Remuneration to senior executives
For the CEO and other members of the Group Management, the principles for remuneration, approved by the Annual General Meeting (“AGM”) 2014, applies. The Board of Directors proposes that the corresponding principles should be approved by the AGM 2015 for the period up to and including the AGM 2016.
These principles set forth in this item shall apply to remuneration and other employment conditions of the Group Management. The principles shall apply to contracts of employment entered into after the AGM 2015 and also to amendments made thereafter to contracts of employment which are in force. Remuneration to the Group Management is determined by the Board of Directors based on proposals from the Board of Directors’ Remuneration Committee.
Remuneration to Group Management 2013-2014 1)
Severance pay etc
President and CEO
Former President and CEO
Other members of Group Management
1) For more information on the Remuneration to Group Management see note 4 in the Annual Report.
The overall principles for remuneration to Group Management shall be based on the position held, individual performance, Group performance and remuneration shall be on a competitive basis in the country of employment. The overall remuneration package for Group Management comprises fixed salary, variable salary in the form of short-term incentives based on annual performance targets, long-term incentives, pension and other benefits. In addition, there are conditions on notice of termination and severance pay.
The Group shall aim to offer a competitive total remuneration level with a primary focus on “pay for performance”.
Fixed salary shall comprise the basis for total remuneration. The salary shall be related to the relevant market and shall reflect the degree of responsibility involved in the position. The salary levels shall be reviewed annually in order to ensure continued competitiveness and in order to correctly reward performance.
Variable salary (Short-Term Incentive “STI”)
Members of Group Management shall be entitled to STI in addition to the fixed salary. The STI shall be based on the financial result for the Group and/or for the business unit for which the member of Group Management is responsible. In addition, performance indicators can be used in order to focus on improvement areas of special interest to the company.
Clearly defined objectives for “target” and “stretch” levels of performance shall be stated in the beginning of the year and reflect the plans approved by the Board.
STI shall be dependent on the position and may amount to a maximum of 50 percent of the salary on attainment of the “target” level and a maximum of 100 percent of the salary on attainment of “stretch” level, which also is the maximum STI.
In the U.S., the STI component is normally higher and may in some cases amount to a maximum of 100 percent on attainment of the “target” level and a maximum of 150 percent of the salary on attainment of the “stretch” level.
The Board of Directors decides whether the maximum levels 50/100/150 percent shall be utilized or if a lower level shall be used.
Long-Term Incentive (”LTI”)
The Board of Directors will annually evaluate if a long-term incentive program (e.g. share-based or share-price based) should be proposed to the AGM. At the AGM 2014, a long-term incentive program, LTI 2014, was adopted.
For more information concerning the long-term incentive program, see Note 4 in the Annual Report.
Pensions and insurance
Pension and disability benefits shall be designed to reflect regulations and practice in the country of employment and the value of the benefits shall match normally accepted levels in the country. If possible, pension plans shall be defined-contribution plans in accordance with the Group Pension Policy.
Other benefits can be provided in accordance with normal practice in the country where the member of Group Management is employed. However, these benefits shall not constitute a significant part of the total remuneration.
Notice of termination and severance pay
Members of Group Management shall be offered notice periods and levels of severance pay which are in line with accepted practice in the country where the member is employed. Members of Group Management shall be obliged not to compete with the company during the notice period. Based on the circumstances in each case, a non-compete obligation with continued payment may be applied also after the end of the notice period. Such non-compete obligation shall not apply for more than 24 months from the end of the notice period.
Previously determined remuneration which has not become payable
The main conditions for remuneration to Group Management in the current employment agreements should be clear from Note 4 in the Annual Report.
Authority for the Board to deviate from the principles
Under special circumstances, the Board of Directors may deviate from these guidelines. In case of such deviation, the next AGM shall be informed of the reasons.