Remuneration Group management

Decisions regarding guidelines for salary and other remuneration to the CEO and other members of senior management are to be made by the Annual General Meeting after a proposal by the Board of Directors.

The Annual General Meeting on May 11 2022 resolved to adopt the current guidelines presented below in accordance with the proposal of the Board. These guidelines are in effect until an Annual General Meeting adopts new guidelines (when necessary or at least every four years).

The 2024 Annual General Meeting approved the PSP 2024 share savings programme aimed at Group Management and other senior executives based on performance shares. Participants were given the right to acquire Class B investment shares from Alligo during the period 31 May 2024 to 4 June 2024.

The AGM 2025 resolved to approve the Board’s annual remuneration report for the remuneration paid in 2024.

Guidelines for determining remuneration and other terms of employment for senior management

Guidelines determined at the Annual General Meeting of Shareholders in Alligo AB (publ) on 11 May 2022.

The guidelines are to be applied for remu-neration agreed after the 2022 Annual General Meeting and to subsequent amendments to remuneration already agreed The guidelines do not apply to remuneration resolved by the General Meeting of Shareholders As regards employment relationships governed by rules other than those of Sweden, the appropriate adjustments must be made to pension benefits and other benefits to comply with mandatory rules or established local standards, while also fulfilling the overall purpose of these guidelines as far as possible Provisions stipulated for the company also apply where appropriate to the Group.

The guidelines promotion of the Company’s business strategy, long-term interests and sustainability

The successful implementation of the company’s business strategy and protection of the company’s long-term interests, including its sustainability, require that the company can recruit and retain qualified employees. This requires that the company can offer competitive total remuneration, which is made possible through these guidelines. Total remuneration is to be in line with market conditions and competitive and be linked to responsibility and authority.

Forms of remuneration etc.

Remuneration is to be in line with market conditions and comprise the following components: fixed salary, possible variable salary according to a separate agreement, pension and other benefits. In addition, the General Meeting can, irrespective of these guidelines, resolve on share-based and share-price-based remuneration, for example:

Fixed salary

The fixed salary shall consist of a fixed cash salary and be reviewed on an annual basis. The fixed salary shall be competitive and reflect the requirements placed on the role in terms of qualifications, responsibility, complexity and the manner in which it contributes to achieving the business targets. The fixed salary shall also reflect the performance of the senior executive and thus be individual and differentiated.

Variable salary

In addition to fixed salary, the CEO and other senior executives may periodically, according to a separate agreement, receive variable salary for fulfilling agreed criteria. Any variable salary may consist of an annual cash salary and be equivalent to not more than 50 per cent of the fixed annual salary.

A fundamental balance must exist between fixed and variable salary to avoid unhealthy risk taking.

The fixed salary is to account for a sufficient portion of the senior executive’s total remuneration to allow the variable portion to be reduced to zero. The variable salary shall be linked to one or more predefined and measurable criteria determined by the Board of Directors, which may be financial, such as the Group’s and/or the business area’s earnings growth, profitability and cash flow, or non-financial, such as customer satisfaction, quality, environment, work environment and safety. The targets link the senior executive’s remuneration to the company’s earnings and thus promote the implementation of the company’s business strategy, long-term value creation and competitiveness.

The terms and bases of calculation of variable salary shall be determined for each financial year. Fulfillment of the criteria for payment of variable salary must be measurable over a period of one financial year Variable salary is regulated the year after qualification.

The degree to which the criteria were met is assessed when the measurement period for fulfilling the criteria for the payment of variable salary ends. The Board of Directors is responsible for determining variable cash payments to the CEO Variable cash payments to other senior executives are determined by the Remuneration Committee. As regards financial targets, the assessment is based on the company’s latest published financial information.

The terms for variable salary should be formulated such that the Board, in the event of exceptional financial conditions, is able to limit or refrain from making variable salary payments should such action be deemed reasonable. In drawing up variable remuneration for the company management, the Board must consider including provisions that:

• impose conditions on the payment of a portion of such remuneration requiring that the performance on which the payment was based is shown to be sustainable over time, and
• enable the company to reclaim such remuner-ation paid on the basis of information that is later shown to be manifestly erroneous

Further variable cash payments may be paid in extraordinary circumstances, assuming that such extraordinary arrangements are of limited duration and are only introduced at an individual level either to recruit or retain senior executives, or as remuneration for extraordinary work duties beyond the individual’s ordinary work duties. Such remuneration may not exceed an amount corresponding to 20 per cent of the fixed annual salary and not be paid more than once per year and per individual. A decision on such remuneration shall be made by the Board of Directors based on a proposal from the Remuneration Committee.

