THE GUIDELINES’ PROMOTION OF THE COMPANY’S BUSINESS STRATEGY AND LONG-TERM INTERESTS, INCLUDING SUSTAINABILITY
The purpose of the guidelines is to provide a structure that adapts the remuneration to the Company’s business strategy and long-term interests, including sustainability. The Company’s business strategy requires that the Company can continue to attract, motivate and retain key employees. The guidelines must therefore enable appropriate and competitive remuneration in line with market terms to senior executives.
For more information about the Company’s business strategy, please visit www.norva24.com.
FORMS OF REMUNERATION
The remuneration shall be in accordance with market terms and consist of the following components:
- Fixed cash salary
- Variable cash salary
- Other benefits
In addition, the General Meeting may – without regard to the remuneration guidelines – decide on, for example, share- and share-related remuneration.
Fixed cash salary
Fixed cash salary shall be the basis for the total remuneration. The salary shall reflect the individual’s role, experience and contribution to the Company and be based on market terms.
Variable cash salary
The variable cash salary for the CEO and other senior executives may amount to a maximum of 75 percent of the annual fixed cash salary.
The variable cash salary shall be linked to pre-determined and measurable criteria that may be financial or non-financial. The criteria can vary from year to year, to reflect business priorities, typically with a balance of criteria relating to the Group’s financial performance (for example profitability and cash flow) and to non-financial performance (for example important strategic, or other sustainability related measures). By applying pre-determined financial and non-financial performance measures that reflect the Company’s business priorities in this manner, the Company believes that it improves its ability to attract, motivate and retain key employees, which contributes to the Company’s business strategy and long-term interests, including sustainability.
Fulfilment of criteria for payment of variable cash salary shall be measured during an evaluation period of at least 12 months. At the end of the evaluation period for meeting criteria for payment of variable cash salary, an assessment shall be made to determine to what extent the criteria has been met. The Remuneration Committee is responsible for conducting such assessment with respect to variable cash salary for the CEO and other senior executives.
Before payment of variable remuneration is made, the remuneration committee shall determine whether the results of the assessment are reasonable, taking into account the Company’s financial results and financial position. The Company reserves the right to reclaim any variable remuneration paid out based on incorrect data and assumptions.
For the CEO and other senior executives, pension benefits shall be determined based on a premium. Pension premiums for premium based pension shall amount to a maximum of 30 percent of the fixed cash salary.
Other benefits can include, among other things, life insurance, health insurance and a company car. For the CEO, such other benefits may not exceed 15 percent of the fixed cash salary and for other senior executives, other benefits may not exceed 15 percent of the fixed cash salary.
Additional benefits and other types of remuneration can be offered under certain circumstances, e.g. in case of re-location or in connection with assignments in other countries, in which case benefits and remuneration is determined according to local practice.
With regards to conditions for employment concerning pension benefits and other benefits, appropriate adjustments may be made to comply with compulsory rules or local practice, whereupon the overall purposes of the guidelines shall be satisfied to the extent possible.
Long-term incentive plan
With the aim of aligning the interests of senior executives with those of shareholders, to encourage senior executives’ acquisition of equity in the Company, and in addition to the annual variable remuneration described above, the Company has established a long-term incentive programme offered to the Company’s senior executives (“LTIP”). The LTIP is approved by the general meeting of shareholders of the Company and, thus, is not covered by these guidelines. Further information about the Company’s LTIP is available on the Company’s website.
Notice of termination and severance pay
In case of termination by the Company, the notice period shall not exceed 12 months. In case if termination by the Company, fixed cash salary during the notice period and severance pay shall, combined, not exceed an amount equivalent to 12 months fixed cash salary for the CEO and other senior executives. In case of termination by the employee, the notice period may amount to a maximum of 6 months, with no right to severance payment. The CEO and other senior executives may have a right to accrued variable cash salary, however not for a period exceeding the remainder of the employment.
