Metsä Board Annual and sustainability report 2022

■ 3.3 Share-based payments

determined by achievement of the set goals and paid in March following the incentive period. In addition to shares, the bonus includes a cash com- ponent, which is used to cover taxes and tax-like charges incurred by plan participants due to the bonus. The number of shares allocated under the performance based incentive scheme 2020–2024 includes both the share and the cash portion. Accordingly, the reward is paid partly in shares and partly in cash and the cash portion is intended to cover taxes and tax-like payments. The bonus is not paid if the person’s employment ends before the end of the earning period. In addition, the scheme includes a two-year commitment period. If the key employee’s employment ends during the commitment period, the key person must, as a rule, return the delivered shares to the Company free of charge. Based on the fulfillment of the criteria for the earning period 2019–2021, 182,280 Metsä Board Oyj B shares and a cash contribution were paid to cover taxes and tax-like payments arising from the reward at the time of the transfer of the shares. During the period, 8,707 shares were returned. The company changed the terms of the scheme during 2016 so that for incentive periods 2014–2016 and 2015–2017 a cap was set for total employee compensation, including the share incentive paid, based on each plan participant’s salary. The part of earned incentive exceeding the cap is deferred and paid in full in cash in coming years when allowed by the cap. Starting from vesting period 2016–2018, a salary based cap was set with the effect of cutting the part of share incentive exceeding the cap and resulting in the forfeiture of the excess part of the incentive. During 2022, the last deferred compensations were paid to those entitled. Committing-based share incentive scheme 2020–2024 The scheme offers key employees in the target group the opportunity to receive Metsä Board Corporation’s B-series shares, provided that the par- ticipant’s employment relationship remains in force and continues in force until the end of the restriction period. The scheme has restriction periods of 12 to 36 months. As a rule, rewards are not paid if the participant’s employment relationship ends during the restriction period.

Accounting principles Share-based incentive programmes in which the payments are made with equity instruments and cash have been established for the company’s top executives. The Group’s share-based incentive schemes have been treated in full as arrangements settled in shares. The incentives granted are measured at fair value on the grant date, and recognised as expenses in the income statement and equity evenly over the vesting period. The effect on profit of the incentive programmes is presented under employee costs.

During the review period, Metsä Board had four active share-based incentive schemes: Share incentive scheme 2014, which company Board of Directors decided to adopt on 6 February 2014, Performance based share incentive scheme 2017–2021 of which the company Board of Directors decided to adopt on 10 January 2017 and Performance based share incentive scheme 2020–2024 which the company Board of Directors decided to adopt on 12 December 2019, as part of company’s incentive and key personnel retention programme. The effect on consolidated income statement of share-based incentive schemes amounted to EUR 2,817,955 in 2022 (2021: EUR 3,193,961). Share incentive scheme 2014, Performance based share incentive scheme 2017–2021 and Performance based share incentive scheme 2020–2024 The schemes offer the participants the possibility to be awarded Metsä Board Corporation’s B shares for achieving set goals for three-year periods. Incentive periods are the calendar years 2014–2016, 2015–2017, 2016–2018, 2017–2019, 2018–2020, 2019–2021, 2020–2022, 2021–2023 and 2022–2024. The bonus awarded under the share incentive scheme 2014 and performance based share incentive plan 2017–2021 is


Consolidated financial statements | METSÄ BOARD ANNUAL AND SUSTAINABILITY REPORT 2022

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