Remuneration 2023

Remuneration policy

The Chairman of the Board and Board members receive Board fees in accordance with the resolutions of the AGM. Remuneration is not paid to members of the Board employed within the Group.

Remuneration to the CEO is determined by the Board on the basis of proposals made by the Remuneration Committee. Remuneration to other senior management has been approved by the Remuneration Committee following proposals from the CEO.

Remuneration to the CEO and other senior management consists of basic salary, variable remuneration, company car benefits and pensions. The balance between basic salary and variable remuneration is to be in proportion to the employee’s responsibilities and authority.

For the CEO, annual variable remuneration is maximised at the equivalent of 50 per cent of fixed salary. The variable salary is based on the Group’s earnings per share. In addition to the annual bonus, the CEO is covered by the performance-based share-sav- ings plan described below.

For other senior management, annual variable remuneration is capped at 30–40 per cent of basic salary. Variable remuneration is typically based on improvement, compared to the previous year, in terms of each individual’s respective responsibility for operating profit, the Group’s earnings per share and the outcome of individual activity plans.

Pensions

The retirement age of the CEO and other senior management is 65. Defined-contribution pension insurance corresponding to 35 per cent of the fixed annual salary is paid for the CEO. Pension benefits for other senior management are paid within the framework of the applicable ITP supplementary pension plan.  

Severance Pay

For the CEO, the notice period for termination of employment is 12 months if termination is initiated by the company and six months if initiated by the CEO. If termination is initiated by the company without reason for termination, the CEO is entitled to severance pay corresponding to 12 months’ salary. Severance pay is deducted against other earned income.

For other senior management, the notice period is 3–12 months if initiated by the
Company, and 3–6 months if initiated by the employee. No separate agreements exist
regarding retirement age, future pension or severance pay to Board members and other
senior management.

Performance-based share-savings plan

The company’s 2012 AGM resolved to implement a performance-based share-savings plan for the CEO, senior management and a number of key employees within the Group. Additional performance-based share-savings plans were then approved by the AGMs from 2013 to 2023, with the exception of 2020. In the most recently decided plan, 2023, a total of 94 people were offered the opportunity to participate, of which 43 accepted. Participation in the plan requires a personal investment in Fagerhult Group shares. Under normal circumstances, following a three-year vesting period, a cost-free allocation of shares in Fagerhult Group can be made to the participants, provided that certain conditions are met.

In order for the share awards to be eligible for the allotment of shares, participants are
required to remain in employment within the Group and to retain their entire investment in
Fagerhult Group shares acquired within the framework of the plan during the vesting period. The allocated share awards (known as performance share awards) also require meeting a financial performance target related to Fagerhult Group’s average earnings
per share.

The 2018 plan was concluded in 2021. The conditions for the performance share
awards pertaining to average earnings per share for 2018–2019 were not fulfilled and no
shares were allocated to the participants. The 2019 plan, which was to end in 2022, did
not meet the conditions (pertaining to average earnings per share for 2019–2022) that
would allow the award of performance shares. For this reason, the Board decided that
the plan participants would be entitled to retrieve their investment in Fagerhult Group
shares in advance (in 2021 instead of in 2022).

For the remaining plans (2021, 2022 and 2023), in accordance with the conditions for
the plans, the remaining participants have acquired a total of around 137,512 shares in
Fagerhult. A total of approximately 823,916 share awards have been allocated to plan
participants, of which 106,400 to the CEO and 149,744 to other senior management.
For the 2023 plan, the financial performance target pertains to average earnings per
share for the 2023–2025 financial years. A maximum of about 266,940 shares can be
allocated as part of the 2023 plan. The valuation of the allocated share awards is based
on the market price of the share at the time of allotment, with a deduction for the lack of
dividend. For the 2022 plan, the financial performance target pertains to average
earnings per share for the 2022–2024 financial years. A maximum of about 269,580
shares can be allocated as part of the 2022 plan. The valuation of the allocated share
awards is based on the market price of the share at the time of allotment, with a
deduction for the lack of dividend.

The total cost in 2023 for all share-savings plans was MSEK 6.8 (6.4) or SEK 0.04
(0.04) per share. The estimated fair value on the allocation date is SEK 44.82 for the
2022 plan and SEK 61.32 for the 2023 plan.