Remuneration to the Management Team
Gränges guidelines states that remuneration is to be competitive and consist of a fixed salary and a variable component in the form of various incentive programmes. The fixed salary is based on responsibility, performance, skills and the complexity and scope of the duties. Variable pay is to consist of an annual short-term incentive programme (STI) and a long-term incentive programme (LTI).
Annual short-term incentive programme (STI 2015)
The outcome of the STI is determined by a number of parameters consisting of financial key ratios for the Group, such as adjusted operating profit and capital employed, and individual pre- determined targets. Remuneration under STI 2015 are not to exceed 60% of basic pay.
Long-term incentive programme (LTI 2015)
LTI 2015 will run for three years and is structured as follows: An amount equivalent to the payout from STI 2015 for each participant will be reserved in a special so-called LTI bank. Provided that the participants remain in the employ of Gränges, the payout will be made at the rate of one third per year during the years 2017, 2018 and 2019, adjusted for Gränges’ total return. The total payout from LTI 2015 and STI payable in one year is maximised at 1.5 times an annual salary.
Both STI 2015 and the proposed LTI 2015 programme will provide cash payouts.
Benefits that are not directly related to fixed and variable pay, such as car allowance, should facilitate the execution of duties and be in line with standard practices in the market for this target group.
Pension benefits are to comply with Swedish laws and relevant collective agreements, and be limited to ITP plans (supplementary pension for salaried employees in industry and commerce). Gränges thus has both defined contribution and defined benefit commitments based on individual circumstances. Pension terms are to be in line with market norms. The retirement age for the CEO is 65. The retirement age for other senior executives is 60–65, depending on in which country they are employed.
Period of notice of termination
The contract between the company and Chief Executive Officer stipulates a mutual 12-month period of notice. Additionally, in the case of termination by the company, severance pay is payable without deduction for an additional twelve months. The contracts between the company and other senior executives stipulate a mutual six-month period of notice. Additionally, in the case of termination by the company, severance pay is payable of an additional 12 months, without deduction for the first six months.
Employee incentive program 2014
Gränges’ employee incentive program (Long Term Incentive, LTI 2014) addresses the company’s executive management and other key employees. The program aims to promote and stimulate continuous loyalty with the operations by linking interests of such persons with the interest of the shareholders. The LTI 2014 comprises a total of 1,000,000 employee warrants. The program runs for two years as from the listing on Nasdaq Stockholm on the 10 October, 2014, followed by a conversion period of one year. The strike price is SEK 51. If exercised in full, the LTI 2014 would lead to a dilution of 1.3 percent of the total number of shares in the company.
Participation in the program require that the executive management and other key employees that are entitled in the program, still are employed by the company when the vesting period expires. The program is limited to three times the yearly salary for each participant.
The total costs for the incentive program, including social insurance contribution, amounts to approximately SEK 4.8 million at the time for allotment (share price SEK 42,50). The Black & Sholes model has been used in the calculations.