Hiab Oyj

Remuneration Information • Feb 19, 2019

Remuneration statement

CARGOTEC REMUNERATION STATEMENT 2018

The remuneration statement presents Cargotec's decisionmaking procedure, remuneration principles and the remuneration paid to members of the Board, Chief Executive Officer (CEO) and the Executive Board in 2018.

Decision-making procedure

The Annual General Meeting (AGM) decides on the remuneration of members of the Board of Directors, on the basis of a proposal made by the Board's Nomination and Compensation Committee (NCC). In determining such remuneration, the committee takes account of the Board members' responsibilities and obligations towards the company. Furthermore, the committee compares the Board's remuneration packages to those paid by other companies of the same size operating in a comparable business environment.

Cargotec's compensation and benefits policy is applied in determining the total remuneration of the CEO and Executive Board. The policy is approved by the Board of Directors. Based on a proposal by the NCC, the Board decides on the annual base salary, short-term incentive programmes and benefits of the CEO and the Executive Board. In addition, the Board of Directors decides on long-term incentive programmes and on the target group and allocation of such programmes based on a proposal by the NCC.

Main principles of remuneration

Remuneration at Cargotec is characterised by five key principles:

• We align total compensation funding with our strategic and business plans – Our compensation and benefits programmes reinforce the link between rewards and achievement of business results. Programmes are funded on the basis of business affordability to justify the spending of compensation euros.
• We reinforce a high-performing culture We pay for performance and behaviours that reinforce the underlying shared performance culture value. Cargotec has a standard approach for managing performance on a global basis to reward top performers and support low performers.
• We promote pay for performance differentiation Our compensation programmes enable robust differentiation based on individual performance contributions to business results. As individual and company performance goals are met and exceeded, our programmes offer incentives that position actual cash compensation at competitive levels.
• Our goal is to balance shareholder and employee needs – Our compensation and benefits programmes are designed to optimise the needs of both shareholders and employees.
• We enhance our ability to attract, retain, and motivate a diverse group of talented individuals – Our compensation and benefits programmes are flexible and fair and are understood and valued by employees.

Board of Directors

The Board members receive from the company only remuneration related to their Board and Committee memberships and Board work. Board members are not included in Cargotec's short-term or long-term incentive programmes. Of the total annual remuneration, 30 percent is paid in Cargotec's class B shares and the rest in cash. The shares are purchased at market price on a yearly basis. Board members must keep the shares they have obtained as annual remuneration under their ownership for at least two years from the day they obtained them.

CEO and Executive Board

The total remuneration structure of the CEO and Executive Board comprises a fixed base salary including fringe benefits and incentive plans, for which both short- and long-term targets have been defined. The variable salary component consists of a share-based incentive programme linked to the company's long-term targets, as well as short-term incentive programme. Relevant market practices are closely followed when defining the remuneration elements.

Cargotec Executive Board remuneration consists of the following elements:

Remuneration element	Description
Base salary	Fixed salary including taxable fringe benefits
Short-term Incentives (STI)	2018 annual bonus programme performance targets: • CEO: Financial 70% weight (2018 cash flow and operating profit). Strategic individual targets 30% weight. • Other Executive Board members: Financial 60% weight (2018 cash flow and operating profit). Strategic individual targets 40% weight. • Threshold, target and maximum performance levels defined Target (maximum) incentive levels as a % of annual base salary: • CEO: 60 % (120 %)
	• Business Area President: 50 % (100 %) • Other Executive Board member: 40 % (80 %)
Long-term Incentives (LTI)	2018 share-based incentive programme: Performance period 2018–2019 + ownership and value creation period 2020; in total 3-year long-term incentive programme.
	Performance period includes two measuring periods, both lasting for one calendar year. Performance targets for measuring period 2018: • Cargotec or Business Area participants: Service gross profit • Navis software division participants: Navis' sales and on sales excluding TOS-business
	Performance targets for measuring period 2019 will be set in the beginning of the year by the Board of Directors.
	After the end of the performance period, the Board of Directors will confirm the cumulative amount of rewards earned from the measuring periods 2018 and 2019, and potential rewards from the performance period 2018-2019 will be paid partly in Cargotec's class B shares and partly in cash in 2020 (the cash portion of the reward will cover the tax and and tax-like payments arising from the reward). The shares paid as reward may not be transferred during an approximate one-year ownership and value creation period established for the shares.
	Target (maximum) number of net shares allocated for the performance period 2018-2019: • CEO: 7,520 (15,040) • Other Executive Board members: 1,520–3,035 (3,040–6,070)
	Target (maximum) gross incentive level as a % of gross annual base salary for the performance period 2018–2019: • CEO: 115 % (230 %) • Other Executive Board members: 70–100 % (140–200 %)
	No share delivery if a termination notice has been delivered by either party prior to the share delivery.
	Share ownership recommendation for the Executive Board members: One-year gross base salary, the recommendation is to be fulfilled through refraining from transferring shares received under the Cargotec share-based incentive programmes.
	Claw-back provision: Board of Directors may decide to cut or cancel rewards and recover already delivered rewards from the participant in case of misconduct.
	In addition to the 2018 share-based incentive programme, there are two earlier established long-term incentive programmes: • 2016 share-based incentive programme (incentive payout in spring 2019) • 2017 share-based incentive programme (incentive payout in spring 2019, followed by ownership and value creation period until 31.12.2019)
Restricted shares	As a part of total remuneration, additional restricted shares can be granted to selected Executive Board members. Gross reward, before deduction for the applicable taxes and employment related expenses, is in range of 20–100% of the annual base salary. Threshold level for financial performance is set by the Board. One-year earning period is followed by one-year restriction period.
Pension	The CEO is entitled to a supplemental pension benefit. According to the pension agreement, the CEO is entitled to retire between the age of 60–65.A EUR 500,000 contribution has been paid in 2018 to insurance company administering the pension benefit. Any additional contributions to the CEO's supplemental pension benefit are approved by the Board of Directors (pension contributions are subject to performance criteria set by the Board of the Directors). Other Finnish members of the Executive Board are entitled to a statutory pension. Their retirement age is determined in accordance with the statutory pension scheme in Finland. Hiab and MacGregor Business Area Presidents have supplemental defined contribution pension plans, following the local market practice.
Severance pay	The members of the Executive Board have a period of notice of 6 months and are entitled to compensation, for termination of employment, corresponding to 6 to 12 months' salary.

