At Vitrolife’s Annual General Meeting on April 27, 2017, was decided:
Remuneration for the CEO and other senior executives comprises a basic salary, variable remuneration, pension and other remuneration. All pension benefits are defined contribution plans. Variable remuneration is considered by the Remuneration Committee and decided on by the Board.
A. Fixed basic salary
The fixed basic salary of the CEO and the other senior executives is reconsidered each year. The division between basic salary and, where appropriate, variable remuneration shall be proportionate to the senior executive’s responsibility and authority. The group other senior executives currently consists of five people, one woman and four men. The composition and size of this group can change over time as a consequence of how the business develops.
B. Variable remuneration (Short-Term Incentive, STI)
The ceiling for the CEO’s variable remuneration is a maximum of 50 percent of annual salary. For other senior executives the ceiling for variable remuneration is a maximum of 25 percent of annual salary. The variable remuneration of the CEO and the other senior executives is based on the outcome of a number of primarily quantitative parameters when compared with set targets. The quantitative parameters are related to the Company’s sales and income (EBITDA). The total cost to the company of the total variable remuneration to the CEO and other senior executives must not exceed SEK 5,800,000 (including social security fees).
C. Long-term incentive program (Long-Term Incentive, LTI)
With a view to interconnecting the interests of Company management with those of the shareholders and in order to encourage the acquisition of shares in the Company, a long-term incentive programme is proposed in addition to the annual variable remuneration described above. The long-term incentive programme would have the following principal components and would apply to senior executives and certain selected key persons in the Company:
i. It is proposed that 8 employees over and above the senior executives, in total 14 Company employees, are included in the programme (the participants mentioned below).
ii. If a participant, during a certain period of time and within the LTI framework, buys shares with his/her own funds via Nasdaq Stockholm up to a certain amount, the Company will match this through cash payment of the same net amount, i.e. compensating for the employee’s marginal tax expense, in the form of a one-time payment (the “Matching Amount”).
Each participant will be entitled to buy shares for an amount relative to the employee’s responsibility and authority. The limits for each participant’s Matching Amount are between SEK 50,000 and SEK 200,000. Participants must use the Matching Amount to acquire shares in the Company via Nasdaq Stockholm. Pursuant to an agreement between the Company and each participant, these shares must be held for at least three years.
iii. If the conditions stated in item iv. are fulfilled, the Company shall make a further one-time payment corresponding to the Matching Amount, but without compensation for the employee’s marginal tax expense (the “Performance Amount”). Participants shall use the Performance Amount to acquire shares in the Company via Nasdaq Stockholm. Pursuant to an agreement between the Company and each participant, these shares must be held for at least one year.
iv. The criteria for payment of the Performance Amount shall be, amongst other things, that the participant is still an employee of the Company and that he/she has held the shares acquired in accordance with item ii. throughout the initial three-year period, and that the performance target set by the Board regarding the Company’s earnings (EBITDA) per share during the financial year 2019 has been met.
v. The total cost for the Company during the period regarding payment of Matching and Performance Amounts shall not exceed SEK 5,400,000 (including social security fees).
Notice of termination for the CEO shall be no more than 12 months and for the other senior executives three to six months. If the Company terminates employment, severance pay of no more than twelve months’ salary is to be paid to the CEO. There is no severance pay for other senior executives when their employment is terminated.
The Board may deviate from these guidelines if in an individual case there are special reasons for doing so.
The Company has two share-related incentive programmes outstanding, as adopted by the 2015 and 2016 Annual General Meetings, respectively. Their conditions are essentially in line with what has been stated in section C (Long-term incentive programme) above. The total cost for the Company with regard to payment of the Matching and Performance Amounts for these two programmes shall not exceed SEK 10,000,000. The Company’s outstanding commitment in relation to these two programmes comprises the Performance Amounts, which can total no more than approximately SEK 2,600,000.
The Company currently has no outstanding warrants programs.