Remuneration Statement

REMUNERATION STATEMENT

This is a regularly updated report. Yearly remuneration statements:

Remuneration Statement 2012
Remuneration Statement 2011
Remuneration Statement 2010

BOARD OF DIRECTORS

Remuneration
The Annual General Meeting 2013resolves the remuneration paid to the Board of Directors.

the annual remuneration payable to the members of the Board of Directors to be elected for a term of office ending at the end of the next Annual General Meeting shall be the following: Chairman EUR 60,000, Vice Chairman EUR 45,000 and other Board members EUR 30,000
the chairmen of the board committees shall be paid an additional annual remuneration of EUR 10,000 and the other committee members EUR 5,000
the meeting fee for attending the board meetings shall be the following: Chairman EUR 1,200 per meeting, and other Board members EUR 800 per meeting. The meeting fees will be doubled in case Board member physically participates in a meeting held in a country, where Board member is not resident. No meeting fee shall be paid for the decision minutes drafted without holding a meeting nor for participating in committee meetings
in addition, the travel and accommodation expenses related to the board and committee meetings shall be paid.

Other benefits
The Chairman or the members of the Board of Directors are not in employment relationship or have service contract with company or its subsidiaries. The Board of Directors is not included in the stock option schemes of years 2006, 2009 or 2012. The company has not otherwise granted shares or other share related rights as compensation to the Board of Directors. The options in the possession of the member of the Board Harri Suutari were granted to him when he was PKC Group Plc´s President & CEO. The company does not pay Board members fees on any other basis or grant them loans or give guarantees on their behalf.

PRESIDENT AND EXECUTIVE BOARD

President
The Board of Directors decides on the salary and other benefits of the President. The President is included in the management's bonus system, with the annual bonus being a maximum of six months' salary, depending on the achievement of the objectives set annually. The President's service contract has provision for a notice period of three (3) months on the President's part and six (6) months on the company's part, in addition to which Matti Hyytiäinen´s service contract has provision of severance payment of twelve months salary. Harri Suutari´s service contract didn´t have provision of separate severance payment. The retirement age is statutory and no voluntary pension insurance policies have been taken.

The President is included in the 2009 and 2012 stock option schemes. The President has not otherwise been granted shares or other share related rights as compensation.

Executive Board
The Board of Directors confirms the salaries and benefits of the members of the Executive Board upon President's proposal. The members of the Executive Board are included in the management's bonus system with the annual bonus being typically 6 months depending on the achievement of the objectives set annually. The retirement age is statutory and no voluntary pension insurance policies have been taken.

The members of the Executive Board are included in the 2006, 2009 and 2012 stock option schemes. The company has not otherwise granted shares or other share related rights as compensation to the Executive Board.

Short-term Remuneration - Bonus System
The Group has in force a result based bonus system approved by the Board of Directors, the purpose of which is to reward achievement of strategic objectives and to offer competitive incentive scheme for personnel. The principles, terms and conditions, earnings criteria, maximum and minimum limits of targeted yield levels and persons included in the system are confirmed annually by the Board. For year 2012, the result criteria were business unit specific EBITDA and cash flow targets. Within the target ranges, bonuses were determined linearly. Group management and key personnel, and also white and blue collar employees in Finland, are included in the system. The members of the Executive Board are included in the management's bonus system. The limit of the annual bonus is predominantly maximum of six months' salary, depending on the achievement of the objectives set annually. The system's earning period is the financial year.

Long-term Remuneration - Stock Option Schemes
PKC´s long-term remuneration consists of stock option schemes approved by the annual general meeting. PKC has currently three stock option schemes: year 2006, 2009 and 2012 stock-options. The Board of Directors shall annually decide upon the distribution of the stock options to the key personnel employed by or to be recruited by the Group. The stock options shall be issued free of charge to the Group key personnel. The earnings period of all stock option schemes is three years.

All stock option schemes contain a share ownership plan. The option recipients are required to acquire or subscribe for the Company´s shares with 20 per cent of the gross stock option income gained from the exercised stock options, and to hold such shares for at least two years. The Company´s President must hold such shares as long as his service contract is in force.

Options 2006
The year 2006 stock option scheme comprises of 697,500 stock options and they are divided into A, B and C warrants. The stock options entitle their owners to subscribe for a maximum total of 697,500 new shares in the Company or existing shares held by the Company. The subscription period is during the years 2009-2013. The share subscription price for stock options is the volume-weighted average price of the PKC Group Plc share on the Helsinki Stock Exchange, with dividend adjustments as defined in the stock option terms.

Options 2009
The year 2009 stock-option scheme comprises of 600,000 stock options and they are divided into A, B and C options. The stock options entitle their owners to subscribe for a maximum total of 600,000 new shares in the Company or existing shares held by the Company. The share subscription period is during the years 2012-2016. The share subscription price for stock options is the volume-weighted average price of the PKC Group Plc share on the Helsinki Stock Exchange, with dividend adjustments as defined in the stock option terms.

