Remuneration

 The Annual General Meeting annually determines the emoluments payable to the members of the Board of Directors for Board and committee work. The Shareholders' Nomination Board prepares the proposals concerning the remuneration of the Board of Directors.

Key Remuneration Principles

In accordance with the resolution of the Annual General Meeting on 23 March 2023 the annual fees to be paid to the members of the Board are as follows: Chairman EUR 60,000, Vice Chairman EUR 40,000 and the ordinary members EUR 30,000.

The fees shall be paid so that 40% of the annual fee is paid in Lassila & Tikanoja plc's shares held by the Company or, if this is not feasible, shares acquired from the market, and 60% in cash. Shares are to be issued to Board members and, where necessary, acquired directly from the market on behalf of Board members on the third trading day after the publication of Lassila & Tikanoja plc’s interim report for the first quarter of 2023.

In addition, the following meeting fees will be paid: Chairman EUR 1,000, Vice Chairman EUR 700 and the ordinary members EUR 500 per meeting.

Meeting fees will also be paid to the Chairman and to the members of committees established by the Board as follows: Chairman EUR 700 and the ordinary members EUR 500.

None of the members of the Board of the Directors is employed by the Company or company belonging to the same group of companies with the Company or acts as the Company’s advisor, and thereby they receive no salary, pension benefits, other financial benefits associated with employment or service, or other emoluments or fees not associated with Board work from the Company. The members of the Board are not included in the Company’s share-based incentive schemes and they do not have any pension contracts with the Company.

The Board of Directors decides on the remuneration and financial benefits payable to the President and CEO. Before decision-making by the Board of Directors, the matter is prepared by the Personnel and Sustainability Committee of the Board.

Key Remuneration Principles

The remuneration of the President and CEO consists of a fixed monthly salary and benefits and a separate annually decided short-term incentive. In addition, the President and CEO is included in the share-based incentive scheme, which serves as a long-term incentive scheme. The short-term incentive scheme and the share-based incentive scheme that serves as a long-term incentive scheme constitute the variable components of the President and CEO’s remuneration.

Short-term Incentive Scheme

The President and CEO's short-term incentive scheme is based on the Group's result and the achievement of strategic and operational objectives. In the financial year 2023, the President and CEO's short-term incentive scheme was based on the Group’s profit performance and strategic targets defined by the Board of Directors as follows: consolidated operating profit (70% weight), improving working capital (20% weight) and the employee Net Promoter Score (eNPS, 10% weight). The amount of the performance bonus corresponds to a maximum of 6 months' salary.

In the financial year 2024, the short-term incentive fee is based on the group's result and the strategic goals defined by the board as follows: the group's operating profit with a weighting of 70 percent, the improvement of working capital with a weighting of 20 percent, and the personnel recommendation index (eNPS) with a weighting of 10 percent.

The incentive bonus corresponds to seven months’ salary at a maximum. The objectives of the short-term incentive scheme are set – and their achievement assessed – annually.

Any incentives are usually paid in February of the year following the earnings period typically spanning a calendar year. The precondition for payment is that the President and CEO is employed by the Company at the time.

Long-term Incentive Scheme

The President and CEO’s long-term incentive scheme is the Company’s share-based incentive scheme. The Board of Directors decides on the share-based incentive scheme as part of the overall incentive and commitment scheme. The Board of Directors decides on the earning criteria for each earnings period based on the Personnel and Sustainability Committee’s proposal. The final numbers of shares issued based on meeting the earnings criteria are decided by the Board of Directors at the beginning of the year following the earnings period.

Rewards are paid in February of the calendar year following the earnings period. The rewards are paid partly as shares and partly in cash.

The precondition for payment is that the President and CEO is employed by the Company at the time. The shares earned on the basis of the one-year incentive program must be owned for at least two years after the payment of the bonus (commitment period). Even after this, shares must be owned for at least half a year's gross salary until the end of the employment relationship. If the CEO resigns on his own initiative during the commitment period, he is obliged to return the shares he received without compensation.

The Board of Directors decided on 14 December 2022 to establish a new share-based transitional phase incentive scheme and a share-based incentive scheme for the Group's key employees for the years 2023–2027.

The transitional phase scheme consists of two (2) earnings periods of one (1) year each, corresponding to the calendar years 2023 and 2024. The earnings period is followed by a two-year commitment period. The possible reward for the earnings period is paid as soon as possible after the end of the earnings period, by the end of May, at the latest. The shares paid as a reward are subject to a two-year (2) commitment period, during which the shares received as a reward may not be sold, transferred, pledged or otherwise used. The share-based incentive scheme for the Group's key employees for the years 2023–2027 comprises three (3) three-year (3) earnings periods covering the calendar years 2023–2025, 2024–2026 and 2025–2027. The reward is paid by the end of May of the calendar year following the earnings period.

The share-based incentive schemes with the years 2023 and 2024 as the earnings periods, and the three-year earnings period of 2023–2025 and 2024-2026, are described below:

