Remuneration

Remuneration of the Board and its Committees and remuneration of the Nomination Board

The Annual General Meeting decided on March 18, 2021 that the members of the Board of Directors be paid the following fixed annual fees for term of office ending at the conclusion of the next Annual General Meeting:

• Chairman of the Board: EUR 100,000
• Vice Chairman and Chairmen of the permanent Committees: EUR 70,000, unless the same person is Chairman of the Board or Vice Chairman of the Board
• members EUR 50,000
  
  

In addition, it was decided that the award and payment of the fixed annual fee be contingent on the Board members committing to purchasing directly, based on the resolution of the Annual General Meeting, YIT Corporation shares amounting to 40% of the fixed annual fee from a regulated market (Nasdaq Helsinki Ltd) at a price determined by public trading, and that the shares in question be purchased directly on behalf of the Board members. The shares shall be purchased within two weeks of the publication of the interim report for the period January 1–March 31, 2021.

In addition to the fixed annual fee, the Board and its permanent and temporarily appointed committee member living in Finland be paid a meeting fee of EUR 800 per meeting and a member living elsewhere in Europe be paid EUR 2,000. The chairmen of the permanent and temporarily appointed committees be paid a meeting fee of EUR 1,600 per meeting.

Per diems are paid for trips in Finland and abroad in accordance with YIT Corporation’s and tax authorities’ travelling compensation regulations.

The members of the Shareholders’ Nomination Board, including the expert member, will be paid a meeting fee of EUR 800 per a Board meeting and the Chairman be paid EUR 1,600 per a Board meeting.

Read more about remuneration to the Board and Committees in the Remuneration Report 2020

The Board of Directors decides on the remuneration, benefits and other terms of the service contract of the YIT Group President and CEO. Same remuneration components form the total remuneration also for Deputy to President and CEO.

Main components of the President and CEO’s total remuneration are

• Annual salary and benefits
• Annual short-term incentives
  The Board of Directors confirms annually the plan rules according to which the rewards can be paid. The bonuses paid are determined on the basis of the realization of the Group’s financial result and the attainment of profitability, growth and development targets. The maximum annual performance bonus paid to the President and CEO may equal 70 % of his annual remuneration (salary and fringe benefits).
• Long-term incentives
  Plan 2017-2019 consisted of earning periods of one year that were followed by a two-year commitment period. Key indicator was Return on investment (2017: ROI, 2018 and 2019: ROCE). An additional target related to the Group’s net promoter score (NPS) was set for 2017, 2018 and 2019. The reward will not be paid if the targets are not achieved or if the employment ends before the reward is paid.
  
• Supplementary pension
  The pension scheme is a defined contribution (DC) pension scheme. The payment is 20 % of the fixed annual salary.
  
  

Other terms of the President and CEO's Service Contract

The terms of the President and CEO's service shall be specified in writing in the President and CEO's service contract, which shall be approved by the Board of Directors. The President and CEO's service contract shall also specify the financial benefits of the service, including the President and CEO's severance package and any other compensation. 

Read more about President and CEO's remuneration in the Remuneration Report 2020

Remuneration of Group Management Team members consists of fixed salary, fringe benefits such as car, phone and meal benefit, annual short-term bonus payment and long-term plans such as long-term incentive plan and pension benefits.

Decision-making regarding remuneration

YIT Corporation’s Annual General Meeting decides on the fees for the Board of Directors. The Board of Directors decides on the salary and fees and other terms of employment of the CEO and other key Group employees, such as the members of the Group’s Management Team. In addition, the Board of Directors decides annually both short and long-term indicators for management remuneration and the target values for the indicators which are designed to support the achievement of the strategic goals. On the basis of the President and CEO’s proposal, the Board of Directors also decides on the amount of fees and whether the indicator-based goals have been reached.

The task of the Personnel Committee is to assist the Board in matters related to appointing and rewarding key personnel. The Personnel Committee prepares proposals for the development of the Group's corporate culture and HR policy, remuneration and incentive schemes, the rules for performance-based bonuses and the proposals for performance-based bonuses paid to the management. In addition, identifying talents, the development of key personnel and planning for management successors fall under the preparation responsibility of the Committee.

