The Annual General Meeting 2020 resolved that the fees paid to the Board of Directors shall amount to SEK 1,950,000, of which SEK 450,000 shall be paid to the Chairman of the Board of Directors and SEK 300,000 shall be paid to other non-employee Members of the Board of Directors elected by the Annual General Meeting. For committee work in the Remuneration Committee, a total fee of SEK 40,000 shall be distributed with SEK 20,000 per member. For committee work in the Sustainability Committee, a total fee of SEK 60,000 shall be distributed with SEK 20,000 per member. For the Audit Committee, which consists of Members of the Board of Directors, fees for participation shall be included in the ordinary Board of Directors fees. Fees to the auditors shall be paid in accordance with approved invoice.
The AGM 2020 also resolved on the following guidelines for remuneration to senior executives.
Application of the guidelines and who they apply to
These guidelines for remuneration to senior executives apply to Members of the Board of Directors, the CEO and the deputy CEO as well as other persons in the group executive management. The guidelines shall apply to remuneration that is agreed upon, and to changes made in already agreed upon remuneration, after the guidelines have been adopted by the 2020 Annual General Meeting. The guidelines do not apply to renumeration decided upon by the general meeting of shareholders.
The Board of Directors shall be entitled to, in whole or in part, temporarily deviate from these guidelines if special circumstances justify doing so in an individual case, and such deviation is necessary in order to meet the Company’s long-term interests and sustainability or to ensure the Company’s financial viability. If such deviations occur, it must be reported in the renumeration report before the next Annual General Meeting. These guidelines are in effect from the Annual General Meeting 2020. Matters regarding deviations from the guidelines shall be prepared by the Remuneration Committee and decided upon by the Board of Directors.
The guidelines’ promotion of the Company’s business strategy, long-term interests and sustainability
The Company’s strategy is to own, manage and develop housing in Sweden and community properties in the Nordic region in the long term, and to pursue active property development where cash-flow properties are converted into development rights for housing. For further information regarding the Company’s strategy, please refer to www.sbbnorden.se.
The Board of Directors regards it as critical for the successful implementation of the Company’s business strategy and the safeguarding of the Company’s long-term interests, including its sustainability, that the Company can recruit and retain senior executives with the competence and capacity to achieve set goals. To achieve this, the Company must be able to offer competitive packages of renumeration to motivate senior executives to do their outmost. Variable remuneration covered by these guidelines shall be based on criteria aimed at promoting the Company’s business strategy and long-term interests, including its sustainability, and where the fulfilment of the criteria is determined by the method set out below.
Forms of renumeration etc.
The renumeration and other terms of employment for senior executives shall be in line with market levels. The renumeration consists of fixed base salary, variable renumeration, pension benefits and certain other benefits. In addition, the general meeting may – regardless of these guidelines – resolve on share-related or share-price related renumeration.
Fixed base salary
Fixed base salary for the CEO and other senior executives is reviewed annually. The fixed base salary constitutes 60 – 80 percent of total remuneration excluding LTI and under the assumption of a 50 percent outcome of STI.
Short-term incentive program (STI)
The renumeration shall consist of three parts, each of which shall entitle to one third of the maximum amount of renumeration. Two of the parts are determined by certain performance targets for the Company being achieved, while the remaining part is determined by individual performance targets being achieved. In order for the remuneration to be paid out, it is required that the individual performance targets are achieved and that at least one of the parts concerning performance targets for the Company is achieved.
The criteria that is to be applied regarding performance targets for the Company are NAV growth, ie. growth of net share value for shares in the Company according to the adopted annual report, and net operating income, ie. the Company group’s rental income subtracted by property costs according to the adopted annual report. The criterion that is to be applied regarding individual performance targets shall be established before the end of the first quarter of the financial year to which the remuneration relates and must be as specific as the criteria regarding performance targets for the Company. The criteria are designed with the intent to promote the Company’s business strategy, long-term interests and sustainability, and thus the Company’s long-term value creation.
Any payment of remuneration shall be made in conjunction with the salary payment that falls closest to general meeting during which the Company’s annual report is adopted regarding the qualifying year. The remuneration can amount to a maximum of 50 per cent of the fixed base salary and, at full outcome, up to a maximum of 40 per cent of total remuneration excluding LTI. The variable remuneration grants the right to pension benefits and constitute grounds for holiday pay. The Company is not able to recover the compensation.
Long-term incentive program (LTI)
Senior executives may be offered incentive programs which shall be primarily share-related or share price-related. An incentive program shall be intended to improve the participants’ commitment to the Company’s development and is implemented according to market terms. Share and share price-related incentive programs must be decided by the general meeting and are therefore not covered by these guidelines.
The agreed retirement age for the CEO is 65 years. Other senior executives have no specially agreed retirement age. All pension benefits for senior executives are based on defined contribution, meaning the Company pays an individually agreed defined pension premium for senior executives. Except for the aforementioned pension benefits, the Company has no pension obligations to senior executives.
Company car etc.
Senior executives are if necessary, which in each case is decided by the CEO, entitled to a company car. In addition, all senior management are covered by, inter alia, customary health insurance. Other benefits comprise 10 – 25 percent of total remuneration excluding LTI and under the assumption of a 50 percent outcome of STI.
Notice of termination and severance pay
Senior executives’ employment or contractual agreements shall be valid for an indefinite period of time or for a specified period of time. The CEO is subject to a twelve-month notice period upon termination by the Company. In addition to salary during the notice period, the CEO is entitled to severance pay corresponding to twelve times the fixed monthly salary. During the notice period, the current employment contract with associated benefits continue to apply. Other senior executives have a notice period of six months and are not entitled to any severance pay in addition to their salary during the notice period. During the notice period, the current employment contract with associated benefits continues to apply. In cases where severance pay would be paid, no other benefits will apply after the expiry of the notice period. Fixed salary during the notice period and severance pay may not, in total, exceed an amount equal to two years’ worth of the fixed base salary.
Salary and terms of employment for employees
In preparing the Board of Directors’ proposal regarding guidelines for remuneration to senior executives, the salaries and terms of employment for the Company’s employees have been considered and has formed part of the decision basis for the Remuneration Committee and the Board of Directors’ evaluation of the fairness of the guidelines and the limitations arising from them.
The Board of Directors shall prepare a proposal for new guidelines when there is a need for substantial changes to the guidelines, however at least every four years. The Board of Directors’ proposal is prepared by the Renumeration Committee. The Chair of the Board of Directors may be the Chair of the Renumeration Committee. In order to manage conflicts of interest, other members of the Renumeration Committee who are elected at General Meeting of shareholders must be independent in relation to the Company and the senior executives.
The Renumeration Committee shall, inter alia, monitor and evaluate the application of the guidelines for renumeration to senior executives decided by the Annual General Meeting. When the Renumeration Committee has prepared the proposal, it is to be submitted to the Board of Directors for decision. The CEO and other senior executives shall not participate in the Board of Directors’ processing and decisions regarding renumeration-related matters in so far as they are affected by such matters.
If the Annual General Meeting resolves not to adopt guidelines when there is proposal for such a resolution, the Board of Directors shall submit a new proposal no later than the next Annual General Meeting. In such cases, renumeration shall be paid in accordance with the currently valid guidelines or, if no guidelines exist, in accordance with the Company’s practice.
When deemed necessary, external advice is sought in the preparation of these issues.