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Remuneration

KONE’s remuneration approach is built around strong principles of driving high performance, fair and competitive remuneration, encouraging value-based behavior and sustainability. We are committed to developing a strong pay for performance culture for employees at all levels across the organization.

KONE - Investors

  • The Annual General Meeting 2022 confirmed an annual compensation of EUR 220,000 for the Chairman of the Board, EUR 125,000 for the Vice Chairman and EUR 110,000 for Board Members. Of the annual remuneration, 40 percent will be paid in class B shares of KONE Corporation and the rest in cash. In addition, the General Meeting confirmed a separate annual compensation to the members of the board committees: Chairman of the Audit Committee: EUR 20,000 and members of the Audit Committee: EUR 10,000, and Chairman of the Nomination and Compensation Committee: EUR 20,000 and members of the Nomination and Compensation Committee: EUR 10,000. The annual compensation of the members of the board committees is paid in cash. Compensation is not paid to a board member who is employed by the company. Board members’ travel expenses and daily allowances are compensated in accordance with the company’s travel expense policy.

  • Antti Herlin has had a separate employment contract for his role as Full-time Chairman of the Board at KONE until March 2, 2021. The employment-based compensation for Antti Herlin consisted of a base salary and an annual bonus decided by the Board on the basis of the Group’s financial result. The annual bonus may not exceed 100 percent of the recipient’s annual salary. In 2021, Antti Herlin’s base salary was EUR 74,600. In addition, he received a bonus of EUR 290,462 which was earned in 2020. He was also paid EUR 223,500 as compensation for serving as Chairman of the Board. From March 2021 onwards, Antti Herlin will continue in his role as Chairman of the Board but no longer with a separate employment contract as a Full-time Chairman.

    A separate employment contract was entered into with Vice Chairman of the Board Jussi Herlin for his role as the Executive Vice Chairman of the Board as of March 2, 2021. The employment-based compensation for Jussi Herlin consists of a base salary and an annual bonus decided by the Board on the basis of the Group’s financial result. The annual bonus may not exceed 100 percent of the recipient’s annual base salary. In 2021, Jussi Herlin’s base salary was EUR 104,365. In addition, his accrued bonus for 2021 totaled EUR 26,166. This bonus will be paid in 2022. He was also paid EUR 3,500 in meeting fees for Board and Committee work during the time preceding March 2, 2021.

    The Executive Vice Chairman’s retirement age and pension are determined in accordance with Finland’s Pensions Act. No separate agreement regarding early retirement has been made.

  • The President and CEO’s compensation consists of a base salary and an annual bonus determined by the Board on the basis of the Corporation’s key targets. The annual bonus may not exceed 150 percent of the recipient’s annual salary.

    Henrik Ehrnrooth’s annual base salary is EUR 750,000. In addition, his accrued bonus for 2021 totaled EUR 835,350, which equaled 74.3% out of the maximum performance. The performance criteria applied to this annual short-term incentive is based on financial, strategic and individual performance. The bonus will be paid in 2022.

    Henrik Ehrnrooth is included in the share-based incentive plan for the Group’s senior management. In April 2021, on the basis of the incentive plan for the year 2020, Henrik Ehrnrooth received a reward of EUR 2,512,242 which consisted of 17,625 KONE class B shares (net) together with a cash bonus to cover taxes and similar charges arising from the receipt of shares. This represents an outcome of 58.7 % out of the maximum earning opportunity. The award will be subject to a restriction period until the end of 2022. The maximum number of KONE class B shares available for earning for the President and CEO for the year 2020 was 30,000 KONE shares. The reward was based on sales growth and profitability as well as growth of KONE’s digital services. For the incentive plan for the year 2021, the maximum number of shares available for earning for the President and CEO is 53,541 KONE class B shares (gross before deduction for applicable taxes). The final outcome and any potential share awards under the incentive plan for the year 2021 will be confirmed in January 2024, depending on the performance against the criteria set by the Board for the performance years 2021, 2022 and 2023.

