Remuneration to senior executives
The forms of compensation, etc.
The company shall offer a total compensation on market terms and that is competitive that enables qualified senior executives to be recruited and retained. Remuneration within the company shall be based on principles of performance, competitiveness, and fairness.
Remuneration shall be on market terms and consist of the following components: fixed salary, any variable remuneration according to separate agreement, pension, and other benefits. In addition, the General Meeting may, if resolved, make an offer for long-term incentive programs such as share or share price-related remuneration or incentive programs. Such long-term incentive programs are resolved by the General Meeting and are therefore not covered by these guidelines.
The fixed salary consists of fixed cash salary and is reviewed annually. The fixed salary reflects the requirements for the position regarding competence, responsibility, complexity and how the position is expected to contribute to achieving the business goals. Furthermore, the fixed salary shall be individual and differentiated, and reflect predetermined and achieved performance targets.
In addition to fixed salary, the CEO and other members of the executive management may, in accordance with separate agreement, receive variable remuneration in the event of compliance with predetermined criteria. Any variable remuneration consists of annual variable cash remuneration and may not exceed 50 percent of the fixed annual salary for the CEO and 30 percent for other senior executives.
The variable remuneration shall be linked to one or more predetermined and measurable criteria and shall aim to promote the company’s business strategy and long-term interests, including its sustainability, by, for example, having a clear link to the business strategy or promoting the executive’s long-term development. The criteria can be both financial and non-financial. The criteria may also consist of personalized quantitative or qualitative objectives. By linking the remuneration of senior executives to the company’s performance and sustainability, the targets promote the implementation of the company’s business strategy, long-term interests and competitiveness. The criteria apply for one fiscal year at a time. Compliance with criteria for the payment of variable remuneration is measured annually. This establishes how well the criteria have been met. The remuneration committee is responsible for the assessment of variable cash remuneration to the CEO. Regarding variable cash remuneration to other executives, the CEO is responsible for the assessment. Financial targets shall be assessed based on the latest financial information published by the company. At the end of the measurement period for the fulfilment of criteria for the payment of variable remuneration, the extent to which the criteria have been met shall be determined. The remuneration committee is responsible for this assessment. As far as financial targets are to be considered, the assessment is based on the latest financial information published by the company.
The board of directors shall have the possibility, by law or agreement and with the restrictions that may result from it, to recover, in whole or in part, variable remuneration paid on incorrect grounds. The board of directors has the right, in the event of unforeseen events and at any time, to change or eliminate the variable remuneration.
For the CEO, pension benefits, including health insurance, are defined contribution and premiums shall not exceed 20 percent of the fixed annual salary. For other members of the executive management, pension benefits, including health insurance, are defined contribution unless the executive is covered by a defined benefit pension in accordance with mandatory collective agreement provisions. Premiums for defined contribution pensions shall not exceed 30 income base amounts annually. Variable cash remuneration shall not be pensionable.
Other benefits, which may include, inter alia, car benefit, travel benefit and medical insurance, are market-based and form a limited part of the total remuneration. Premiums and other costs arising from such benefits may amount to a maximum of 10 per cent of the fixed annual salary.
Terms and conditions of termination
For the CEO, the notice period of 6 months applies in the event of termination by the CEO. In the event of termination by the company, the notice period of 12 months applies. In the event of termination by the company, variable remuneration that has been earned but has not yet been received by the company at the time of termination of work shall be paid to the CEO no later than at the end of the employment. Notice periods for other senior executives normally amount to 3 to 6 months. In the event of termination by the company, notice period of a maximum of 6 months applies. No severance pay is agreed with senior executives.
Remuneration to members of the board of directors
Board members are only entitled to receive such remuneration as has been resolved by the General Meeting. Board members may in special cases be remunerated for services within their respective areas of expertise or competence provided that such services performed is outside of what can be considered as the usual assignment as a board member. For these services (including services provided by a wholly owned company) a market-based fee shall be paid provided that such services contribute to the implementation of the company’s business strategy and the safeguarding of the company’s long-term interests, including its sustainability. Such consulting fees may not exceed the annual board fees for each board member and shall be governed by a consultancy agreement approved by the board of directors (however, pursuant to the Conflict of Interest Act).
Salary and terms of employment of employees
In preparing the board’s proposal for these remuneration guidelines, salary and terms of employment for the company’s employees have been taken into account by the fact that information on employees’ total remuneration, the components of the remuneration and the increase and rate of increase of the remuneration over time, have formed part of the remuneration committee and the board’s basis for decision when evaluating the reasonableness of the guidelines and the limitations that result from them. The remuneration committee, together with the CEO, also ensure counteracting discrimination and promoting equal opportunities and rights regardless of gender, ethnicity, transgender identity, religion, disability, sexual orientation or age, from a remuneration perspective.
Preparation and decision-making process
The board of directors has established a remuneration committee consisting of the chairman of the board and two board members. The members of the remuneration committee shall be independent in relation to the company and the company management. The committee’s tasks include, among other things, preparing the board’s decision on proposals for guidelines for remuneration to senior executives. The board of directors shall prepare proposals for new guidelines at least every four years and submit the proposal for resolution at the Annual General Meeting.
The guidelines apply until new guidelines have been adopted by the general meeting. The remuneration committee monitors and evaluates programs for variable remuneration to company management, the application of guidelines for remuneration to senior executives and current remuneration structures and levels in the company. Remuneration to the CEO is resolved within the framework of approved principles by the board of directors after preparation and recommendation by the remuneration committee. Remuneration to other senior executives is decided by the CEO within the framework of established principles and after reconciliation with the remuneration committee. The CEO or other members of the executive management are not present at the board’s processing of and decisions on remuneration-related matters, to the extent that they are affected by the issues.
Deviation from the guidelines
The board of directors may decide to deviate from the guidelines in whole or in part, if in an individual case there are special reasons for this and a deviation is necessary to satisfy the company’s long-term interests, including its sustainability, or to ensure the company’s financial viability. As stated above, it is part of the remuneration committee’s tasks to prepare the board’s decisions on remuneration issues, which includes decisions to deviate from the guidelines.