Remuneration

The Annual General Meeting (AGM) decides on the remuneration of the Board of Directors. Upon the recommendation of the Board’s Remuneration and HR Committee, the Board submits the Remuneration Policy (at least within every 4 years) and Remuneration Report (annually) to the AGM. The Board decides on the remuneration of the President and CEO within the confines of the Remuneration Policy, and on the remuneration of the other Management Group members based on the President and CEO’s proposal.

In determining the remuneration, Vaisala takes into account its financial performance, employees’ knowledge and performance in their job, job grading and external remuneration references at relevant markets. Remuneration of the President and CEO follows the same principles and takes into account the special role of the position in the formation and implementation of the business strategy of the company and in achieving short- and long-term financial results.

Vaisala Remuneration Policy
Vaisala Remuneration Report 2020

Remuneration of the Board of Directors

Remuneration of the members of the Board of Directors consists of an annual fee and a meeting fee. The members of the Board do not participate in incentive or retirement plans of the company. The Annual General Meeting held in June 2020 confirmed that that the annual remuneration payable to the Chairman of the Board of Directors is EUR 45,000 and each Board member EUR 35,000 per year. Approximately 40% of the annual remuneration will be paid in Vaisala Corporation’s series A shares acquired from the market and the rest in cash. No special terms or conditions are associated with the share ownership. In addition, the Annual General Meeting confirmed that the meeting fee for the Chairman of the Audit Committee would be EUR 1,500 per attended meeting and EUR 1,000 for each member of the Audit Committee and Chairman and each member of the Remuneration and HR Committee and any other committee established by the Board of Directors for a term until the close of the Annual General Meeting in 2021. The meeting fees are paid in cash.

Remuneration of the President and CEO

Information on the President and CEO Kai Öistämö’s current remuneration is provided in the table below.

Remuneration of the President and CEO  
Salary The fixed total salary, including base salary and fringe benefits, of the President and CEO is EUR 38,000 per month. He is entitled to vacation allowance as well.
Short-term incentives The President and CEO is entitled to participate in short-term incentive (STI) plan. STI is based on predefined performance criteria, which are Vaisala EBITA and Vaisala Net Sales development. The maximum STI payment is 72% of annual salary. Potential reward will be paid in March 2022.
Share-based incentives The President and CEO is entitled to participate in Performance Share Plan 2021-2023. The plan is based on predefined performance criteria, which are the Total Shareholder Return (TSR) of Vaisala’s share and operating profit during the performance period. The maximum number of reward shares is 23,100. The potential rewards will be paid partly in the company’s shares and partly in cash in 2024. The reward is conditional to continued employment in Vaisala.
Special award The President & CEO's service contract includes a special award related to its entry into force. He is entitled to subscribe for 8000 shares in April 2021 and 4000 in April 2022. The reward is conditional to continued service in Vaisala.
Shareholding requirement The President and CEO is required to build up and hold the reward shares received from the share-based incentive plans so that his total shareholding in Vaisala corresponds to at least the annual gross base salary.
Supplementary pension The President and CEO is entitled to participate in a supplementary defined contribution pension plan with an annual fee corresponding to three month’s base salary. The President and CEO’s retirement age is 62 years.
Termination of agreement The notice period for both parties is six months. If the company terminates the agreement, there is an additional severance pay equaling six times the monthly salary. 

 

Remuneration of the other Management Group members

The Board of Directors decides on the remuneration of the other Management Group members based on the President and CEO’s proposal and Vaisala's remuneration strategy and principles. Overall remuneration of the Management Group members consists of a monthly total salary (including base salary and customary fringe benefits), pension plan, and short-term incentive (STI) plan as well as share-based incentive plan. Information on the current remuneration is provided in the table below.

