Corporate governance

The Annual General Meeting shall decide on the basis for remuneration for work in the Board and committees.

The Board shall decide on the CEO’s remuneration and any other compensation. CEO remuneration shall comply with the valid remuneration policy.

The Board or a separately appointed remuneration committee, shall prepare matters concerning CEO remuneration. The Board or a separately appointed remuneration committee, shall assess the appropriateness of CEO remuneration to ensure that it complies with the company’s strategy, business requirements and shareholder interests. The assessment may include external consultation and research data on remuneration to ensure that the level of CEO remuneration is appropriate with regard to comparable companies.

The CEO is not a member of the Board or a separately appointed remuneration committee, and will not take part in the decision-making concerning his or her personal remuneration.

Honkarakenne’s remuneration policy is based on the following main principles:

• The opportunity for overall remuneration must be sufficiently competitive in relation to the market level.
• Performance-based incentives form part of the CEO’s remuneration potential.
• Some of the performance-based incentives emphasise long-term performance and are linked to shareholder value development and the company’s strategy.

Principles of Board remuneration

In accordance with the Limited Liability Companies Act, the shareholders shall decide on the Board’s remuneration in the Annual General Meeting. The Board’s remuneration shall always comply with the valid remuneration policy. The Board or a separately appointed remuneration committee, shall make a proposal to the Annual General Meeting concerning remuneration of the Board.

The remuneration of Board members may consist of annual or monthly remuneration and/or meeting remuneration. Board members may also, if the General Meeting so decides, be reimbursed for travel expenses related to Board work and/or other direct costs arising from Board work. The Board members do not have an employment relationship with the Company and are not part of any share-based remuneration scheme of the Company.

Based on the Annual General Meeting’s decision, remuneration for work in the Board or any committees may be paid in cash and/or entirely or partly in company shares or equity-linked securities, within the limits of the remuneration policy.

If a company employee is a Board member, their remuneration for Board work is determined on the same grounds as other Board members, and their salary based on their employment relationship and other benefits is determined on the basis of the terms applicable to their employment relationship.

The purpose of the decision to remunerate the Board is to ensure that the remuneration is competitive and in line with the demands, obligations and amount of work involved.

Principles of the CEO’s remuneration

The terms of the CEO’s remuneration and service contract shall be decided by the Board. CEO remuneration shall comply with the valid remuneration policy.

The CEO’s remuneration consists of a fixed monthly salary including fringe benefits, variable long- or short-term incentive schemes based on performance, and any other elements that may be included in the remuneration policy.

The CEO’s basic salary shall be in line with the interests of the company and shareholders. The basic salary shall be competitive compared to similar positions in the market, in order to attract and retain skilled professionals in the company.

Long- and/or short-term incentive schemes form the performance-based part of the CEO’s remuneration.

Short-term performance-based incentive schemes are part of the CEO’s annual remuneration system. Short-term performance-based incentive schemes may include elements paid in cash and/or share-based elements, and supplementary pension cover.

Long-term performance-based incentive schemes may be used to further commit the CEO, ensuring a strong alignment between the CEO and shareholders’ interests. Long-term performance-based incentive schemes may include elements paid in cash and/or share-based elements.

The proportion of fixed remuneration to variable remuneration shall be determined on the basis of the company’s business situation to ensure that the overall remuneration system is appropriate. The Board shall decide on both annual and longer-term remuneration elements, their weight, criteria and targets, considering Honkarakenne’s strategy and targets and typical market practices.

The Board will set a target and maximum level either in monetary terms and/or number of shares for both short- and long-term remuneration. In share-based systems, the remuneration value is calculated according to IFRS practices.

The CEO’s remuneration consists of a fixed monthly salary including fringe benefits, variable long- and short-term incentive schemes based on performance, and any other elements that may be included in the remuneration policy. Long- and short-term incentive schemes form the performance-based part of the CEO’s remuneration. The fixed salary of the CEO is EUR 20,500 per month. In 2023 the President & CEO was paid a total fee of EUR 300,900. The President & CEO’s remuneration consisted of the following in 2023:

• fixed base salary,
• fringe benefits (incl. medical expenses insurance),
• voluntary pension insurance, which amounted to two monthly salaries in 2023 including additional pension plan
• payment and payment related to the short-term incentive, remuneration for short-term performance-based incentive scheme decided by the Board, that is, the 2022 bonus. The remuneration under the short-term performance-based incentive scheme consisted of both cash and share based elements.

In 2023, the President & CEO’s incentive scheme based on short-term performance was in three tiers and it was tied to the budgeted operating profit from 2023 onwards and operating margin until 2022. The scheme’s first-tier bonus corresponded to a supplementary pension payment equivalent to one monthly salary, plus 5,000 of Honkarakenne Oyj’s Series B shares. The second-tier bonus consisted of the first-tier bonus, a cash bonus worth one monthly salary and 5,000 of Honkarakenne Oyj’s Series B shares. The scheme’s third-tier bonus corresponded to the first- and second-tier bonuses, a supplementary pension payment equivalent to one monthly salary, plus 5,000 of Honkarakenne Oyj’s Series B shares.

Pension scheme

The CEO’s pension cover has been organised with statutory pension cover that is based on length of service and earnings as prescribed by law. The CEO’s retirement age is determined by the Employees Pensions Act.

As part of the CEO’s overall remuneration, supplementary pension cover may be offered in addition to statutory cover. Any supplementary pension cover shall be implemented with defined contribution plans.

Conditions for termination

If the CEO’s service contract is terminated, the CEO’s compensation will be determined on the basis of contractual obligations and the incentive scheme’s terms and conditions.

The CEO’s service contract specifies the CEO’s period of notice and any severance pay. The CEO’s notice period is six months on both sides. If the CEO’s contract is terminated by the company, the CEO will also receive additional severance pay equivalent to six months’ salary.

The Board of Directors determines the salary, bonuses and other benefits of other Executive Group members. The remuneration of Executive Group members consists of the following:

• salary
• fringe benefits
• medical expenses insurance
• voluntary pension insurance, which may amount to one or two monthly salaries
• remuneration for short-term performance-based incentive scheme decided by the Board. The remuneration under the short-term performance-based incentive scheme consists of both cash and pension benefits.

In 2022, the Executive Group’s incentive scheme based on short-term performance was in three tiers and tied to the budgeted operating margin. The scheme’s first-tier bonus corresponded to a supplementary pension payment equivalent to one monthly salary. The second-tier bonus consisted of the first-tier bonus and a cash bonus worth one monthly salary. The scheme’s third-tier bonus corresponded to the first- and second-tier bonuses and a cash bonus equivalent to one monthly salary.

Pension scheme

Other members of the Executive Group do not have pensions schemes.

Conditions for termination

The notice period for other members of the Executive Group is six months.

Executive Group’s remuneration in 2023 (excl. the CEO)

Remuneration of the Board of Directors 2024

The Annual General Meeting held on 18 April 2024 decided that the Board members shall be paid the following fees:

The Annual General Meeting decided to set the remuneration of the members of the Board of Directors at EUR 2 000 per month, the remuneration of the chairman of the board at EUR 3 500 per month. Should the Board of Directors appoint committees from among its number, the committee members will be paid EUR 500 for each committee meeting. Furthermore, the members’ travel and accommodation costs shall be reimbursed against an invoice.

Remuneration report 2022
Remuneration report 2021
Remuneration report 2020
Statement on salaries and remuneration 2019
Statement on salaries and remuneration 2018
Statement on salaries and remuneration 2017
Statement on salaries and remuneration 2016