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Annual Report 2008 - AMG Advanced Metallurgical Group NV

Annual Report 2008 - AMG Advanced Metallurgical Group NV

Management Board

Management Board position Minimum payout Target payout Maximum payout Chairman and Chief Executive Officer 0% 85% 255% Deputy Chairman 0% 75% 225% Divisional head 0% 65% 195% Chief Financial Officer 0% 65% 195% Long-term incentives In line with the proposed Remuneration Policy for 2009, the long-term incentives for the Management Board for 2009 consist of two programs: the Performance Share Unit Plan and the Stock Option Plan. To facilitate a smooth transition from the old remuneration policy to the new remuneration policy, the Performance Share Unit Plan has a phasing-in schedule as indicated below. PSU initial grant 2009 2010 2011 2012 2013 2014 Grant #1 Phase-in Grant 1 1/3 vest 1/3 vest 1/3 vest Grant #2 Phase-in Grant 2 No vest 1/3 vest 2/3 vest Grant #3 Normal cliff Grant 3 No vest No vest 3/3 vest This year’s grant (2009) will be the first grant under the new plan and vesting will apply by 1/3 a year starting at the first anniversary date. Vesting of the Performance Share Units under the first grant is subject to: • A minimum average ROCE over the performance period • The relative Total Shareholder Return compared to the Bloomberg World Fabricate/ Hardware Index (according to the scheme on page 52). With regard to the vesting of the PSUs, the following performance scheme applies: Key performance metrics 2009 2010 2011 2012 AMG ROCE Grant 1 Minimum level over Minimum average Minimum average period year 0 – year 1 level over period level over period year 0 – year 2 year 0 – year 3 AMG TSR Ranking Grant 1 TSR Ranking TSR Ranking TSR Ranking year 0 – year 1 year 0 – year 2 year 0 – year 3 The present value of the PSUs to be granted in 2009 is 1500,000 for Dr. Schimmelbusch, 1350,000 for Mr. Spector, 1150,000 for Mr. Jackson and Dr. Walter and 1100,000 for Mr. Levy. The present value of the PSUs is calculated as 80% of the fair market value at the grant date. With regard to the Stock Option Plan, each member of the Management Board will be granted stock options in 2009. Vesting of the stock options is subject to a minimum three year average ROCE requirement. The stock options will vest half after the third anniversary and half after the fourth anniversary. The present value of the stock options under the SOP to be granted in 2009 is 1500,000 for Dr. Schimmelbusch, 1350,000 for Mr. Spector, 1150,000 for Mr. Jackson and Dr. Walter and 1100,000 for Mr. Levy. The present value of the stock options under the SOP is calculated as 50% of the fair market value of the shares at the grant date. The number of stock options to be granted to members of the Management Board in the year 2009 shall not exceed the number of shares authorized by the General Meeting of Shareholders for issue by the Management Board, upon approval of the Supervisory Board, for 2009. In addition, for 2009, each member of the Management Board will receive an additional grant of stock options representing the decrease in the amount of the cash portion of the Base Salary for 2009. The terms of such stock options and a proposal to reserve shares for issuance in connection with such stock options will be presented to the 2009 General Meeting of Shareholders for approval. 54 Report of the Supervisory Board

Pension and other benefits The pension and other benefits of the members of the Management Board will not change compared to 2008. Contracts The current contractual agreements will not change compared to 2008. Main elements of the contract of the Management Board are published under the Corporate Governance section of the Company’s website. Shares Held by Members of the Management Board As of December 31, 2008, Dr. Schimmelbusch and Dr. Walter directly held, respectively, 14,150 and 6,000 of AMG’s shares. Dr. Schimmelbusch and Mr. Spector each hold derivative rights in the shares of AMG owned by Safeguard International and derivative rights in the convertible notes of Timminco owned by ALD International LLC. As of December 31, 2008, Safeguard International owned 7,142,662 shares of AMG, and ALD International LLC owned notes in AMG’s subsidiary, Timminco, convertible into 18,823,286 shares of Timminco. Through Safeguard’s and ALD LLC’s ownership positions, Dr. Schimmelbusch and Mr. Spector derivatively own in the aggregate approximately 517,740 shares in AMG and notes convertible into approximately 1,365,890 shares of Timminco. In addition, Dr. Schimmelbusch owns 211,000 shares of Timminco and has options to acquire an additional 1,300,000 shares of Timminco. Mr. Spector has options to acquire 930,000 shares of Timminco. Appreciation for the Management Board and the Employees of AMG The Supervisory Board would like to thank the Management Board for its extraordinary efforts in leading the Company through its first full year of operation after its initial public offering and listing on Euronext Amsterdam in 2007. The economic and financial circumstances have changed dramatically during the second half of the year 2008, and yet, the Management Board did an excellent job of keeping the Company focused on its operations as evidenced by the strong financial results. The Supervisory Board would also like to thank all the employees of AMG Group for their daily commitment to AMG. Annual Report 2008 The Annual Report and the 2008 Annual Accounts, audited by Ernst & Young Accountants LLP, have been presented to the Supervisory Board. The 2008 Annual Accounts and the report of the external auditor with respect to the audit of the annual accounts were discussed with the Audit Committee in the presence of the Management Board and the external auditor. The Supervisory Board endorses the Annual Report and recommends that the General Meeting of Shareholders adopts the 2008 Annual Accounts. Supervisory Board AMG Advanced Metallurgical Group N.V. Pedro Pablo Kuczynski, Chairman Wesley Clark Jack Messman, Vice Chairman Norbert Quinkert Guy de Selliers March 30, 2009 Report of the Supervisory Board 55

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