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Remuneration

Principles for Remuneration to the CEO and Senior Executives

Adopted at Annual General Meeting 2017

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

Senior executives include the CEO, the senior management team and other executives reporting directly to the CEO.

Remunerations

The ÅF Group bases remunerations on the principle that remuneration shall be adjusted to conditions on the market facilitating that the Group can recruit and retain senior executives. ÅF employs the “grandfather principle”, meaning that the immediate superior of the manager who has negotiated the terms shall approve all employment terms.

The remuneration of senior executives consists of the components basic salary, variable remuneration, pensions and long-term incentive programmes. Other remuneration may also be provided, usually in the form of car benefit.

The Board shall safeguard an appropriate balance between fixed and variable remuneration.

The board may deviate from these guidelines if required by special circumstances.

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 Board sets the goals and salary of the CEO. 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. The board has decided on a specific incentive programme for the new CEO, connected to the Company’s growth target until year 2020. The size of the remuneration depends on the development of the stock price between first quarter of 2017 and first quarter of 2021.

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.

Pensions

Senior executives shall have defined contribution pension plans with premiums that reflect current market terms and conditions. All pension benefits shall be vested and thus not be dependent on future employment. Remuneration resulting from the short term and long-term incentive programmes shall not constitute pensionable salary.

Termination of employment and severance pay

The notice period for the CEO is 12 months when notice of termination is given by the Company and 6 months if given by the CEO. In the event that the company gives notice the CEO shall receive a severance payment corresponding to up to 12 month’s salary.

For other senior executives, the notice period is normally 12 months for the company and 6 months for the employee.

Current incentive programmes