Flow Traders : Remuneration Report 2023

Remuneration Report

2023 Remuneration report

Letter from the Chairwoman of the Remuneration & Appointment Committee

Flow Traders' remuneration philosophy

2023 remuneration for the Executive Directors of the Board

3

5

7

FLOW TRADERS | REMUNERATION REPORT 2023

1

Remuneration report

Letter from the Chairwoman of the

Remuneration & Appointment Committee

Flow Traders' remuneration philosophy

Remuneration for the Board

Our remuneration approach is focused on providing enhanced transparency on performance to our stakeholders

Linda Hovius | Independent

Non-Executive Director and

Chairwomen of the

Remuneration & Appointment

Committee

FLOW TRADERS | REMUNERATION REPORT 2023

2

Letter from the chairwoman of the Remuneration & Appointment Committee

Dear Shareholder,

On behalf of the Remuneration & Appointment Committee, I am pleased to present our 2023 Remuneration Report. This report includes a summary of our remuneration policy currently in place, as approved at the 2023 AGM, and the remuneration paid out in 2023 in accordance with this policy. 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, last year 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. This year's remuneration report reflects the reporting requirements originating from the updated EU Shareholder Rights Directive and the Dutch implementation of this Directive.

2023 Main development

2023 AGM

In 2023, we put forward our revised remuneration policy for the Executive Directors and our enhanced

2022 remuneration report (advisory vote) for the AGM's approval. 76.9% of shareholders voted in favor of the remuneration report, which has been a great recognition of our efforts in enhancing the transparency and clarity of our report. This year's report builds on the steps taken towards enhanced transparency and provides enhanced clarity on the weighting of our Company (financial and non- financial) versus individual KPI's. The revised policy for the Executive Directors was approved by 76.01% of our shareholders, meaning it obtained the required 75% super majority from the AGM. As a result, we have now commenced operating under the newly approved Remuneration policy, including important enhancements such as formally introduced share-based compensation, enhanced deferral and vesting provisions, share-ownership encouragement and a formal cap on compensation.

Leadership changes

In 2023 we have had a number of leadership changes. Firstly, Dennis Dijkstra our former Chief Executive Officer (CEO) decided not to seek reappointment in 2023 as CEO and member of the Flow Traders Ltd. In addition, one of our Co- Founders Roger Hodenius also decided not to seek reappointment as Non-Executive member of the Board. Mike Kuehnel, until then serving as Chief Financial Officer (CFO) has succeeded Dennis and became CEO effective 1 February 2023. Following Mike's appointment as CEO. Hermien Smeets-Flier joined us from Achmea Investment Management and became Executive Director of the Board and CFO on Thursday 14 September 2023, through a special general meeting during which shareholders elected her with a majority of 99.8%. In September, Folkert Joling decided to step down as Chief Trading Officer and Executive Director of the Flow Traders Ltd. Board. At the same time, also a number of other appointments were made to the Executive Committee, including a newly appointed Global

Head of Risk and Global Head of Compliance. On behalf of the Board and of all Flow Traders employees I want to express our gratitude to Dennis, Folkert and Roger for their impactful contributions to the success of the Company over many years. With regard to the composition of the Board, we are very happy with our three new Non-Executive Directors (Karen Frank, Delfin Rueda and Paul Hilgers), who joined the Flow Traders Board in 2023 bringing a wealth of experience and insights. Delfin Rueda took the role of Chair of the Audit Committee and Paul Hilgers stepped in as Chair of the Risk Committee.

Organization and culture

Across 2023, the objective of the Board has been to expand the broader leadership group across regions and functions, to ensure clearer accountability as well as increasing alignment. This has been a key priority for the Remuneration & Appointment Committee, who have regularly discussed the division of roles and responsibilities in order to increase the effectiveness and efficiency of Flow Traders as well as to create opportunities for leadership to grow at different levels in the organization. Furthermore, the topic of culture and tone at the top is a recurring item on our agenda, as is DE&I and employee engagement. Engagement is an important element for the development of a culture in which employees can flourish and in light of the lower 2023 employee engagement scores, we have asked the Executive Directors to develop and implement a plan to increase employee engagement in 2024.

