Lemminkäinen Group

Board of Directors´ remuneration

Lemminkäinen Corporation’s General Meeting elects the members of the Board of Directors on an annual basis and also determines their fees. These fees are paid entirely as monetary compensation. Board members’ term of office ends at the conclusion of the first Annual General Meeting held after their election.

Members of Lemminkäinen’s Board of Directors do not fall within the scope of the company’s share scheme, nor do they have an employment contract with Lemminkäinen.

2011 The 2011 Annual General Meeting decided that the Chairman of the Board would be paid a fee of EUR 10,000 per month (2010: EUR 10,000) and Board members would each receive EUR 3,000 per month (EUR 3,000). Members of the Board also received an attendance fee of EUR 500 per meeting (EUR 500).

The Chairman of the Audit Committee was paid an attendance fee of EUR 1,000 (500) and members EUR 500 (500) per committee meeting.

Mangement remuneration

On the basis of a proposal submitted by the Remuneration Committee, Lemminkäinen’s Board of Directors decides on the salaries, incentive schemes and other benefits received by the President & CEO and the Executive Board.

As part of Lemminkäinen’s strategy renewal process in 2009, we also renewed our management remuneration and incentive policy to aid developments in management. Remuneration for the Group’s Executive Board has been based on this policy since 2009, and was extended to cover all management positions in 2010.

According to the policy, the pay of the President & CEO as well as the members of the Group’s Executive Board and other management personnel consists of fixed basic pay, payments in kind, other benefits, as well as short- and to some extent long-term rewards.

A fixed basic salary denotes monthly monetary compensation, which is determined by the nature of the position as well as the person’s experience and performance. In addition to meal benefits and the use of a company car and mobile phone, management personnel also have extended insurance coverage for accidents and travel during their leisure time. Total remuneration therefore consists of both basic salary and benefits.

Each year, Lemminkäinen’s Board of Directors decides on benchmarks for long- and short-term incentive plans for the Group’s Executive Board, which seek to support the achievement of our strategic targets.On the basis of a proposal by the President & CEO , the Board decides on the benchmarks to be reached and the size of the incentives to be awarded.

Short-term incentives

Management’s short-term incentives are based on the opportunity to receive an annual performance-related bonus. The size of the bonus received depends on whether or not the performance targets specified at the beginning of each year have been achieved.

Lemminkäinen’s management is divided into four performance-related bonus groups, which determine the maximum percentage applicable to each individual. Individuals are allocated to groups based on both their position in the organisational hierarchy and the nature and commercial value of their position.

2011 In 2011, management’s performance-related bonuses were based on the Lemminkäinen Group’s profit before taxes and the successful implementation of the Group’s strategic programme. In addition to these criteria, the performance-related bonuses for the executive vice presidents of Lemminkäinen’s business sectors were also based on each sector’s result and the successful implementation of its own business plan. The performance-related bonuses for the Executive Board were based on implementation of Group’s business plan. The achievement of the targets of performance-related bonuses is monitored at least every six months.

In 2011, the President & CEO ’s maximum performance-related bonus was 80 per cent of his annual salary. The maximum percentage for performance-related bonuses for other members of the Group’s Executive Board was 60 per cent of their annual salary in 2011.

Long-term incentives

Lemminkäinen’s long-term incentive plan is a sharebased scheme comprising three one-year earning periods: the calendar years 2010, 2011 and 2012. The commitment period is two years. The Board of Directors decides on the earning criteria for each period as well as on the targets to be established at the beginning of each earning period. The achievement of earning criteria is monitored at least once every six months.

The scheme’s target group consists of the President & CEO , the members of Lemminkäinen’s Executive Board, and about 35 others. The Board of Directors decides on the distribution of shares to key personnel. 2011 In 2011, the earning criteria for the long-term incentive plan were targets set for the Group’s equity ratio and return on investment.

Supplementary pension plans

As of 1 January 2010, supplementary pension plans for the President & CEO and Executive Board have been based on a defined contribution scheme and obtaining a paid-up policy. Contributions are calculated as a percentage of annual salary. Executive Board members are entitled to retire upon reaching 60 years of age (old system) or 63 years of age (new system, as of 15 September 2011).

2011 In 2011, EUR 1.2 million was paid into defined contribution pension plans for the President & CEO and Executive Board members. EUR 0.2 million was paid into defined benefit schemes.

President & CEO

Timo Kohtamäki, Lic. Tech., (b. 1963) has served as President & CEO of Lemminkäinen Corporation since 2009.

The President & CEO ’s pension is determined according to the terms of the Group’s supplementary pension plan for management. The President & CEO ’s plan is therefore based on a defined contribution scheme and obtaining a paid-up policy. The President & CEO is entitled to retire upon reaching 60 years of age.

The President & CEO ’s employment contract may be terminated with six months’ notice. Upon termination of the contract by the company, the President & CEO shall be entitled to receive a one-off severance payment equivalent to 18 months’ salary in accordance with his or her salary rate at the time of termination.

 Updated 2.4.2012