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Note 7 Board and executive remuneration
Board remuneration and committee memberships
Year Ended 31 December
2016 2015
EUR thousand Cash Shares Total Total Committee Memberships
Board Members at 31 December 2016
Gunnar Brock, Chairman 126 68 194 194 Remuneration, Nomination2,3, Financial and Audit
Jorma Eloranta, Vice Chairman 66 40 106 - Remuneration, Nomination2,3
Anne Brunila 52 28 80 80 Sustainability and Ethics
Elisabeth Fleuriot 48 28 76 76 Sustainability and Ethics
Hock Goh 42 28 70 70
Mikael Mäkinen 56 28 84 84 Financial and Audit
Richard Nilsson 68 28 96 90 Financial and Audit, Sustainability and Ethics
Hans Stråberg 48 28 76 76 Remuneration
Former Board members
Juha Rantanen (until 28 April 2016) - - - 126
Total Remuneration as Directors1 506 276 782 796
1 40% of the Board remuneration in 2016 was paid in Stora Enso R shares purchased from the market and distributed as follows: to Chairman 9 092 R shares, Vice Chairman 5 348 R shares, and members 3 744 R shares each. The Company has no formal policy requirements for the Board members to retain shares received as remuneration.
2 Stora Enso’s Nomination Board is appointed by the shareholders at the Annual General Meeting. Gunnar Brock and Jorma Eloranta were appointed thereto in their roles as Chairman and Vice Chairman of the Board of Directors. A member of the Board of Directors may not be Chairman of the Nomination Board.
3 Kari Järvinen appointed by Solidium Oy is Chairman of the Nomination Board. Marcus Wallenberg is the member of the Nomination Board appointed by FAM AB.
Shareholders at the Annual General Meeting (AGM) have appointed a Shareholders’ Nomination Board to prepare proposals for the AGM's approval concerning the number of members of the Board of Directors, the members of the Board, remuneration for the Chairman, Vice Chairman and members of the Board and the remuneration for the Chairman and members of the committees of the Board.
Board share interests at 31 December 2016
Shares held1
A R
Board Members at 31 December 2016
Gunnar Brock, Chairman - 78 000
Jorma Eloranta, Vice Chairman 150 5 648
Anne Brunila - 15 909
Elisabeth Fleuriot - 15 909
Hock Goh - 21 692
Mikael Mäkinen - 28 585
Richard Nilsson - 14 042
Hans Stråberg - 31 470
Total Shares Held 150 211 255
1 Board members’ related parties hold no Stora Enso shares.
The following Board members also Served in 2016
Shares Held when Board Membership Ended Effective Date of Board Membership Ending
Juha Rantanen 9 918 28 April 2016
Group Leadership Team (GLT) remuneration and share interests
The table below includes the remuneration paid to GLT members during the year, including the share awards that vested in that year. The Company recommends and expects the CEO and GLT members to hold Stora Enso shares at a value corresponding to at least one annual base salary. Stora Enso shares received as remuneration are therefore recommended not to be sold until this level has been reached.

The aggregate cost of GLT remuneration in 2016 amounted to EUR 9.9 (EUR 11.0) million. The total number of GLT members was twelve (thirteen) at year end 2016. Malin Bendz joined GLT at 1 November, and two GLT members left during the year, Jari Latvanen on 28 October and Lars Häggström on 31 October.

In accordance with their respective pension arrangements, GLT members may retire at sixty-five years of age with pensions consistent with local practices in their respective home countries. Contracts of employment provide for notice of six months prior to termination with severance compensation of twelve months basic salary if the termination is at the Company’s request.

The outcome of the financial targets relating to the Short Term and Long Term Incentive programmes for performance year 2015 were reviewed and confirmed by the Remuneration Committee in the ordinary annual salary review in March.

Shown in Note 21 Employee variable compensation and equity incentive schemes are details of share awards programmes and incentive schemes for the management and staff of Stora Enso.
Group Leadership Team remuneration
Year Ended 31 December
2016 2015
EUR thousand CEO Others1 GLT Total CEO Others GLT Total
Remuneration
Annual salary4 934 3 964 4 898 932 3 846 4 778
Local housing (actual costs) - 119 119 - 132 132
Other benefits 20 581 601 25 605 630
Termination benefits - - - - 475 475
Short Term Incentive programme3 499 924 1 423 232 650 882
Long Term Incentive programme3 151 424 575 371 1 493 1 864
1 604 6 012 7 616 1 560 7 201 8 761
Pension Costs
Mandatory Company plans 64 1 044 1 108 61 983 1 044
Stora Enso voluntary plans 5502 625 1 175 537 629 1 166
614 1 669 2 283 598 1 612 2 210
Total Compensation 2 218 7 681 9 899 2 158 8 813 10 971
1 The amounts include payments related to Jari Latvanen until 28 October and Lars Häggström until 31 October. Payments related to the new GLT member Malin Bendz are included from 1 November.
2 The CEO participates in the Swedish Executive Pension Plan where pension accruals are unfunded for all participants, the liability is calculated and insured in accordance with Swedish legislation. The unfunded liability for the CEO amounts to EUR 1 579 thousand.
3 Disclosed amounts for Short and Long term Incentives include amounts for executives who were GLT members at the time of the payment in March 2016.
4 Annual salary for executives is disclosed only for the period during which they were GLT members.
Executives other than CEO
Short Term Incentive (STI) programmes for management
GLT members have STI programmes with up to a maximum 40% or 50% of their annual fixed salary, payable the year after the performance period. The STI for 2016 was based 70% on financial measures and 30% on Individual Key Targets.
Long Term Incentive (LTI) programmes for management
Since 2014 the LTI programmes have three year targets and vest in only one portion after three years and the absolute maximum vesting level is 100% of the number of shares awarded. Three quarters (75%) of the awards under the 2016 programme is in Performance Shares, where shares will vest in accordance with performance criteria proposed by the Remuneration Committee and approved by the Board of Directors. One quarter (25%) of the award under the 2016 programme is in Restricted Shares, for which vesting is subject to continued employment.

