Executives of large companies given generous pay hikes
Some CEOs rewarded in spite of poor results
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The executives of manyh large Finnish companies were given pay increase in 2004 that were about three times higher than those of ordinary wage earners.
A survey by Helsingin Sanomat reveals that executive pay rose by an average 12%, even if income from stock options is not taken into account.
However, there were great variations. Also, there was not necessarily any strong correlation between the rise in executive pay and the company's financial result. In some cases, top executives got generous pay rises even if the company was not doing very well.
The study focused on 23 large companies listed on the stock exchange. Many companies have begun giving out information on executive pay more openly than before.
The survey examined changes in the companies' profit margins in 2003. Many CEOs were paid bonuses on the basis of those profits in 2004, and others had their pay adjusted on the basis of the previous year's performance.
Profit from stock options was not taken into account, because it is up to the executives themselves to decide whether nor not to cash them in.
Executive pay appears to have a tendency to rise more often than fall. Of the 23 executives under examination, 18 were given rises, and only five experienced pay cuts from 2003 to 2004.
Most of the pay hikes correlated with higher profits. Harri Suutari, CEO of the electronics company PKC Group, doubled the company's profit from 2002 to 2003. He was awarded with a 50% pay hike in 2004.
Kim Gran of Nokian Tyres also got a 50% pay hike for a 30% rise in profits in 2003.
Three executives were given pay cuts after their companies' business profits had declined, including Jouko M. Jaakkola, who recently left his post at the helm of the paper company M-Real.
The most interesting group are those who were given pay rises in spite of a shrinking result. For instance, Jukka Härmälä, CEO of the paper company Stora Enso, got a 29% increase in bonuses last year in spite of a 42% drop in profitability in 2003.
Keijo Suila of the state-owned airline Finnair got a small pay rise even though the company's profits plummeted in 2003.
Helsingin Sanomat
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| 8.4.2005 - TODAY |
 Executives of large companies given generous pay hikes |
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