Remuneration

Fortum manages remuneration through well-defined processes ensuring that no individual is involved in the decision-making related to their own remuneration. The General Meeting of Shareholders, the Shareholders’ Nomination Board, the Board of Directors, and the People and Remuneration Committee (Nomination and Remuneration Committee until 25 March 2024) of the Board of Directors are all involved in the preparations and decision-making regarding remuneration at Fortum.

Remuneration Policy for Governing Bodies of Fortum

Remuneration Governance

In accordance with the Finnish Corporate Governance Code, the People and Remuneration Committee prepares the Remuneration Policy and the Remuneration Report for Governing Bodies. The Shareholders’ Nomination Board is involved in preparing the Remuneration Policy for the Board of Directors. The Board of Directors submits the Remuneration Policy to the AGM at least every four years and the Remuneration Report annually.

Upon the recommendation of the People and Remuneration Committee, the Board of Directors approves annually the compensation of the President and CEO within the confines of the Remuneration Policy for the President and CEO. The composition and duties of the People and Remuneration Committee are described in detail in the Corporate Governance Statement. In order to avoid any conflicts of interest, the People and Remuneration Committee shall consist of non-executive members only and the majority of the members of the People and Remuneration Committee shall be independent of the Company. The People and Remuneration Committee has the power in its sole discretion to retain external advisors to assist in the evaluation of the executive remuneration.

Remuneration Principles

At Fortum, we strive for a performance culture where our people understand:

  • the company’s strategy and performance targets,
  • how they as individuals can impact the results,
  • the link between business performance and remuneration, and
  • the importance of delivering sustainable business results.

Remuneration Policy builds on our remuneration principles, which have been designed to encourage and recognise high performance and behaviour in line with Fortum’s values and leadership principles. In general, the same remuneration principles and practices are applied to the President and CEO as to the other personnel. However, taking the demands and the responsibilities of the President and CEO role into account, the remuneration of the President and CEO also includes elements that differ from those of other personnel. There is a separate Remuneration Policy in place for the other personnel.

Remuneration structures are designed with appropriate consideration of the views and interests of Fortum’s stakeholders. This means listening to our shareholders and representative bodies, investors and proxy advisors, regulators, the government, customers and employees and ensuring that their views are appropriately represented when making decisions regarding remuneration.

Changes in remuneration during 2023
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The Annual General Meeting 2023 resolved to reject the Remuneration Report for the company’s governing bodies for 2022 in an advisory vote. After the meeting, Fortum’s new Board of Directors reassessed the implementation of the remuneration restrictions imposed by the Bridge financing agreement with the Finnish State signed on 6 September 2022 and changed the interpretation made by the previous Board of Directors. Based on the decisions of the new Board of Directors and the members of the Fortum Leadership Team, Fortum supplemented and restated the 2022 Remuneration Report on 2 May 2023 and published a stock exchange release on the matter.

With regard to the long-term incentive plans, the Board decided that the results of all years would be measured, but no shares could be earned in 2022 and 2023. Thus, the maximum number of shares the members of the Fortum Leadership Team could earn was cut to 1/3 or 2/3 in accordance with the remuneration restriction. This led to an outcome of 9% of the pre-restriction maximum in the 2020–2022 plan, with share delivery scheduled for the spring of 2024. By comparison, the outcome for the other participants in the 2020–2022 plan was 14% and the shares were delivered in the spring of 2023. The same principle applies to all other long-term incentive plans that are ongoing during 2022 and/or 2023.

Fortum’s Leadership Team informed the Board that they would voluntarily waive the shares that are scheduled for delivery in the spring of 2024. The new Leadership Team members who started in the Fortum Leadership Team as of 31 March 2023 were eligible for the LTI award for the 2020–2022 LTI plan, as well as for the short-term incentives accumulated in 2022 based on their previous roles in the company.

In 2022, after Russia’s attack on Ukraine, Fortum announced that the company was pursuing a controlled exit from the Russian market. Russia has not been included in the target setting regarding the ongoing incentive plans since then. Furthermore, as a result of the Presidential decree (No. 302) issued by Russia in April 2023 and the seizure of Fortum’s Russian assets, the company lost control of its Russian operations. Consequently, the Russia segment was deconsolidated, impaired in full and reclassified as discontinued operations in the second quarter of 2023.

Remuneration of the Board of Directors in 2023
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The Board members are not in an employment relationship or service contract with Fortum and therefore they have not been given the opportunity to participate in Fortum’s STI or LTI programmes, nor has Fortum had a pension plan in which they could have opted to take part. The travel expenses are compensated to the members of the Board of Directors in accordance with Fortum’s travel policy.

The Shareholders’ Nomination Board proposed to the Annual General Meeting 2023 that the fees, presented in the table below, would be paid to the members of the Board of Directors for a term ending at the end of the Annual General Meeting 2024.

The Annual General Meeting held on 13 April 2023 approved the proposals of the Shareholders’ Nomination Board.

