The Board of Directors of Valmet Oyj has decided on new share-based incentive plans for key employees and on the acquisition of own shares

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The Board of Directors of Valmet Oyj has decided on a long-term share-based incentive plan (LTI Plan) and a new restricted shares pool (Restricted Pool) for Valmet’s key employees. The aim of the plans is to combine the objectives of the shareholders and the key employees in order to increase the value of the Company in the long run, to commit the key employees to the Company, and to offer them a competitive reward plan based on holding the Company’s shares.

The LTI Plan includes three discretionary periods, which are the calendar years 2018, 2019 and 2020. Valmet’s Board of Directors decides on the performance criteria and targets in the beginning of each discretionary period. The potential reward from the discretionary period 2019 is based on Valmet’s Comparable EBITA margin and orders received growth (%) of the stable business, that is, the Services and Automation business lines. The potential reward from the discretionary period 2019 will be paid partly in Company shares and partly in cash in 2020. The proportion to be paid in cash is intended to cover taxes and tax-related costs arising from the reward to the key employee.

The rewarded shares from the LTI Plan may not be transferred during the restriction period, which will end two years from the end of the discretionary period. As a rule, no reward is paid if the key employee’s employment or service at Valmet ends before the reward payment. Should a key employee’s employment or service end during the restriction period, he or she must, as a rule, gratuitously return the shares given as reward to the Company.

The LTI Plan is directed to a maximum of 123 participants, of which 83 are key employees in management positions (including Executive Team members), and 40 are management talents. The rewards to be paid on the basis of the discretionary period 2019 will correspond to a maximum total of approximately 465,000 shares in Valmet Oyj, representing the gross reward before the deduction of taxes and tax-related costs arising from the reward. The estimated maximum total expense of the LTI Plan for the performance period 2019 is EUR 8.8 million.

As part of total remuneration, for example for retention purposes, the Board of Directors has also decided on an additional incentive element for 2019, the Restricted Pool, from which shares can be granted to selected key employees. Restricted pools are intended to be annually commencing, but any future restricted pool is subject to separate approval by the Board of Directors. In 2019 a maximum of 70,000 shares can be allocated to possible participants in the Restricted Pool. As a rule, the restriction period for these shares is 3 years. A precondition for the payment of the share reward based on the Restricted Pool is that the employment relationship of the individual participant with Valmet continues until the payment date of the reward.

Both the LTI Plan and the Restricted Pool include a recommendation that the members of Valmet’s Executive Team own and hold an amount of Company shares equaling to their gross annual base salary (100 percent ownership recommendation).

Acquisition of own shares

The Board of Directors of Valmet has in its meeting on December 20, 2018 decided to use the authorization granted by the General Meeting held on March 21, 2018 to acquire the Company’s own shares. Based on the authorization, the Board has decided to initiate a fixed-term share buy-back program for the purpose of acquiring the Company’s own shares to meet part of the obligations arising from the LTI Plan and the Restricted Pool incentive plans. The share acquisitions will begin at the earliest on February 8, 2019 and will end at the latest on March 4, 2019. The maximum number of shares to be acquired is 278,000, corresponding to a value of approximately EUR 5 million based on the closing share price of the last trading day preceding the date hereof. The shares will be acquired at market price in public trading on Nasdaq Helsinki Ltd.

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