In accordance with its remuneration policy, Kempower strives to reward its management in a way that provides an incentive and engages them in executing the Company’s strategy and creating value for the shareholders. Remuneration and remuneration development are assessed on the basis of the Company’s success, general economic development and the industry’s remuneration practices. In addition to a fixed salary, the key remuneration principle is performance-based remuneration. In addition, the overall remuneration of the management is central to the remuneration. Kempower’s remuneration consists of the following:

• Annual basic salary
• Short-term incentive (STI)
• Long-term incentive scheme (LTI)
• Other financial benefits

During the financial year 2023, the remuneration policy was followed in the remuneration of the Board of Directors and the CEO. With regard to the performance bonus paid to the CEO during 2023, which was however based on the 2022 financial period, the terms of the previous bonus system based on the achievement of 2022 goals were followed. The matter is also discussed in more detail below in section 3. It was not resolved to defer, deny, or recover all or part of the remuneration of the members of the Board of Directors or the CEO.

Kempower Corporation’s Annual General Meeting decided on March 30, 2023 that the Chair of the Board will be paid EUR 45,000 per year, the Deputy Chair EUR 35,000 per year and the other members of the Board EUR 35,000 per year. Entitlement to the Board’s annual fee accrues over time and is paid in equal monthly installments (annual fee / 12). In addition, a separate meeting fee is paid to the members of the Board of Directors for attending a meeting as follows:

• the meeting fee is EUR 500 per meeting if the meeting is held in the home country of the member of the Board of Directors or if the meeting is a virtual meeting,
• the meeting fee is EUR 1,000 per meeting if the meeting is held on the same continent as where the home country of the member of the Board of Directors is located but not in his or her home country, and
• the meeting fee is EUR 1,500 per meeting if the meeting is held on a different continent from where the home country of the member of the Board of Directors is located.

Travel expenses are reimbursed in accordance with Kempower’s travel policy.

In addition, the Chair of the Audit Committee is paid EUR 5,000 per year in addition to the Board fee and the Chair of the Remuneration and Nomination Committee is paid EUR 2,500 per year.

No options, shares or other share-based remunerations have been granted to the members of the Board of Directors for their work as Board members.

No other financial benefits have been paid to the members of the Board of Directors in addition to the annual fee and meeting fees decided by the Annual General Meeting. There are no pension contributions related to the remuneration of the Company’s Board of Directors.

The CEO’s annual fixed basic salary for 2024 is EUR 325,380.

Fees payable in the financial year 2024 based on the financial year 2023

The CEO was part of Kempower’s shortterm incentive (STI) plan, under which the performance bonus will be paid in April 2024. Based on the 2023 bonus program, a total amount of approximately EUR 163,260 will be paid to the CEO as a bonus, which corresponds to a fixed base salary of 6 months.

The targets of the performance bonus to be paid to the CEO on the basis of the financial year 2023 were partly based on the Kempower Group’s revenue, order backlog (total 70% of total targets) and gross profit margin (total 30% of total targets).

The performance bonus to be paid to the CEO for the financial year 2023 is based on the Board’s assessment and decision on the achievement of targets.

Personnel offering

In October 2021, the company carried out a directed share issue made in deviation from the shareholders’ pre-emptive subscription rights to engage personnel of Kempower by issuing 5,789 new shares in a Personnel Offering. The subscription price in the personnel offering was EUR 100.00 per share before the share issue without consideration registered on 26 November, 2021, in which for each existing share, 53 new shares were given. The number of shares to which the CEO subscribed, after the share issue without consideration, was 15,768. The members of Kempower’s personnel including the CEO who participated in the personnel offering have signed a shareholder agreement in which they have, among other things, committed to sell their shares to the company if their employment with Kempower ends in certain situations and committed to a lock-up period based on which they cannot sell, transfer, donate or pledge the shares subscribed by them without a permission granted by the Board of Directors of the company until 31 December, 2024.

Share-based incentive plan (2022–2024)

In 2022 the Board of Directors of Kempower decided to establish a new share-based incentive plan for the Group’s key employees including the CEO. The aim was to align the objectives of the shareholders and key employees for increasing the value of the company in the long-term, to commit the key employees to working for the Company and to offer them a competitive incentive scheme that is based on earning and accumulating shares.

The Performance Share Plan 2022–2024 consists of a three (3) year performance period, covering the financial years 2022–2024.

During the performance period 2022–2024, the rewards are based on the Total Shareholder Return of the Kempower share in 2022–2024 and Group Revenue in 2024. The value of the maximum rewards to be paid to the CEO will correspond to a total of approximately 14,000 Kempower’s shares including also the cash proportion. However, if the targeted performance criteria will be significantly exceeded the ultimate maximum of the rewards to be paid will correspond to a total of approximately 17,500 Kempower’s shares.

The CEO does not have any other personal compensation plan based on shares or stock options or other special rights entitling to shares.

Share-based incentive plan (2023–2025)

In 2023 the Board of Directors of Kempower decided continue the share-based incentive plan with new three-year period in 20232025. The aim is to align the objectives of the shareholders and key employees for increasing the value of the company in the long-term, to commit the key employees to work for the Company and to offer them a competitive incentive scheme that is based on earning and accumulating shares. The program is for Companys management and key employees.

The Performance Share Plan 2023–2025 consists of a three (3) year performance period, covering the financial years 2023–2025. During the performance period, the rewards are based on the Total Shareholder Return of the Kempower share in 2023–2025 and Group Revenue in 2023–2025. The value of the maximum rewards to be paid to the CEO will correspond to a total of approximately 12,400 Kempower’s shares including also the cash proportion.

Employee Share Savings Plan

In 2023 the Board of Directors of Kempower decided to establish an Employee Share Savings Plan for all Kempower and its subsidiaries’ employees. The objective of the Employee Share Savings Plan is to offer the employees of Kempower Group an opportunity to invest a part of their regular salary in Kempower shares. By encouraging the employees to purchase and own the Company’s shares the Company is pursuing to strengthen the connection of interests between the employees and the shareholders, and to increase the employees’ motivation and commitment to the company.

The Employee Share Savings Plan consists of annually commencing plan periods, each one comprising of a 12-month savings period and a holding period following the savings period. The ESSP is offered to all Kempower employees and management in countries where there are no legal or administrative constraints for participation. The employees will have an opportunity to save a proportion of their salaries consistently and invest those savings in Kempower shares. After a three year savings period the Company rewards for the commitment by granting the participating employees a gross award of one matching share for every two (2) savings shares acquired with their savings.