Principles for Remuneration to the CEO and Senior Executives
adopted at Annual General Meeting 2015.
The Remuneration Committee
The Board appoints a Remuneration Committee to prepare proposals relating to the CEO's employment conditions, pension benefits and bonuses and to make decisions on corresponding conditions for the other senior executives. The Remuneration Committee shall also consider principles relating to terms of employment and other remuneration for all employees in the ÅF Group.
Senior executives include the CEO, members of the Company management team and executives who report directly to the CEO.
The ÅF Group bases remunerations on the principle that remuneration shall be on competitive market terms that enable the Group to recruit and retain senior executives. ÅF employs the "grandfather principle", meaning that all employment conditions shall be approved by the closest manager for the manager who has negotiated the conditions.
The remuneration of senior executives consists of the following components: basic salary, variable remuneration, pensions and long-term incentive programmes. Other remuneration may also be provided, usually in the form of car benefits.
The Board shall safeguard an appropriate balance between fixed and variable remuneration.
Basic salary and variable remuneration
These forms of remuneration are renegotiated annually. Remuneration shall be based on factors such as duties, expertise, experience, position and performance. In addition, the ratio between basic salary and variable remuneration shall be related to the individual’s position and duties. Variable remuneration for the CEO and other senior executives is a maximum of 60% of fixed annual salary. Fixed annual salary is current monthly salary multiplied by 12. The variable component of salary is based on outcomes in relation to targets. The targets and salary of the CEO are set by the Board. For other senior executives, these are set by the Remuneration Committee.
Long term incentive programmes
Key personnel within the ÅF Group may be eligible to participate in various types of incentive programmes on market terms. The emphasis shall be placed on share-related incentive programmes that aim to reward performance, increase and spread share ownership among senior executives, and encourage them to remain with the Company. The assumption is that a personal, long-term ownership commitment among key personnel stimulates greater interest in the business and in profitability, while also strengthening motivation and identification with the Company, thus safeguarding the Company's needs for key competence.
To encourage embracing the challenges presented by the integration of Epsilon, an incentive programme of a one-off nature was set up in 2013. The programme was offered to a limited number of key personnel who will receive an extra remuneration of a maximum of 60% of fixed annual salary during the period 2013-2015 if ÅF at the end of year 2015 has met certain financial goals relating to the integration.
The form and structure of incentive programmes shall be determined by the Board and shall, as regards share and share related programmes, be subject to the final decision of the Annual General Meeting.
Senior executives shall have defined contribution pension plans with premiums that reflect current market terms and conditions. All pension benefits shall be vested, and shall not, therefore, be dependent on future employment. The retirement age is 60 for the CEO and 65 for other senior executives. Remuneration resulting from the long term incentive programmes shall not constitute pensionable salary.
Termination of employment and severance pay
In the event that the CEO is given notice by the Company, the period of notice is 24 months. If the CEO gives notice, the period of notice is 6 months.
The period of notice between the Company and other senior executives, the period of notice from the Company's side is normally 12 months and from the employee's side, 6 months.