Guidelines for remuneration to senior executives
At the Extraordinary General Meeting held on 13 October 2021, it was resolved that the following guidelines as to the remuneration of senior executives be adopted.
The guidelines shall apply to the remuneration of the Chief Executive Officer, the Deputy Chief Executive Officer, other members of the Executive Committee and, where applicable, the remuneration of the members of the Board of Directors in addition to Director’s fees. The guidelines do not cover remuneration approved by the general meeting.
The remuneration of the Chief Executive Officer is prepared by the Remuneration Committee and determined by the Board of Directors at an ordinary Board meeting, which is not attended by the Chief Executive Officer. The Board of Directors instructs the Chief Executive Officer to make arrangements with other senior executives in accordance with the guidelines adopted below. The remuneration levels etc. for the other senior executives as proposed by the CEO are subject to approval by the Remuneration Committee.
The supporting of the Company's business strategy, long-term interests and sustainability provided by the guidelines
Successful implementation of the Company's business strategy and the safeguarding of the Company's long-term interests, including its sustainability, requires the Company to be able to recruit and retain skilled employees. In order to do so, the Company must be able offer competitive remuneration, which these guidelines allow.
Variable cash remuneration falling within the scope of the guidelines shall be aimed at promoting the Company's business strategy and long-term interests, including its sustainability.
Forms of remuneration
The Company shall offer market-based levels of remuneration and terms and conditions of employment in order to retain and, where required, attract and recruit senior executives with the required qualities, skills and experience. Furthermore, the remuneration shall contribute to the fulfilment of the Company's objectives and be consistent with the interests of the shareholders. Remuneration to the Company's management is paid mainly in the form of cash salary, customary benefits and pension. Remuneration may be a combination of fixed and variable remuneration.
The fixed salary shall be deemed to represent fair market remuneration for work performed satisfactorily.
Any variable remuneration shall be subject to fulfilment of annually established criteria. Such criteria may consist of well-defined targets for the financial performance of the Company or its subsidiaries or the like, and shall be designed in such a way as to promote the Company's business strategy, long-term interests and sustainability.
Any variable remuneration may not exceed 30 percent of the fixed annual salary in any one financial year.
Fulfilment of the criteria for the payment of variable remuneration must be measurable over a period of one year. At the end of the measurement period for fulfilment of the criteria for payment of variable remuneration, the extent to which the criteria have been fulfilled shall be assessed. The Remuneration Committee is responsible for carrying out this assessment. As far as financial targets are concerned, the assessment shall be based on the latest financial information published by the Company.
In addition, the Board shall annually evaluate whether or not long-term share or share-price-related incentive schemes should be proposed to the annual general meeting.
Pension benefits shall be defined contribution and may not exceed 30 percent of the fixed annual salary. Variable remuneration shall not be pensionable.
Other benefits may include health insurance, car allowance, housing allowance and health and fitness allowance. Such benefits, where provided, shall be in line with market conditions and shall form only a limited part of the total remuneration. Premiums and other costs associated with such benefits may not exceed a total of 10 percent of the fixed annual salary.
Notice period and severance pay
The notice period may not exceed twelve months in the case of termination by the Company and twelve months in the case of termination by the executive.
Termination pay shall not exceed 12 months' salary. Any severance payment shall not exceed the equivalent of twelve months' salary.
Salary and terms and conditions of employment for employees
In preparing the Board's proposals for these Remuneration Guidelines, the remuneration and terms and conditions of employment for the Company's employees have been taken into account. This has been done by including data on the total remuneration of employees and the components and evolution of the remuneration over time as part of the decision-making process of the Remuneration Committee and the Board of Directors when assessing the appropriateness of the guidelines and the resulting limitations.
Consultancy fees to Board members
If a director performs work on behalf of the Company, over and above that person’s Board duties, a consultancy fee and other remuneration for such work may be paid by special decision of the Board of Directors.
Decision-making process for establishing, reviewing and implementing the guidelines
The Board has established a Remuneration Committee. The Committee's tasks include preparing the Board's decision on proposed guidelines for remuneration to senior executives. The Board shall draw up proposals for new guidelines no less than every four years and submit them to the annual general meeting for decision. The guidelines shall remain in force until new guidelines are adopted by the general meeting. The Remuneration Committee shall also monitor and evaluate variable remuneration programmes for senior management, the application of the guidelines as to remuneration of senior executives and the structures and levels of remuneration in force in the Company. The members of the Remuneration Committee are independent of the Company and its management. The CEO and other members of senior management are not present when the Board or the Remuneration Committee discusses and resolves on remuneration-related matters, insofar as they are concerned by such matters.
Breach of the guidelines
The Board of Directors is entitled to decide to temporarily deviate from the above guidelines in whole or in part, if in a particular case there are specific reasons for doing so and a deviation is necessary in order to meet the long-term interests of the Company, including its sustainability, or to ensure the financial viability of the Company. If the Board of Directors deviates from the guidelines as to remuneration to senior executives, this shall be disclosed in the remuneration report to the next annual general meeting. As stated above, the Remuneration Committee's tasks include preparing the Board's decisions on remuneration issues, including decisions on deviations from the guidelines.