Summary of Group Management Team remuneration

* Awards earned from YIT LTIP 2017-2019 scheme’s 2017 earning period were paid 8 May 2020. Awards earned from Lemminkäinen 2016-2018 scheme’s 2016 earning period were paid 10 September 2020.

Group Managment Team Annual STIP metrics

Pension, retirement age and termination compensation

Group Management Team`s pension scheme is defined contribution-based and the amount of the payment is 20 per cent of the fixed annual base salary. Group Management Team members are entitled to retire at the age of 63. The supplementary pension arrangements do not apply for interim members of the Group Management Team.

The period of notice for the members of the Group Management Team is 6–12 months. Some members of the Group Management Team also have the contractual right to be paid severance payments amounting to six months’ salary if the company terminates their contract.

Short-term remuneration

The basis of remuneration is a fixed salary, in addition to which most of the Group’s salaried employees are included in a short-term performance-based bonus scheme. The Board of Directors confirms the criteria for the payment of performance-based bonuses annually. The bonuses paid are determined on the basis of the realization of personal objectives, the Group’s financial result, and the attainment of profitability, growth and development related objectives. Performance and development discussions are an essential part of the management by key results system. In these discussions, employees and their superiors agree on the key objectives and their relative weighting and review the fulfilment of the previously agreed objectives. The achievement of key objectives is monitored regularly by the Group Management Team. The key principles and objectives for the result period influencing the personal performance-based bonuses are specified at the business division and unit level

For Group Management Team members, other than President and CEO, the maximum annual performance-based bonus paid equals 50 per cent of their annual remuneration (salary and fringe benefits). The bonus payments made in 2020 were earned in 2019 based on operating profit, cash flow, work safety and customer satisfaction related objectives. From year 2020, there will be no performance-based bonus made.

As part of the measures to mitigate the impacts of the economic slowdown to the company, the members of the Group management team unanimously decided to reduce their annual salary by the half month salary or equivalent to it.

Long-term incentive plan

YIT has long-term incentive plans (abbreviated LTIP) in use to drive strategic transformation, long-term financial performance and retain key persons.

Plan of 2020-2022

In 2020 – 2022 incentive scheme, there is one three year earning period aligning with calendar years 2020 – 2022. Any bonus will be determined on the basis of the indicators decided by YIT’s Board of Directors for the earning period and their target levels. Return on investment is the key indicator in the scheme (2020 – 2022: ROCE). In addition, there are targets related to return to shareholder (TSR) and Group’s net promoter score (NPS). Plan participants may earn a maximum of 2,100,00 gross shares from 2020 – 2022 earning period. President and CEO may earn a maximum of 128,000 gross shares, Deputy to the President and CEO and the other members of the Group Management Team may earn a maximum of 64,000 gross shares. The shares to be granted are already held by YIT as a rule. After the earning period the net shares are transferred to key persons still employed by YIT Group. YIT’s Board of Directors may decide to provide key employees with a monetary amount corresponding to the market price of the shares determined on the basis of the time of the transfer instead of the shares themselves. Under all circumstances, the Board has the right to amend the plan terms.

Plan of 2017 - 2019

The earnings periods of the 2017 – 2019 incentive scheme are the calendar years 2017, 2018 and 2019. Any bonus will be determined on the basis of the indicators decided annually by YIT’s Board of Directors for each earnings period and their target levels. Return on investment is the key indicator in the scheme (2017: ROI, 2018: ROCE. 2019: ROCE). An additional target related to the Group’s net promoter score (NPS) was set for 2017, 2018 and 2019. A maximum of 700,000 shares from year 2017 and maximum of 1,150,000 shares from years 2018 and 2019 can be distributed annually. In 2019, a maximum of 45,000 shares can be distributed to the President and CEO and a maximum of 20,000 shares to the Deputy to the President and CEO and the other members of the Group Management Team. The shares to be granted are already held by YIT as a rule. There is a two-year commitment period associated with each earnings period, after which the shares are transferred to key persons still employed by YIT Group. The employer will cover the taxes and tax-like fees charged to the key employees covered by the scheme in connection with the handing over of the shares. YIT’s Board of Directors may decide to provide key employees with a monetary amount corresponding to the market price of the shares determined on the basis of the time of the transfer instead of the shares themselves. Under all circumstances, the Board has the right to amend the plan terms.

