Salaries
The base salaries and fringe benefits of the Konecranes President and CEO and Konecranes Leadership Team members reflect the performance and individual job responsibilities, experience, skills and knowledge.
Konecranes’ salaries are defined according to the relevant local market in each country. In terms of base salary, Konecranes aims to be globally at the median of the chosen markets. Base salaries vary between countries and employee groups.
At Konecranes, managers evaluate their employees’ salaries annually against the Konecranes Rewards Principles, ensuring that possible salary increases are allocated effectively to individual employees based on their performance and contribution. The Annual Salary Review Process also applies to Konecranes Leadership Team members and senior management who report directly to the CEO and is completed by the Board of Directors.
Incentives
Short-term incentives
The Konecranes Group remuneration structure includes an incentive plan. Konecranes’ short-term incentives are designed to support the Company’s financial success and the employees’ commitment to achieve set targets on a semi-annual or annual basis, depending on the year. Participants, in addition to senior management, are decided locally based on the market practice.
Konecranes’ incentives are typically based on the financial results of the Konecranes Group, business area, business unit and/or a smaller unit, and the employee’s personal performance in comparison to set targets. Incentive criteria may vary but are usually based on the Konecranes Group’s five key performance areas: safety, customer, people, growth and profitability. Currently, a minimum of 50% of all employees’ targets shall be based on financial performance. As for executives, such as business area/unit management or service region management, 90% of the annual incentive is typically based on financial performance. To further enforce management's commitment to Konecranes' sustainability targets, an ESG target with a 10% weight has been implemented since 2023.
The amount of the incentive opportunity is defined by the employee’s position in the organization and the geographical location. The actual pay-out is based on the combination of personal and financial performance. The local and global market needs guide the use of incentives in each geographical location, separately.
Konecranes’ incentive schemes are always based on written documentation. Quantitative performance criteria are used rather than qualitative assessments, whenever possible.
The President and CEO’s annual incentive is based on the comparison of financial and sustainability performance of the Company against the expectations set out by the Board of Directors for the applicable year. The maximum incentive opportunity for the President and CEO is 100% of the annual base salary.
The Konecranes Leadership Team members’ annual variable pay is based on the Group’s financial and sustainability performance, and on business area performance, if applicable for the person, for the respective year. The annual variable pay percentage is based on individual responsibilities and is at maximum 150% of the individual annual base salary (50% of the maximum being the target level).
Long-term Incentives
The aim of Konecranes’ long-term incentive plans, i.e. the Performance Share Plans (PSP), is to align the objectives of shareholders and Konecranes’ key employees to increase the value of the Company, to commit key employees to the Company and to reward employees for achieving set targets. The actual grant is directly linked to Key Performance Indicators supporting long-term shareholder return and applies multi-year performance period.
Konecranes’ Performance Share Plans have a three-year performance period, during which the plan participants may earn rewards according to the realization of the criteria set in the beginning of the performance period and approved by the Board of Directors.
Each Performance Share Plan period defines a maximum remuneration in shares. For practical reasons, part of the earned share remuneration is paid in cash to ensure that the participants can pay the necessary taxes for the share-based compensation. The actual remuneration payment is based on the performance of the Company against the predefined criteria – if a threshold level for the criteria is not met, long-term incentives will not be paid.
Konecranes’ long-term incentive plans include ownership obligations that pose restrictions to named plan participants selling shares received as remuneration. The members of the Konecranes Leadership Team, including the Interim CEO, have an obligation to continue to own at least 50% of the shares earned annually through the Performance Share Plan until their ownership of the Company shares equals their annual salary.
The CEO of the Company has the obligation to own 100% of the net shares until the CEO holds shares equal to the annual base salary, and thereafter, 50% of the Net Shares until the CEO holds shares at least worth 150% of the annual salary.
The Board shall have the right to cancel any short-term and long-term incentive reward, fully or partly, if the Group’s financial statements have to be amended and those amendments affect the amount of the reward; if the Plan’s performance criteria and Performance Requirement have been manipulated; or in case of any action against the business interest of the Company, or against criminal or employment related law, or against the ethical guidance of the Company, or any other unethical action, as resolved by the Board in each case.
In 2012, Konecranes launched an Employee Share Savings Plan for all employees, including the Management, except in those countries where the plan could not be offered for legal or administrative reasons. Participants save a monthly sum of up to 5% of their gross salary, which is used to buy Konecranes shares from the market on behalf of the participants. If participants are still in possession of these shares after an approximate three-year holding period, they will receive one matching share for every two initially purchased.
Pensions
The Finnish statutory pension system covers Finnish Konecranes Leadership Team members. The non-Finnish members participate in pension systems in their local countries. In addition to statutory pensions, Konecranes provides a supplementary contribution-based pension benefit to the President and CEO.
The pension scheme for the President and CEO sets his defined contribution at 20% of his annual salary, excluding performance-based compensation (annual or long-term incentives). The contribution level for the Deputy CEO has been set at 1 percent of the annual base salary.
The Finnish members of the Konecranes Leadership Team participate in a defined group pension insurance scheme, which can be withdrawn from at the age of 60. However, the retirement age is set according to the Finnish Employees Pensions Act (TyEL). The Finnish Konecranes Leadership Team members have life insurance and disability insurances. The non-Finnish members participate in a contribution-based pension plan (Defined Contribution Plan) and have local insurance coverage.