Guidelines for remuneration of senior executives
The AGM on 12 May 2022 adopted the following guidelines for the remuneration of senior executives that apply for remuneration agreed upon by the company after the 2022 AGM (however, no later than until the 2026 AGM).
In this context, the term senior executives refers to the CEO of Bokusgruppen and the other members of Group management.
The guidelines do not apply to issuances or transfer under Chapter 16 of the Swedish Companies Act or remuneration resolved or approved by the general meeting.
The guidelines’ promotion of the company’s business strategy, long-term interests and sustainability
Information about Bokusgruppen’s strategic priorities is provided in the company’s annual report and on the company’s website.
The successful implementation of Bokusgruppen’s business strategy and safeguarding of its long-term interests is dependent on Bokusgruppen being able to recruit, develop and retain senior executives with relevant experience, expertise and qualified leadership skills. It is therefore important for Bokusgruppen to be able to offer its senior executives a competitive total remuneration.
On this basis, the company is to endeavour to offer its senior executives terms that are market-based and motivating, as well as well-balanced and reasonable based on the expertise, responsibility and performance of the senior executives.
The remuneration guidelines are intended to provide a clear framework for remuneration of Bokusgruppen’s senior executives so that terms can be formulated that promote Bokusgruppen’s business strategy and long-term interests, including its sustainability, lasting growth and profitability.
Forms of remuneration
Remuneration may take the following forms:
- Fixed cash remuneration
- Variable cash remuneration
- Pension benefits
- Other benefits
Guidelines for fixed remuneration
Each senior executive is to receive fixed cash remuneration, in other words a fixed monthly basic salary. This comprises predictable remuneration that contributes to attracting and retaining qualified employees. The senior executives’ fixed remuneration is to be competitive and based on the individual’s experience, area of responsibility and performance.
Guidelines for variable remuneration
Senior executives may receive variable remuneration in addition to fixed remuneration. Variable remuneration is to be linked to pre-defined targets and measurable criteria that can be financial or non-financial. The targets and criteria should be designed to promote Bokusgruppen’s business strategy, long-term interests and sustainability by having a clear connection to Bokusgruppen’s business objectives and/or strategies.
For variable remuneration, limits for the maximum amount to be paid are set for each individual senior executive. Variable remuneration is paid in arrears and is conditional on the fulfilment of the targets or criteria linked to the remuneration proving to be sustainable from a long-term perspective and on the remuneration not having any material negative impact on Bokusgruppen’s position.
The AGM can also resolve that variable remuneration be paid in the form of shares in the company as well as its subsidiaries. In addition to promoting the company’s business strategy, long-term interests and sustainability, share-based remuneration must be designed to more closely align the interests of the senior executive with those of the company’s shareholders.
Whether or not the agreed targets or criteria for variable remuneration have been achieved is to be determined when the relevant measurement period has ended. The Board is responsible for any evaluation of variable remuneration paid to the CEO. The CEO is responsible for any evaluation of variable remuneration paid to the senior executive concerned. For financial targets, the evaluation is based on Bokusgruppen’s most recently published financial information.
For each senior executive concerned, variable remuneration may represent a maximum of 25 percent of the fixed remuneration and, if full variable remuneration, pension benefits and other benefits are paid, a maximum of 14 percent of the total remuneration.
Guidelines for pension benefits
Pension benefits are generally paid in accordance with rules, collective agreements (which may involve a right to early retirement), and, if relevant, common practice in the senior executive’s permanent country of residence. This comprises predictable remuneration that contributes to attracting and retaining qualified employees. Pension benefits comprise defined-contribution pensions, unless the individual in question is covered by a defined-benefit pension in accordance with compulsory collective agreement provisions. Pension benefits are vested when they have accrued. Variable remuneration is only pensionable if it follows from compulsory collective agreement rules.
For each senior executive concerned, defined-contribution pension benefits may represent a maximum of 33 percent of the fixed remuneration and, if full variable remuneration, pension benefits and other benefits are paid, a maximum of 19 percent of the total remuneration.
Guidelines for other benefits
Senior executives may be entitled to both general benefits offered to all employees and additional benefits. These benefits contribute to attracting and retaining qualified employees. Examples of other benefits that may be received by senior executives include car allowance, health insurance, household-related services and financial protection for family/survivors.
For each senior executive concerned, other benefits may represent a maximum of 15 percent of the fixed remuneration and, if full variable remuneration, pension benefits and other benefits are paid, a maximum of 9 percent of the total remuneration.
Guidelines for termination of employment and severance pay
Employment contracts between Bokusgruppen and its senior executives normally pertain to permanent employment. The contracts may be terminated without objective grounds by either party. Salary during the period of notice and any severance pay due are generally to comply with rules, collective agreements and common practices. In addition, the following applies: If employment is terminated by Bokusgruppen, the period of notice is not to exceed 12 months. In addition, severance pay based on fixed monthly salaries may be paid for a maximum of 12 months. The combined remuneration during the period of notice and period of severance pay is not to exceed a total amount corresponding to the agreed fixed monthly salary at the time of termination and contractual benefits for 12 months plus the fixed monthly salary for 12 months. If employment is terminated by the senior executive, the period of notice is not to exceed six months, without severance pay. If Bokusgruppen chooses to apply a non-compete agreement in certain cases, fixed remuneration may be paid during the relevant period.