    Henrik Ehrnrooth’s retirement age and pension are determined in accordance with Finland’s Pensions Act. No separate agreement regarding early retirement has been made. Should his employment contract be terminated before retirement, he has the right to the equivalent of 18 months’ salary, which includes the salary for a six-month term of notice.

  • The compensation for the members of the Executive Board comprises a base salary and an annual bonus, based on the Group’s annual result and the achievement of individual targets, which can relate to, for example, strategy execution, safety or quality. The bonus amount is determined by the Nomination and Compensation Committee and may not exceed 75 percent of the annual salary.

    The members of the Executive Board are included in the share-based incentive plan for senior management. In April 2021, on the basis of the incentive plan for the year 2020, the members of the Executive Board received a reward of 83,897 KONE class B shares together with a cash bonus equal to the amount required to cover taxes and similar charges arising from the receipt of shares. For the incentive plan for the year 2021, the maximum number of shares available for earning for the Executive Board is 233,794 KONE class B shares (gross before deduction for applicable taxes). The final outcome and any potential share awards under the incentive plan for the year 2021 will be confirmed in January 2024, depending on the performance during the years 2021, 2022 and 2023. If the participant's employment or service relationship with KONE Group terminates before the end of the performance period, the participant, as a rule, forfeits the share award without compensation. As part of the performance share plan for the senior management, a long-term target for their ownership has been set. For the Executive Board members, the long-term ownership target is that the members have an ownership of KONE shares corresponding to at least five years’ annual base salary.

    The total amount of base salary paid to the Executive Board members (excl. President and CEO) was EUR 5.0 million in 2021. The total amount paid to the Executive Board members (excl. President and CEO) based on the annual short-term incentive and the share-based incentive plan was EUR 12.1 million.

    No separate agreement regarding early retirement has been made for the members of the Executive Board. The compensation for the termination of the employment contract prior to retirement is a maximum of 15 months’ salary, which includes the salary for a six-month term of notice.

  • KONE has a long-term share-based incentive plan to support long term value creation and align interests of shareholders and management. Measuring performance over three years, the share plan emphasizes profitable growth and sustainability. Incorporating sustainability measures alongside financial metrics ensures a strong focus in driving transformation and achieving our sustainability ambitions.

    The performance share plan consists of annually commencing individual share plans, each subject to a separate approval of the Board of Directors. The target group and targets within the plan as well as possible rewards are decided upon annually by the Board. The company's Board Members are not included in the plan. If the participant's employment or service relationship with KONE Group terminates before the end of the performance period, the participant, as a rule, forfeits the share award without compensation. The potential reward will be paid as a combination of KONE class B shares and a cash payment equivalent to the taxes and similar charges that are incurred from the receipt of the shares. A long-term target for share ownership has been set as part of the plan for the senior management of KONE.

    In addition to the above, KONE operates a restricted share plan that serves as a complementary long-term share plan to be used as a commitment instrument for retention and recruitment purposes for top management and other selected key persons. The plan has a commitment period up to three years, after which the potentially granted share awards for an individual plan will be paid to the participant in KONE class B shares, provided that their employment or service relationship with KONE Group is in force at the time of payment.

    Performance share plan 2022

    The 2022 performance share plan is targeted to approximately 55 members of the top management, including the President and CEO, members of the Executive Board and other top management, and approximately 525 other selected key personnel of KONE Group. The performance criteria applied to the 2022 performance share plan are based on annual growth in sales, adjusted EBIT margin and improvements in sustainability. The sustainability performance condition is a combination of reductions in carbon footprint, and targets related to diversity, equity and inclusion as well as safety.

    Information about the previous years’ performance share plans can be found from the remuneration reports.

    Option programs

    KONE no longer has option programs in place. More information on the previous option rights can be found from the published stock exchange releases.

Remuneration Policy and Statements

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