EUR

2023

Annual fee for the Board work 
Chair

88,800

Deputy Chair

63,300

Chair of the Audit and Risk Committee   
(If not simultaneously Chair or Deputy Chair)

63,300

Members

43,100

Fixed fee for the Committee work

 

Member of the Audit and Risk Committee

3,000

Chair of the Nomination and Remuneration Committee

5,000

Member of the Nomination and Remuneration Committee

2,000

Chair of any additional Committee established by a Board decision

5,000

Member of any additional Committee established by a Board decision

2,000

Meeting fees (incl. Committee meetings)

 

Meeting fee

800

Meeting fee in case member travels to the meeting outside his/her country of residence

1,600

Meeting fee when member participates in the meeting via remote connection or for decisions that are confirmed without convening a meeting

800

The annual fee for the Board work of the Board members is paid in company shares and cash in such a way that approximately 40% of the amount of the annual fee is payable in shares acquired on behalf and in the name of the Board members, and the remainder in cash. The company pays the costs and the transfer tax related to the purchase of the company shares. The meeting fees and the fixed fees for the Committee work are paid fully in cash.

Fortum’s operating environment changed drastically in 2022 because of Russia’s attack on Ukraine and the effects from the consequent European energy crisis, due to which the number of Board meetings increased significantly compared to the previous years. In 2023, a total of 16 Board meetings were held, while in 2022 the number of Board meetings had been 42 in total. Further information on the number of Board meetings held in 2023 is available in the Governance 2023 report.

In line with the terms of the Solidium bridge financing facility with the Finnish State, the fees to be paid to the Board of Directors did not increase in 2023.

 

Fees paid to the members of the Board of Directors in 2023

EUR thousand

Annual Fee for the Board work, paid 2023

Fixed Fee for the Committee work, paid 2023

Meeting fees, paid 2023 1)

Total remuneration, paid 2023

Shares owned 31 Dec 2023

Board service 2023

Mikael Silvennoinen, Chair

89

12

24

125

9,497 2)

13 Apr–31 Dec

Essimari Kairisto, Deputy Chair

63

2

42

107

2,872

1 Jan–31 Dec

Ralf Christian

43

7

37 

87

2,270

1 Jan–31 Dec

Luisa Delgado

43

2

27

73

2,270

1 Jan–31 Dec

Jonas Gustavsson

43

3

22

69

1,285

13 Apr–31 Dec

Marita Niemelä

43

2

14

59

1,285

13 Apr–31 Dec

Teppo Paavola

43

2

33

78

7,000

1 Jan–31 Dec

Maija Strandberg

43

7

27

78

1,285

13 Apr–31 Dec

Johan Söderström

43

2

12

57

1,285

13 Apr–31 Dec

Vesa-Pekka Takala

43

5

18

67

1,285

13 Apr–31 Dec

Total

497

44

256

800

30,334

 

1) The amounts stated in the table above include also the corrections made regarding the meeting fees in 2022. The corrections were paid in 2023.   
2) Includes the 6,849 Fortum shares held through Mikael Silvennoinen’s controlling company Agendum Oy.

Fees paid to the members of the Board of Directors 2019-2023

EUR thousand

2023

2022

2021

2020

2019

Current Board members

 

 

 

 

 

Mikael Silvennoinen

125

-

-

-

-

Essimari Kairisto

107

135

76

72

56

Ralf Christian

87

90

-

-

-

Luisa Delgado

73

102

34

-

-

Jonas Gustavsson

69

-

-

-

-

Marita Niemelä

59

-

-

-

-

Teppo Paavola

78

117

58

45

-

Maija Strandberg

78

-

-

-

-

Johan Söderström

57

-

-

-

-

Vesa-Pekka Takala

67

-

-

-

-

FormerBoard members

 

 

 

 

 

Matti Lievonen

-

-

32

101

89

Klaus-Dieter Maubach

-

-

15

65

71

Anja McAllister

5

122

65

57

59

Eva Hamilton

-

-

19

55

54

Heinz-WernerBinzel

-

-

-

-

12

Kim Ignatius

-

-

-

21

67

Veli-Matti Reinikkala

10

181

92

77

58

Marco Ryan

-

-

-

-

19

Philipp Rösler

4

101

55

57

44

Annette Stube

11

105

57

42

-

Kimmo Viertola

6

86

-

-

-

Board of Directors, total remuneration, average

56

115

50

59

53

Board of Directors, ordinary member annual fixedfee

431)

431)

40

40

40

President and CEO Markus Rauramo

1,932

2,699

3,136

965

-

Average employee total remuneration 2) 4)

80

803)

59

67

56

Comparable operating profit, continuing operations, EUR million 4)

1,544

1,611

1,429

1,344

1,191

Earnings per share, continuing operations, EUR 4)

1.68

2.343)

4.49

2.05

1.67

1) Excluding the annual fixed fee for the Committee work.   
2) Based on the figures in the consolidated financial statements, including wages and salaries, pensions, social security costs as well as short- and long-term incentives (excl. the President and CEO). The financial statements include costs accrued for the year.   
3) Comparative information for 2022 has been restated following the reclassification of the Russian operations as discontinued operations in 2023. For additional information, see Financials 2023.   
4) Including Russian operations in 2019–2021 and Uniper in 2020.

Remuneration of the President and CEO in 2023
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The Board of Directors considers various factors when determining the fixed compensation of the President and CEO, including individual contribution, business performance, role scope, employee pay across Fortum, and alignment with external market levels.

