The terms of the managing director service agreement of President and CEO Markus Rauramo are in line with Fortum’s Remuneration policy for the governing bodies. The malus and clawback provisions for the President and CEO were not utilised in 2024.
In December 2024, the Fortum Board of Directors approved a change of the total remuneration structure of the President and CEO to better align with market practise. The President and CEO’s fixed compensation is reduced while the maximum earnings potential for the variable remuneration (short-term and long-term incentives, STI & LTI) is increased. These changes are effective as of 1 January 2025 and are described below.
Fixed compensation
The monthly fixed compensation of the President and CEO is EUR 100,000 (2024:125,000). The fixed compensation includes a company car and phone as fringe benefits. In addition, the President and CEO receives an electric vehicle subsidy of 25% of the taxable value of the full car benefit in accordance with Fortum’s Company Car Instructions.
Incentives
The total variable elements (STI and LTI) are capped at a maximum pay-out of 200% (2024:120%) of the annual fixed compensation. The maximum STI is capped at 100% (2024: 40%) of the annual fixed compensation and the maximum LTI at 80–120% (2024: 100%) of the annual fixed compensation at grant. In accordance with the terms of the Solidium bridge financing facility with the Finnish State, Markus Rauramo is not paid any short- or long-term incentives (STI and LTI) accumulated in 2022 and 2023.
Pension
The retirement age of the President and CEO 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 Fortum Leadership Team. The annual defined contribution premium is 20% of the annual fixed compensation. If Markus Rauramo’s managing director service agreement is terminated before the retirement age, the President and CEO is entitled to retain the accrued funds in the pension arrangement up to that time.
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 managing director service agreement
The notice period for both parties is six (6) months. If the company terminates the agreement, the President and CEO is entitled to a fixed compensation for the notice period and a severance pay equal to six (6) months’ fixed compensation. No severance compensation is paid if the agreement is terminated by the President and CEO himself.
Supplementary information
In accordance with the terms of the Solidium bridge financing facility with the Finnish State, the President and CEO is not paid any short- or long-term incentives accumulated in 2022 and 2023. The awards for the 2020–2022 and 2021–2023 LTI plans were originally scheduled for payment in 2024. The Board of Directors earlier resolved that the agreed deduction related to the change in his role in Uniper’s Supervisory Board in 2021 would have been done from the LTI payments in the spring of 2024. As Markus Rauramo decided to waive the awards for the 2020–2022 and 2021–2023 LTI plans and no LTI awards were paid in 2024, the Board of Directors resolved that the agreed deduction would be done from the incentive payments for the President and CEO in the spring of 2025.