Majority state-owned national carrier Finnair responded on Monday to Minister of Economic Affairs Mika Lintilä's query over an unusual extra pension payment to the company's CEO. Finnair granted chief Pekka Vauramo a pension boost of some 130,000 euros in 2016 – on top of his occupational pension.
The plan is to pay these additional contributions every year until Vauramo leaves the company, leaving him with a much bigger pension than he would otherwise receive. The arrangement was publicly revealed after Helsingin Sanomat shone a light onto executive compensation at Finland's biggest listed companies.
When Vauramo started as CEO in 2013 his contract stipulated that he would receive a normal employee pension upon retirement. Finnair stopped paying additional pension contributions to executive management team members in 2013.
High quality work
Finnair board chair Jouko Karvinen released a public letter to Minister Lintilä saying that the added pension – counted as 20 percent of the CEO's fixed annual salary – was granted due to Vauramo's "high-quality work" and because, the carrier says, 70 percent of listed domestic companies abide by the same practice.
The letter says that Finnair's rewards committee discussed the added remuneration in March, 2016, at which point Vauramo had worked as the company's CEO for three years.
"At the time of the decision Finnair's CEO already had three years of exemplary experience in realising the company's renewal and growth strategies," the letter reads.
Karvinen's letter emphasises the transparent nature of the extra pension decision. The rewards committee chair informed the government's ownership steering unit of the pension decision in March last year, and did not receive any complaints on its practices at the time.
Minister Lintilä said on Monday that he is not content with Finnair's report on its pension policy.
"I have read the reports from both the ownership steering body and Finnair's executive board, and I must conclude that they are contradictory," Lintilä said in a release.
Lintilä says that he will be setting up a meeting to determine the nature of the extra pension scheme as soon as possible. Attending the meeting are Finnair chair Jouko Karvinen, ownership steering group chief Eero Heliövaara and Finnair's rewards committee chair Jussi Itävuori.