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 2023. As resolved by the Board of Directors, the variable elements in total (STI and LTI) were limited to a maximum pay-out of 120% of the President and CEO’s annual fixed compensation. The maximum STI was limited to 40% of the annual fixed compensation. In accordance with the terms of the Solidium bridge financing facility with the Finnish State, Markus Rauramo is not paid the short- or long-term incentives (STI and LTI programmes) that accumulated in 2022 and 2023. Read more about the Remuneration and Terms of the Service Contract of the President and CEO

EUR thousand 

Markus Rauramo
2023

Markus Rauramo,
earned 2023

Fixed compensation84%

1,613

-

Supplementary pension

16%

315

 

Short-term incentives

0%

01)

1)

Long-term incentives

0%

02)

2)

Employee Share Savings Plan

0%

43)

4)

Total remuneration

100%

1,932

 

1) In accordance with the terms of the Solidium bridge financing facility with the Finnish State, the STI earned in 2022 and 2023 are not paid.
2) The LTI award for the 2020–2022 and 2021–2023 LTI plans were scheduled for payment in 2024. In May 2023, President and CEO Markus Rauramo decided to waive the LTI awards for the 2020–2022 and the 2021–2023 LTI plans, thus no LTI awards will be paid to Markus Rauramo in 2024.
3) President and CEO Markus Rauramo earned a total of 280 matching shares (gross) for the 2020 Employee Share Savings plan amounting to a gross award of EUR 4,015.
4) With regard to the 2021 Employee Share Savings plan Markus Rauramo earned a total of 235 matching shares (gross) at the maximum. The matching share amount (gross) will be confirmed and the delivery of the net number of matching shares will take place in the spring of 2024.

Summary of granted, earned and paid share-based incentives to the President and CEO

LTI Plan

2020-2022

2021-2023

2022-2024

2023-2025

Performance period

20202022

20212023

20222024

20232025

Share delivery year

2023

20241)

2024

2025

2026

Performance measures

80% relative TSR

20% ESG

80% relative TSR

20% ESG

80% relative TSR

20% ESG

70% relative TSR

30% ESG

Outcome of the plan

14% 

(9%)2)

9%

(3%)2)

-

-

Maximum number of shares granted (gross)

63,000
42,0213)

85,000
28,3313)


62,000
20,7023)

110,000

73,3703)

Grant date

28 February 2020

28 February 2021

28 February 2022

31 August 20235)

Share price at grant, EUR

19.28

20.69

18.84

12.40

Maximum LTI value at grant, EUR

1,214,640

810,1653)

1,758,650

586,1683)

1,168,080

390,0263)

1,364,000

909,7883)

Number of shares earned (gross)

5,8834)

2,5504)

-

-

Number of shares delivered (net)

4)

4)

-

-

Share delivery date

4)

4)

-

-

Share price at delivery, EUR

4)

4)

-

-

1) Due to the remuneration restrictions regarding the Fortum Leadership Team members, the LTI award for the 2020–2022 LTI plan was scheduled for payment in 2024.
2) Taking the pro-ration into account, the final earning for Markus Rauramo led to an outcome of 9% of the original maximum number of shares granted in the LTI Plan 2020–2022 and to an outcome of 3% in the LTI Plan 2021–2023.
3) The number/maximum value of shares granted (gross) takes into account the remuneration restrictions regarding the Fortum Leadership Team members in 2022 and 2023. 2020–2022: the original maximum number of shares granted and shares pro-rated 1/3; 2021–2023 and 2022–2024: the original maximum number of shares granted and shares pro-rated 2/3; 2023–2025: the original maximum number of shares granted and shares pro-rated 1/3.
4) In May 2023, President and CEO Markus Rauramo decided to waive the LTI awards for the 2020–2022 and the 2021–2023 LTI plans, thus no shares will be delivered to Markus Rauramo in 2024.
5) The shares of the 2023–2025 LTI plan were granted in deviation from the schedule of the previous years due to the preparations related to the new organisation.

President and CEO Markus Rauramo received compensation for serving as the Chair of the Supervisory Board of Uniper SE. The compensation for serving on Uniper’s Supervisory Board was paid according to the policies in force at Uniper. The fee for the service as the Chair until 21 December 2022 was EUR 204,247. In connection with the change in this Supervisory Board role in 2021, the Board of Directors of Fortum resolved that Markus Rauramo’s total compensation would not increase due to the changing role, and therefore the excess of the compensation paid based on the Deputy Chair role was decided to be decreased from the Fortum incentive payments. 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 that accumulated in 2022 and 2023. Therefore, the Board of Directors resolved earlier that the agreed deduction related to the change in Uniper’s Supervisory Board role in 2021 will be done from the LTI payment in the spring of 2024. As Markus Rauramo decided to waive the LTI awards for the 2020–2022 and 2021–2023 LTI plans and no LTI awards will be paid in 2024, the Board of Directors resolved that the agreed deduction will be done from the incentive payments scheduled to be made in the spring of 2025.

President and CEO Markus Rauramo participated in the 2020 Employee Share Savings (ESS) plan and earned a total of 280 matching shares (gross). The delivery of the net number of matching shares (149 shares in total) took place in March 2023. Markus Rauramo has also participated in the 2021 ESS plan, in which the holding period of the purchased shares ended at the end of 2023. Based on the participation in the ESS plan in 2021 and the number of ESS shares held on 31 December 2023, the President and CEO earned a total of 235 matching shares (gross) at the maximum. The matching share amount (gross) will be confirmed and the delivery of the net number of matching shares will take place in the spring of 2024. Due to the restrictions regarding management remuneration as a part of the terms of the Solidium bridge financing facility with the Finnish State, Fortum concluded that the Fortum Leadership Team would not participate in the 2023 ESS plan.

