Remuneration

The key principles of Nightingale Health’s remuneration are transparency, market orientation, and remuneration based on the good performance of both the individual employee and the company. Nightingale Health’s remuneration principles apply to the entire personnel.

The objective of Nightingale Health’s management remuneration is to encourage and reward the management for work that is in line with Nightingale Health’s strategy at a given time and for compliance with the set rules, as well as to motivate them to strive for the success of Nightingale Health.

Remuneration Policy of Nightingale Health Plc

Remuneration Report 2022–2023

Remuneration of The Board of Directors

Decisions concerning the remuneration of the Board are made by the General Meeting for a single term of office at a time based on a proposal of the Board.

The remuneration of the Board can consist of one or more components. The members of the Board can, for instance, be paid an annual or a monthly fee as well as a meeting fee for board meetings or committee and governing body meetings.

The members of the Board may be compensated for traveling expenses and/or other costs directly incurred by the board work. The compensation paid to the Chair of the Board may be higher than the fees paid to other members of the Board.

The members of Nightingale Health’s Board are not eligible for short-term incentive plans based on their position as a member of the Board.

Board remuneration in financial year 2022 – 2023

Each Board member has been paid a monthly remuneration of EUR 2,000.

No separate fees for Board meetings have been paid to Board members during the financial period 1 July 2022 – 30 June 2023.

Remuneration based on the employment or service contract of the Chairman or members of the Board and advisor remuneration

CEO remuneration is described in the next section, “CEO Remuneration”.

The remuneration based on the employment of Chief Technology Officer Antti Kangas, who is also a member of the company’s Board of Directors, consists of a fixed salary, which during the financial period 1 July 2022–30 June 2023 was EUR 97 thousand. The salary includes vacation pay, holiday compensation, and taxable fringe benefits.

Board member Timo Soininen works, in addition to his role as a Board member, at Villagecape Ventures Oy, which provides the company with consultancy services related to business development. Based on the agreement between the company and Villagecape Ventures Oy, the company pays Villagecape Ventures Oy a monthly consultancy fee of EUR 4,000 (excluding VAT) for the months that Timo Soininen is available for offering consultancy services in accordance with the agreement. Villagecape Ventures Oy is a company under the influence of Timo Soininen, but Timo Soininen does not exercise control over the company. The fees paid to Villagecape Ventures Oy in the financial year 1 July 2022–30 June 2023 were EUR 20 thousand in total.

CEO Remuneration

The remuneration of the CEO and the terms applicable to the service contract of the CEO are prepared by the Board. The service contract is approved by the Board.

The remuneration of the CEO consists of a monthly salary, employee benefits, and performance-based incentive programs.

The incentive programs consist of a long-term share-based incentive plan and a short-term performance bonus plan based on reaching targets set by the Board.

The CEO’s contract may be terminated by the CEO with four (4) months’ notice and by the company with 0–2 months’ notice, and the contract includes non-competition, non-recruitment and non-solicitation obligations that remain in force for 24 months from the date the company gives the termination notice to the CEO. If the CEO’s contract is terminated by the company, the company shall pay the CEO a severance payment corresponding to the CEO’s salary for 24 months. The CEO’s contract will automatically expire without any notice period when the CEO reaches the applicable minimum age for retirement.

The CEO’s fixed annual salary for the financial period 1 July 2022–30 June 2023 was EUR 239,000, including vacation pay, holiday compensation, and taxable fringe benefits.

Proportional shares of fixed and variable remuneration during financial year 2022 – 2023

The Board of Directors decided at the end of the financial period 1 July 2022–30 June 2023 on paying a short-term incentive bonus to the CEO totaling EUR 60,000, based on the outstanding execution of the company’s strategy and achievement of its strategic targets. The CEO’s performance review was also based on the stage of completeness of the targets that were not achieved during the financial year and the progress made on those targets. The bonus was paid to the CEO on 15 August 2023.

In the financial year 1 July 2022–30 June 2023, variable remuneration was 20% of the CEO’s of total remuneration (19% in the financial year 1 July 2021–30 June 2022).

