Finnish power firm Fortum says it is freezing pay and cancelling bonuses for senior executives after opposition from its majority owner, the Finnish state.
"I promised at the AGM that the board would look again at the leadership team's stock awards," said Mikael Silvennoinen, the chair of the company's board of directors.
In 2022 Fortum had to be bailed out of a catastrophic failed investment in German fossil energy firm Uniper, before taking bridge financing from the state to cover collateral needs in the Nordic power derivatives market.
That loan had clauses restricting payments to senior managers who had overseen a poor year for the company, but the original proposed package included bonuses for executives.
At the firm's AGM in April, the state had used its 51 percent shareholding in the company to vote against the package.
On Tuesday Fortum announced it had "reassessed the implementation of the remuneration restrictions set forth in the Bridge financing arrangement with the Finnish State last fall" and cancelled bonuses.
Executive pay will now be frozen this year, stock awards cancelled and senior managers are also voluntarily giving up stock awards due to be paid as part of a longer-term programme.
The planned bonuses had been heavily criticised in April, after the company lost billions of euros with its failed bet on Uniper.
CEO Markus Rauramo, for example, had been due to receive shares worth some 700,000 euros.
Critics suggested that the board had misinterpreted the instructions to allow more generous remuneration packages. The board was mostly replaced at the AGM, with Silvennoinen replacing his predecessor as chair, Veli-Matti Reinikala.
Victor Snellman, who chairs Finland's Shareholders' Association, said that the decision on pay was good news for small shareholders.
"It is always good news if the leadership is not rewarded for poor results," said Snellman. "The original proposal would have been absurd, if the leadership had been rewarded for destroying shareholder value."
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