Global Bonus Programme The bonus booklet
Table of Contents Background information 3 What is the purpose of the Bonus Programme? What is the Bonus Handbook? Where can I find more information? Bonus calculation and payment 4 When and how are bonuses paid out? How much bonus can I get paid? How is the bonus calculated? What is annual base salary? What does time in position mean? How is the bonus taxed? Bonus targets (KPIs) 6 Bonus Cycle Model 7 Bonus Calculation Model 8 Calculation elements 9 New employees, promotions and job 5 changes in the performance year As a new employee starting in the performance year, do I take part in the Bonus Programme? What does a promotion mean in relation to the Bonus Programme? What happens to my bonus if I change job position during the performance year? 2
Background Information What is the purpose of the Bonus Programme? The overall purpose of the Vestas Bonus Programme is to reward all Vestas employees financially when annual goals are achieved. The Bonus Programme stems from the Vestas corporate strategy which says that all employees benefit from Vestas becoming more profitable. All Vestas employees contribute to the same value chain and support the same customers, whether working in a support function or developing, producing, marketing, selling, installing or servicing wind turbines. The Bonus Programme encompasses measurable focus areas, also known as Bonus Targets / KPIs, which help to realise Vestas strategic priorities and internal targets. What is the Bonus Handbook? The Bonus Programme is defined by the guidelines in the Bonus Handbooks, which includes a large amount of detailed information about how the programme is composed and what the calculation elements are. You can find the Bonus Handbooks relevant to you on the HR Knowledge Base. If you do not have access to the intranet or have specific questions, you can address these to your immediate manager. Where can I find more information? The Bonus Programme is part of the Performance & Development Dialogue (PDD) concept. You can find more information about the Vestas Bonus Programme and the PDD concept on the HR Knowledge Base. If you do not have access to the intranet or have specific questions, you can address these to your immediate manager. 3
Bonus calculation and payment When and how are bonuses paid out? Bonuses are paid in the same way as your normal salary and are expected to be paid with your April salary the year after the performance year. How much bonus can I get paid? That depends on your corporate title. You can get between 0% to 150% of your bonus target, which is then applied to your annual base salary depending on how well the business performs. How is the bonus calculated? When Vestas annual results are determined for the performance year, the performance of each bonus target / KPI translates to a percentage of your target bonus. Your individual bonus amount is then calculated using three overall factors: Individual bonus percentage, annual base salary and time in position (number of days employed in a year i.e. days / 365). What is annual base salary? Annual base salary is the basis for calculating the bonus payment and is based on the annual base salary on 31 December. For hourly-paid employees the annual base salary is calculated as the basic hourly rate in December 31 (including any supplements giving right to bonuses) x standard norm hours. Note that an adjustment is made if the employee does not work full-time. What does time in position mean? Each bonus payment reflects the time you have held a position giving entitlement to a bonus in the performance year. You will receive a bonus for the time you were employed in the performance year (number of days). A change in employment conditions during the performance year can result in two or more bonus periods. That also means that you can receive your bonus in more than one payment. How is the bonus taxed? The bonus is taxed as local legislation requires it. 4
New employees, promotion and job changes As a new employee starting in the performance year, do I take part in the Bonus Programme? Yes, if you are employed as an internal employee during the performance year, you are also included in the Bonus Programme from the first day of your employment. You will receive a bonus relative to your period of employment in (number of days). The bonus calculation will be based on the annual base salary set when your employment commenced. What does a promotion mean in relation to the Bonus Programme? A promotion with an associated change of corporate title level is treated as a change of position. Refer to What happens to my bonus if I change job position?. What happens to my bonus if I change job position during the performance year? A change in employment conditions can result in two or more bonus periods. The bonus calculation for each period will reflect your employment conditions at the time you held that position. You will therefore have an Overall Bonus Score based on the relevant KPIs for each position as the basis for the bonus calculation (see description below). A change of position for the purposes of the Bonus Programme is defined as: from one EVP area to another from one country to another where the corporate title level changes (as defined in the bonus handbook) between being hourly-paid and receiving a monthly salary Other types of change of position do not give rise to a new bonus calculation. 5
Bonus targets / Key Performance Indicators (KPIs) What is a Bonus target or Key Performance Indicator (KPI)? A KPI is used to measure and evaluate selected performance areas that are related to Vestas strategic priorities and internal targets. If all Vestas employees are aware of and pursue the common goals, it contributes to continuously maintaining and strengthening Vestas position as global market leader. Do the EVP areas have different bonus targets / KPIs? Yes, and your bonus targets / KPIs depend on where you work in the organisation. The bonus targets for the performance year are available in the P&C Knowledge Base 6
The Bonus Cycle Model 7
Bonus calculation model Step 1 Bonus KPI performance defines bonus pay out percentage Performance that pays 50% 100% 150% Bonus KPI No performance Bonus payout = bonus 0-150% of Bonus Target Step 2 The bonus percentage is used to calculate the individual bonus amount Individual bonus percentage annual base salary Days in position in the year Individual bonus amount Example 5% 20,000 365/365 1,000 8 Vestas Bonus Programme
Calculation elements Bonus pay out percentage The Bonus Programme is based on Key Performance Indicators (KPIs) that encompass important focus areas reflected as Global bonus targets and EVP area bonus targets. Each Bonus target / KPI can realize a bonus pay out between 0% and 150% of your bonus pay out target percentage, as determined by your corporate title. Vestas corporate title The Vestas corporate title structure is used for comparing and aligning job positions across Vestas, for example between EVP areas and countries. Your corporate title may deviate from your working job title and is used to define your individual bonus pay out target percentage. Annual base salary Your individual bonus is calculated of your annual base salary as of 31 December. The annual base salary is defined for salaried and hourly paid employees in the Bonus Handbook available in the Knowledge Base. Time in position Any bonus payment will reflect the time (number of days) you have held a position eligible for bonus. A change in employment conditions may trigger two or more bonus payments. For detailed information about the calculation elements please refer to the Bonus Handbook on the Knowledge Base. Note: The bonus programme is communicated locally following due procedures in accordance with local legislation. 9