Flow Traders N : 2021 Remuneration Report

Remuneration Report 2021

Remuneration report

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The Remuneration & Appointment Committee Letter from the Chairman of the Remuneration & Appointment Committee

Flow Traders' approach to remuneration

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Remuneration report

The Remuneration & Appointment Committee

The key objective of the Remuneration Committee is to advise the Supervisory Board on the design and execution of the remuneration policy and to ensure that the decision making is in line with the remuneration policy, Flow Traders performance and strategic priorities. Further, during the year, the Committee engaged in a comprehensive consultation with stakeholders regarding the current remuneration policy. Based on this consultation, an updated remuneration policy will be submitted for shareholder approval at our 2022 AGM.

the committee held 6 formal meetings in 2021 and each meeting had full attendance.

Responsibilities

• ◾ Determining, on behalf of the Supervisory Board, the company's remuneration policy for the management Board

• ◾ proposing the remuneration of the individual members of the management Board to the Supervisory Board

• ◾ Reviewing the proposal of the management Board for the remuneration and variable remuneration for all employees

• ◾ assessing performance of the members of the management Board in 2021 and establishing their individual key performance indicators for 2022

• ◾ preparing the annual remuneration report

Letter from the Chairman of the Remuneration & Appointment Committee

Dear shareholder, on behalf of the Remuneration & appointment Committee, i am pleased to present our 2021 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 2021 in accordance with this policy. the full remuneration policy has been published on our websitewww.flowtraders.com.the remuneration report reflects the reporting requirements originating from the updated eu Shareholder Rights Directive and the Dutch implementation of this Directive.

in addition, this report details our proposed updates to our policy we will submit to the 2022 aGm. as a growing organization, Flow traders' revised policy has been proposed following an extensive dialogue with various stakeholders, peer analysis and the need to create a policy to continue to be able to retain and attract talent of the highest caliber.

Company performance and progress

market conditions in 2021 were more stable compared to 2020. Volatility, as measured by the ViX index, averaged at 19.88 (2020: 29.49), with a high of 37.51 (2020: 85.47). nevertheless, 2021 was a successful year for Flow traders. total value traded in 2021 amounted to €5.7 trillion (2020: €5.2 trillion); of which, €1.54 trillion was traded in etps (2020: €1.52 trillion). in terms of net traded income (nti), we experienced a highly successful year with nti reaching €384 million. this is the second highest nti result in Flow traders' history after 2020.

on the cost side, we continued to maintain a firm discipline with fixed operating expenses amounting to €122.1 million in 2021 (2020: €118.6 million), which is within the cost guidance provided in the beginning of 2021. We saw an increase in Ftes to 613 as of 31 December 2021 compared to 554 on

31 December 2020. Despite this increase, variable employee expenses saw a significant decrease to €102.5 million in 2021 (2020: €228.1 million), reflecting the reduced variable remuneration pool. in light of the reduced top line compared to 2020 and, as a result, reduced operational leverage, net profit amounted to €114.9 million (2020: €464.5 million), while eBitDa achieved in 2021 is €159.4 million (2020: €586.6 million), with an eBitDa margin of 41%.

the wellbeing of our people has continued to be a point of focus throughout 2021. We have continued to facilitate working from home for the majority of our staff. as the pandemic evolved, we welcomed many of our colleagues back into our offices, with many adopting a hybrid working model. Further, Flow traders opened a new office in paris during 2021.

Remuneration in 2021

the Supervisory Board, in close consultation with, and supported by, the management Board has decided that the 2021 firm-wide variable remuneration pool will be €83.3 million1 , corresponding to 35% of the operating result in 2021. the Supervisory Board has also determined the 2021 variable remuneration awards to the members of the management Board, upon the proposal of the Remuneration Committee, in accordance with the remuneration policy adopted at the 2016 aGm, while also considering the new policy proposed at the 2022 aGm. the performance of the management Board has been reviewed against their individual Kpi scorecards, which cover both quantitative and qualitative targets. Following extensive considerations and thorough review of the performance of each member of the management Board, we have decided that 6.1% of the variable remuneration pool shall be allocated to the management Board. this is what we believe is a fair allocation and aligns with our long-standing company philosophy of sharing our profits and creating equal opportunities to share in both success and risk, followed since we were founded and has contributed to the success Flow traders has achieved. this approach provides a relatively modest base salary, no benefits and a profit share that directly reflects company performance - therefore varying considerably in successful and less successful financial years.

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Amended on 18 March 2022 to €83.3m from €88.3m as previously stated

in addition, we feel it is important to highlight a number of balancing elements:

• ◾ We believe in rewarding for performance. if Flow traders is less successful, there is a corresponding downwards impact on variable remuneration levels without any smoothing actions

• ◾ at the same time, we defer a significant portion of the variable remuneration granted, and this deferred remuneration remains at risk until vesting. if Flow traders were to make a loss in upcoming years, any outstanding deferred variable compensation from previous years will be forfeited and used to cover this loss.

• ◾ We share our profits fairly with our shareholders and employees. although individual award levels for members of the management Board may be considered substantial, the other employees are paid from the same variable remuneration pool and equally benefit from the company's performance.

Activities of the Committee in 2021

in 2021, we put forward our revised remuneration policies for both the management Board and Supervisory Board (binding vote) and our 2020 remuneration report (advisory vote) for the aGm's approval. the remuneration policy for the Supervisory Board was approved by over 97% of shareholders, while 66% of shareholders voted in favor of the remuneration report. the revised policy for the management Board was approved by 67% of our shareholders and therefore did not obtain the required 75% majority vote from the aGm. therefore, we continued to operate under the Remuneration policy as approved in 2016.

Stakeholder engagement

We take our stakeholder's views very seriously and welcome an open dialogue with them on all aspects of remuneration. as the remuneration policy for the management Board did not receive the required 75% vote at the 2021 aGm and a minority of shareholders voted against our remuneration report at the 2021 aGm, the Committee conducted consultations with those shareholders and proxy advisors to see whether we could further align our remuneration practices to shareholder expectations.

"We take our stakeholder's views very seriously and welcome an open dialogue with on all aspects of remuneration. "

We recognize the evolution of the corporate governance landscape in recent years. We believe that the principles that underlie our approach remain relevant. We align employee pay, including the management Board, with the interests of shareholders and our financial performance. We aim to pay levels of total pay that are competitive with our predominantly international, and in many cases privately-owned, competitors and design our remuneration structures to encourage all our employees to stay with us for the longer term. to summarize, in light of the feedbackwe have received, we have enhanced the disclosure around individual Kpis and vesting schedule of deferred awards in our 2021 remuneration report, and we have further discussed the management Board's remuneration policy proposed at the 2021 aGm to see where we can further align with shareholders expectations. We summarize the main feedback provided, and how we have acted upon this feedback in the table below.