Remuneration

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

The Annual General Meeting decided on March 14, 2024 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 105,000
• Vice Chairman and Chairmen of the permanent Committees: EUR 73,500, unless the same person is Chairman of the Board or Vice Chairman of the Board
• members EUR 52,500
  
  

In addition, it was decided that the annual remuneration for the members of the Board of Directors shall be paid in company shares so that 40% of the annual fee is paid in YIT Corporation shares to be purchased on the Board members’ behalf at a price determined in public trading from a regulated market (Nasdaq Helsinki Ltd). The shares will be purchased within two weeks of the publication of the Interim Report for the period 1 January–31 March 2024 or on the first possible date under applicable law. The company will pay any costs related to the purchase of company shares.

In addition to the fixed annual fee, the members of the Board and its permanently and temporarily appointed committees living in Finland be paid a meeting fee of EUR 800 per meeting and members living elsewhere in Europe be paid EUR 2,000, also for meetings of the Board and its committees held via electronic remote connections or by telephone.

The chairman of the Board and 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 2023

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 90 % of his annual remuneration (salary and fringe benefits).
• Long-term incentives
  The Board of Directors decided of a new long-term incentive plan in 2019. The first three-year earning period was decided for years 2020-2022 and the rewards from this period were paid in 2023. The next three-year earning periods have been decided for years 2021-2023, 2022-2024, 2023-2025 and 2024-2026 and the possible rewards are paid in 2024, 2025, 2026 and 2027 respectively.
• 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. 

According to the CEO's contract, the current CEO has a notice period of 6 months. If the company terminates the contract, the CEO is entitled to severance pay equivalent to 6 months' salary.

Read more about President and CEO's remuneration in the Remuneration Report 2023

Remuneration of Group Management Team members consists of total salary, including 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. In addition, the Board has decided of a fixed-term incentive plan for 2023 and 2024 related to the Group’s strategic transformation program.

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

*Rewards earned from YIT LTIP 2020-2024 program’s earning period 2020-2022 were paid 4 May 2023.

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 total 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 2023 were earned in 2022 and based on operating profit, cash flow or capital employed, work safety, and customer satisfaction related metrics.

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 2020-2024

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.

The fifth earning period was agreed for years 2024-2026. Absolute TSR (Total Shareholder Return) and Sustainability (Science Based Target initiative scope 1 and 2 emissions reduction) have been set as earning period KPIs. The Board of Directors also decided on the approximately 135 key persons to be included in the incentive plan for this earning period. A maximum of approximately 1,999,000 gross shares can be distributed, of these a maximum of 280 000 can be distributed to the President and CEO and a maximum of 84 000 to other members of the Group Management Team.

The fourth earning period was agreed for years 2023-2025. Absolute TSR (Total Shareholder Return) and Sustainability (Science Based Target initiative scope 1 and 2 emissions reduction) have been set as earning period KPIs. The Board of Directors also decided on the approximately 150 key persons to be included in the incentive plan for this earning period. A maximum of approximately 2,184,000 gross shares can be distributed, of these a maximum of 280 000 can be distributed to the President and CEO and a maximum of 84 000 to other members of the Group Management Team.

The third earning period was agreed for years 2022-2024. Absolute TSR (Total Shareholder Return) and Sustainability (Science Based Target initiative scope 1 and 2 emissions reduction) have been set as earning period KPIs. The Board of Directors also decided on the approximately 150 key persons to be included in the incentive plan for this earning period. A maximum of approximately 2,326,000 gross shares can be distributed, of these a maximum of 280 000 can be distributed to the President and CEO and a maximum of 84 000 to other members of the Group Management Team.

The second earning period was agreed for years 2021-2023. Return on capital employed, absolute TSR (Total Shareholder Return) and the Sustainability (emissions reduction index) have been set as earning period KPIs. The Board of Directors also decided on the approximately 260 key persons to be included in the incentive plan for this earning period. A maximum of approximately 2,100,000 gross shares can be distributed, of these a maximum of 154 000 can be distributed to the President and CEO and a maximum of 64 000 to other members of the Group Management Team.

The first earning period was agreed for years 2020-2022. Return on capital employed, absolute TSR (Total Shareholder Return) and the Group’s Net Promoter Score (NPS) were set as earning period KPIs. The Board of Directors also decided on the approximately 260 key persons to be included in the incentive plan for this earning period. The earning opportunities for the planned participants were a maximum of approximately 2,100,000 gross shares, of these a maximum of 154 000 to the President and CEO and a maximum of 64 000 to other members of the Group Management Team.

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.

The shares needed for the long-term incentive plan rewards are typically already owned by the YIT Group. After the three-year earning period and the confirmation of the annual report, the earned shares are transferred to key persons employed by the company. Under all circumstances, the Board of Directors has the right to amend the bonuses in a reasonable manner.