The Board of Directors may decide that market term consultancy fees shall be paid to members of the Board of Directors performing services for the Company outside the scope of the directorship, provided that such services contribute to the Company’s business strategy and long-term interests, including sustainability.
DECISION-MAKING PROCESS FOR ESTABLISHING, REVIEWING AND APPLYING THE GUIDELINES
The Board of Directors has established a Remuneration Committee consisting of members of the Board of Directors appointed by the General Meeting. The Committee is tasked with the preparation of the Board of Directors’ proposal for remuneration guidelines for senior executives. The Board of Directors shall prepare proposals for new remuneration guidelines when material changes are required or, at least, every fourth year and present the guidelines for the General Meeting to resolve on. The guidelines shall apply from the approval by the General Meeting, until new guidelines have been resolved upon by the General Meeting (and for a maximum of four years). The Remuneration Committee may seek approval of new guidelines at an earlier point in time if significant modifications of the guidelines become necessary.
The Remuneration Committee shall also follow up and evaluate programmes for variable remuneration to senior executives, the application of the remuneration guidelines and current remuneration structures and levels within the Company.
The Remuneration Committee’s members are independent in relation to the Company and the Group management.
CONSIDERATION OF SALARY AND EMPLOYMENT TERMS FOR EMPLOYEES
In the Remuneration Committee’s preparation of the Board of Directors’ proposal for remuneration guidelines, information on total remuneration for employees, the components of the remuneration and increases of the remuneration, as well as the rate of increases over time, has been considered and forms a part of the basis for the Remuneration Committee’s and the Board of Directors’ decisions when preparing and evaluating the fairness of the guidelines and the limitations they impose. The difference between the remuneration for the CEO, and, where applicable, the deputy CEO and the Board of Directors, and the remuneration for other employees will be disclosed in the yearly remuneration report.
DEVIATION FROM THE GUIDELINES
The Board of Directors may decide to temporarily, wholly or partially, deviate from the guidelines if there are special circumstances in an individual case and deviation is necessary in order to support the Company’s business strategy and long-term interests, including sustainability, or to secure the Company’s financial capacity. As stated above, the Remuneration Committee is responsible for preparation of the Board of Directors resolutions on matters relating to remuneration, which includes resolutions on deviation from the remuneration guidelines.
BOARD OF DIRECTORS
The amount of remuneration granted to the Board of Directors, including the Chairman, is determined by resolution at the annual general meeting. On the extraordinary general meeting held on 30 June 2021, it was resolved that the remuneration to the Chairman of the Board of Directors Vidar Meum shall be NOK 600 000 and that the remuneration to Arild Bødal, Terje Bøvelstad, Mats Lönnqvist, Einar Nornes, Monica Reib and Ulrika Östlund, respectively, shall be NOK 300 000 for their Board of Directors assignment. Further, it was resolved that Allan Engström and Linus Lundmark will not receive any remuneration for their assignments as members of the Board of Directors.
Furthermore, it was resolved that the remuneration for work in the audit committee or in the remuneration committee shall be NOK 100 000 to the chairman of the audit committee and with NOK 50 000 to ordinary members of the audit committee as well as NOK 70 000 to the chairman of the remuneration committee and with NOK 40 000 to ordinary members of the remuneration committee. The members of the Board of Directors are not entitled to any benefits upon ceasing to serve as a member of the Board of Directors.
The following table sets forth the remuneration paid to the Board of Directors of the Company by Norva24 Holding AS (the “Former Parent Company”) in 2020 (amounts in NOK thousand):
|Name||Remuneration (NOK thousand)|
|Vidar Meum (Chairman)||150|
|Einar Nornes 3)||0|
The following table sets forth the remuneration paid to the members of the Group Management for the year ended 31 December 2020 (amounts in NOK thousand):
|Name||Gross base salary including bonus||Pension||Other remuneration||Total|
|Henrik Damgaard, CEO||4 804||72||173||5 049|
|Other members of the Group management (5 individuals)||10,386.9||339.6||253.2||10,979.7|
1) The board members Allan Engström and Linus Lundmark represents the Principal Owner. No board fee has been paid from the Company.