There have not been significant changes in the CEO’s remuneration after 30 June 2023.

Remuneration of management team

The CEO determines the salary, remuneration, and other benefits of Nightingale Health's Management Team. The remuneration of the members of the Management Team is based on a total remuneration, which may, among other things, include both variable and fixed components of remuneration as well as personnel benefits.

A notice period between 1-3 months applies to the Management Team.

During the financial year ended 30 June 2023, the salaries, remuneration, share-based payments, and other benefits (excluding pension expenses and other incidental expenses) of the Management Team (excluding the CEO) totaled EUR 2,251 thousand of which 1,432 were IFRS 2 related costs and 819 were monthly remuneration. The salaries, remuneration, share-based payments and other benefits include bonuses paid to the Management Team, in total EUR 10 thousand. There have been no material changes to the remuneration of the Management Team after 30 June 2023.

Incentive programs

Nightingale Health has established option programs as incentive programs for company personnel, covering employees of the company and its group companies and other key persons. The company’s Board of Directors has outlined that future option programs of the company must be tied to an increase in the company’s value. The purpose of the option programs is to bind the option holders to the economic growth of the company and to the development of the company’s share value as well as create a long-term relationship between the company and the option holders, which benefits the company both economically and operationally.

Nightingale Health has a long-term incentive plan 2021 Board, the CEO and Key Management Incentive Program, in which the vesting of options is determined based on the company’s market value. The incentive plan has no time-based vesting rights.

All options under the 2021 Board, the CEO, and Key Management Incentive Program entitle the option holder to subscribe for Series B shares at a subscription price of EUR 2.50.

In 2022, Nightingale Health launched three types of stock option programs: stock option program directed to management team members, stock option program connected to acquisition and stock option program for other key employees.

In the stock option programs launched in 2022, the right to subscribe for shares is earned mainly based on an increase in Nightingale Health’s market capitalization. In the stock option program for management team members, approximately 10–20 percent of the stock options rights can be subscribed to shares after 12 months have passed since the beginning of the employment of the option holder, and approximately 80–90 percent of the stock option rights can be subscribed based on the increase in Nightingale Health’s market capitalization. In the stock option program for acquisition and stock option program for other key employees, stock option rights are fully vested based on an increase in Nightingale Health’s market capitalization.

Each option right in the 2022 new option programs entitles the option holder to subscribe for one Series B share. The subscription price of each share is EUR 2.50 per share.

The total number of option rights that can be issued based on the new stock option programs is 4.8 million stock option rights, which entitle to subscribe for a maximum of 4.8 million Series B shares. Out of the 4.8 million option rights, 2.1 million are allocated to the management team stock option program, 200,000 stock options for the acquisition option program, and 2,5 million stock options for the option program for other key employees.

In 2023, Nightingale Health launched two stock option programs: stock option program for new board member and stock option program to new management team member.

In the stock option program for the management team member, approximately 20 percent of the stock options rights can be subscribed to shares after 12 months have passed since the beginning of the employment of the option holder, and approximately 80 percent of the stock option rights can be subscribed based on an increase in Nightingale Health’s market capitalization. In the stock option program for the new board member, stock option rights are fully vested based on an increase in Nightingale Health’s market capitalization.

Each option right in the new option programs entitles the option holder to subscribe for one Series B share. The subscription price of each share is EUR 2.50 per share.

The total number of option rights that can be issued based on the new stock option programs is 1.2 million stock option rights, which entitle to subscribe for a maximum of 1.2 million Series B shares. Out of the 1.2 million option rights, half is allocated to the management team member stock option program and half to the new board member stock option program.