Performance outcomes

Short-term incentives for 2022 

In the STI 2022 plan, the weights of the set performance measures for the President and CEO were as follows: financial measure (CompOP) 60%, ESG measures (safety) 10% and joint Leadership Team/individual measures 30%. The Group (including Uniper) comparable operating profit + share of profits of associates and joint ventures (CompOP) 2022 did not reach the set minimum level. The achievement of Fortum Group’s severity rate per total recordable injuries and the completion of the safety leadership trainings for 2022 was 57% and the weighted outcome was 5.7%. In 2022, President and CEO Markus Rauramo had two joint Leadership Team measures and one individual performance measure. These measures related to the structural changes in Fortum Group, various strategic projects and the review of Fortum Group strategy. The achievement of the joint Leadership Team and individual measures was 44% of the maximum and the weighted outcome was 13.2%. 

Concerning the STI plan 2022, Fortum’s stand-alone segments reached overall good results, but Uniper having been included in the target setting led to the situation where the Group’s result did not reach the set threshold level. Therefore, the total short-term incentives were cut by 50%. In accordance with the terms of the Solidium bridge financing facility with the Finnish State, President and CEO Markus Rauramo was not paid the short-term incentives earned in 2022. In case the short-term incentives had been paid, 50% of the total outcome would have been cut as the Group’s result did not reach the set threshold level.

Short-term incentives for 2023

In the STI 2023 plan, the weights of the set performance measures for the President and CEO were as follows: financial measure (CompOP) 50%, ESG measures (customer satisfaction and safety) 20% and joint Leadership Team/individual measures 30%.

The target scale for the Group comparable operating profit + share of profits of associates and joint ventures (CompOP) was set based on the exceptional market conditions and unprecedentedly high and volatile power prices seen in 2022. As market conditions totally changed and power prices clearly declined, the Group comparable operating profit did not reach the set threshold level. The Group’s financial results for 2023, however, reached a very good level due to the Generation segment’s strong financial and operational performance. Taking into account the volatile market prices, the transformation and reorganisation of the company and employees’ contribution and engagement during the year, the Board of Directors used their discretion right and decided to evaluate the achievement of the Group comparable operating profit to be at 45% resulting at weighted outcome of 22.5%.

The achievement of the customer satisfaction index target was 42.5%. Management safety leadership trainings resulted at maximum level and the achievement of actions accomplished as a part of the safety improvement plan was 78%. The weighted outcome of the customer satisfaction index target was 4.3% and safety measures was 8.9%.

In 2023, President and CEO Markus Rauramo had one joint Leadership Team measure and two individual performance measures. The joint Leadership Team targets consisted of successful return to the fixed income markets, progress in the Company transformation and set strategic projects. The individual targets related to concretisation and implementation of the new strategy and the operating model. The achievement of these joint Leadership Team and individual measures was 50% of the maximum and the weighted outcome was 15%.

In accordance with the terms of the Solidium bridge financing facility with the Finnish State, President and CEO Markus Rauramo will will not be paid the short-term incentives earned in 2023.

2020–2022 Long-term incentive plan

The performance measures for the 2020–2022 LTI plan were the relative TSR measured against a European utilities peer group (80% weight) and the ESG measure (20% weight). The ESG measure related to the reduction of Fortum’s CO2 emissions and the reduction of coal-based power generation capacity aligned with Fortum’s strategy.

In accordance with the terms of the Solidium bridge financing facility with the Finnish State, President and CEO Markus Rauramo is not paid any long-term incentives accumulated in 2022. Therefore, the maximum number of shares granted was pro-rated taking the remuneration restriction for the year 2022 into account. The achievement of the relative TSR was 0%. With regard to the ESG measure, the achievement was 70% and the weighted outcome was 14%, resulting in an overall outcome of 14% of the maximum for the 2020–2022 LTI plan. Taking into account the pro-ration, the final earning led to 9% of the original maximum number of shares granted. The LTI award for the 2020–2022 LTI plan was scheduled for payment in 2024. In May 2023, President and CEO Markus Rauramo decided to waive the LTI award for the 2020–2022 LTI plan, thus no LTI award will be paid to Markus Rauramo in the spring of 2024.

2021–2023 Long-term incentive plan

The performance measures for the 2021–2023 LTI plan were the relative TSR measured against a European utilities peer group (80% weight) and the ESG measure (20% weight), which was linked to the reduction of Fortum’s coal-based power generation capacity in line with Fortum’s coal-exit path, with a minimum level requiring the exceeding of the communicated ambition level. The relative TSR peer group consisted of the following companies: A2A S.p.A., BKW AG, CEZ a.s., Drax Group plc, EDP - Energias de Portugal S.A., Enagás S.A., Endesa S.A., Enel SpA, ENGIE SA, Eni S.p.A., Hera S.p.A., Iberdrola, S.A., Iren SpA., Naturgy Energy Group S.A., RWE Aktiengesellschaft, Snam S.p.A., SSE plc, Veolia Environnement S.A., VERBUND AG, and Ørsted A/S. Due to the divestment of Uniper in 2022, the Board of Directors resolved to adjust the ESG measure. Fortum’s reputation index among key stakeholders in Finland, Sweden and Norway was set as a new measure for the year 2023 with a 7% weight resulting in a change in the weight of the original measure for the period 2021–2022, thus being 13%.