Consideration of remuneration and terms of employment for other employees
In preparing the Board’s proposal for these remuneration guidelines, salary and terms of employment for Bokusgruppen’s other employees have been taken into account by ensuring that information about the company’s total salary costs and other personnel expenses is included in the Board’s support material for these guidelines. This information will be included in the Board’s annual remuneration report should the Board issue one.
Decision-making process for establishing, reviewing and implementing the guidelines
Bokusgruppen’s Board of Directors, or the Remuneration Committee if such a committee has been established by the Board to fulfil its tasks, is to monitor and evaluate the application of the guidelines for remuneration of senior executives, current programmes for variable remuneration of senior executives and programmes completed during the year, and applicable remuneration structures and remuneration levels within Bokusgruppen.
The Board is, to the extent such requirements follow from applicable law or stock exchange regulations, to prepare a remuneration report for each financial year and make the report (if the report is prepared) available to shareholders on Bokusgruppen’s website no later than three weeks before the AGM.
If a Remuneration Committee is established by Bokusgruppen’s Board, the Committee is to prepare the Board’s proposal for guidelines for remuneration of senior executives. Every four years, or earlier if there is a need for significant amendments to the guidelines, the Board is to prepare proposed guidelines for resolution by the AGM. If the Board has established a Remuneration Committee, the Committee's recommendation in this regard is to form the basis for the Board’s proposal. The AGM is to resolve on the proposal.
The guidelines apply to each remuneration obligation to senior executives, and any change to such an obligation, decided after the AGM at which the guidelines were adopted. The guidelines do not therefore have any effect on previously binding contractual obligations. The guidelines apply until new guidelines are adopted by the AGM and made available to the public on Bokusgruppen’s website.
When the Board considers and decides on remuneration-related matters, the CEO and other members of Group management are not present, insofar as they are affected by the matters.
Right to decide on deviations from these guidelines
The Board may decide to temporarily deviate from the guidelines, in whole or in part, if there are special reasons for doing so in an individual case and a deviation is necessary to promote Bokusgruppen’s long-term interests, including its sustainability, or to ensure Bokusgruppen’s financial viability. As stated above, the tasks of any Remuneration Committee appointed include preparing the Board’s decisions in the area of remuneration, including decisions to deviate from the guidelines. The Board is to report and explain any deviations in its annual remuneration report.
Review of and changes to the guidelines and explanation of how the shareholders’ views have been taken into account
These guidelines are decided by the 2022 Annual General Meeting and in addition to shareholders' right of proposal before the Annual General Meeting, shareholders have not had the opportunity to submit comments on these guidelines.
Share-based and share price-based incentive programmes
On 30 April 2021, Bokusgruppen’s AGM resolved on a warrants programme for the CEO and other Bokusgruppen senior executives. Through the programme, Bokusgruppen may issue up to a total of 647,054 warrants, of which the CEO is entitled to subscribe for up to 117,647 and other senior executives are entitled to subscribe for up to 58,823 per person.
The warrants programme is intended to create the conditions for retaining and recruiting talented employees at Bokusgruppen; to motivate the participants, increase their company loyalty and align their interests with those of Bokusgruppen’s shareholders; and to support shareholding in the company and thus Bokusgruppen’s long-term value creation.
The warrants must be subscribed for by no later than the sixth trading day after the first day of trading in the Bokusgruppen share on Nasdaq First North Premier Growth Market. The subscription price for the warrants is to be set at market price based on the original price (as defined below) and calculated using the Black & Scholes model. Each warrant entitles the holder to subscribe for one new share in Bokusgruppen at an exercise price per share equivalent to 130% of the original price (as defined below). “Original price” refers to the average volume-weighted price paid for the company’s share on Nasdaq First North Premier Growth Market for the first five trading days immediately following the first day of trading in the company’s share on Nasdaq First North Premier Growth Market. The original price and the subscription price calculated according to the above are to be rounded to the nearest SEK 0.10, with rounding down at SEK 0.05. The complete terms for the warrants series also include customary translation agreements, such as for dividends paid before the exercise date for the warrants. The company also retains the right to buy back warrants, for example when a participant’s employment at Bokusgruppen ends. If all warrants are exercised for shares, this would entail a total of 647,054 new Bokusgruppen shares issued, which would correspond to a dilution effect of approximately 4% of the total number of shares and votes in Bokusgruppen. The registration period for share subscription lasts for four months beginning on the third anniversary of the last subscription day for the warrants, which is the sixth trading day after the first day of trading in the Bokusgruppen share on Nasdaq First North Premier Growth Market.