This remuneration statement of Biotie Therapies Corp. (the “Company” or “Biotie”) is the statement referred to in recommendation 47 of the Finnish Corporate Governance Code for listed companies issued by the Securities Market Association on 15 June 2010.

Remuneration of the directors

The General Meeting held on 6 May 2011 resolved that the remuneration payable to the Chairman of the Board of Directors be EUR 4,000 per month and to other Board members EUR 3,000 per month. In addition, reasonable travelling expenses for the meetings shall be compensated. According to the resolution by the General Meeting, no separate remuneration will be payable for the Committee work, and no separate fees for participating in meetings is paid to the Board members.

In 2011 the Company did not pay remuneration for Board or Committee work in the form of company shares or rights entitling to shares.

A member of the Board of Directors Guido Magni holds as of 8 March 2012 134,592 options entitling to shares in the Company. The options relate to the Swiss option program described below in this statement and were initially issued by Synosia Therapeutics Holding AG. The options granted prior to the acquisition of Synosia by Biotie in February 2011. Otherwise the members of the Board of Directors during 2011 do not participate in the Company’s bonus and incentive schemes or in the voluntary insurance policy.

None of the members of the Board of Directors are in an employment relationship or have service contracts with the Company.

The total remuneration paid during 2011 to Biotie’s Directors is represented in the following table.
 

Principles of the remuneration of the CEO and other management and decision making process

The Nomination and Remuneration Committee of the Board is responsible for preparing the framework for the remuneration of the CEO and other executives for the Board’s approval. When elaborating on the remuneration, bonus and incentive schemes, the Nomination and Remuneration Committee also takes into account aligning of the interests between shareholders and directors. The remuneration of the CEO and other executives comprise of fixed basic salary and fringe benefits (such as rights for company car and phone), performance based bonus (short term incentives), option plans and share based equity incentive plan (long-term incentives) as well as the executives’ pension benefits.

Biotie´s remuneration principles are closely linked to financial and personal performance. The performance may be based on terms of reference or on periodic reviews. The success of the Company and the performance of the CEO and the other executives are being reviewed and examined continuously. Due to the international nature of Biotie’s business, the analyses on the compensation levels are partially done by benchmarking with non-Finnish companies in the same line of business.

Since the aim of the total executive remuneration is to lead the business to success, the remuneration programs shall attract, motivate, reward and retain good and high performers on an international level.

Performance based bonus

The Board of Directors assesses annually the need for bonus payments to the CEO and to the members of the management team. The eventual bonuses are discretionary and the payments are subject to achieving the operational goals set by the Board of Directors for each year. Maximum bonus to the CEO and to the members of the management team is 80% of fixed compensation.

Remuneration and service contract of CEO

The Board of Directors appoints the CEO and decides on his salary, benefits and the terms and conditions of his contract.

The CEO contract may be terminated by the Company with a six month notice period and by the CEO with a three months’ notice period. If the Company terminates the contract with the CEO, the CEO is, in addition to his salary during the notice period, entitled to a severance pay corresponding to 12 months of salary. To the extent the CEO is employed at least up to 31 December 2011, the CEO shall be entitled to a retention bonus corresponding to his six months’ salary, including benefits. This bonus was paid in 2011.

Based on achieving certain pre-agreed operative and strategic targets in 2010 the CEO was eligible for a success bonus of up to EUR 150,000. This bonus was paid in full in 2011.

The Board of Directors has resolved that the CEO of the Company must keep 25% of the net return from the stock option plan 2011 in Biotie shares, unless such 25% of net return would be higher than his twelve (12) months’ gross salary; in such case, the amount of net return to be kept will be the twelve (12) months’ gross salary equivalent. Such shares must be held as long as the CEO’s service in a group company continues. The Board of Directors may, for very weighty reasons, permit exceptions to this ownership obligation.  The same ownership obligation applies to the net return to the CEO from the equity incentive plan.

Since Biotie’s CEO’s retirement age has not been determined in the CEO contract, the Company is not committed to any lowered retirement age.

Pension benefits

The Company has committed, as a part of the terms of employment of the CEO and certain members of the management team, to make certain contributions to a voluntary, payment based retirement insurance policy. In 2011 no such contributions were made. The management team members not residing in Finland are not covered by any statutory Finnish pension system.

Long term incentives

The Board of Directors of Biotie approved in December 2011 two new share-based incentive plans for the Group employees; a stock option plan for mainly its European employees and an equity incentive plan for mainly its US employees. The plans are intended to form part of the incentive and commitment program for the employees. The incentives support the attainment of the targets established by the Company and the implementation of the Company's strategy, as well as the Company's long-term productivity.

In addition to the aforementioned plans, the Company has a valid stock option plan 2009. The stock option plan 2006 expired on 31 December 2011 (read more of the 2006 stock option plan here).

Equity Incentive Plan

The maximum number of share units to be granted and the number of corresponding shares to be delivered on the basis of the plan will be a total of 4,599,000 shares.

The equity incentive plan includes three consecutive discretionary periods, calendar years 2011, 2012 and 2013. Each discretionary period is followed by an approximately two year vesting period, ending on January 5, 2014, on January 5, 2015 and on January 5, 2016, after which Company's shares will be delivered to employees on the basis of the granted share units. Should an employee´s employment or service in a group company end before the end of a vesting period, the corresponding share units will gratuitously be forfeited.