The achievement of the relative TSR was 0%. Due to the divestment of Uniper in 2022, the achievement of the reduction of Fortum’s coal-based power generation capacity was no longer possible to evaluate in accordance with the original target setting, as the original target setting had been done for the combined coal capacity of the Fortum and Uniper fleet. Therefore, the Board of Directors resolved to evaluate the achievement at 50% (mid-point level) for the period 2021–2022 giving the weighted outcome of 7%. The set target of Fortum’s reputation index among key stakeholders in Finland, Sweden and Norway reached the achievement of 25% giving the weighted outcome of 2%. As a result, the overall outcome for the 2021–2023 LTI plan was 9% of the maximum.

In accordance with the terms of the Solidium bridge financing facility with the Finnish State, President and CEO Markus Rauramo is not paid any long-term incentives accumulated in 2022 and 2023. Therefore, the maximum number of shares granted was pro-rated taking the remuneration restrictions for the years 2022 and 2023 into account. Taking the pro-ration into account, the final earning led to 3% of the original maximum number of shares granted. The LTI award for the 2021–2023 LTI plan was scheduled for payment in 2024. In May 2023, President and CEO Markus Rauramo decided to waive the LTI award for the 2021–2023 LTI plan, thus no LTI award will be paid to Markus Rauramo in the spring of 2024.

Remuneration of other Fortum Leadership Team in 2023
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Remuneration of other Fortum Leadership Team (excl. the President and CEO) in 2019-2023

EUR thousand

2023

2022202120202019
Fixed compensation

3,369

3,4473,7273,1953,382
Supplementary pension

792

717513527586
Short-term incentives

68 1)

1,032478657631
Long-term incentives

862)

1,2232,2503,5982,360
Employee Share Savings plan

11 3)

----
Total remuneration

4,327

6,4196,9687,9776,958
Shareholding requirement is 100% of individual annual fixed compensation 

1) In accordance with the terms of the Solidium bridge financing facility with the Finnish State, the STI earned in 2022 and 2023 are not paid. The new FLT members who joined the Fortum Leadership Team as of 31 March 2023 were eligible for the short-term incentives accumulated in 2022 based on their previous roles in the company.  
2) The LTI award for the 2020–2022 and 2021–2023 LTI plans were scheduled for payment in 2024. In May 2023, the FLT members decided to waive the LTI awards for the 2020–2022 and the 2021–2023 LTI plans, thus no LTI awards will be paid in 2024. The amount stated in the table above includes the LTI award paid to the new FLT members who were eligible for the LTI award for the 2020–2022 LTI plan based on their previous roles in the company. These shares were delivered in March 2023 resulting in taxable income in April 2023. The amount includes also the RSP 2020–2022 award paid, based on the Executive agreement, to EVP, Sustainability and Corporate Relations in the spring of 2023.  
3) With regard to the 2020 Employee Share Savings plan, the FLT members (excl. the President and CEO) who were employed by the company in 2020 and were members of the Fortum Leadership Team in 2023 earned a total of 808 matching shares (gross) amounting to a gross award of EUR 11,474.

Fortum reorganised the Group’s operating model to drive the execution of the Group’s new strategy announced in March 2023. The new business structure and the revised Fortum Leadership Team (FLT – previously called the Fortum Executive Management) became effective at the end of March 2023. The former Fortum Executive Management consisted of 8 members, while the new Fortum Leadership Team consists of 11 members.

In accordance with the terms of the Solidium bridge financing facility with the Finnish State, the Fortum Leadership Team are not paid the short-term incentives earned in 2022 and 2023, and their salaries did not increase in 2022 (as of the signing date of the agreement) and 2023. Furthermore, the FLT members are not paid the long-term incentives accumulated in 2022 and 2023. Therefore, the maximum number of shares granted was pro-rated taking the remuneration restrictions for the years 2022 and 2023 into account. The achievement of the relative TSR for the 2020–2022 LTI plan was 0%. With regard to the ESG measure, the achievement was 70% and the weighted outcome was 14%, resulting in an overall outcome of 14% of the maximum for the 2020–2022 LTI plan. The achievement of the relative TSR for the 2021–2023 LTI plan was 0%. With regard to the ESG measure, the achievement of the climate related target was 50% and the set target of Fortum’s reputation index target reached the achievement of 25%. The weighted outcome of the ESG measure was 9% in total, resulting in an overall outcome of 9% of the maximum for the 2021–2023 LTI plan.

The LTI awards for the 2020–2022 and 2021–2023 LTI plans were scheduled for payment in 2024. In May 2023, the Fortum Leadership Team members decided to waive their LTI awards for the 2020–2022 and 2021–2023 LTI plans, thus no LTI awards will be paid to Leadership Team members in the spring of 2024. The new Leadership Team members who joined the Fortum Leadership Team as of 31 March 2023 were eligible for the LTI award for the 2020–2022 LTI plan as well as for the short-term incentives accumulated in 2022 based on their previous roles in the company.

The Leadership Team members (excl. the President and CEO) who were employed by the company in 2020 and were members of the Fortum Leadership Team in 2023 earned a total of 808 matching shares (gross) for the 2020 Employee Share Savings (ESS) plan. The delivery of the net number of the matching shares (479 shares in total) took place in March 2023. With regard to the 2021 ESS plan, the holding period of the purchased shares ended at the end of 2023. Based on the number of ESS shares held on 31 December 2023, seven of the current Leadership Team members (excl. the President and CEO) who were employed by the company in 2021 earned a total of 810 matching shares (gross) at the maximum. The matching share amount (gross) will be confirmed and the delivery of the net number of the matching shares will take place in the spring of 2024. Due to the restrictions regarding management remuneration as a part of the terms of the Solidium bridge financing facility with the Finnish State, Fortum concluded that the Fortum Leadership Team would not participate in the 2023 ESS plan (excl. the new Leadership Team members who joined the FLT as of 31 March 2023).

