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Finnish PM criticizes steel company's golden handshake: paper

CEO of Outokumpu Mika Seitovirta addresses a news conference in Duesseldorf February 1, 2012. REUTERS/Ina Fassbender

HELSINKI (Reuters) - Finnish Prime Minister Juha Sipila has criticized a 1.5 million euro golden handshake given to the outgoing chief executive of troubled steel company Outokumpu (OUT1V.HE), adding that compensation policies in state-owned companies will change.

"I think that (1.5 million euros) is oversized. Compensation should be based on how the company is succeeding," Sipila, himself a former telecom executive, said according to the online edition of Helsingin Sanomat newspaper.

Outokumpu, Europe's largest stainless steel producer and 26 percent owned by the state, earlier this week sacked its CEO Mika Seitovirta who had failed to make the firm profitable in four years.

According to his contract from 2011, Seitovirta will be given a two-year salary in compliance with the government's policy from 2009 regarding state-owned companies.

"We are going to shorten these as we update our state-ownership strategy next year," Sipila told the newspaper.

Finland is mired in a three-year recession, and Sipila has urged citizens to find a "common spirit of reform" as he has stepped up with cuts in workers' benefits to boost the country's export competitiveness.

The state owns large stakes in 15 listed companies, including paper maker Stora Enso (STERV.HE), utility Fortum (FUM1V.HE) and refiner Neste (NESTE.HE), and the companies' policies often become political.

Earlier this year, the government blocked a pay rise for Fortum board members due to concerns that the increase would seem unfair to recession-hit citizens.

(Reporting by Jussi Rosendahl, editing by David Evans)