According to the terms and conditions for the equity incentive plan, fifty (50) per cent of the maximum number of share units will be granted to the group employees subject to the fulfillment of targets as determined for each discretionary period by the Board of Directors, and the other fifty (50) per cent of the share units will be granted without reference to the strategic and operational targets.

The Board of Directors approved in its meeting on 23 February 2012 that a total of 1,558,600 share unit awards are granted for 2011 under the equity incentive plan. Each granted share unit award entitles to one share in the Company, subject to a vesting period of approximately two (2) years pursuant to the terms and conditions of the equity incentive plan. For 2012, a maximum of 2,020,000 share unit awards may be granted under the equity incentive plan.

Stock Exchange Release, published 7 December 2011 read more

Stock Option Plan 2011

The maximum total number of stock options issued is 7,401,000, and they entitle their owners to subscribe for a maximum total of 7,401,000 new shares in the Company or existing shares held by the Company. The Board of Directors will decide on the distribution of the stock options.  The stock options will be issued at no cost. The stock options are divided into three (3) tranches, of which 2,467,000 will be marked as 2011A, 2,467,000 will be marked as 2011B and 2,467,000 will be marked as 2011C.

According to the terms and conditions for the stock options, fifty (50) per cent of the maximum number of stock options will be granted to the group employees based on the fulfillment of targets determined each year by the Board of Directors, and the other fifty (50) per cent of the stock options will be granted without reference to the strategic and operational targets.

The subscription periods and prices for the shares by virtue of 2011 stock options are as follows:

Tranche​	​Subscription period	Subscription price​	Number of option rights​
2011A​	​1 Jan 2014 - 31 Dec 2015	​EUR 0.01 per share	​2,467,000
​2011B	​1 Jan 2015 - 31 Dec 2016	​EUR 0.01 per share	​2,467,000
​2011C	​1 Jan 2016 - 31 Dec 2017	​EUR 0.01 per share	​2,467,000
Total​	​	​	​7,401,000

 

The justification for the determination of the share subscription price is to achieve instant and efficient commitment of the group employees to the Company and to combine the objectives of the shareholders and the employees. The shares must be paid upon subscription. The share subscription price will be credited to the reserve for invested unrestricted equity of the Company. Should a stock option owner´s employment or service in a Group Company terminate, such person will, forfeit without compensation, all stock options for which the relevant share subscription period has not begun.

The Board of Directors decided on the new stock option plan 2011 on the basis of the authorization granted by the Company's Annual General Meeting of Shareholders held on 6 May 2011.
The Board of Directors may decide on any amendments and specifications to the terms and conditions of the stock options which are not considered as essential, as well as on all other matters related to the stock options.

Stock Exchange Release, published 7 December 2011 read more

Stock Option Plan 2009

The stock option plan of 2009 was resolved on by Biotie’s Board of Directors on 26 April 2009 based on the authorisation of the Company’s Extraordinary General Meeting of 14 November 2008. The number of option rights issued under the scheme was 7,000,000 and the option rights would entitle their holders to subscribe for 7,000,000 new shares in the Company. Of the option rights, 2,000,000 were to be marked with the symbol 2009A, 2,500,000 with the symbol 2009B and 2,500,000 with the symbol 2009C.

Each option right entitles its holder to subscribe for one new share in the Company. The option rights were offered for subscription to key personnel of the Company and to Biotie Therapies International Oy, a fully-owned subsidiary of the Company, free of charge.

The subscription periods and prices for the shares by virtue of 2009 stock options are as follows:
 

The subscription price has been determined based on the volume-weighted average trading price of the Company's share on NASDAQ OMX Helsinki Ltd during the period of 1 January - 31 March 2009, i.e. EUR 0.29, with an increase as follows: (i) option right 2009 A: an increase of approx. 38 per cent, (ii) option right 2009 B: an increase of approx. 141 per cent and (iii) option right 2009 C: an increase of approx. 245 per cent. The determination of the subscription price of the share is based on the market price of the Company's share and, at the same time, it sets an incentive to the key personnel in order to add ownership value. The subscription price of the shares shall be recorded in the Company's reserve for invested unrestricted equity.

No shares have been subscribed for under the stock option plan 2009 at 31 December 2011.

Swiss Option Plan

The Swiss company Synosia Therapeutics Holding AG (currently Biotie Therapies Holding AG) acquired by Biotie in February 2011 also has a stock option plan, based on which stock options have been granted to employees, directors and consultants. In connection with the completion of the acquisition of Synosia, the option plan was amended so that instead of shares in former Synosia Therapeutics Holding AG, an aggregate maximum of 14,912,155 shares in Biotie may be subscribed based on the plan. Biotie issued these 14,912,155 shares to its current subsidiary Biotie Therapies Holding AG in connection with the acquisition to be further conveyed to the option holders when they potentially exercise their option rights in accordance with the terms and conditions of the option rights. The last day for share subscriptions based on the option rights in the Swiss option plan is 7 December 2020.

The subscription prices for the shares by virtue of Swiss stock options are as follows: