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Finnair’s board of executives decided last year to award a supplementary pension of 130,000 euros to Pekka Vauramo, the chief executive of the majority state-owned airline.
Finnair’s board of executives decided last year to award a supplementary pension of 130,000 euros to Pekka Vauramo, the chief executive of the majority state-owned airline.

 

Mika Lintilä (Centre), the minister responsible for ownership steering, has expressed his dissatisfaction with the reports submitted to him concerning a 130,000-euro supplementary pension awarded to Pekka Vauramo, the chief executive of Finnair.

Lintilä had requested a report on the decision to award the supplementary pension from both the majority state-owned airline and the ownership steering department on 2 August, 2017.

“I unfortunately discovered that [the reports] contradict each other,” he stated in a press release after examining the reports on Monday.

He also revealed that he will discuss the issue with Jouko Karvinen, the board chairman at Finnair, Jussi Itävuori, the chairperson of the compensation and nomination committee at Finnair, and Eero Heliövaara, the director general of the ownership steering department. The teleconference was reportedly held yesterday, but no details of the discussions were disclosed to the media.

Suomen Kuvalehti in February reported that the state-owned airline agreed last year to award its chief executive a supplementary pension equivalent to 20 per cent of his fixed annual wage despite its earlier announcement that supplementary pensions would not be used to reward executives hired after 1 January, 2013. Vauramo took the reins of the airline in the spring of 2013.

The weekly also pointed out that the reward seems disproportionate in light of the performance of Finnair. The airline, it highlighted, reported a profit margin of slightly over two per cent on net sales of 2.3 billion euros in 2016.

The supplementary pension was also awarded after the state-owned airline had introduced considerable cost cuts.

The Finnish government has similarly stated that state-owned companies should refrain from using supplementary pensions to reward their senior executives. The state currently owns 55.8 per cent of shares in Finnair.

Prime Minister Juha Sipilä (Centre), who was responsible for ownership steering up until this spring, says he was not notified of the proposal to award the personal pension scheme to Vauramo.

“The use of supplementary pensions violates the state’s ownership steering guidelines, a fact that the company was aware of at the time of the decision [to award the pension],” he wrote in an e-mail response to an enquiry from Helsingin Sanomat on Monday. “I would’ve made this clear had I been notified of and asked to comment on the issue.”

The government is opposed to the use of supplementary pensions to reward employees because they are effectively instruments of tax planning. Vauramo, for example, will benefit more from the supplementary pension than he would from a 130,000-euro increase in annual wage as his tax rate will drop after retirement, explains Helsingin Sanomat.

Aleksi Teivainen – HT
Photo: Irene Stachon – Lehtikuva

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