Corporate Governance

The remuneration principles set out in the Remuneration Policy guide the Company’s incentive structure and performance metrics. The Company’s remuneration principles have been designed to align the interests of the members of the Board and the executives, employees and shareholders while supporting the Company’s pay-for-performance principle. The objectives of the Company’s incentive plans are to support the implementation of the Company’s strategy as well as to create long-term, sustainable performance with increased shareholder value. The Board regularly monitors the operation of the Company’s remuneration plans to ensure that the selected performance metrics contribute to the Company’s business strategy and long-term financial success.

The Remuneration Policy is based on the following guiding principles:

• The Remuneration Policy has been designed to promote the Company’s competitiveness and to support the execution of the Company’s strategy.
• The incentive plans support key employees’ long-term commitment to achieve shared goals and to create shareholder value.

• Each element of the remuneration has been balanced to facilitate the continuous positive development of the Company both in the short term and the long term.

• The Remuneration Policy is in line with the Company’s strategic plan, particularly in terms of the targets chosen to incentivize the executives in the short-term and long-term remuneration and the weighting of those targets.

The Company's approach to the CEO’s remuneration is based on principles similar to the employees’ remuneration, although the role and responsibilities of the CEO affect the size of the remuneration. Mainly the same principles apply to a potential Deputy CEO’s remuneration, unless the Remuneration Policy expressly stipulates otherwise. The Remuneration Policy follows the principles applied to the remuneration of all employees.

Remuneration must always be transparent, fair and in relation to the complexity of an employee’s role and experience. A significant portion of the CEO’s remuneration consists of performance-based incentives, as the Company aims to have an especially strong link between executive remuneration and the Company’s performance. Exceptional achievements must be adequately rewarded and, accordingly, failure to achieve the targets should lead to an appropriate reduction in remuneration.

Remuneration is managed through clearly defined processes and governance principles outlined below. The decisionmaking process comprises the assessment, approval and implementation of the Remuneration Policy. The Company complies with the Finnish Limited Liabilities Companies Act and the Finnish Corporate Governance Code which, among others, set out independence requirements for the members of the Board and its committees, as well as describe procedures and practices to avoid conflicts of interest and to ensure that persons with a conflict of interest do not participate in the preparation or making of decisions.

Decision-Making on Remuneration Policy The Board is responsible for preparing the Remuneration Policy, the presentation of the Remuneration Policy to the General Meeting and answering questions related thereto. The Board is also responsible for preparing the amended
Remuneration Policy for the General Meeting if the General Meeting has objected to the Remuneration Policy or if significant amendments are made to the approved Remuneration Policy which are not only technical or are not covered by the possibility of temporary exemptions, as defined in the Remuneration Policy.

The Company is committed to ongoing dialogue with shareholders and asks for their views whenever material amendments are made to Remuneration Policy.

Decision-Making on Board’s Remuneration

The General Meeting decides on the fees to be paid to the members of the Board and may also decide or authorize the Board to decide on issuing shares and stock options for the remuneration of the members of the Board or the CEO.

The shareholders of the Company decide on the remuneration of the Board as a separate item on the agenda of the General Meeting.

Decision-Making on CEO’s Remuneration

The Board decides on the CEO’s remuneration, including the fixed base salary, variable elements of remuneration and other benefits. The CEO is not a member of the Board and does not participate in the decision-making process for their own remuneration.

The Board ensures that the CEO is properly compensated for their contribution to the Company's growth and profitability, and that remuneration practices are aligned with the Company's business strategy, long-term financial success and shareholder interests. The Board also evaluates the performance of the CEO as to the above targets and goals and decides on the remuneration of the CEO and on its elements on the basis of its assessment.

The Board may establish a Remuneration Committee to prepare proposals for the remuneration of the CEO for the Board to decide. The Company may use third-party advisors to support its decision-making when evaluating and determining the remuneration to be paid to the CEO. In order to combine the interests of the CEO and shareholders, and to strengthen the link between performance and remuneration, part of the total remuneration of the CEO may be paid in the Company’s shares or share-based instruments. The Board decides on the payment of such rewards. The Board authorized by the General Meeting, or the General Meeting decides on the issue of shares, stock options or other special rights entitling to shares to the CEO in accordance with applicable laws and regulations.

Principles for Board Remuneration

The Company's shareholders decide on the remuneration of the Board members each year at the Annual General Meeting. The decision is based on a proposal presented by the Shareholders’ Nomination Board to the General Meeting. The premise of decision-making on Board remuneration is to ensure that remuneration reflects the competencies and efforts required from the Board members to fulfil their duties. The Remuneration Policy cannot restrict the decision
power of shareholders to decide on the remuneration of Board members at General Meetings.

When preparing the proposal, the Shareholders’ Nomination Board may consult the largest shareholders on any changes in the remuneration arrangements and take into account relevant benchmarks of Finnish and international companies of equivalent size and equivalent to the requirement level. The Board members' remuneration structure is designed to ensure that the Board is focused on the Company's long-term success.