Pension

The CEO and other senior executives are covered by a defined contribution pension, the size of which depends on the outcome of the pension insurance policies taken out. Premiums for the defined contribution pension must not exceed 40 per cent of the fixed annual salary.

Other benefits 

Other benefits, including company car, travel concessions, extra healthcare insurance and occupational health services, shall be in line with market conditions and only constitute a limited share of total remuneration. Premiums and other costs pursuant to such benefits shall amount to not more than ten per cent of the fixed annual salary in total.

Conditions in the case of termination

All senior executives must observe a period of notice of up to six months if notice is given by the employee. If employment is terminated by the company, the period of notice applied is up to 12 months. If employment is terminated by the company, senior executives may be entitled, in addition to salary and other employment benefits during the period of notice, to severance pay corresponding to up to 12 months’ fixed salary. Severance pay is not offset against other income. No severance pay is to be paid if notice is given by the employee. In addition to severance pay, remuneration may be paid for non-compete undertakings. Such remuneration shall compensate for loss of income and shall only be paid when the former executive is not entitled to severance pay.

Remuneration shall be based on the fixed salary paid at the time of termination and shall amount to not more than 60 per cent of the fixed salary at the time of termination, subject to mandatory collective agreement provisions, and shall be paid for the period covered by the non-compete undertaking, which shall amount to not more than 12 months after the end of employment.

Salary and terms of employment

In the preparation of the Board’s proposal for these remuneration guidelines, salary and employment conditions for employees of the Company have been taken into account by including information on the employees’ total remuneration, the components of the remuneration and increase and growth rate over time, in the Compensation Committee’s and the Board’s basis of decision when evaluating whether the guidelines and the limitations set out herein are reasonable.

Preparation and decision-making process

The Board has established a Remuneration Committee. The Committee’s duties include preparing principles for remuneration of senior executives and the Board’s decision on proposed guidelines for remuneration of senior executives. The Board shall prepare a proposal for new guidelines at least every four years and submit it to the Annual General Meeting. The guidelines shall be in force until new guidelines are adopted by the General Meeting of Shareholders.

The Remuneration Committee shall also monitor and evaluate the programme for the variable remuneration of senior executives, the application of the guidelines for the remuneration of senior executives, as well as the current remuneration structures and remuneration levels at the company. Remuneration of the CEO shall be decided by the Board of Directors after being prepared and recommended by the Remuneration Committee, within the scope of established remuneration principles. Remuneration of other senior executives shall be decided by the Remuneration Committee, within the scope of established remuneration principles and after consulting with the CEO. The CEO and other senior executives do not participate in the discussions and decisions of the Board or the Remuneration Committee regarding remuneration-related matters in so far as they are affected by such matters.

Share-based incentive programmes resolved by the General Meeting of Shareholders

The Board of Directors shall each year assess the need for a share-based incentive programme and when necessary present proposals for a decision to the Annual General Meeting. Decisions on any share-based and share price-based incentive programme for senior executives shall be made by the General Meeting of Shareholders and contribute to long-term value growth. Senior executives may be offered an equivalent incentive to that which would have been paid under a share-based or share price-based incentive programmes, if such a programme is impracticable in the country where a senior executive is tax resident, or if in the company’s view such participation cannot take place at a reasonable administrative cost or economic contribution.

In relation to share-based remuneration, information shall be provided about acquisition periods and, where applicable, information about the obligation to hold shares for a certain period after acquisition. The cost and investment for the company and incentive and financial outcome for such senior executives shall under such circumstances essentially correspond to the share-based or share price-based incentive programme.

Deviation from the guidelines

The Board may resolve to temporarily derogate in part from the guidelines if in a specific case there is special cause for the derogation and a derogation is necessary to safeguard the company’s long-term interests, including its sustainability, or to ensure the company’s financial viability.

As stated in the section on preparation and decision-making process, the Remuneration Committee’s duties include the preparation of the Board’s decisions on remuneration issues, which also includes decisions on derogation from the guidelines. If the Board resolves to derogate from the guidelines, this decision shall be reported at the next Annual General Meeting.

The Board’s remuneration report

As of 2021, the Board compiles an annual report on how the guidelines for remuneration for senior management of Alligo, adopted by an Annual General Meeting in accordance with above, were implemented in the previous financial year. The report also provides information on remuneration to the President & CEO and Executive Vice President and a summary of the Company’s outstanding share-based incentive programmes. The report is prepared in accordance with the Swedish Companies Act and the Rules on Remuneration of the Board and Executive Management and on Incentive Programmes (the “Remuneration Rules”) issued by the Swedish Corporate Governance Board.