Plan of 2016 – 2018 (transferred from Lemminkäinen)

Those members of YIT’s Group Management Team who transferred from Lemminkäinen Corporation in connection with the merger on February 1, 2018, and who were previously covered by Lemminkäinen Group’s share-based incentive scheme, were paid share rewards for the 2016 earnings period. At the end of 2015, Lemminkäinen Corporation’s Board of Directors decided to introduce a new share-based incentive scheme for key personnel. The incentive scheme consisted of three earnings periods: the calendar years 2016, 2017 and 2018. At the beginning of each earnings period, the company’s Board of Directors decided on the scheme’s earning criteria, the targets set for them, the number of shares to be allocated and the participants. The potential reward for each earnings period is paid in four instalments, each of them corresponding to 25 per cent of the total reward. The payments are made during the four years following the earnings period. If a participant’s employment or service contract ends during the earnings or payment period, they will not, as a rule, be entitled to any unpaid rewards. The reward is paid as a combination of shares and cash. The aim is that the cash portion will cover any taxes and tax-related costs arising from the reward. In 2016, the maximum share reward for the members of the Group Management Team was 12,500 gross shares. No shares have been earned from earning periods 2017 and 2018.

YIT has implemented a long-term share-based incentive scheme to support the company’s strategy of profitable growth and supplement the already available incentive schemes. The scheme aims at encouraging employees to engage in goal-oriented work, rewarding good performance and committing employees to long-term persistent work. Members of YIT’s Board of Directors are not included in the share-based incentive scheme.

Plan of 2020-2022

The earning periods of the incentive scheme are for three years. A potential bonus will be determined on the basis of the indicators decided annually by the Board of Directors of YIT Corporation for each earning period and their target levels. Return on capital employed, absolute TSR (Total Shareholder Return) and the Group’s Net Promoter Score (NPS) have been set for 2020-2022. The Board of Directors also decides on the approximately 260 key persons from different YIT countries to be included in the incentive scheme for each earning period.

After the three-year earning period and the confirmation of the annual report, the shares are transferred to key persons employed by the company. A maximum of approximately 2,100,000 gross shares can be distributed each year. Furthermore, the Board of Directors recommends that the Group Management Team member aims to hold along with the long-term incentive program YIT shares with the value of half of his/her annual salary as long as he/she is the member of the Group Management Team. The President and CEO aims to hold YIT shares with the value equivalent to his annual salary. Under all circumstances, the Board of Directors has the right to amend the bonuses in a reasonable manner.

Plan of 2017-2019

The earnings periods of the 2017–2019 incentive scheme are the calendar years 2017, 2018 and 2019. Any bonus will be determined on the basis of the indicators decided annually by YIT’s Board of Directors for each earnings period and their target levels. Return on investment is the key indicator in the scheme (2017: ROI, 2018: ROCE). An additional target related to the Group’s net promoter score (NPS) was set for 2017 and 2018. A maximum of 700,000 net shares from year 2017 and maximum of 1,150,000 net shares can be distributed annually.

In 2018, a maximum of 45,000 net shares can be distributed to the President and CEO and a maximum of 20,000 shares to the Deputy to the President and CEO and the other members of the Group Management Team. The shares to be granted are already held by YIT as a rule.  There is a two-year commitment period associated with each earnings period, after which the shares are transferred to key persons still employed by YIT Group. YIT’s Board of Directors may, for justified reasons, decide to provide key employees with a monetary amount corresponding to the market price of the shares determined on the basis of the time of the transfer instead of the shares themselves. The employer will cover the taxes and tax-like fees charged to the key employees covered by the scheme in connection with the handing over of the shares. Under all circumstances, the Board has the right to amend the bonuses in a reasonable manner.