FLOW TRADERS | REMUNERATION REPORT 2023

3

Company performance and remuneration

Flow Traders delivered subdued financial and trading performance in 2023 compared to 2022, reflecting a less active trading environment. We recorded Normalized Total Income in 2023 of €299.8 million and demonstrated a healthy Normalized EBITDA margin of 30.8% with Normalized EBITDA of €92.2 million. Ultimately, we posted Normalized Net Profit of €59.4 million with Normalized Basic EPS of €1.38. This allowed the Company to pay a total dividend of €0.45 per share to shareholders, in-line with our dividend policy. The Non-Executive Directors, in close consultation with, and supported by, the Executive Directors have decided that the 2023 firm-wide variable remuneration pool will be €34.7 million (2022: €86.6 million), corresponding to 32.5% of operating result in 2023.

Linda Hovius

Chairwoman of the Remuneration & Appointment Committee

FLOW TRADERS | REMUNERATION REPORT 2023

4

Flow Traders' remuneration philosophy

We believe in operating a single & straightforward policy, where we reward all our employees, including the Executive Directors, based on the same remuneration philosophy and according to several defined principles. While we recognize that the corporate governance landscape has evolved in recent years, we believe that the principles that underline our approach remain relevant. The defined principles as described below guide the Remuneration and Nomination Committee when making decisions on the remuneration policy and its implementation.

Profit sharing

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. Given good performance employees from any role and office are entitled to receive variable remuneration relative to their contribution to the firm as a whole. We share one singular firm-wide variable remuneration pool. The total profit pool available for all employees and the Board is 32.5% of operating profit. In addition, we have a formal cap on compensation in place for any individual Executive Director of the Board where compensation is capped at 20 times the average FTE total remuneration.

Rewarding for exceptional performance

Our remuneration consists of a relatively modest base salary and a variable remuneration component.

Positive Company performance enables employees in any role to receive variable compensation relative to their contribution to the firm. The variable remuneration profit share is paid out partly in equity and directly reflects Company and personal performance. The pay-mix is skewed towards variable remuneration in good (financial) years. At the same time, if we make no profit, we do not pay- out variable remuneration - and reclaim outstanding deferrals if we sustain a loss.

Guarding long-term interests & stimulating risk awareness

We align employee pay with the interests of shareholders and our financial performance. Where Flow Traders is successful, the profits are shared with all stakeholders, including our employees. As such, variable pay is only possible in a year when a profit is made, and a significant part of any profit sharing (62.5%) is deferred for a multi-year period (up to 4 years) that remains at risk in full during this period. The cash component of the profit share vests on a pro-rata basis over a two-year period, with the first tranche vesting on the date of award. This aligns the interests of the Company and its shareholders with those of our employees by building long-term value and creating 'skin in the game' as well as continued loyalty. Where Flow Traders is less successful, there is a corresponding downwards impact on variable remuneration levels creating a risk aware culture and creating larger alignment with long term growth and reward (as deferred variable remuneration remains at risk until vesting).

Emphasizing share ownership

We see the advantages of employee ownership, ranging from positive effects on employee commitment (attracting and retaining employees), corporate innovation, our business performance (productivity and profitability as well as

competitiveness to our peers), through greater work effort of employees and a more cooperative and entrepreneurial corporate culture.

Social responsibility

The Company and its management believe in being a socially responsible Company. Enabling equal opportunities and fostering ownership is embraced across all areas of how we do business.

Flow Traders' approach to Executive Director remuneration

Our Executive Director remuneration policy aims to attract, motivate and retain Executive Directors to lead Flow Traders and sustainably execute Flow Traders' strategy. We aim to provide total remuneration that is competitive with our predominantly international, and in many cases privately-owned, competitors and design our remuneration structures to encourage our employees to stay with us for the longer term. Our Executive Director remuneration policy reflects our mission, corporate identity and values and fosters our unique Flow Traders culture. We provide our Executive Directors a remuneration package that consists of fixed remuneration and variable remuneration. The Executive Directors do not receive material ancillary benefits beyond variable remuneration. As permitted by the remuneration policy, total remuneration of Executive Directors is formally capped at a multiple of the average employee total remuneration. We present detailed insights into our Executive Director remuneration policy in the next section.

FLOW TRADERS | REMUNERATION REPORT 2023

5

Executive Director Remuneration at a glance

In accordance with our Remuneration Philosophy, we provide Executive Directors with a remuneration package that consists of fixed remuneration, in the form of a relatively modest base salary, and variable remuneration that is aligned with Company performance.

