Remuneration to the Board of Directors
Fees to Board members elected by the annual general meeting are approved by the annual general meeting. Ahead of the annual general meeting 2019, the nomination committee will submit proposals in regard to remuneration. It was decided at the annual general meeting on 26 April 2018 that fees be paid at a rate of SEK 550,000 to the Chairman and SEK 300,000 to each of the other Board members who are not employed by the Company. In addition, it was decided that compensation for committee work shall be paid at a rate of SEK 125,000 to the Chairman of the Audit Committee and SEK 30,000 to each of the other members of the Audit Committee and SEK 25,000 to the Chairman of the Remuneration Committee.
Guidelines for remuneration to senior executives
According to the Swedish Companies Act, the general meeting shall determine the guidelines for remuneration to the CEO and other senior executives. At the annual general meeting on 2 May 2017, guidelines were adopted with the following content.
The Company's starting point is that remuneration and benefits should be paid at competitive and market based rates which will enable senior executives to be recruited and retained. Remuneration to senior executives may consist of basic salary, variable remuneration, pension benefits, other benefits and share-related incentive programs. The CEO and other senior executives are generally entitled to other customary benefits as may be considered reasonable in relation to market practice and the benefit to the Company.
Remuneration to the CEO and other senior executives is based on factors such as work tasks, expertise, experience, position and performance. Furthermore, the relationship between basic salary and variable remuneration shall be related to the person’s responsibilities and tasks. Variable remuneration shall be linked to predetermined and measurable criteria, designed to promote the Company's long-term value creation. Remuneration must not discriminate on grounds of gender, ethnic background, national origin, age, disability or other irrelevant factors.
The CEO and other senior executives shall be offered a fixed salary that is in line with market rates and based on the individual's responsibility, competence and performance. In addition to salary, the CEO and other senior executives are generally entitled to an annual bonus of up to 25 percent of base salary.
In addition to that agreed in collective agreements or other agreements, the CEO and other senior executives may have the right to arrange individual pension solutions. Waiver of salary and variable remuneration can be used to increase pension provisions provided that the costs to the company remain unchanged during the period.
A mutual notice period of six months applies for the CEO and a mutual notice period not exceeding six months shall apply for other senior executives. Severance pay, in addition to salary during the notice period, will only be paid to the CEO, who will be entitled to severance pay corresponding to 6 months salary in the event the Company terminates the contract of employment.
To the extent that a board member performs consultancy work on behalf of the Company, in addition to the assignment as board member, consultancy fees and other remuneration for such consultancy work should be payable. Such remuneration shall be paid on market terms and the remuneration as well as other terms shall be resolved upon by the board.
The Board of Directors shall be entitled to deviate from these guidelines in individual cases should there be special reasons for doing so.
The Board of Directors shall consider each year whether or not a share price-related incentive program shall be proposed to the annual general meeting. Issuance and transfer of securities decided by the general meeting in accordance with the rules of chapter 16 of the Swedish Companies Act are not covered by these guidelines in the extent that the annual general meeting has taken or will take such decisions.
Share-related incentive programs
Warrant program 2013/2017
The extraordinary general meeting of 5 November, 2013 decided in favor of a warrant program with the issue of no more than 1,750,000 warrants to employees of the Company. In total, 1,605,000 warrants were issued under the program. Each warrant gives the right to subscribe for one new share in the Company at an exercise price of SEK 9 per share. The warrants can be exercised as of 1 April 2014 until and including 31 March 2017. Thus far, 230,000 warrants have been exercised. With full exercise of the remaining warrants, the Company's share capital will increase by SEK 550,000 through the issue of 1,375,000 shares. The warrants are subject to normal recalculation conditions in connection with share issues etc.
Warrant program 2016/2020
The annual general meeting of 20 April, 2016 decided in favor of a warrant program with the issue of no more than 1,000,000 warrants to a Group subsidiary for transfer on to employees of the Company. In total, 1,000,000 warrants were subscribed for by the subsidiary of which 877,000 warrants have thus far been transferred to participants in the program while the remaining 123,000 warrants have been reserved for transfers to future employees. The transfer to the participants was made at market value calculated according to the Black-Scholes formula. Each warrant gives the right to subscribe for one new share in the Company at an exercise price of SEK 75 per share. The warrants can be exercised during the periods as of 1 June 2019 until and including 31 August 2019, and as of 1 March 2020 until and including 31 May 2020. With full exercise of the warrants, the Company's share capital will increase by SEK 400,000 through the issue of 1,000,000 shares. The warrants are subject to normal recalculation conditions in connection with share issues etc.
Employee stock option program 2016/2020
The annual general meeting of 20 April, 2016 decided to introduce an employee stock option program for a maximum of 1,000,000 employee stock options. In total, 900,000 employee stock options were issued free of charge to participants in the program. Granted employee stock options are vested with 1/3 on 1 May 2017, 1/3 on 1 May 2018 and 1/3 on 1 May 2019. Vesting requires that the participant continues to be employed by the Company and has not terminated his/her employment as of the date when the respective entitlement is vested. In the event the participant ceases to be an employee or terminates his employment with the Company prior to a vested date, stock options already vested can be exercised at the ordinary date for exercise according to that stated below, but no further vesting will occur. Each vested option entitles the holder to acquire one share of the Company at an exercise price of SEK 75. Vested employee stock options can be exercised during the periods from and including 1 June 2019 up to and including 31 August 2019, and from and including 1 March 2020 up to and including 31 May 2020. The employee stock options are subject to normal recalculation conditions in connection with share issues etc.
To enable the Company's delivery of shares under the employee stock option program and thereby to secure ancillary costs, primarily social security expenses, the annual general meeting also decided to issue up to 1,314,200 warrants to a wholly owned subsidiary. Total issued subsidiary 1,182,780 warrants. With full exercise of the warrants, the Company's share capital will increase by SEK 473,112 through the issue of 1,182,780 shares.
Employee stock option program 2018/2022
The annual general meeting of 26 April, 2018 decided to introduce an employee stock option program for a maximum of 2,300,000 employee stock options.
To enable the Company's delivery of shares under the employee stock option program and thereby to secure ancillary costs, primarily social security expenses, the annual general meeting also decided to issue up to 3,022,660 warrants to a wholly owned subsidiary.