Remuneration guidelines and incentives
Guidelines for remuneration to the senior executives
Pursuant to the Swedish Companies Act, the annual general meeting of the Company shall adopt guidelines for remuneration to the senior executives. The extra general meeting on 13 August 2021 resolved to adopt the below guidelines for remuneration to the senior executives for the period until the close of the annual general meeting 2022.
General principles for remuneration and other terms and conditions
These guidelines apply to remuneration to senior executives in the company, including Board members to the extent remuneration is received outside of their board duties. For the purposes of these guidelines, senior executives include the CEO, the deputy CEO (if applicable), and certain other executives who, from time to time, are members of the Group Management and directly report to the CEO. As of the date of these guidelines, Cary Groups senior executives.
These guidelines do not apply to any remuneration resolved upon or approved by the general meeting and are only applicable to remuneration agreed, and amendments to remuneration already agreed, after the adoption of these guidelines by the annual general meeting 2021.
Purpose and general guidelines
These guidelines constitute a frame for which remuneration to senior executives may be decided by the board of directors during the period of time for which the guidelines are in force and on what principal terms.
The company’s guidelines are designed to ensure responsible and sustainable decisions regarding remuneration that support the company’s business strategy, long-term interests and sustainable business practices. To this end, salaries and other employment terms shall enable Cary Group to retain, develop and recruit skilled senior executives with relevant experience and competence. The remuneration shall be on market terms, competitive and reflect the performance and responsibilities of individual senior executives.
Remuneration and employment conditions for employees of the company have been regarded in the preparation of these guidelines. Information on the employees’ total income, the components of the remuneration and its conditions has been taken into account by the Remuneration Committee and Board of Directors when evaluating whether the guidelines and limitations set out herein are reasonable.
Remuneration for senior executives must be duly adjusted to comply with any local mandatory rules in the juris diction of their employment and may be duly adjusted to comply with established local practice, taking into account, to the extent possible, the overall purpose of the guidelines.
Elements of remuneration
The remuneration to the senior executives covered by these guidelines may consist of base cash salary, performance based cash salary, pension and non-financial benefits. In addition hereto, the general meeting may decide on share based long-term incentive programs in which senior executives can participate.
Principles for base cash salary
The base cash salary shall be in line with market conditions, be competitive, and shall take into account the scope of and responsibility associated with the position, as well as the skills, experience and performance of each senior executive.
Principles for performance based cash salary
Performance based cash salary (i.e., cash bonuses) shall be based on a set of predetermined and measurable performance criteria that reflect the key drivers for pursuing the company’s business strategy, long-term interests and sustainable business practices. Such performance criteria shall consist of key performance indicators both for the company’s overall and financial performance as well as individual performance. To which extent the criteria for awarding performance based cash salary have been satisfied shall be determined when the relevant measurement period of the performance criteria has ended. The Remuneration Committee is responsible for such an assessment with regards to performance based cash salary. Such performance based cash salary shall be evaluated and documented on an annual basis.
Performance based cash remuneration may amount to a maximum of 30 percent of the base annual cash salary for each senior executive.
Principles for pension benefits
Pension benefits shall be based on local practices and applicable law. Any deviations from local practices must be separately approved by the Remuneration Committee and documented in its report to the Board of Directors. Pension benefits may not amount to more than 35 percent of the annual base cash salary of each senior executive, provided that mandatory provisions of applicable laws or collective bargaining agreements do not require a higher pension provision.
Principles for non-financial benefits
Non-financial benefits shall be based on market terms and shall facilitate the performance of the duties of senior executives. The aim of the company is to have sufficiently competitive salary and incentive programs to minimize the need for additional non-financial benefits. Any non-financial benefits, beyond what is offered to the entire workforce of the company, shall be reviewed and approved by the Remuneration Committee. The total value of such non-financial benefits may not exceed 10 percent of the annual base cash salary of each senior executive. Other benefits may include, among other things, health insurance, company car and/or household assistance.
The Board of Directors may decide that market term consultancy fees shall be paid to members of the Board of Directors performing services for the company outside the scope of the directorship, provided that such services contribute to the company’s business strategy and long-term interests, including sustainability.
