Remuneration to senior executives

According to the Swedish Companies Act the annual general meeting each year, based on proposals from the Board, shall decide on guidelines for remuneration to senior executives.

The company’s variable remuneration system
Members of Group management receive both a fixed and a variable salary portion. The fundamental principle is that the variable salary portion may amount to a maximum of 30 per cent of fixed annual salary. The exception to this principle is the President whose variable salary portion may amount to a maximum of 50 per cent of fixed annual salary. Exceptions may also be made for other senior executives following a decision by the Board.

The variable salary portion is normally divided between several targets:

1) the Group’s earnings

2) earnings in the business unit for which the manager is responsible

3) individual/qualitative targets

The fundamental principle is that 50 per cent of the maximum variable salary portion for each quantitative target is paid when the budgeted profit level is attained, with a subsequent rising scale of up to 100 per cent. No variable salary portion is paid if these targets are not met. Individual/qualitative targets may amount to a maximum of 50 per cent of the total variable salary portion.

The variable salary portion is based on a period of service of one year. The targets for the President are determined by the Board. The targets for other senior executives are determined by the President following recommendations from the Board’s Remuneration Committee.

Incentive scheme
Following decisions taken at each Annual General Meeting (most recently the 2010 Annual General Meeting), the Group has implemented an annual employee share option scheme since 2005 in which approximately 150 senior executives in the Nobia Group participate. The purpose is to further strengthen the commitment of senior executives to and ownership in the company, and to attract, motivate and retain key employees in the Group. The allotment of employee share options is free of charge, but the allotment is conditional on a rising scale based on the average increase in earnings per share during the vesting period, which is three years. Accordingly, the earnings trend determines the number of employee share options that may be exercised of the total number of allotted employee share options.

Further information about the incentive schemes is provided in the Board of Directors’ Report in the 2009 Annual Report (page 19).