2020 Board Member Options

The company and the Board Member Timo Soininen have entered into an Agreement on 7 September 2020 according to which the Board Member has been granted 1,362,025 contractual stock options entitling to new shares of the Company. Each stock option entitles the Board Member to subscribe for one (1) Series A share in the company with a subscription price of EUR 1.63 per share. In addition, the Board Member has the right to stock options

· equaling to 1 per cent of the company’s shares on fully diluted basis shall be vested based on reaching target valuation, i.e. the company’s pre-money valuation in connection to a financing round, trade sale or IPO exceeding EUR 500 million; and

· the right to stock options equaling to 1 per cent of the company’s shares on fully diluted basis shall be vested based on reaching target valuation, i.e. the company’s pre-money valuation in connection to a financing round, trade sale or IPO exceeding EUR 1 billion

In case the Board membership ends, the Board Member shall maintain the right to subscribe for shares with the stock options that have vested before the end of the membership in the Board of Directors.

The company and the Board Member Leena Niemistö have entered into an Agreement on 15 December 2020, according to which the Board Member has been granted 231,770 contractual stock options entitling to new shares of the company. Each stock option entitles the Board Member to subscribe for one (1) Series A share in the company with a subscription price of EUR 2.48 per share. In addition, Leena Niemistö has the right to Stock Options

In case the Board membership ends, Leena Niemistö shall maintain the right to subscribe for shares with the stock options that have vested before the end of the Board membership.

Stock options granted under the 2021 Board, the CEO and Key Management Incentive Program

The company’s Board of Directors has on 3 March 2021 resolved to issue 5,200,000 option rights entitling to subscribe for 5,200,000 new Series B shares in the company. The first part of the options vest when the company’s market capitalisation is at least EUR 500 million based on 45-day volume weighted average purchase price (the “First Vesting Event”). The second part of the options vest when the company’s market capitalisation is at least 1 000 million based on 45-day volume weighted average purchase price (the “Second Vesting Event”).

The company’s Board of Directors decided to issue to Tom Jansson and Lotta Kopra 1,200,000 option rights in aggregate, 600,000 option rights to each, each of which entitles to subscribe for one Series B share. At the First Vesting, Tom Jansson and Lotta Kopra are both entitled to subscribe for Series B shares in the company that correspond to ½ of the total maximum number of the option holder’s option rights. At the Second Vesting Event, Tom Jansson and Lotta Kopra are both entitled to subscribe for Series B shares in the company that correspond to ½ of the total maximum number of the option holder’s option rights. Tom Jansson and Lotta Kopra were members of the Board of Directors until 24 April 2023, and according to the terms and conditions for the stock options they were entitled to keep the option rights that will vest at the First Vesting Event.

All options under the 2021 Board, the CEO and Key Management Incentive Program entitle the option holder to subscribe for Series B shares at a subscription price of EUR 2.50. The purpose of the option program is to bind the option holders to the economic growth of the company and to the development of the company’s share value as well as create a long-term relationship between the company and the option holders, which benefits the company both economically and operationally.

2021 CEO options

The company’s 2021 Board, the CEO and Key Management Incentive Program is described in the previous section. The option holders earn the right to subscribe for the first part of the options when the company’s market value exceeds EUR 500 million based on 45-day volume weighted average share price (“First Vesting Event”). The option holders earn the right to subscribe for the second part of the options when the company’s market value exceeds EUR 1,000 million based on 45-day volume weighted average share price (“Second Vesting Event”).

The company’s Board of Directors decided to issue to Teemu Suna 2,000,000 option rights, each of which entitles to subscribe for one Series B share. At the First Vesting Event, Teemu Suna is entitled to subscribe for Series B shares in the company that correspond to ½ of the total maximum number of the option holder’s option rights. At the Second Vesting Event, Teemu Suna is entitled to subscribe for Series B shares in the company that correspond to ½ of the total maximum number of the option holder’s option rights.

2021 Key Management Options

The company’s Board of Directors decided to issue to Satu Saksman and Minja Salmio 2,000,000 option rights in aggregate, 1,000,000 option rights to each, each of which entitles to subscribe for one Series B share. At the First Vesting Event, Satu Saksman and Minja Salmio are both entitled to subscribe for Series B shares in the company that correspond to ½ of the total maximum number of the option holder’s option rights. At the Second Vesting Event, Satu Saksman and Minja Salmio are both entitled to subscribe for Series B shares in the company that correspond to ½ of the total maximum number of the option holder’s option rights.