The table below provides insight into the main elements of our Remuneration policy

Base salary

Variable pay

• Relatively modest base salary Policy
• Executive Directors may be awarded a variable remuneration entitlement in the form of a percentage of the firm-wide variable remuneration pool.
• No variable remuneration pool will be available where Flow Traders was not profitable in a performance year.
• Up to 32.5% of Flow Traders' operating result over the performance year shall be available for variable remuneration.
• The majority of variable compensation is deferred over multiple years to create long-term perspective and align with long-term shareholder value.
• Total remuneration for any individual Executive Director of the board is formally capped at 20 times the average FTE total remuneration.

Operation

• Performance is measured over a one-year performance period.
• Variable remuneration awards are predominantly based on Flow Traders' operating profit.
• The performance of the Executives Directors will be assessed by the Non-Executive Board members against Company KPI's (70% weight) and individual targets (30% weight).
• The Company KPI scorecard consists of both financial and non- financial performance metrics.

Variable pay

Encourage share ownership

Deferral and vesting

• 50% of variable remuneration is paid out in equity.
• To enhance the long-term perspective and alignment with long-term shareholder value, 62.5% of the variable remuneration is deferred over a period of up to four years.
• The cash component of the variable remuneration will vest on a pro-rata basis over a two-year period, whereby the first tranche will vest at the date of award.
• The equity component of the variable remuneration will vest over a 4-year period on a pro-rata basis, whereby the first tranche will vest at date of award.
• All equity awards that vest are subject to a holding period of one year.

Equity awards

• Variable remuneration will be settled in both cash and Flow Traders' equity.
• 50% of any variable remuneration shall be paid out in the form of equity, which will vest over a four-year period
• Executive Directors shall retain 50% of the shares granted as part of remuneration until at least 12 months have lapsed after the end of employment, equalling 25% of total variable remuneration granted.

FLOW TRADERS | REMUNERATION REPORT 2023

6

2023 remuneration for the Executive Directors of the Board

Introduction

The remuneration (and other arrangements) for the Executive Directors are determined by the Non- Executive Directors of the Board (following proposals from the Remuneration & Appointment Committee). The Non-Executive Directors have assessed the remuneration of the Executive Directors based on their performance - both individual and as a team- and in accordance with Company performance in 2023. A detailed explanation of the assessment is included in the "Performance assessment" section on page 10.

Total remuneration

The table below shows the total remuneration awarded to individual Executive Directors in 2023.

• Flow Traders delivered a subdued financial and trading performance in 2023 compared to 2022, reflecting a less active market trading environment. We recorded Total Income in 2023 of €303.9 million and demonstrated a healthy EBITDA margin of 22% with EBITDA of €67.5 million. Ultimately, we posted Net Profit of €36.2 million with Basic EPS of €0.84.
• Despite the trading environment, we continued to make progress in terms of executing our strategic growth agenda with the further expansion of our ETP market making activities in

Shanghai and Chicago, the growth of our fixed income market making capabilities, and the broadening and deepening of our digital assets footprint with the launch of AllUnity, a Euro- denominated stablecoin venture with DWS and Galaxy Digital.

• The subdued financial performance translated to a smaller variable remuneration pool in 2023 compared to 2022. The firm-wide variable remuneration pool in 2023 represents 32.5% of the operating result, in line with the existing remuneration policy.3.8%
• In line with the proposed cap on total remuneration in the 2023 remuneration policy, the hard cap on total remuneration for each Executive Director in 2023 is €3,032,000. The cap is based on average employee total pay of €151,600, calculated according to the recommendation of the Dutch Monitoring Commission.

