Finnair’s Board of Directors decided on incentive plans to support the restoration of profitability

posted on 23rd January 2023 by Eddie Saunders
Finnair's Board of Directors decided on incentive plans to support the restoration of profitability

Finnair’s Board of Directors has approved Finnair’s long-term incentive plans. The plans support the implementation of Finnair’s strategy to restore its profitability and the performance criteria for the plans is Finnair EBIT margin.

The target levels for the improved EBIT margin during 20232025 are the same for all personnel groups.

The cash-based Staff incentive plan 20232025 covers all those personnel groups who have contributed with savings agreements in the reduction of the company’s unit costs, which is one of the key actions of the strategy.

The other incentive plan is share-based, and its participants include the Finnair Executive Board as well as other management and experts.

“The restoration of Finnair’s profitability after two significant successive external crises has, thanks to the entire Finnair team, got off to a good start, as demonstrated by the company’s third quarter 2022 results”, says Jouko Karvinen, Chairman of the Finnair Board of Directors.

“We want to support the journey towards profitability, profit improvement and value creation with long-term programmes that have a common improvement metric and clearly increase shareholder value.”

Staff incentive plan 2023–2025 

The staff incentive plan covers three years, 2023–2025, and all personnel groups that have participated in reducing Finnair’s unit costs with long-term savings agreements.

The plan will produce a cash payout in the first quarter of 2026 if Finnair achieves the EBIT margin target set in the plan. Finnair’s Board of Directors may approve new personnel groups to join the plan.

Two new periods for the share-based incentive plan

The purpose of the share-based incentive plan for management and experts is to support strategy implementation and encourage the participants to work for increased shareholder value in the long-term.

The now-decided periods cover years 20232024 and 20232025. There are approximately 70 participants in the plan, including the CEO and the Executive Board. 

This means that Finnair reinstates for the CEO and the Executive Board their long-term remuneration to support strategy implementation, which was cancelled for a period of three years after the State of Finland participated in Finnair’s rights issue in the early stages of the COVID-19 pandemic. 

The plan will result in a share payout to the participants if Finnair achieves the EBIT margin target set in the plan.

The EBIT margin targets for period 20232024 are based on the restoration of profitability, while period 20232025 emphasizes significant improvement in profitability.

The potential share rewards based on the plan will be paid to the participants in the first quarter of 2025 for the 2023–2024 plan and in the first quarter of 2026 for the 2023–2025 plan.