Share-based long-term incentive programs
Remuneration resolved upon or approved by the general meeting is not covered by these guidelines. Accordingly, these guidelines do not apply to, for example, share-based long-term incentive programs resolved upon or approved by the general meeting. However, as a principle, it is the aim of the Board of Directors to propose such programs to the annual general meeting each year, as attractive share-based long term incentive programs form a critical part of the total compensation for senior executives and will allow the Company to retain and hire the talent it needs for further growth.
Preparation and review of these guidelines
These guidelines have been prepared by the Board of Directors’ Remuneration Committee. The Remuneration Committee shall have a preparatory function, in relation to the Board of Directors, in respect of principles for remuneration and other terms of employment regarding the senior executives. With the recommendation of the Remuneration Committee as the basis, when the need arises for significant changes in the guidelines, but at least every fourth year, the board of directors shall prepare a proposal for guidelines for approval by the annual general meeting. The annual general meeting shall decide on such proposals. Approved guidelines may also be amended by way of resolution by general meetings other than annual general meetings.
Within the scope and on the basis of these guidelines, the Board of Directors shall, based on the Remuneration Committee’s preparation and recommendations, annually decide on the general principles and structure of the remuneration of senior executives and specific remuneration terms for the CEO and make such other resolutions in respect of remuneration for the CEO that may be required. The specific remuneration terms for each senior executive (other than the CEO) shall be prepared by the CEO and be agreed with the Chairman of the Board in consultation with the Remuneration Committee (if needed).
The members of the Remuneration Committee are independent in relation to the company and the senior executives. The CEO and the other senior executives do not participate in the Board of Directors’ handling of and resolutions regarding remuneration-related matters if they are affected by such matters.
Termination of employment
A mutual notice period of 12 months applies for the CEO. For other senior executives, the mutual notice period is set in relation to position. Base cash salary during the notice period and severance pay (if any) may not together exceed an amount corresponding to 18 months base cash salary.
Derogations from these guidelines
The Board of Directors may temporarily resolve to derogate from these guidelines, in whole or in part, if in a specific case there is special cause for such 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.
Long-term share based investment programs to senior executives and other employees
In connection with the admission of the company’s share to trading at Nasdaq Stockholm, Cary Group has a share-related investment program comprising a warrant program. The purpose of the investment program is among other things, to encourage a broad share ownership amongst the company’s employees, facilitate recruitment, maintain competent employees and the company’s shareholders and increase motivation to reach or excel the company’s financial goals.
An extraordinary general meeting held on 22 September 2021 resolved on issuing warrants as a part of an investment program to certain senior executives and key employees in the Group (the “Participants”).
In total the investment program will comprise at the most 30 individuals and a maximum of 2,351,122 warrants.
If fully subscribed and fully exercised, the increase of the company’s share capital is not expected to exceed 12,595 SEK. The maximum number of warrants which may be subscribed by the Participants, under assumption that the warrants are fully exercised, correspond approximately to 1.8 percent of the total number of shares in the company.
The warrants will be issued in a series. The warrants will be issued to the Participants at a marketing value calculated in an evaluation done according to the Black & Scholes model. The number of warrants offered to each Participant is dependent on the Participant’s position and responsibility within Cary Group.
The warrants can be exercised during a subscription period which runs during 6 months from the day which falls 3 years after the commencement of trade in the company shares at Nasdaq Stockholm. Each warrant can be used to subscribe for a share in the company during the subscription period.
The exercise price will correspond to 135 percent of the offer price of SEK 70 per share, but may not be lower than the quotient value of the share. The complete terms for the warrants also include customary recalculation provisions for distribution of dividends which are made prior to the exercise of the warrants and for consolidation or split of shares.
The company has reserved the right to buy back the warrants inter alia if the Participant’s employment in the company is terminated. Cary Group’s costs for the investment program during the program’s duration are, apart from administrative costs, limited to social security contributions for Participants in jurisdictions where participation in the investment program is taxed as earned income). These costs are dependent on the share price of Cary Group at the time of exercise of the warrants and would, for example, amount to approximately SEK 1.2 million at a share price at exercise of 200 percent of the offering price of SEK 70 per share.