FLOW TRADERS | REMUNERATION REPORT 2023

7

Total remuneration of Executive Directors of the Board (in thousands of euro)

															Proportional
	Fixed		Variable Remuneration		Extraordinary	Pension	Total		split (%) of
	remuneration			items	scheme	remuneration	remuneration in
															fixed/variable
	Base salary		Cash		Company								Variable
Name			shares'
	2023	2022	2023	2022	2023	2022	2023	2022	2023	2022	2023	2022	2023	2022
			Upfront	Deferred	Upfront	Deferred
Mike Kuehnel, CEO (2023 -)1
156	95	125	125	425	425	250	850	-	-	-	-	656	1,795	24%/76%	5%/95%
Hermien Smeets-Flier, CFO
(2023 -)2	134	-	100	100	-	-	200	-	-	-	-	-	534	-	25%/75%	-
Dennis Dijkstra3	8	95	-	-	425	425	-	850	-	-	-	-	8	1,795	100%/0%	5%/95%
Folkert Joling4	67	95	400	-	425	425	-	850	8	8	-	-	475	1,803	14%/86%	5%/95%

1. Mike Kuehnel was appointed Chief executive Officer, succeeding Dennis Dijkstra, as per 1 February 2023, until then serving as Chief Financial Officer. Following a rebalancing of base salaries to be able to attract a new CFO externally, Mike Kuehnel's base salary was increased as of 14 September 2023. Mike Kuehnel joined Flow Traders as CFO in 2021.
2. Hermien Smeets-Flier was hired on 17 July 2023 and succeeded Mike Kuehnel as Chief Financial Officer, appointed to the Board on 14 September 2023.
3. Dennis Dijkstra stepped down as Chief Executive Officer and a member of the Board as per 1 February, 2023. The remuneration granted in capacity as CEO is shown in the table above. Given the resignation, no variable remuneration has been granted in 2023.
4. Folkert Joling stepped down as Chief Trading Officer and member of the Board as per 5 September 2023. The variable remuneration disclosed includes the total amount as agreed per the termination agreement.

For the year ended 31 December 2023 and 2022, 90% of total remuneration of Executive Directors of the Board was charged to subsidiaries through an intergroup cost-sharing arrangement.

FLOW TRADERS | REMUNERATION REPORT 2023

8

Base salary

In 2023, we had a few leadership changes. Our former Chief Executive Officer (CEO) Dennis Dijkstra decided not to seek reappointment and was succeeded by Mike Kuehnel, until then serving as Chief Financial Officer (CFO). Succeeding Mike, Hermien Smeets-Flier joined us from Achmea Investment Management as CFO. Following these leadership changes some amendments had to be made to the base salaries of the board members, as some rebalancing was conducted to be able to attract our new CFO externally. Even after the rebalancing, the CEO and CFO continue to receive a relatively modest annual base salary for the size of their role and responsibilities of €300,000. This modest base salary remains aligned with our Remuneration Philosophy, which heavily relies on variable remuneration based on positive Company performance.

Variable remuneration

The design of our variable remuneration reflects our remuneration principles. We operate a single incentive plan that drives and rewards both annual and long-term performance with a significant focus on the long-term through the multi-yearpay-out mechanism and half of the award being paid in Flow Traders equity. The value of the equity is directly linked to performance of the Flow Traders' share price from the date of grant to vesting. Further, any outstanding variable remuneration (deferred or unvested) remains at risk in full for future years.In line with our guiding principles, the Executive Directors share in the same firm-wide variable remuneration pool as all other employees. This pool of variable remuneration is primarily a function of operating results. While this structure is uncommon among listed companies, it is in line with the practice in our industry among both listed and non- listed peer companies, and necessary to be able to

attract, retain and motivate individuals of the highest caliber.

Executive Directors performance assessment

To determine the Executive Directors' variable remuneration awards, the Non-Executive Directors conduct a holistic assessment of the performance of each Executive Director and the Executive Directors as a whole in accordance with a defined scorecard. In this holistic performance assessment, the Non- Executive Directors consider performance against Company targets, which have a weight of 70% and include both financial and non-financial key performance indicators (KPIs). To ensure a balanced assessment, our KPIs do not have pre-determined weightings, allowing the Remuneration Committee to determine the overall outcome and ensure appropriateness in wider circumstances. Objectives for the KPIs included in the scorecard are set prior to the beginning of the year and where appropriate quantitative targets are predefined to ensure the assessment is robust. Individual performance is assessed alongside Company performance with a 30% weighting to determine the final variable compensation outcomes. Below we present the Company KPIs and the explanation on the performance assessment as conducted for 2023. Total remuneration amounts are formally capped for any individual Executive Director of the Board at 20 times the average FTE total remuneration.

FLOW TRADERS | REMUNERATION REPORT 2023

9