Information on incentive plans

The Group-level metrics and outcomes of the short-term incentive plans 2022 and 2023 are described on Fortum Remuneration 2023 on page 8.

Due to the remuneration restrictions set for the Fortum Leadership Team based on the Solidium bridge financing facility, the FLT members will not be paid short- or long-term incentives that were accumulated in 2022 and 2023. In the short-term incentive (STI) plan 2023 for personnel, the target scale for the Group comparable operating profit was set based on the exceptional market conditions and unprecedentedly high and volatile power prices seen in 2022. As market conditions totally changed and power prices clearly declined, the Group comparable operating profit did not reach the set threshold level. The Group’s financial results for 2023, however, reached a very good level due to the Generation segment’s strong financial and operational performance. Taking into account the volatile market prices, the transformation and reorganisation of the company and employees’ contribution and engagement during the year, the Board of Directors used their discretion right and decided to evaluate the achievement of the Group comparable operating profit and other alternative financial targets to be at 45%.

For 2024, the STI performance measures comprise the Group’s financial, operational, customer and safety measures as well as business/function specific measures and/or team/ individual measures. The financial performance measure consists of the Group’s comparable operating profit (30% weight) and group fixed costs (10% weight). The operational measure (10% weight) is based on the availability of the production fleet and the customer measure on the net promoter score, NPS (10% weight). The safety measure consists of safety actions (10% weight). The business/function specific measures and/or team/individual measures are set taking the business/function priorities and employees’ roles and responsibilities into account (30% weight).

Fortum’s LTI programme consists of the annually commencing LTI plans with a three- year performance period. The relative TSR measured against a peer group of European  
utilities has been the financial measure in the LTI programme since 2019. Fortum introduced an ESG-related measure as part of the LTI target setting for the first time in the 2020–2022 LTI plan.

In the 2021–2023 LTI plan, the set ESG measure was linked to the reduction of Fortum’s coal-based power generation capacity in line with Fortum’s coal exit path, with a minimum level requiring the exceeding of the communicated ambition level. The relative TSR remained as a measure in the LTI plan, and selected gas companies were added to the existing peer group comprising selected European utility companies. Due to the divestment of Uniper in 2022, the ESG measure was adjusted in early 2023 in such a way that the original measure was evaluated regarding the period 2021–2022, and Fortum’s reputation index among key stakeholders in Finland, Sweden and Norway was set as a measure for the year 2023.

In the 2022–2024 LTI plan, the ESG measure was related to the reduction of the absolute CO2 emissions in the European fossil fleet, based on a fossil fleet review addressing the Group’s European generation portfolio and a pathway developed to reach Fortum Group’s 2030 and 2035 climate targets. The relative TSR measured against a peer group consisting of European utilities and gas companies also remained as a measure in the plan. Due to the divestment of Uniper in 2022, the ESG measure was revised in early 2023. The revised climate target for 2022–2024 for Fortum is related to the reduction of the absolute CO2 emissions of the company in Europe, i.e., including also Fortum Recycling and Waste.

In the 2023–2025 LTI plan, the ESG measure is linked to emission reduction targets based on climate science (SBTi 1.5°C) and related to emissions in Europe and to Fortum’s reputation index development among key stakeholders. The relative TSR measured against a peer group of European utilities remained as a measure in the plan but due to the divestment of Uniper and Fortum’s renewed strategy, changes were made to the companies included in the peer group to better match Fortum.

In the 2024–2026 LTI plan, the performance measures consist of financial, customer related and ESG measures. The relative TSR measured against a peer group of European utilities is set for the financial measure. The relative TSR peer group is the same as in the 2023–2025 LTI plan and consists of the following companies: A2A S.p.A., Acciona energías renovables, BKW AG, Centrica plc, CEZ, a.s., Drax Group plc, Encavis AG, EDP - Energias de Portugal, S.A., EDP Renováveis, S.A., Endesa, S.A., Enel SpA, ENGIE SA, E.ON SE, Hera S.p.A., Iberdrola, S.A., Iren SpA., Naturgy Energy Group, S.A., RWE Aktiengesellschaft, SSE plc, Veolia Environnement S.A., VERBUND AG and Ørsted A/S. The customer related measure is based on the increase in the share of long-term customer power purchasing agreements (PPA) as part of hedging. The ESG measures are based on the development of a pipeline of renewable energy to respond to future demand-driven growth and emission reduction targets aligned with SBTi.

In April 2023, the Russian authorities seized control of Fortum’s assets in Russia and Fortum lost control of PAO Fortum, which triggered full impairments and deconsolidation of the company’s Russian assets in the second quarter of 2023. Russia is not included in the target setting regarding the ongoing incentive plans.

Since 2020, Fortum has also had a restricted share plan (RSP) as a supplement to the LTI programme. In the RSP, a maximum number of shares can be allocated for a threeyear plan period in accordance with the customary LTI plan, but the plan is excluded from the performance targets. On 31 December 2023, the amount of shares allocated was 13,500 in the RSP 2021–2023, 34,800 in the RSP 2022–2024 and 37,300 in the RSP 2023–2025. The delivery of the RSP 2021–2023 award is expected to take place in the spring of 2024.