Remuneration of the other Management Group members

 
Short-term incentives Management Group members are entitled to participate in short-term incentive (STI) plan. STI is based on predefined performance criteria, which are Vaisala EBITA and Vaisala Net Sales development as well as unit based performance metrics depending on the position. The maximum STI payment is 60% of annual salary. Potential reward will be paid in March 2021.
Share-based incentives Management Group members are entitled to participate in Performance Share Plan 2020-2022. The plan is based on predefined performance criteria, which are the Total Shareholder Return (TSR) of Vaisala’s share and operating profit during the performance period. The maximum number of reward shares varies from 5,500 to 15,400 depending on role. The potential rewards will be paid partly in the company’s shares and partly in cash in 2023. The reward is conditional to continued employment in Vaisala. 
Shareholding requirement Each Management Group member is required to build up and hold the reward shares received from the share-based incentive plans so that the total shareholding in Vaisala corresponds to the member’s annual gross base salary.
Supplementary pension Management Group members are entitled to participate in a supplementary defined contribution pension plan with an annual fee corresponding to two to three month’s base salary depending on role. The plan defines the optional retirement age as 62 years.
Termination of agreement Notice period for the Management Group members is three to six months for both parties depending on role. 

 

Remuneration paid to other Management Group members during 2020 (in aggregate):

EUR 1,000

Total
Salary 1424
Short term incentives 805
Share-based payment 2606
Supplementary pension 245
Total 5079

 

Share-base​d incentive plans

The share issue without payment approved by Vaisala’s Annual General Meeting on April 10, 2018 doubled the total number of series K andm A shares. All share-related figures have been adjusted to reflect the increased number of shares. Until the end of 2017, the cost of the share part of the share-based payments corresponded to the value of Vaisala’s series A share closing price on the grant date of the incentive plan, and the cash-settled part of the share-based payments was valued at the closing price of the share. As of January 1, 2018, the cost of the share part as well as the cash-settled (cash) part of the share-based payments correspond to the value of Vaisala’s series A share closing price on the grant date of the incentive plan less expected discounted dividends.

On December 16, 2015, the Board of Directors resolved for the group key employees a share-based incentive plan that was based on the development of group’s profitability in calendar year 2016. The reward payment corresponded to 49% of the maximum target. On March 5, 2019, a total of 88,452 company’s series A shares were conveyed without consideration to the 30 key employees participating in this incentive plan. The rest of the reward was paid in cash. Closing price of Vaisala’s series A share was EUR 11.57 on the grant date of the incentive plan. A total expense of this plan of EUR 2.3 million was recorded for 2016–2019.

On February 10, 2016, the Board of Directors resolved for a share-based incentive plan, in which the earning criteria was uninterrupted employment of certain group employees for a defined number of years. This share-based incentive plan ended in March 2018, and the remaining reward, corresponding to 3,000 Vaisala’s series A shares including the cash portion, was conveyed without consideration to the key employees participating in this incentive plan. A total expense of this plan of EUR 0.3 million was recorded for 2016–2018.

On December 15, 2016, the Board of Directors resolved for the group key employees a share-based incentive plan that was based on the development of group’s profitability in calendar year 2017. The reward payment corresponded to 65% of the maximum target. On March 3, 2020, a total of 118,950 company’s series A shares were conveyed without consideration to 33 key employees participating in this incentive plan. The rest of the reward was paid in cash. In addition, on June 28, 2019, a total reward of 1,734 Vaisala’s series A shares was conveyed without consideration to a key employee who participated in this incentive plan and the other half of the reward was paid in cash. Closing price of Vaisala’s series A share was EUR 17.90 on the grant date of the incentive plan. A total expense of this plan of EUR 4.2 million was recorded for 2017–2020.