2) No longer members of the Board of Directors of the Company.
3) Former employee representative of the Board of Directors of the Former Parent Company.
LONG-TERM INCENTIVE PROGRAM
At the time of the initial public offering of the Company’s shares on Nasdaq Stockholm Norva24 will have a share based incentive program (the “Long-term Incentive Program”). The purpose of the program is, inter alia, to encourage a widespread ownership of shares among the Company’s employees, retain competent employees, achieve increased alignment of interests between the employees and the Company’s employees as well as increase the motivation to achieve or exceed the Company’s financial targets.
Share based incentive program
The Company will establish a new company (the “MipCo”), which initially will be owned by the Company. Further, the Company will transfer shares in Norva24 Holding AS (the Group’s former parent company) corresponding to 3% of the total number of shares in Norva24 Holding AS to MipCo.
Certain member of the management and key employees in the Group (the “Participants”) will be offered to acquire shares in MipCo at fair market value of the shares in MipCo. The number of shares that each Participant is offered depends on the Participant’s position and responsibility in the Group. After the acquisitions have been completed, the Participants will own ordinary shares and the Company will own preference shares in MipCo.
In total, the incitement program will include a maximum of 22 individuals. The Participants will have the opportunity to acquire warrants in the Company against payment consisting of their shares in MipCo, which will then be used by the Participants and the Participants will then obtain shares in the Company on the day occurring three years after the initial public offering of the Company’s shares on Nasdaq Stockholm. The Participants rights to obtain warrants for the full value of the MipCo shares is dependent on for how long the Participants have been employed during the three year period as well as the reason for the termination of the employment.
At the time once three years have passed from the date at which the Company’s shares were admitted for trade at Nasdaq Stockholm, the Company will acquire the participants’ MipCo shares by transferring warrants in the Company to the participants. I connection with the acquisition of the participants’ MipCo shares, the warrants shall be exercised by the participants to subscribe for new shares in the Company.
For each MipCo share the Company shall transfer such number of warrants, that the fair market value of the total number of warrants which are transferred to the participant is equal to the fair market value of the total number of MipCo shares which are acquired from the participant in question. Notwithstanding the foregoing, a participant shall under no circumstances, have the right to receive more than 8.4 warrant(s) per MipCo share, and the total number of warrants which are transferred to the participants for the acquisition of all MipCo shares, shall under no circumstances exceed 6,207,880 warrants. If the total number of warrants that a participant is entitled to is not an integer, it shall be rounded down to the nearest integer.
The acquisition of MipCo shares and the transfer of warrants (and exercise of warrants by the participant) shall normally take place within one month after three years have passed from the date at which the Company’s shares were admitted for trade at Nasdaq Stockholm, however, it might be postponed, if necessary due to regulatory or administrative reasons. The valuation of MipCo shares and warrants shall, however, be made at the date once three years have passed from the admission for trade of the Company’s shares at Nasdaq Stockholm.
Each warrant entitles the participant to subscribe for a certain number of shares in the Company, where the number of shares is dependent on the increase or decrease of the value of the Company’s shares during the vesting period of three years, the subscription payment for one share shall, after the transfer of the warrant to the participant, correspond to the quota value of one share in the Company. Each warrant can at the most entitle the holder to one share in the Company (with reservation for recalculation in accordance with standardized conditions for recalculation).
On exercise of all warrants, which have been issued, for subscription of shares in the Company a maximum of 6,207,800 new shares in the Company are issued (with reservation for potential recalculation), corresponding to approximately 3.29 percent of the total number of shares and votes in the Company, at the date of proposal to issue warrants.
The Company has retained the right to repurchase the shares, against payment with warrants, that a Participant owns in MipCo, e.g. if the Participant’s employment in the Company is terminated.