LTI Plan

2020-2022

2021-2023

2022-2024

2023-2025

2024-2026

Performance period

2020-2022

2021-2023

2022-2024

2023-2025

2024-2026

Share delivery year

2023  
20241)

20241)

2025

2026

2027

Performance measures

Relative TSR 80%  
ESG 20%

Relative TSR 80%  
ESG 20%

Relative TSR 80%  
ESG 20%

Relative TSR 70%  
ESG 30%

Relative TSR 50%  
Customer related measure 20 %  
ESG 30%

Outcome of the plan

14%

9%

 

 

 

Max. no of shares granted (gross)

410,488

317,0002)

342,5972)

713,6142)

6)

No of shares forfeited

119,2043)

4)

 

 

 

No of shares earned (gross)

39,890

4)

 

 

 

No of participants (at delivery)

88

4)

 

 

 

Grant date

28 Feb 2020

28 Feb 2021

28 Feb 2022

31 Aug 2023  
30 Nov 20235)

6)

Share price at grant, EUR

19.28

20.69

18.84

12.40  
12.895)

6)

Share delivery date

9 March 2023

4)

 

 

 

Share price at delivery, EUR

14.34

4)

 

 

 

1) Due to the restrictions regarding management remuneration, the LTI award for the Fortum Leadership Team members for the 2020–2022 LTI plan was scheduled for payment in 2024. In May 2023, the Fortum Leadership Team members decided to waive their LTI awards for the 2020–2022 and 2021–2023 LTI plans. Therefore, no LTI awards will be paid to the Leadership Team members in the spring of 2024. The new Leadership Team members who joined the Fortum Leadership Team as of 31 March 2023 were eligible for the LTI award for the 2020–2022 LTI plan based on their previous roles in the company.  
2) The number of shares granted presents the situation as on 31 December 2023 (i.e. the remuneration restrictions regarding the FLT members in 2022 and 2023 have been taken into account). Regarding the 2021–2023 LTI plan the number of shares granted takes also into account the LTI awards waived by the FLT members.  
3) The number of shares forfeited includes granted shares lost due to the termination of the employment after 31 December 2022 as well as granted shares waived by the Leadership Team members (excl. the new Leadership Team members who were eligible for LTI award for the 2020–2022 LTI plan based on their previous roles in the company).  
4) The share delivery will take place after the publication of the Remuneration Report 2023.  
5) The shares of the 2023–2025 LTI plan were granted in deviation from the schedule of the previous years due to the preparations related to the new organisation.  
6) The planned grant date of the 2024–2026 LTI plan is 29 February 2024.

In 2023, due to the reorganisation of Fortum’s operating structure, businesses and enabling functions, the timeline for the LTI allocations deviated from the normal annual timeline. The first phase was completed at the end of August, and the allocation process was finalised by the end of November. In accordance with the terms of the management remuneration restrictions in the Solidium financing facility from 2022, the maximum share allocation to the FLT members was pro-rated. The maximum number of shares granted (gross) to the FLT members (excl. the President and CEO) was 232,000 shares and the pro-rated number 154,744 shares. The outcome of the 2023–2025 LTI plan will be confirmed in the spring of 2026.

The FLT members are required to build up and maintain a holding in Fortum shares equivalent to 100% of their gross fixed compensation. 50% of the net shares (after-tax) received at each vesting of share-based remuneration must be retained until a shareholding of 100% of gross fixed compensation is met.

Number of shares delivered (net) to the Fortum Leadership Team

LTI Plan

PSP 2020-2022

RSP 2020-2022

PSP 2021-2023

Shares owned  
31 Dec 2023

Nebahat Albayrak, Executive Vice President, Sustainability and Corporate Relations

1)

2,6773)

1)

3,438

Eveliina Dahl, Executive Vice President, People and Procurement

1)

 

1)

2,859

Bernhard Günther, Chief Transformation Officer

1)

 

1)

767

Mikael Lemström, Executive Vice President, Hydro Generation

2)

 

1)

15,021

Petra Lundström, Executive Vice President, Nuclear Generation

2)

 

1)

13,617

Simon-Erik Ollus, Executive Vice President, Corporate Customers and Markets

1)

 

1)

6,838

Markus Rauramo, President and CEO

1)

 

1)

115,162

Mikael Rönnblad, Executive Vice President, Consumer Solutions 

1)

 

1)

20,685

Nora Steiner-Forsberg, Executive Vice President, Legal, General Counsel

1)

 

1)

1,615

Peter Strannegård, Executive Vice President, Renewables and Decarbonisation

2)

 

1)

3,292

Tiina Tuomela, Chief Financial Officer

2)

 

1)

40,169

Total

-

2,677

-

223,463

Former Fortum Executive Management members

 

 

 

 

Per Langer, Executive Vice President, City Solutions 

4)

 

4)

-

Total

-

 

-

-

1) In May 2023, the Fortum Leadership Team members decided to waive their LTI awards for the 2020–2022 and 2021–2023 LTI plans. Therefore, no shares will be delivered to the Leadership Team members in 2024.  
2) The LTI award for the 2020–2022 LTI plan was paid to the new Fortum Leadership Team members who joined the Fortum Leadership Team as of 31 March 2023 and were eligible for the LTI award for the 2020–2022 LTI plan based on their previous roles in the company. These shares were delivered in March 2023 resulting in taxable income in April 2023.  
3) Nebahat Albayrak participated in the restricted share plan (RSP) 2020–2022. A total of 2,677 shares (net) were delivered to her in March 2023 based on the Executive agreement.  
4) Per Langer stepped down from the Fortum Executive Management as of 30 March 2023.

