 

The fixed annual salary paid to the President and CEO in 2023 accounted for 46% of total remuneration, while the short- and long-term performance bonuses constituted 29%. The supplementary pension benefit paid to the President and CEO accounted for approximately 24% of total remuneration.  No other remuneration was paid to the President and CEO in 2023. 

Performance
Short-term remuneration of the President and CEO

During the 2023 financial year, the President and CEO was paid a performance bonus for the achievement of the targets set for 2022 in accordance with the Board of Directors’ assessment and decision. The targets set for the performance bonus were based on indicators related to the efficiency of the working capital (WoCa-%, with a weighted value of 30% and cash flow from operating activities (EUR), with a weighted value of 40%, in total a weighted value of 70%) and the company’s profitability (EBIT-%, with a weighted value of 30%). The annual performance bonus cannot exceed 50% of the salary paid in the previous year. 

In 2023, a total performance bonus of EUR 121,920.00 was paid based on the achievement of the targets of the 2022 performance bonus, representing 47.5% of the maximum amount of the performance bonus. 

During the 2023 financial year, the President and CEO continued to be covered by the short-term incentive scheme, in which the targets set for the performance bonus were based on indicators related to the efficiency of working capital (WoCa-%, with a weighted value of 30% and cash flow from operating activities (EUR), with a weighted value of 30%, in total a weighted value of 60%), the company’s profitability (EBIT-%, with a weighted value of 30%), and personnel satisfaction (eNPS, with a weighted value of 10%). The annual performance bonus cannot exceed 50% of the salary paid in the previous year. 

The performance bonus to be paid based on the 2023 financial year is based on the Board of Directors’ assessment and decision regarding the achievement of the targets set for 2023. The performance bonus is expected to be paid to the President and CEO in March 2024.

Long-term remuneration of the President and CEO

The company’s Board of Directors has decided on a performance-based shareholding plan for the President and CEO for 2023–2027. The aim of the new plan is to align the objectives of the shareholders and the President and CEO to increase the company’s long-term value, to retain the President and CEO at the company, and to offer them a competitive incentive scheme based on earning and accumulating shares in the company. The new plan replaced the President and CEO’s performance-based shareholding plan for 2021–2025, based on which EUR 225.8 thousand was paid in 2023.

The President and CEO’s shareholding scheme consists of five earning periods: the calendar years 2023, 2023–2024, 2023–2025, 2024–2026 and 2025–2027. The 2023 and 2023–2024 earning periods include a restriction period, starting from the payment of remuneration, and ending on 31 December 2025. The conditional remuneration will be paid by the end of May 2024, 2025, and 2026. Shares received as conditional remuneration may not be transferred during the restriction period ending on 31 December 2025, 31 December 2026, and 31 December 2027. The performance-based remuneration will be paid by the end of May following the end of each earning period. Shares received as remuneration for the 2023 and 2023–2024 earning periods may not be transferred during the restriction period; that is, before 31 December 2025. 

The earning criteria for the earning periods beginning in 2023 are Ponsse Group’s operating result, growth of net sales, and personnel satisfaction.  The portion of the maximum reward to be paid to the President and CEO is determined based on the achievement of the targets set for the earning criteria in relation to the investment made by the President and CEO.

The remuneration to be paid for earning periods starting in 2023 is estimated to correspond to a total value of at most 75,000 Ponsse Plc shares, including the component paid in cash (gross remuneration).