Remuneration report Board of Directors

Based on the decision of the AGM of 20 March 2018, the Board's annual remunerations for the year 2018 are as follows:

• Chairman: EUR 85,000
• Vice Chairman: EUR 60,000
• Chairman of the Audit and Risk Management Committee: EUR 60,000
• Other Board members: EUR 45,000

In addition, a fee of EUR 1,000 is paid for attendance of meetings of the Board and its committees.

Remuneration paid to Board members in 2018 is shown in the following table.

Member of the Board	Remuneration for Board membership and Board work, EUR*	Number of class B shares obtained as remuneration**
Ilkka Herlin, Chairman	103,240	598
Tapio Hakakari, Vice Chairman	73,240	422
Kimmo Alkio, member	53,000	316
Jorma Eloranta, member	58,000	316
Peter Immonen, member	58,000	316
Teresa Kemppi-Vasama, member	54,000	316
Johanna Lamminen, member	54,000	316
Kaisa Olkkonen, member	59,000	316
Teuvo Salminen, member	73,000	422
Heikki Soljama, member	54,000	316
Total	639,480	3,654

* Including Board remuneration, meeting attendance fees and fringe benefits for period of 1 January 2018–31 December 2018.

** Value included in remuneration for Board membership and Board work.

CEO and Executive Board

For the financial period 2018, the base salary of Cargotec's CEO Mika Vehviläinen was EUR 701,190 including fringe benefits. In addition, he received a short-term incentive payout of EUR 340,184 (payout is based on 2017 performance) and long-term incentive payout of EUR 1,821,328 in total. The CEO is covered by Cargotec's shortterm incentive programme and share-based incentive programmes. The remuneration paid to the CEO and the Executive Board members in 2018 is stated in the following table:

Remuneration paid during 2018, EUR	CEO Mika Vehviläinen*	Other members of Executive Board (in aggregate)**
Base salary including fringe benefits	701,190	2,425,375
Short-term incentives (based on 2016 performance, taxable gross amount before deduction of taxes and employment-related expenses)	340,184	854,932
Long-term incentives: 2015 share-based incentive programme payout (taxable gross amount before deduction of taxes and employment-related expenses)	1,821,328	2,000,332
Long-term incentives: 2017 restricted shares programme payout (taxable gross amount before deduction of taxes and employment-related expenses)	-	330,159
Total	2,862,702	5,610,798

* In addition, CEO Mika Vehviläinen received a EUR 500,000 supplemental one-time pension contribution in 2018.

** Mikael Laine, Soili Mäkinen (since 26. March 2018), Mikko Pelkonen, Mikko Puolakka, Antti Kaunonen, Scott Phillips (since 1. October 2018), Roland Sundén, Michel van Roozendaal.

The following table summarises the actual number of class B shares delivered (net, after deduction of taxes and employment-related expenses) to the CEO and other members of the Executive Board in 2018:

Actual number of shares delivered in 2018	CEO Mika Vehviläinen	Other members of Executive Board (in aggregate)
2015 share-based incentive programme: 2015-2017 earning period; class B shares	22,693	28,786
2016–2018 restricted shares programme: 2017 earning period, 2018 restriction period; class B shares	-	4,906

The following table summarises the net number of shares granted to the CEO and other members of the Executive Board in 2018 (possible incentive payout in spring 2020):

Net number of shares granted in 2018	CEO Mika Vehviläinen	Other members of Executive Board (in aggregate)
2018 share-based incentive programme: Performance period 2018-2019 + value creation period 2020, on target perfor mance, net number of shares. Additionally cash portion to cover taxes.	7,520	21,905

The following table summarises the gross value in Euros of restricted shares granted to the CEO and other members of the Executive Board in 2018 (possible incentive payout in spring 2019):

Gross LTI value granted in 2018, EUR	CEO Mika Vehviläinen	Other members of Executive Board (in aggregate)
2016–2018 restricted shares programme; earning period 2018 (gross in Euros, before deduction of taxes and employment-related expenses)	-	300,000

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CONTACT US

Cargotec corporation

Porkkalankatu 5, Helsinki, Finland P.O. Box 61, FI-00501 Helsinki Tel. +358 20 777 4000

Business identity code 1927402–8

Websites

www.cargotec.com www.kalmarglobal.com www.hiab.com www.macgregor.com

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Cargotec (Nasdaq Helsinki: CGCBV) enables smarter cargo flow for a better everyday with its leading cargo handling solutions and services. Cargotec's business areas Kalmar, Hiab and MacGregor are pioneers in their fields. Through their unique position in ports, at sea and on roads, they optimise global cargo flows and create sustainable customer value. Cargotec's sales in 2018 totalled approximately EUR 3.3 billion and it employs around 12,000 people.

Cargotec's reporting for the year 2018 consists of five documents: the Annual review, the Financial review, the Corporate governance statement, the Remuneration statement, and the GRI index. All documents are available on the company website www.cargotec.com.

Annual review 2018 Financial review 2018

statement 2018