Compensation

Board of Directors

The remuneration packages for Board members are resolved by the AGM on proposal by the Nomination and Compensation Committee. The AGM confirmed an annual fee for year 2007 of EUR 78,000 for the Chairman of the Board, EUR 48,000 for the Vice Chairman of the Board, and EUR 30,000 for other Board members, and that 40 percent of the annual fee will be used to acquire Konecranes shares from the market to each Board member. Should the receipt of shares entail administrative difficulties for a Board member the compensation will be paid in its entirety in cash. In addition, a compensation of EUR 1,200 was approved for attendance at Board committee meetings. The 2007 annual remuneration for the Board was paid according to the fees approved by the AGM. Non-executive members of the Board of Directors do not receive stock options. Board members employed by Konecranes do not receive separate compen-sation for their Board membership.

President and CEO

The Nomination and Compensation Committee reviews the President and CEO’s performance. Based on this review and other relevant facts, the Board determines the total compensation package of the President and CEO.

On December 15, 2006, the Board of Directors approved a long-term incentive scheme directed to Pekka Lundmark. The incentive scheme was implemented by disposing of Konecranes shares in the Company’s possession on the basis of the authorization granted to the Board of Directors by the AGM on March 8, 2006. Pursuant to the incentive scheme, 50,000 shares were sold in January 2007 on terms and conditions defined in the terms of subscription. The shares sold are subject to a five-year transfer restriction. As part of the program, the Company paid a separate bonus to Pekka Lundmark to cover the taxes levied as a result of the arrangement.

The purpose of the incentive scheme is to motivate the Managing Director to contribute in the best possible manner to long-term success of the Company and increased shareholder value for all shareholders of the Company. The agreed price per share of 12 euros corresponds approximately to the average share price during the period that Mr. Lundmark had been CEO of the company, and this was the ground for determining the share price.

The terms of subscription for the directed issue of shares relating to the President and CEO’s incentive scheme are available on the Company’s website. The main elements of the President and CEO’s remuneration and other benefits for the year ended December 31, 2007 were as follows: Pekka Lundmark received a salary and fringe benefits of EUR 354,831, a bonus of EUR 165,000, and a separate bonus of EUR 519,052 as part of the incentive program described above.

Group Management

The Nomination and Compensation Committee reviews Group compensation policies and issues guidelines for the same. In accordance with these guidelines, the President and CEO confirms all individual top management compensation packages. Compensation packages normally include a base salary, fringe benefits (typically use of company car), pension schemes and performance related bonus schemes. Bonus schemes are always based on written contracts. Bonus criteria vary, but are usually based on profitability, asset management and growth. Bonuses are related to the individual’s performance, as well as to the performance of the organizational unit he/she is directly responsible for. Numerical performance criteria are used, in preference of personal assessments.

The remuneration of the Group Executive Board is present-ed in note 13 to the Financial Statements.

Stock Options

The Company has issued stock option plans for its key employees, including top and middle management, and employees in expert positions. A summary of the four ongoing Konecranes stock option plans (1997, 2001, 2003, 2007) is available under Stock Option Plans. Stock option plans require a corresponding resolution by a General Meeting, and all plans have been unanimously adopted by relevant General Meetings. Certain large institutional shareholders have adopted guidelines for stock option plans. These guidelines offer advice on the acceptable (maximal) dilution effect, levels of incentives, lock-up periods, length of programs etc. The Company's option plans have been designed to essentially comply with these guidelines.

The purpose of the option schemes is to motivate key personnel to contribute to the long-term success of the Company, and to create a common understanding and commitment for the creation of shareholder value. Further, a specific articulated purpose is to create a joint sense of common ownership among managers. This is believed to be of specific value for a company of Konecranes’ nature with a structure covering many countries, cultures and customer industries.

Upon proposal by the President and CEO, the Board decides on the distribution of options to key personnel. In granting options to the President and CEO, the Board acts independently. At the end of 2007, approximately 320 employees were part of the Group’s stock option plans.