Pensions
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Members of Fortum Leadership Team in Finland participate in the Finnish TyEL pension system, which provides for a retirement benefit based on earnings in accordance with the prescribed statutory system. In the Finnish pension system earnings are based on base pay, annual bonuses, and taxable fringe benefits, but gains realised from the LTI plans are not included.

In addition to the statutory pensions, the members of the Fortum Leadership Team have supplementary pension arrangements. The Group principle is that all new supplementary pension arrangements for the President and CEO as well as the Fortum Leadership Team are defined contribution plans.

Regarding the present Fortum Leadership Team valid as of 31 March, 2023, the retirement age is typically determined in accordance with the local legislation, in Finland in accordance with the Finnish Employees’ Pension Act. This applies also to the President and CEO. Additionally, for three executives the retirement age is 63. In Finland Fortum Leadership Team members (excl. two executives who are in the Fortum Pension Fund) have supplementary defined contribution pension plan. The premium of the supplementary defined contribution pension plan is 20% of the annual base salary. If executive’s contract is terminated before the retirement age, the executive who has the supplementary defined contribution pension plan is entitled to retain the funds that have accrued in the pension arrangement up to that time.

Members of the Fortum Leadership Team outside Finland participate in pension systems based on statutory pension arrangements and market practices in their local countries.

Incentive schemes
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Short-term incentives (STI)

Fortum’s STI programme is designed to support the achievement of the Group’s annual financial, strategic and sustainability targets. As the main principle, all employees are covered by the programme or alternatively by a business-specific or a comparable local variable pay arrangement.

The performance measures, weightings and targets for the selected measures for Leadership Team are set annually by the Board of Directors. Performance measures can vary from year to year to reflect the business priorities, and they typically include a balance of Group’s financial, environmental, social and governance, as well as joint Leadership Team/individual strategic performance measures. The maximum STI is limited to 40% of the annual fixed compensation. The Board of Directors regularly reviews the performance of the President and CEO and other Fortum Leadership Team members.

Remuneration of other personnel is based on the targets of Group, unit or function and individual and team targets. Targets are set in Development Discussions held at the beginning of the year. Rewards for short-term incentive programmes are paid in cash.

In addition to the short-term incentive programme, other variable reward mechanisms can be used in limited, precisely defined cases. Such mechanisms can be, for example, project and recognition fees.

Long-term incentives (LTI)

The purpose of Fortum’s long-term incentive programme is to support the delivery of sustainable long-term performance, align the interests of management with those of shareholders, and support in committing and retaining key individuals.

Fortum’s LTI programme provides participants with the opportunity to earn company shares. Under the LTI programme and subject to the decision of the Board of Directors, a new LTI plan commences annually.

The Board of Directors approves the participation of the Fortum Leadership Team members in each annually commencing LTI plan. Subject to a decision by the Board of Directors the President and CEO is authorised to decide on individual participants and potential maximum awards for other participants than the Fortum Leadership Team in accordance with the nomination guidelines approved by the Board of Directors. Participation in the LTI plan precludes the individual from being a member in the Fortum Personnel Fund.

Fortum’s LTI programme consists of annually commencing individual plans with a three-year performance period. Performance measures, weightings, and targets for these selected measures are set by the Board of Directors to ensure that they continue to support the company strategy. Performance measures typically include financial, share price-related, and sustainability measures and may also include other strategic measures. Following the end of the performance period the Board of Directors reviews the performance and determines the extent to which each of the targets has been achieved, in order to determine the final pay-out level. The LTI is allocated based on a maximum number of shares.

Since 2020, Fortum has also had a restricted share plan (RSP) as a supplement to the LTI programme. In the RSP, a maximum number of shares can be allocated for a three year plan period in accordance with the customary LTI plan, but the plan is excluded from the performance targets.

More detailed information of the LTI plans is available on this page under "Remuneration of the other Leadership Team members".

Employee Share Savings programme – forShares

The objective of Fortum’s Employee Share Savings programme, forShares, is to motivate employees to invest in Fortum shares and retain ownership in the company. The programme consists of annually commencing savings periods, and the annual launch of each period is separately resolved by the Board of Directors. The participants of the ESS programme will invest a part of their monthly salary, and based on this investment they will, as a gross reward, be granted matching shares for the purchased savings shares after approximately three years from the beginning of the respective savings period.

Based on the decision by the Board of Directors, the matching ratio for the 2023 and 2024 savings periods is 2:1. The employee participation rate in the 2023 savings period as well as in the 2024 was 35% of the eligible employees.

Due to the restrictions regarding management remuneration as a part of the terms of the Solidium bridge financing facility with the Finnish State, Fortum concluded that the Fortum Leadership Team would not participate in the 2023 ESS plan (excl. the new Leadership Team members who joined the Fortum Leadership Team as of 31 March 2023).

The holding period for the shares purchased under the 2021 ESS plan ended at the end of 2023. The participants have earned matching shares (gross) according to the terms and conditions of the programme. The matching ratio for the 2021 savings period was 2:1. The delivery of the net number of the matching shares will take place in the spring of 2024.

Fortum Personnel Fund

Fortum employees in Finland, who do not participate in the long-term incentive programme are eligible for the Fortum Personnel Fund. The amount paid annually to the Personnel Fund is based on the achievement of the annual targets. The payments to the fund in 2023 totalled EUR 0.0 million (EUR 4.3 million in 2022).

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