The Board members' fees do not include pension contributions and the Board members do not participate in the Company's short-term or long-term incentive plans. The Board members are recommended to accumulate share ownership in the Company. In order to promote the shareholding of the Board in the Company, the Annual General Meeting may decide to pay part of the Board remuneration in the Company’s shares.

Remuneration report 2022
Remuneration statement 2021

According to the Finnish Companies Act, the Annual General Meeting of Shareholders decides on the fees payable to the members of the company’s Board of Directors.

The Annual General Meeting of Shareholders 2024 resolved that the remuneration of the Chairman of the Board is EUR 60,000 per year and the remuneration of other members of the Board is EUR 30,000 per year. In addition, the Annual General Meeting decided that the Chairman of the Audit Committee is paid a yearly remuneration of EUR 5,000 and each member of the Audit Committee a yearly remuneration of EUR 2,500.

Fees paid to the members of the Board 1 February 2023 – 31 January 2024 (EUR)

The salary of the CEO consists of a fixed monthly salary and customary fringe benefits. The CEO is entitled
to participate in the company’s long-term incentive plan, the CEO does not have a short-term incentive plan.
The company's CEO is entitled to a statutory pension benefit. The company does not have in place current
additional pensions or collateral arrangements. The retirement age of the company’s CEO is determined in
accordance with the legislation in effect.

In the financial period 1 February 2022 – 31 January 2023 the total remuneration including fixed monthly salary and fringe benefits paid to the CEO was EUR 182,940. The CEO was not paid any performance bonus,
additional pensions or other additional benefits.

In April 2022, the Board of Directors of Puuilo Plc decided to launch a new share-based incentive plan for the
key employees of the company. The CEO is entitled to participate in the incentive plan. The Performance
Matching Share Plan 2022 - 2024 includes one performance period, spanning approximately financial years
2022 - 2024. The performance criteria are the Total Shareholder Return of the Puuilo share (TSR) and the
Adjusted EBITA of the Puuilo Group. The achievement of the targets set for the performance criteria will
determine the proportion out of the maximum reward that will be paid as reward to participants. The
prerequisite for participation in the plan and receiving reward on the basis of the plan is that a participant personally has acquired Puuilo shares up to the number determined by the Board of Directors. Furthermore,
payment of reward is based on the participant´s valid employment or service upon reward payment.

Primarily, the rewards from the plan will be paid partly in the company’s shares and partly in cash by the end
of May 2025. The cash proportion is intended to cover taxes and tax-related costs arising from the reward to
the participant. As a rule, no reward will be paid, if a participant´s employment or service terminates before the reward payment. The CEO is obliged to keep the shares paid as a reward for twelve (12) months after the reward payment.

The rewards to be paid on the basis of the plan correspond to the value of a maximum total of 8,256 Puuilo
Plc shares, including the proportion to be paid in cash. The share price at the grant date was EUR 5.34.

Remuneration of the CEO 1 February 2022 – 31 January 2023

EUR million

The Board of Directors decides on the remuneration and its terms of the members of the management team. The remuneration of the management team and the CEO consists of a monthly salary, customary fringe benefits and incentives as in force from time to time.

The company's CEO and other members of the management team are entitled to a statutory pension benefit. The company does not have in place current additional pensions or collateral arrangements.

Remuneration of Group management team excl. CEO 1 February 2022 – 31 January 2023

EUR million

The CEO is entitled to statutory pension, and their retirement age is determined in accordance with the legislation in effect. The period of notice of the CEO is six months and they are entitled to receive salary for the period of notice. The period of notice of the other members of the management team is three months. The members of the management team are entitled to their respective monthly salaries for the period of notice.

Puuilo has a share-based incentive plan for the key employees of the company. The aim of the new plan is to align the objectives of the shareholders and the key employees in order to increase the value of the company in the long-term. The plan is intended to encourage key employees to personally invest in the company’s shares, to steer them toward achieving the company’s strategic objectives, to retain them at the company, and to offer them a competitive reward plan that is based on acquiring, earning and accumulating Puuilo shares.

Each Performance Matching Share Plan includes one performance period, spanning approximately two financial years. The performance criteria are the Total Shareholder Return of the Puuilo share (TSR) and the Adjusted EBITA of the Puuilo Group. The achievement of the targets set for the performance criteria will determine the proportion out of the maximum reward that will be paid as reward to participants. The prerequisite for participation in the plans and receiving reward on the basis of the plans is that a participant personally has acquired Puuilo shares up to the number determined by the Board of Directors. Furthermore, payment of reward is based on the participant´s valid employment or service upon reward payment.

Primarily, the rewards from the plan will be paid partly in the company’s shares and partly in cash. The cash proportion is intended to cover taxes and tax-related costs arising from the reward to the participant. As a rule, no reward will be paid, if a participant´s employment or service terminates before the reward payment. The CEO and other members of the Management Team are obliged to keep the shares paid as a reward for twelve (12) months after the reward payment.

The target group of the plan consists of the CEO, members of the Management Team, Store Managers and other key personnel.

The final number of shares paid will depend on the participants’ personal share acquisitions and the achievement of the targets set for the performance criteria.