On February 7, 2018, the Board of Directors resolved for the group key employees a share-based incentive plan that was based on the development of group’s profitability in calendar year 2018. The reward will be paid partly in Vaisala’s series A shares and partly in cash in spring 2021. The cash proportion will cover taxes and tax-related costs arising from the reward to a key employee. The maximum amount of this plan originally corresponded to 320,000 series A shares, and the reward payment will correspond to 55% of the maximum target. No reward will be paid if a key employee’s employment or service ends before the reward payment date. The expenses of this share-based incentive plan are accrued over the term of the plan from April 2018 to March 2021. Closing price of Vaisala’s series A share was EUR 22.10 on the grant date of the incentive plan. On December 31, 2020, this sharebased incentive plan was directed to 27 persons and the maximum reward payable totals to 166,200 Vaisala’s series A shares, including the cash portion. On the grant date October 1, 2020, a total of 8,000 series A shares were directed to Kai Öistämö, President and CEO, and the earning criteria for these shares is uninterrupted service until the payment date. On June 28, 2019, a total reward of 461 Vaisala’s series A shares was conveyed without consideration to a key employee who participated in this incentive plan and the other half of the reward was paid in cash.

On February 12, 2019, the Board of Directors resolved for approximately 45 group key employees a share-based incentive plan that is based on the development of the total shareholder return (TSR) and profitability in 2019–2021. The reward will be paid partly in Vaisala’s series A shares and partly in cash in spring 2022. The cash proportion will cover taxes and tax-related costs arising from the reward to a key employee. The maximum amount of this plan originally corresponded to 330,000 series A shares. No reward will be paid if a key employee’s employment or service ends before the reward payment date. In addition, Vaisala’s Board of Directors requires that the President and CEO and each member of the Management Group retains his/her ownership of shares received under this plan until the value of his/her ownership in Vaisala corresponds to at least his/her annual gross base salary. The expenses of this share-based incentive plan are accrued over the term of the plan from April 2019 to March 2022. Closing price of Vaisala’s series A share was EUR 19.06 on the grant date of the
incentive plan. On December 31, 2020, this share-based incentive plan was directed to 44 persons. On the grant date October 1, 2020, a total of 4,000 series A shares were directed to Kai Öistämö, President and CEO, and the earning criteria for these shares is uninterrupted service until the payment date.

On February 12, 2020, the Board of Directors resolved for approximately 45 group key employees a share-based incentive plan that is based on the development of the total shareholder return (TSR) and profitability in 2020–2022. The reward will be paid partly in Vaisala’s series A shares and partly in cash in spring 2023. The cash proportion will cover taxes and tax-related costs arising from the reward to a key employee. The maximum amount of this plan originally corresponded to 240,000 series A shares. No reward will be paid if a key employee’s employment or service ends before the reward payment date. In addition, Vaisala’s Board of Directors requires that the President and CEO and each member of the Management Group
retains his/her ownership of shares received under this plan until the value of his/her ownership in Vaisala corresponds to at least his/her annual gross base salary. The expenses of this share-based incentive plan are accrued over the term of the plan from May 2020 to March 2023. Closing price of Vaisala’s series A share was EUR 28.65 on the grant date of the incentive plan. On December 31, 2020, this sharebased incentive plan was directed to 48 persons, including a total of 21,375 series A shares directed to Kai Öistämö, President and CEO, on the grant date October 1, 2020.

On December 17, 2020, the Board of Directors resolved for approximately 40 group key employees a share-based incentive plan that is based on the development of the total shareholder return (TSR) and profitability in 2021–2023. The reward will be paid partly in Vaisala’s series A shares and partly in cash in spring 2024. The cash proportion will cover taxes and tax-related costs arising from the reward to a key employee. The maximum amount of this plan originally corresponded to 180,000 series A shares. No reward will be paid if a key employee’s employment or service ends before the reward payment date. In addition, Vaisala’s Board of Directors requires that the President and CEO and each member of the Management Group retains his/her ownership of shares received under this plan until the value of his/her ownership in Vaisala corresponds to at least his/her annual gross base salary.

Expenses for the share-based incentive plans

EUR million 2016 2017 2018 2019 2020
Share-based incentive plans 2016 0.7 1.2 0.6 0.2  
Share-based incentive plan 2017   1.1 1.3 1.5 0.3
Share-based incentive plan 2018     0.6 1.2 1.5
Share-based incentive plan 2019       0.6 1.6
Share-based incentive plan 2020         0.6


Annual report 2020