Terrafame's salary and remuneration report

In its remuneration, Terrafame Ltd (“Terrafame” or “the company”) abides by the guidelines and principles of the Government Resolution on State Ownership Policy of 13 May 2016. The management of Terrafame Ltd consists of a Board of Directors and an Executive Team.

The Annual General Meeting of Terrafame Ltd decides annually on the remuneration payable to Board members. The Board of Directors decides on the remuneration payable to the Executive Team. In 2017, Terrafame Ltd did not use the services of any external advisors for preparations related to remuneration.    

Remuneration payable to the Board of Directors and other benefits

Remuneration payable to the Board and its Committee members are paid in cash. Board members have no share incentive plans or share-based compensation plans. They are also excluded from the company's other remuneration or pension plans.

As of 14 August 2015, the Chairman's fee has been EUR 72,000 per year and the meeting fee is EUR 600 per meeting. Since the same date, fees payable to other Board members have been EUR 36,000 per year and the meeting fee has been EUR 600.

In 2017, the company did not pay annual or meeting fees or reimburse costs for those members of the Board of Directors who have ties to shareholders in the Company.

Board members were paid a total of EUR 165,000 in monthly and meeting fees in 2017. Fees were paid as follows:

 

Member Attendance of Board meetings Monthly fees in 2017, EUR Meeting fees in 2017, EUR Total remuneration in 2017, EUR
Lauri Ratia 12/12 72,000 7,200 79,200
Esa Lager 11/12 36,000 6,600 42,600
Tuomo Mäkelä 12/12 36,000 7,200 43,200
Matti Hietanen 11/11 0 0 0
Emmanuel Henry 11/11 0 0 0
Jesus Fernandez 10/11 0 0 0
Total   144,000 21,000 165,000

Consultation fees for related parties

At the beginning of the period, Terrafame Group Ltd, the parent company of Terrafame Ltd, purchased consultation services from a company owned by parties related to Lauri Ratia, the Chairman of the Board of Directors of Terrafame Ltd. The consultation services purchased concerned Terrafame’s ownership and financing arrangements in particular.

During 2017, on the basis of a consultation agreement, EUR 50,000 in fees were paid to a firm owned by parties related to Lauri Ratia. The expert services were priced at current value. No consultation services were purchased from companies owned by other members of the Board of Directors or their related parties in 2017.

Salary, remuneration and other benefits of the Executive Team

Details on the CEO’s terms of employment

Joni Lukkaroinen served as the CEO of Terrafame Ltd in 2017. The retirement age of the CEO is 63, and the pension is determined in accordance with the Employees' Pensions Act (TyEL). No supplementary pension arrangements have been made for the CEO.

The CEO's period of notice is six months. If the CEO is given notice by the employer, he shall be paid the equivalent of six months’ salary in addition to his salary paid during the severance period. No other compensation is payable in relation to the termination of the CEO’s employment contract.

Remuneration of the CEO and other members of the Executive Team

Salaries paid to the CEO and other Executive Team members in 2017 were based on fixed monthly salaries. Aside from telephone and internet service benefits, the Executive Team members had no fringe benefits, or any defined contribution or other additional pension insurance plan, during 2017.

Salaries and remunerations paid to Terrafame Ltd's Executive Team in 2017 amounted to EUR 1,537,152. Of this, the CEO was paid EUR 341,045.

In 2017, Terrafame operated a performance-based bonus scheme for members of the Executive Team and other key personnel. The bonus scheme, and the related principles and performance indicators, are determined by the Board of Directors of Terrafame Ltd, which also monitors the fulfilment of the targets on whose basis bonuses are awarded. The production and financial performance of Terrafame, and the company’s safety-related goals, serve as indicators for the bonus scheme. In addition, an individual target has been set for each person belonging to the bonus scheme. The targets for the bonus scheme are set so that their achievement supports the long-term development and success of the company in a fundamental manner.

The maximum performance bonus for the CEO is equivalent to 40 percent of his annual salary. The maximum performance bonus for members of the Executive Team is equivalent to three months’ salary. For other personnel covered by the performance bonus scheme, the maximum performance bonus is equivalent to two months’ salary.

During the spring 2018, members of the Executive Team were paid a total of EUR 134,985 in performance bonuses for 2017, which is equivalent to 9.3 percent of their salaries for 2017. Of this sum, the CEO was paid EUR 42,165, which is equivalent to 13.6 percent of the CEO’s salary.

Terrafame has no incentive schemes for its Executive Team or other key employees, aside from its performance-based bonus scheme.

Remuneration of other personnel

Salaries and remunerations paid to personnel in 2017 totalled EUR 30.5 million. Salary payment complied with the terms and conditions of the collective agreements of each personnel group.

All personnel have been covered by the safety bonus plan since November 2015. The safety bonus is paid if no lost time injuries occur in the following functions: 1) mining and materials handling, 2) bioleaching and metals production plant, and 3) maintenance and office. Safety bonuses of EUR 732,533 were paid in 2017.

A production bonus scheme was introduced for all personnel in July 2017. The bonus is paid on a monthly basis if the production targets for ore and nickel are met. Production bonuses of EUR 86,850 were paid in 2017.

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