Metsä Board Annual review 2023

METSÄ BOARD Annual review 2023

■ 3.3 Share-based payments

Salaries and remuneration paid to the CEO and other members of the Corporate Management Team

Other Management Team

the set goals and paid in March following the incentive period. In addition to shares, the bonus includes a cash component, 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 and 2023–2027 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 2020–2022, 298,785 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. Committing-based share incentive scheme 2020–2024 and Committing-based share incentive scheme 2023–2027 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. Commit- ting-based share incentive scheme 2023–2027 has not any allocations.

CEO

Business operations and value creation 2 This is Metsä Board 4 CEO’s review 6

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.

EUR

2023

2022

2023

2022

Salaries and remuneration Basic salary including fringe benefits 1) Short-term performance bonus 2) Long-term share-based incentive 3) Deferred long-term share-based incentive 4)

545,164 331,049 1,391,888

535,749 327,155 954,226

1,391,974 678,214 1,446,898

1,327,502 634,513 1,022,174

Strategy and financial targets

96,730

Total

2,268,101

1,817,130

3,517,085

3,080,918

Value creation

Pension Costs Supplemental defined benefit pension plan

Financial development 10 Key figures 12

520,027 92,002 612,030 2,880,131

589,122 72,225 661,347

Defined contribution plans

244,555 244,555 3,761,640

205,875 205,875

Total

Salaries and remuneration as well as pension costs in total

2,478,477

3,286,792

Report of the Board of Directors

20 72

• Sustainability statement • Sustainability statement assurance report

1) Basic salary may include car and telephone benefits, extended health, travel and accident insurance cover, and minor other benefits in kind. 2) The 2023 payment concerns performance in 2022; the 2022 payment concerns performance in 2021. 3) 2023: earning period 2020–2022; 2022: earning period 2019–2021. 4) In 2022 delayed long-term rewards were paid in accordance with the terms and conditions and the decision of the Board of Directors

During the review period, Metsä Board had five active share-based incen- tive schemes: 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, Performance based share incentive scheme 2023–2027 of which the com- pany Board of Directors decided to adopt on 15 December 2012 ,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 2,224,395 (2,817,955) in 2023. Performance based share incentive scheme 2017–2021, Performance based share incentive scheme 2020–2024 and Performance based share incentive scheme 2023–2027 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 2017–2019, 2018–2020, 2019–2021, 2020–2022, 2021–2023, 2022–2024, 2023–2025, 2024–2026 and 2025–2027. The bonus awarded under the performance based share incentive plan 2017–2021 is determined by achievement of

Consolidated financial statements

78 Notes to the consolidated financial statements 126 Parent company financial statements 129 Notes to the parent company financial statements 142 The Board’s proposal to the Annual General Meeting for the distribution of funds 143 Auditor’s Report 147 Shares and shareholders 151 Ten years in figures 152 Taxes 153 Production capacities 155 Calculation of key ratios and comparable performance measures Corporate governance 157 Corporate governance statement 165 • Board of Directors of Metsä Board 168 • Corporate Management Team of Metsä Board

The monthly salary of CEO Mika Joukio is EUR 43.478. The salary includes car and phone benefits and extended insurance cover for travel and accidents. In 2022 and 2023, the reward option for the CEO’s short-term compensation plan was at the target level of 30 per cent and at the maxi- mum level of 75 per cent of the fixed annual salary. In 2022 and 2023, the reward option for the short-term compensation plan for members of the Management Team was at the target level of 20 or 25 per cent and at the maximum level of 50 or 62.5 per cent of the fixed annual salary. The Board of Directors decides on the criteria of the short-term remu- neration system. Remuneration is based on defined financial criteria and targets supporting strategy. Share based incentive schemes and the shareholding programme for Corporate Management Team are presented in Note 3.3. The CEO’s mutual term of notice is six months. In case the CEO contract is terminated by the Board of Directors, the CEO is entitled to receive discharge compensation equal to his 12-month salary. The period of notice for other members of Corporate Management Team is six months. Corporate Management Team members are entitled

to additional mainly severance compensation of six month salary in case of employment termination on grounds not related to the affected Management Team member. The CEO is covered by statutory employee pension scheme. This offers pension benefits based on term of service and renumeration earned as prescribed in applicable legislation. Through supplementary pension arrangements, the CEO is entitled to retire at the age of 62 years. His pension will be equal to 60 per cent of his salary at the time of retirement calculated in accordance with Finnish pension legislation and based on the calculation period of five years immediately preceding retirement. In case the CEO’s contract is terminated prior to retirement, the pension earned by the CEO becomes vested. The Corporate Management Team members have no pension arrange- ments differing from statutory pensions. The Group has no off balance sheet pension liabilities on behalf of management. Key management had no loans outstanding from the company or its subsidiares and there were no guarantees given on behalf of key management.

170 Remuneration report 174 Investor relations and investor information

Consolidated financial statements | METSÄ BOARD ANNUAL REVIEW 2023