Fortum’s logo outside its head office in Espoo, Southern Finland, on 22 July 2022. The Finnish majority state-owned energy company said yesterday its board of directors has re-examined the incentives of its executive management, after a questionable interpretation of the incentive limitations stemming from a bridge financing deal with Solidium, a wholly state-owned investment firm. (Roni Rekomaa – Lehtikuva)


FORTUM on Tuesday reported that its board of directors has re-examined the short and long-term incentives of the executive management accumulated in 2022 and 2023.

The incentives came under considerable scrutiny last month, following the release of the remuneration report of Fortum for 2022. The Finnish government, the majority owner of the energy company, rejected the report in the general meeting on grounds that the incentives do not comply with the terms of the bridge financing arrangement made with Solidium.

Solidium is a wholly state-owned investment firm.

The terms stipulate that the fixed wages of the executive management must not be raised in 2022 and that the management must not be paid short or long-term incentives accumulated in 2022–2023. The board of directors, however, interpreted the terms such that the long-term incentives for 2020–2022 and 2021–2023 would have been determined based on performance in 2020 and 2021 – without the heavily loss-making fiscal year of 2022.

Fortum reported a loss of 2.4 billion euros for last year.

After re-examining the incentives, the board of directors has decided that although no years will be excluded when determining the incentives, members of the executive management cannot accumulate share-based incentives in 2022 and 2023. The decision signifies that the members will receive at most a third or two-thirds of the original incentives depending on the incentive plan, according to the company.

“For the performance period of 2020–2022, this results in an outcome of nine per cent and the delivery time for the shares accumulated according to it would be in spring 2024,” the press release reads.

The Finnish government has expressed its support for the decision, viewing in a press release that the decision aligns with its interpretation of the bridge-financing terms and with the spirit of the arrangement.

Fortum stated that its executive management has additionally informed the board that it will voluntarily forgo incentives scheduled for delivery in spring 2024.

“I respect their decision,” said Mikael Silvennoinen, the board chairperson at Fortum.

The energy company reminded that the bridge financing arrangement is no longer valid as it has repaid the financing it withdrew fully and no longer needs additional financing due to its stable financial position. The limitations on incentive plans nevertheless remain in effect, however.

Aleksi Teivainen – HT