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 31 August 2020 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 Annual General Meeting on 11 May 2021 resolved to approve the Board’s annual remuneration report for the remuneration paid in 2020.
Guidelines for determining remuneration and other terms of employment for senior management
Guidelines determined at the Annual General Meeting of Shareholders in Momentum Group AB (publ) on 31 August 2020.
The guidelines are to apply for remuneration for senior management in Momentum Group (”Momentum Group” or ”the Company”) agreed after the 2020 Annual General Meeting, when these guidelines were adopted, and to any subsequent amendments made after this Annual General Meeting to remuneration already agreed. The guidelines do not apply to remuneration resolved by the General Meeting of Shareholders. As regards employment relationships governed by other than Swedish rules and that refer to pension benefits and other benefits, appropriate adjustments may take place to comply with mandatory rules or established local standards, which should satisfy, as far as possible, the overarching purpose of these guidelines. Items stipulated for the Company also apply for the Group, where applicable.
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, requires that Momentum Group 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, any variable salary according to a separate agreement, pension and other benefits. A General Meeting of Shareholders may in addition – and independent of these guidelines – resolve on, for example, share and share price-based remuneration.
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.
In addition to fixed salary, the President & CEO and other senior management 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 percent 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 predetermined and measurable criteria determined by the Board of Directors and that 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 sustainability, customer satisfaction and quality. 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. Fulfilment 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 President & CEO. Variable cash payments to other senior executives are determined by the Compensation Committee. As regards financial targets, the assessment should be based on the Company’s latest published financial information.
The terms for variable salary should be designed so that the Board, in the event of exceptional financial conditions, is able to limit or refrain from disbursing variable salaries should such action be deemed reasonable. In drawing up variable remuneration for the Company’s management, the Board must consider including provisions that (i) impose conditions on the payment of a portion of such remuneration requiring that the achievements on which the payment was based is shown to be sustainable over time, and (ii) enable the Company to reclaim such remuneration 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 percent 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 Compensation Committee.
The President & CEO and other senior executives are covered by a defined-contribution pension, whose size depends on the outcome of the pension insurance policies taken out. Premiums for the defined-contribution pension must not exceed 40 percent of the fixed annual salary.
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 10 percent 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 6 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 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 on the date of termination and shall amount to not more than 60 percent of the fixed salary on the date of termination, subject to mandatory collective agreement provisions, and 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 of Directors has decided to establish a Compensation Committee. The Committee’s duties include preparing principles for remuneration of senior executives and the Board’s decision on proposals for guidelines for remuneration of senior executives. The Board shall prepare a proposal for new guidelines at least every fourth year 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 Compensation Committee shall also monitor and evaluate the programme for variable remuneration of senior executives, the application of the guidelines for the remuneration of senior executives, as well as the current remuneration structures and compensation levels in the Company. Remuneration to the President & CEO shall be decided by the Board of Directors after being prepared and recommended by the Compensation Committee, within the scope of established remuneration principles. Remuneration of other senior executives shall be decided by the Compensation Committee, within the scope of established remuneration principles and after consulting with the President & CEO. The President & CEO and other senior executives do not participate in the Board’s or Compensation Committee’s processing of and resolutions 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. A decision on any share and share price-based incentive programme addressed to senior executives shall be made by a 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 or sharebased 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. The cost and investment for the Company and the incentive and financial outcome for such senior executives shall under such circumstances essentially correspond to the share or share price-based incentive programme.
Derogation from the guidelines
The Board of Directors may resolve to derogate from the guidelines, either in full or in part, if in a specific case there is special cause for the derogation and a derogation is necessary to serve the Company’s long-term interests, including its sustainability, or to ensure the Company’s financial viability. As stated above, the Compensation Committee’s duties include the preparation of the Board’s decision on remuneration issues, which also refers to decisions on derogation from the guidelines. If the Board resolves to derogate from the guidelines, the 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 Momentum Group, 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.
The Board’s remuneration report 2020 adopted by the Annual General Meeting in Momentum Group AB on 11 May 2021.