Flow Traders N : 2022 Remuneration report

Remuneration Report 2022

Remuneration report

• Letter from the Chairman of the Remuneration & Appointment Committee

• Flow Traders' remuneration philosophy

• Remuneration for the Management Board

FLOW TRADERS | REMUNERATION REPORT 2022 1

Letter from the Chairman of the Remuneration & Appointment Committee

Dear Shareholder,

On behalf of the Remuneration & Appointment Committee, I am pleased to present our 2022 Remuneration Report. This report includes a summary of our remuneration policy currently in place, as approved at the 2016 AGM, and the remuneration paid out in 2022 in accordance with this policy. The remuneration report reflects the reporting requirements originating from the updated EU Shareholder Rights Directive and the Dutch implementation of this Directive.

Additionally, following the completion of the update to the corporate holding structure, this report has been amended and simplified compared to previous years to align with this new international context. To aid transparency, this report provides additional information on our remuneration philosophy together with retrospective details of the new Management Board corporate scorecard introduced to assess performance more holistically. Historically, we have not disclosed any targets or actual achievement levels for our performance criteria. However, given the importance of this as expressed by our shareholders and the proxy advisors, we are now disclosing these levels for the KPIs identified in our scorecard. We anticipate that the new format and additional disclosures will help investors see the strong link between our remuneration philosophy and policy design.

Furthermore, this report provides the main proposed updates to our executive remuneration policy that we will submit to the 2023 AGM. The proposed remuneration policy contains several important

changes compared with our current policy, while remaining aligned with our company culture and remuneration philosophy. We are proposing to enhance long-term value creation by formally introducing share-based compensation and enhanced deferral and vesting provisions. For an overview of the proposed changes please refer to page 88.

Stakeholder engagement following 2022 AGM

In 2022, we put forward our revised remuneration policy for the Management Board and our 2021 remuneration report (advisory vote) for the AGM's approval. 60% of shareholders voted in favour of the remuneration report. The revised policy for the Management Board was approved by 57% of our shareholders, meaning it did not obtain the required 75% supermajority from the AGM. As a result, we have continued to operate under the Remuneration Policy as approved in 2016.

Following this voting result, the Committee has undertaken consultations with shareholders and proxy advisors. We have summarized the main feedback received together with how we have acted on this feedback below.

In addition, we have enhanced the disclosures around Management Board performance and the vesting schedules for deferred awards in this 2022 remuneration report.

We strongly believe in the proposed remuneration policy and have taken steps to ensure it is reflective of feedback received from our stakeholders. You will have an opportunity to vote on the proposals at the 2023 AGM. If the policy does not receive the 75% support required, we will be obligated to continue

with our existing policy as described in our policy at a glance section on page 90.

"We take our stakeholders views very seriously and welcome an open dialogue on all aspects of remuneration"

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Main feedback from stakeholders

Ensuring long-term focus

• Long-termvalue creation and share ownership are cornerstones of our remuneration philosophy. We propose to further align our remuneration policy with our philosophy and to defer a significant portion of variable remuneration (62.5%) for a multi-year period (up to 4 years). A significant portion (50%) of variable remuneration is paid out in equity and is subject to a holding period of one year post-vesting.
• In addition to operating above market standards clawback provisions, we propose to update our remuneration policy and introduce post- termination vesting restrictions.
• We propose to update our remuneration policy and encourage our executive directors to retain 50% of the shares granted as part of their remuneration (after tax) until cessation of employment.

Formally capping variable compensation

• It is in our corporate DNA to share our profits fairly with our shareholders and employees, and we have done so since we were founded. The total variable remuneration pool available for all employees (including the Management Board) in 2022 was capped at a maximum of 32.5% of operating result. We also propose to retain the hard cap on individual executive director total remuneration award levels (20 times versus average FTE total remuneration levels).
• This translated into a hard cap of €4,718,000 total remuneration for each member of the Management Board in 2022. The total remuneration of each member of the Management Board was well within this limit.
• We have restructured our remuneration report, with the aim to better explain the design of our

remuneration policy and in particular the philosophy behind our policy

Improved transparency and disclosure

• Following shareholder feedback, we introduced a KPI scorecard for the Management Board with both financial and nonfinancial performance measures. The financial measures will allow for any remuneration awarded to consider multiple aspects of financial performance and not just operating profit, while non-financial measures will be selected to encourage sustained long-term performance.
• For each KPI identified, we are now retrospectively disclosing the targets and actual achievement levels.
• We have restructured our remuneration report, with the aim to better explain the operation of our variable remuneration plan. We have included more details on deferred variable remuneration and real value received in comparison to the theoretical value of the yearly Management Board remuneration awards.
• We believe that these changes will increase transparency and certainty for shareholders.

Company performance and remuneration in 2022

Flow Traders delivered an improved financial and trading performance in 2022 compared to 2021 reflecting a more active market environment. We recorded Normalized Total Income in 2022 of €460.6 million and demonstrated a healthy Normalized EBITDA margin of 45% with Normalized EBITDA of €208.2 million. Ultimately, we recorded a Normalized Net Profit of €150.2 million with Normalized Basic EPS of €3.45. This, along with our strong capital position, allowed the company to pay a total dividend of €1.50 per share to shareholders. The Supervisory Board, in close consultation with,

and supported by, the Management Board has decided that the 2022 firm-wide variable remuneration pool will be €86.6 million (2021: €83.3 million), corresponding to 32.5% of operating result in 2022.

The Supervisory Board has also determined the

2022 variable remuneration awards to the members of the Management Board in line with the recommendation from the Remuneration Committee (in accordance with the remuneration policy adopted at the 2016 AGM and being cognizant of the new policy proposed at the 2023 AGM).

The performance of the Management Board has been reviewed against the corporate KPI scorecard, which includes both quantitative and qualitative targets as well as achievement of individual performance objectives. As a result of this review, the Supervisory Board has decided that 6.1% of the variable remuneration pool should be allocated to the Management Board.

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Changes for 2023

As a result of a thorough legal and capital structure review and to support our aims in becoming more competitive as a global multi-asset liquidity provider, we completed an update to our corporate holding structure which includes a top holding company in Bermuda. We have retained our existing global footprint with no change to day-to-day operations. This includes a substantial presence in the Netherlands as well as maintaining a listing on Euronext Amsterdam.

Our Board remuneration shareholder approval requirements remain unchanged through the holding structure changes. We continue to uphold the requirement to obtain 75% of shareholder approval for our Board remuneration policy which will be put to a vote at the 2023 AGM.

Following the updates to our holding structure, as required by Bermuda law, the top holding company now has a one-tier Board, comprised of executive and non-executive directors, including an independent Chairman.

On behalf of the Committee, I thank all shareholders for their constructive feedback, and we are looking forward to continuing our dialogue in 2023.

Linda Hovius

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