Remuneration and Terms of the Service Contract of the President and CEO
The remuneration of the President and CEO Markus Rauramo follows the principles set and the remuneration programs described in the Remuneration Policy for the Governing Bodies approved in the Annual General Meeting in April 2020.
The base salary of the President and CEO is EUR 125.000/month including taxable fringe benefits (free car benefit and mobile phone).
Short-term incentive (STI) can be earned annually based on the criteria set by the Board of Directors. The Board of Directors will annually decide the maximum STI earning opportunity. Currently, the maximum STI for the President and CEO is 40% of the annual fixed compensation.
Long-term incentive (LTI) can be earned in accordance with Fortum management's ongoing long-term incentive programme based on the maximum number of shares allocated and the performance criteria set by the Board of Directors for each of the annually commencing three-year long performance periods.
The combined value of all variable compensation, before taxation, paid during a calendar year cannot exceed the variable pay cap decided by the Board of Directors for the given year. Currently, the maximum variable pay is limited to 120% of the annual base salary.
The retirement age is determined in accordance with the Finnish Employees’ Pension Act. In addition to the statutory pension, the President and CEO is entitled to participate in the supplementary group pension plan for the members of the Executive Management Team. The annual defined contribution premium is 20% of the annual fixed compensation. If the President and CEO's contract is terminated before the retirement age, he is entitled to retain the funds that have accrued in the pension fund.
Other benefits and programs
Other benefits currently include insurance for permanent total disability and critical illness, life insurance, and voluntary participation in the sickness fund and in the Employee Share Savings (ESS) programme.
Termination of Contract
The notice period for both parties is 6 months. If the company terminates the contract, the President and CEO is entitled in addition to the 6 months’ notice period compensation to a severance pay corresponding to 6 months’ base salary.
In addition to the remuneration paid based on the President and CEO position of Fortum Corporation, the President and CEO Markus Rauramo received compensation of EUR 56,102 as of July 2020 for acting as the Deputy Chairman of the Supervisory Board of Uniper SE. The compensation for acting on Uniper’s Supervisory Board is paid according to the policies in force at Uniper. The annual fee for the Deputy Chairman is EUR 140,000, out of which 20% is variable remuneration which is determined as described in Uniper’s Annual report and is paid as virtual shares.
Markus Rauramo is eligible for compensation related to his current role as the member of the Board of Directors of Teollisuuden Voima Oyj (associated company). The monthly compensation based on the current Board membership at Teollisuuden Voima Oyj is EUR 1,400, and additionally a separate fee of EUR 800 will be paid for each Board meeting.