The Company is to offer its management competitive levels of compensation to ensure that senior executives can be recruited and retained.
Remuneration guidelines for senior executives
Under the Swedish Companies Act, the general meeting is to resolve on remuneration guidelines for the president and other senior executives. The annual general meeting on 20 June 2018 adopted guidelines with essentially the following content.
The Company is to offer its management competitive levels of compensation to ensure that senior executives can be recruited and retained. The compensation package paid to Company management is to be composed of base salary, customary employment benefits and pension. Variable pay may also be offered.
The base salary is to account for the individual’s areas of responsibility and experience, and be reviewed annually. The division between base salary and any variable pay is to be proportionate to the executive’s responsibilities and authorities. The variable pay is always to be limited to a maximum amount in advance, linked to predetermined and measurable criteria and designed to achieve greater alignment between the interests of the executive and the Company’s shareholders.
In employee share and share-price incentive programs, the vesting period or, alternatively, the period from when the agreement is concluded until a share may be acquired, should not be less than three years. The terms for any variable pay should be designed so that the board, in the event of particularly difficult financial conditions, is able to limit or refrain from making a variable payment should such payment be deemed unreasonable and inconsistent with the Company’s responsibilities in general towards its shareholders. In regard to any annual bonuses, it should be possible to limit or refrain from making a variable payment, should the board consider this warranted for other reasons.
Pension terms are to be competitive with those paid to executives in similar organizations, and be based on defined-contribution solutions.
Base salary during a notice period and any severance pay, in total, may not exceed an amount equivalent to the base salary for one year.
Executives who hold a position on the Company’s board are not to be paid separate board fees.
The board may deviate from these guidelines in individual cases should there be special reasons for doing so.
Employee share option program
The 2011 annual general meeting resolved to introduce a performance-based employee share option program. This program includes senior executives and other key individuals at the Company. There is also a program for employees who joined the Company within four years after it was founded (2008-2012). The program comprises a total of 7,778 employee share options, of which a total of 7,450 employee share options (allotted free of charge to program participants) were outstanding on 30 September 2018. The Company has issued warrants to ensure the delivery of the shares to the appropriate employees when they exercise the employee share options.
The employee share options may be exercised to subscribe for shares up to and including 31 December 2019. Each employee share option carries entitlement to subscription for 20 shares for an exercise price of SEK 15 per share (provided that no recalculation takes place).
The Company’s senior executives who are participants of the program are Mats Gullberg, Nils Kristensen, Charlotta Göransson and Jonas Melin.
LTI – Program
At the extraordinary general meeting on 12 November 2018, it was decided that a long-term incentive program in the form of a performance share program should be implemented in connection with the listing on Nasdaq Stockholm. In total, up to 16 of the Company’s key employees, including the CEO and the management team, will be offered to participate in the incentive program. The participants will be divided into three categories depending on their position.
The purpose of the incentive program is to create a close community of interests between the employees and the shareholders, to recruit and retain competent employees and to raise motivation to achieve or exceed the Company’s strategic and operational goals. The introduction of the performance share program is conditional upon the Company’s share being listed on Nasdaq Stockholm no later than the day before the 2019 annual general meeting.
Participation in the performance share program enables employees to receive performance shares, provided that a number of targets set by the board regarding product development, product approval, and commercialization are achieved.
Performance shares will be allotted after the expiry of a performance period that runs for three years from the date of implementation of the incentive program. The rights to receive performance shares will be distributed free of charge no later than the day before the annual general meeting in 2019. In addition to the requirement that the internal goals are met, the allocation of performance shares requires that the participant has been permanently employed at the Company throughout the performance period. The board, or a special committee established by the board, will be responsible for the further development and management of the terms of the incentive program.
The performance share program is estimated to comprise a total of no more than 211,048 shares, which corresponds to approximately 0.92 per cent of the total number of shares after the implementation of the Offering and after implementation of the incentive program, based on full subscription in the Offering. Of the total number of shares included in the incentive program, 160,590 shares may be transferred to participants in the program while 50,458 shares may be transferred to Nasdaq Stockholm in order to cash-flow secure certain payments related to social security contributions related to the incentive program.