Finnair Oyj - Company Announcement

Finnair Board of Directors plans to launch employee share savings plan and has approved new long-term share-based incentive program for management

Finnair Plc.  Stock Exchange Release 8 February 2013 at  09:35 EET

”Remuneration systems play an important role in encouraging employees to work
for the long-term benefit of the company and its shareholders” says Harri
Sailas, Chairman of Finnair Board of Directors. 

“The planned employee share savings plan for Finnair employees adds to our
current incentive programs, and aims at supporting their long-term interest and
involvement in the development of Finnair's shareholder value. The long-term
incentive program for the management is fully in line with the statement by the
Cabinet Committee on Economic Policy regarding the remuneration of executive
management and key individuals in state-owned companies in Finland, and it
replaces the long-term incentive program that expired at the end of last year.” 

The employee share savings plan

Finnair Board of Directors plans to launch an employee share savings plan to be
offered for Finnair's employees in Finland. The aim is thus to increase and
encourage long-term employee interest and involvement in Finnair's success and
development of the company's shareholder value. 

According to the plan, Finnair employees would be offered an opportunity to
invest a proportion of their salary into Finnair shares. After a defined
savings period, the company would award additional shares to the participants. 

Finnair Board of Directors estimates it will decide on the plan and its details
during the spring 2013. 

Finnair also has a Personnel Fund in place for sharing profits with employees,
and for 2012, 4.8 million EUR is proposed to be transferred to the Personnel
Fund. 

The performance share plan

Finnair Board of Directors has approved a new performance share plan for the
key personnel of the Finnair Group. The share plan replaces the previous
programme which expired at the end of 2012. 

Total management remuneration comprises of base salary, variable annual
incentives based on individual and company performance and the performance
share plan. The purpose of the share plan is to encourage the management to
work to increase long-term shareholder value and also to commit the management
to the company. 

The share plan consists of annually commencing individual plans within which
the participants have the opportunity to earn Finnair shares as a long-term
incentive reward, if the performance targets set by the Board of Directors are
achieved. The commencement of each new plan is subject to a separate approval
of Finnair Board of Directors. 

Each plan contains a three-year performance period which is followed by a
restriction period, during which the participant may not sell or transfer the
shares received as a reward. The restriction period is three years for the
members of Finnair's Executive Board and one year for other participants. In
addition, the CEO and members of Finnair's Executive Board are required to
accumulate and once achieved, to maintain a share ownership in Finnair
corresponding to his/her annual base salary as long as he/she holds a position
as a member of Finnair's Executive Board. 

The performance criteria applied to the first plan for years 2013 - 2015 are
the group's relative operating EBIT margin growth, actual EBIT margin and cost
savings in the Group's European traffic. 

The potential reward will be delivered in Finnair shares. The share delivery is
split into three share tranches which will be delivered to the participants
during the three years following the performance period. In years 2014 and 2015
no shares are delivered, which is partly taken into account in the earnings
potential for years 2016 and 2017. 

If the targets set for the first plan for years 2013 - 2015 are met, the
estimated aggregate gross number of shares to be paid on the basis of this
first plan would be 800,000 shares (gross before the payroll tax withholding).
It the maximum targets are met, the estimated gross number of shares to be paid
would be 1,200,000 shares (gross before the payroll tax withholding). The
number of employees eligible to participate in the first plan is approximately
55 persons. 

The maximum value of shares delivered to an individual participant based on the
share plan in any given year may not exceed 60 % of the employee's annual base
salary. 

The details of the share plan are published during spring 2013 on Finnair
internet pages. 

No new shares will be issued in connection with the above share-based incentive
programs and therefore the programs will have no diluting effect. Finnair used
Mercer and PCA Corporate Finance as advisors in the planning of these incentive
programs. 


For more information:

Finnair Media Desk, tel +358 9 818 4020, comms(a)finnair.com

Distribution:
NASDAQ OMX Helsinki
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