Options 2012
The year 2012 stock-option scheme comprises of 1,020,000 stock options and they are divided into 2012A (i and ii), 2012B (i and ii) and 2012C (i and ii) options. The stock options entitle their owners to subscribe for a maximum total of 1,020,000 new shares in the Company or existing shares held by the Company. The share subscription period is during the years 2015-2019. The share subscription price for stock options is the volume-weighted average price of the PKC Group Plc share on the Helsinki Stock Exchange, as defined in the stock option terms.

The share subscription period for stock options 2012A(ii), 2012B(ii) and 2012C(ii) shall, however, not commence, unless certain operational or financial targets of the Group established for the exercise of stock options and determined by the Board of Directors have been attained. The Board of Directors shall annually decide on targets separately for each stock option class in connection with the distribution of stock options. Those stock options, for which the targets determined by the Board of Directors have not been attained, shall expire in the manner decided by the Board of Directors.

Release criteria for 2012 A (ii) options:
- The share subscription period with 2012 A (ii) options begins only if the financial performance and EBITDA of PKC Group for financial years 2012-2014 is, based on the total consideration of the Board of Directors, comparable to PKC Group´s key competitors that have published their results. The total consideration shall also take into account the development of PKC Group´s market share.
- If the above-mentioned prerequisite is not fulfilled, stock options expire based on the consideration and in the extent and manner decided by the Board of Directors and the terms of the stock options.
- 2012 A (ii) options shall be allocated to option holders conditionally so that the options shall be distributed and entered into option holders´ book-entry accounts only after the Board of Directors has decided on the start of the share subscription period and to the extent decided by the Board of Directors.

AUDITOR

The Annual General Meeting resolves the remuneration and the ground for compensation of travelling expenses of the auditor. In 2013, the Annual General Meeting resolved to pay auditor´s fees and travel expenses in accordance with a reasonable invoice.

The remuneration per term resolved by the Annual General Meeting in years 2010-2012

EUR 1,000	2012	2011	2010
Chairman of the Board	60	60	50
Vice Chairman of the Board	45	45	37.5
Member of the Board	30		25
Chairman of the Audit Committee	5	5	5
Member of the Audit Committee	5	5	5
Attendance Fees
Chairman of Nomination Committee	1.2	-	-
Member of Nomination Committee	0.8	-	-

Remuneration paid to Board Members for Board and Committee work in 2012

EUR 1,000	Remuneration for Board work	Remuneration for Audit Committee work	Total
Andres Allikmäe ^2),6)	28	4	32
Outi Lampela ⁶⁾	36	5	41
Shemaya Levy ^{2), 6)}	28	4	32
Endel Palla ¹⁾	8	-	8
Olli Pohjanvirta ¹⁾	8	1	9
Robert J. Remenar ^{2), 7)}	28	-	28
Matti Ruotsala ^{3), 7)}	68	-	68
Harri Suutari ^{2), 5), 7)}	39	-	39
Jyrki Tähtinen ^{4), 6)}	39	4	43

¹⁾ Until 4 April 2012
²⁾ Since 4 April 2012
³⁾ Ruotsala Chairman of the Board
⁴⁾ Tähtinen Vice Chairman of the Board until April 2012
⁵⁾ Suutari Vice Chairman of the Board since 4 April 2012
⁶⁾ Lampela Chairman of the Audit Committee, Allikmäe, Levy and Tähtinen members
⁷⁾ Ruotsala Chairman of Nomination and Remuneration Committee, Remenar and Suutari members

Salaries and bonuses paid to the President and other Executive Board Members in 2012

EUR 1,000	Salaries	Bonuses	Share based payments	Total
Harri Suutari ¹⁾	138	-	44	182
Matti Hyytiäinen ²⁾	295	141	201	637
Other Executive Board	1,557	287	1,472	3,316

¹⁾ Until 4 April 2012
²⁾ Since 4 April 2012

Options granted to the president and other Executive Board members in 2011

Pcs.	2009B	2009C	2012A
Harri Suutari ¹⁾	-	-	-
Matti Hyytiäinen ²⁾	22,522	60,000	30,00
Other Executive Board			95,000

¹⁾ Until 4 April 2012
²⁾ Since 4 April 2012

Options held by the President and other Executive Board members on 31 December 2012

Pcs.	2006C	2009A	2009B	2009C	2012A
Matti Hyytiäinen	-	-	22,522	60,000	30,000
Other Executive Board	7,500	23,000	47,000	45,000	95,000
Total	7,500	23,000	69,522	105,000	125,000

Share ownership by the Board of Directors and Executive Board on 31 December 2012 is presented in the Financial Statements in the Shares and Shareholders section. Current share and option ownership may be reviewed in Insider register.

Fees paid to the Auditor in 2012

EUR 1,000	Audit	Assignments	Tax services	Other Services	Total
KPMG Oy Ab	496	1	77	126	700