Under the 2016 LTI programme, GLT members (in GLT at year end) potentially can receive 248 888 shares assuming the maximum vesting level during the three-year vesting period (2016–2018) is achieved.

The fair value of employee services received in exchange for share-based compensation payments is accounted for in a manner that is consistent with the method of settlement either as cash-settled or equity settled as described in more detail in Note 21 . For the equity settled part, it is possible that the actual cash cost does not agree with the accounting charges as the share price is not updated at the time of the vesting. The figures in the Group Leadership Team Remuneration table refer to individuals who were executives at the time of settlement.

During the year 30% of the 2013 programme vested, in comparison to 2015 when 30% of both 2012 and 2013 programmes vested. The number of shares settled on executives (GLT members at settlement date) from previous awards derived from Restricted Share programmes and Performance Share programmes amounted to 55 681 shares having a cash value at the 1 March 2016 settlement date of EUR 424 289 based on the share price at that date. Next year, in March 2017, the 2014 programme vests in only one portion after three years, dependent on Economic Value Added (EVA) for the Stora Enso Group.
Chief Executive Officer (CEO) - Karl-Henrik Sundström
The CEO has been employed since 1 August 2012 and assumed the position as CEO on 1 August 2014. He has a notice period of six months with a severance payment of twelve months salary on termination by the company but with no contractual payments on any change of control. Benefits include pension provisions. The CEO’s pension plan consists of collectively agreed pension plan in Sweden (ITP2) and a defined contribution (DC) top up pension plan. Contributions to the DC plan in the interval 20–30 Income Base Amounts (IBA; one IBA was 59 300 SEK in 2016) is 23%, contributions above 30 IBA is 35% for the salary the CEO had prior to assuming this position and 39% on the salary increase amount received when assuming the position as CEO. The retirement age is sixty-five years.
Short Term Incentive (STI) programmes for CEO
The CEO is entitled to a STI programme decided by the Board each year giving a maximum of 75% of annual fixed salary. The STI for 2016 was based 70% on financial measures and 30% on Individual Key Targets.
Long Term Incentive (LTI) programmes for CEO
The CEO participates in 2014, 2015 and 2016 share based LTI programmes. The programmes have three year targets and vest in only one portion after three years. Three quarters (75%) of the awards are in Performance Shares, where shares will vest in accordance with performance criteria proposed by the Remuneration Committee and approved by the Board of Directors. One quarter (25%) of the awards are in Restricted Shares, for which vesting is only subject to continued employment.

The CEO has the potential to receive up to 78 799 shares under the 2016 LTI programme. The grant value EUR 600 448 is based on the share price at grant date and assuming maximum vesting level during the three-year vesting period is achieved. The CEO received shares from previous awards of Restricted Share programmes and Performance Share programmes, which amounted to 19 751 shares having a cash value at the 1 March 2016 settlement date of EUR 150 503 based on the share price of EUR 7.62 at that date.
Group Leadership Team share interests
Executives in Office at the Year End R Shares Held1 Performance Share Opportunity 2017–20192 Restricted Share Opportunity 2017–20192
Juan Carlos Bueno - 94 734 31 578
Johanna Hagelberg 1 626 43 672 14 557
Kati ter Horst 11 779 72 402 24 135
Malin Bendz 10 647 25 408 8 469
Ulrika Lilja 13 355 37 251 12 417
Per Lyrvall3 37 954 63 580 21 193
Markus Mannström 20 951 35 651 11 884
Noel Morrin 11 940 38 534 24 453
Gilles van Nieuwenhuyzen - 60 979 20 326
Seppo Parvi 7 253 65 329 21 776
Karl-Henrik Sundström4 91 794 200 901 66 967
Jari Suominen 16 836 56 459 18 819
Total, Serving Officers5 224 135 794 900 276 574
1 None of the GLT members holds A shares.
2 Potential shares to GLT members listed here are gross of taxes
3 Spouse holds 1 257 shares.
4 41 700 of the shares are held by a related party (Alma Patria AB).
5 The Company recommends and expects GLT members to hold Stora Enso shares at a value corresponding to at least one annual base salary. Stora Enso shares received as remuneration are therefore recommended not to be sold until this level has been reached.
The following executive officers also served in 2016
Shares Held when GLT Membership Ended Performance Share Opportunity when GLT Membership Ended1 Restricted Share Opportunity when GLT Membership Ended1 Effective Date of GLT Membership Ending
Lars Häggström 23 095 66 227 22 075 31 October 2016
Jari Latvanen - 58 991 19 664 28 October 2016
1 Unvested Performance and Restricted share awards were forfeited when employment ended.

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