• The share-based incentive scheme with the financial year 2023 as the earnings period. The reward is based on the Group’s return on capital employed (ROCE) with a weight of 80% and carbon footprint reduction with a weight of 20%. The earnings criteria for the earnings period that corresponds to thefinancial year 2023 were achieved to such an extent that the reward represented 51.3% of the maximum amount. The maximum amount of remuneration for the CEO is 31,400 shares. In the financial year 2024, the President and CEO was paid a total of EUR 145,727 under the long-term incentive scheme (corresponding to 16,108 L&T shares to be transferred and including the cash component) for the earnings period that corresponded to the financial year 2023, calculated at the average share price on 23 February, 2024.
• A share-based incentive program whose earning period is fiscal year 2024. The basis of the reward is the group's return on invested capital (ROCE) with an 80 percent weighting and the reduction of the carbon footprint with a 20 percent weighting. The maximum amount of remuneration for the CEO is 31,400 shares.
• The share-based incentive scheme with the financial years 2023–2025 as the earnings period. The reward is based on the Group’s average return on capital employed (ROCE) for 2023–2025 (50% weight), the total shareholder return (TSR) of the Lassila & Tikanoja plc share relative to the stock market index for the Helsinki Stock Exchange (30% weight), and carbon footprint reduction (20% weight). Payment of the rewards under the share-based incentive scheme in question will take place after the three-year earnings period, in 2026. The maximum amount of the CEO's remuneration is 23,600 shares
• A share-based incentive program whose earning period is the fiscal years 2024–2026. The basis of the reward is the average return on invested capital (ROCE) of the group in the years 2023–2025 with a weight of 50 percent, the relative total return (TSR) of Lassila & Tikanoja Oyj's share compared to the general index of the Helsinki Stock Exchange with a weight of 30 percent, and the reduction of the carbon footprint with a weight of 20 percent. The payment of the share incentive program in question will take place after a three-year earning period in 2027. The maximum amount of the CEO's remuneration is 23,600 shares.

Other Key Terms and Conditions

A written service contract has been drawn up for the President and CEO. According to the contract, the period of notice is six months should the company terminate the contract, and six months should the President and CEO terminate the contract. In the event that the company terminates the contract, the President and CEO will be paid compensation amounting to twelve (12) months’ salary.

Separate rewards are not paid to the President and CEO for memberships of the Boards of Directors of the Company’s subsidiaries, and the President and CEO receives no remuneration from L&T Group companies other than the parent company.

The President and CEO is not covered by any supplementary pension scheme.

Remuneration and Base Salary

The remuneration of the President and CEO consists of a fixed salary of EUR 458, 640. Short-term and long-term incentive bonuses were paid to the President and CEO in the financial year 2023. Incentive bonuses amounting to EUR 89,400 will become due for payment for the financial year 2023.

The Board of Directors decides on the remuneration and financial benefits payable to the members of the Group Executive Board each year. Prior to the decision-making of the Board of Directors, the matter is prepared by the Personnel and Sustainability Committee of the Board of Directors.

Key Remuneration Principles

The remuneration of the Group Executive Board consists of a fixed monthly salary with fringe benefits and a separate short-term incentive decided upon annually. In addition, the members of the Group Executive Board are covered by a long-term incentive scheme in the form of a share-based incentive plan.

Short-term Incentive Scheme

The short-term incentives of the members of the Group Executive Board are based on the performance of the Group and division, as well as on the achievement of strategic, operational and personal targets. The bonus equals a maximum of 2–4 months’ salary, depending on the responsibilities of the recipient.

The objectives of the short-term incentives are set, and their achievement assessed, annually. Any incentives are usually paid in February of the year following the earnings period typically spanning a calendar year. Payment is subject to the individual being employed by the Company at the date of payment.

Long-term Incentive Scheme

The long-term incentive scheme for the members of the Group Executive Board is a share-based incentive plan. The Board of Directors decides on the earnings criteria for the earnings period and the maximum amounts of the share-based remuneration on the proposal of the Personnel and Sustainability Committee. Rewards are paid in February of the calendar year following the earnings period. The rewards are paid partly as shares and partly in cash.

The Board of Directors decided on 14 December 2022 to establish a new share-based transitional phase incentive scheme and a share-based incentive scheme for the Group's key employees for the years 2023–2027.

The transitional phase scheme consists of two (2) earnings periods of one (1) year each, corresponding to the calendar years 2023 and 2024. The earnings period is followed by a two-year commitment period. The possible reward for the earning period is paid as soon as possible after the end of the earnings period, by the end of May, at the latest. The shares paid as a reward are subject to a two-year (2) commitment period, during which the shares received as a reward may not be sold, transferred, pledged or otherwise used. On 14 December 2023, the Board of Directors set targets for the transitional phase incentive scheme for the earnings period 2024. The return on capital employed (ROCE) with a weight of 80 per cent and the carbon footprint target with a weight of 20 per cent were set as the earning criteria.

The share-based incentive scheme for the Group's key employees for the years 2023–2027 comprises three (3) three-year (3) earnings periods covering the calendar years 2023–2025, 2024–2026 and 2025–2027. The reward is paid by the end of May of the calendar year following the earnings period. On 14 December 2022, the Board of Directors set targets for the earnings period 2023–2025. The return on capital employed (ROCE average during the earnings period) with a weight of 50 per cent, total shareholder return (TSR) with a weight of 30 per cent and a carbon footprint target with a weight of 20 per cent were set as the earning criteria.

On 14 December 2023, the government set the goals for the earning period 2024-2026. The earning criteria were set as return on invested capital (ROCE average during the earning period) with a weight of 50%, relative total share return (TSR) with a weight of 30% and the carbon footprint target with a weight of 20%.

Remuneration and Base Salary of the Group Executive Board in 2023 Financial Year

In 2023, the members of the Group Executive Board (excluding the President and CEO) were paid an annual salary (including salary and fringe benefits) of a total of EUR 1,644,289. Paid performance-based bonuses totalled EUR 134,682. Share-based incentive plan bonuses were EUR 243,190 (excluding the President and CEO).

Other Key Terms and Conditions

The notice period for the members of the Group Executive Board is six months. The amount of severance pay has not been specified. The old-age pension of the members of the Group Executive Board is subject to the general regulations applicable to employee pensions in Finland (TyEL). The members of the Group Executive Board are not covered by any supplementary pension plan.