Reward Agency’s Executive and Board Remuneration report 2022 published

Reward Agency’s 8th annual report of publicly listed companies executive and board remuneration has now been published. Once again we have analysed the Finnish remuneration policies and reports published by Finnish listed companies in the spring of 2022. The research data consists of 179 companies in the stock exchange’s main list and the First-North list of companies.

Executive remuneration returned to normal last year. When the corona crisis began in 2020, a small part of listed companies decreased executive salaries temporarily or suspended incentive plans, but these measures were not in place anymore last year. In 2021 the potential exceptional arrangements were ceased, and executive remuneration returned to normal practices. The board fees for larger companies had some increases and the requirement to own the rewarded rewards increased.

The internationally exceptional times can still be seen as prudence in executive remuneration. The Fixed Salary median decreased 5 % compared to the previous year, which was due to the addition of 29 new companies in the stock exchange. New companies are mostly small, and the CEO remuneration levels moderate, which brings the average values down. In the companies, in which the reported salaries are comparable with each other in 2020-2021, the CEO median Fixed Salary increased 3 % compared to the previous year.

Increasingly more listed companies tune their incentive plans ever more aggressive to succeed in attracting, motivating and retaining professionals and to make remuneration more flexible and impacting on behaviour. The changes in the Short-Term Incentives are more moderate, but the significance of Long-Term Plans increases continually. This can clearly be seen especially in CEO Total Remuneration, of which half is composed of Fixed Salaries and half of Incentives. In 2021 CEOs earned 30 % annual bonuses on top of Fixed Salaries and 70 % Long-Term Incentives. With regards to Long-Term Incentives in large companies, Restricted Share Plans, which are based on continued employment, increased in popularity. In smaller companies, option plans were developed further to incentivize strong growth and value increase.

When considering the paid (and reported) base salaries, benefits, annual bonuses and Long-Term Incentives in 2021, then slightly over half of the CEOs earned between 100 000 – 500 000 euros. 20 % earned a total salary between 500 000 – 1 000 000 euros, 12 % earned between 1-2 million euros and 8 % (15 persons) over 2 million euros.  At the median level, the total remuneration of a publicly listed company’s CEO was 400 000 euros per year.

One key cornerstone of responsible remuneration in listed companies is transparent reporting. In the spring 2022 Remuneration Reports, the quality was deemed excellent in four listed companies: Fortum, Basware, Nokian Tires and Exel Composites. This spring the reporting improved again with regards to CEO remuneration and in several companies also the incentive plan objectives were reported more clearly than before. On the other hand, we observed a decrease in the quality of Management Team salary reporting in some companies, compared to the previous year. There is large variation between companies however, and too many companies are way under the bar in this.

Our remuneration survey aims to provide updated information for company boards to support decision making. We also want to encourage Finnish listed companies for increasingly more performance-based remuneration and more open reporting. Sustainable and transparent remuneration benefits us all.

The survey report can be ordered here.

Kirjoittaja: Samuli Sistonen
Made in Redland