Remuneration of senior executives

The Annual General Meeting 2019 established guidelines for remuneration to senior executives in accordance with the Board’s proposal, comprising that the company is to offer market-based remuneration that allows the Group to recruit and retain the right executives, and entail that the criteria for determining remuneration is to be based on the significance of work duties and employees’ competencies, experience and performance.

Remuneration is to comprise fixed basic salary, variable remuneration, pension benefits, other benefits and severance pay. The guidelines encompass the Group Management Team, which currently comprises five individuals including the President. Remuneration is determined by the Board’s Remuneration Committee. However, remuneration of the President is determined by the Board in its entirety.

The company is to offer an attractive basic salary in the market, in the form of a fixed cash monthly salary. This comprises remuneration for dedicated work performance at a high professional level that creates added value for Mekonomen Group’s customers, owners and employees. In addition to basic salary, short-term and long-term variable cash remuneration is to be offered, both of which are based on fulfilment of Mekonomen Group’s goals for the Group’s earnings, and individual qualitative parameters.

The distribution between basic salary and variable remuneration is to be proportionate to the senior executive’s responsibilities and authorities. The short-term variable remuneration is maximised to a certain percentage of fixed annual salary. The percentage is linked to the position of each individual and varies between 33 and 60 percentage points for members of the Group Management Team. Other benefits refer primarily to company cars. Pension premiums are paid in an amount that is based on the ITP plan or a corresponding system for employees outside Sweden. For the President, pension provisions according to the employment agreement are paid in an amount corresponding to 30 per cent of basic salary.  Pensionable salary comprises basic salary.

The period of notice for the President is 12 months if employment is terminated by the company, and six months if terminated by the President. The period of notice for other members of the Group Management Team is a maximum of 12 months if employment is terminated by the company, and six months if terminated by the employee. In addition, severance pay of a maximum of 12 months salary may be paid in the event of termination of employment by the company.

Long-term share-based incentive program (LTIP 2019)
The Annual General Meeting 2019 resolved to establish a long-term share-based incentive program (LTIP 2019). LTIP 2019 replaces the
program that was resolved by the Annual General Meeting 2018 (LTIP 2018) under which no allocation was made.  As a result of the acquisition of FTZ and Inter-Team, the targets in LTIP 2018 were not achieved. The Board of Directors has decided to not change the targets, but rather discontinue LTIP 2018 in its entirety.

The fundamental reason for establishing LTIP 2019 is to align the shareholders’ interests with the interests of the company management and other key employees to ensure maximum long-term value creation and to encourage a personal shareholding in Mekonomen. In addition, the Board is of the opinion that LTIP 2019 will help Mekonomen to recruit and retain members of the company management and other key employees.

LTIP 2019 comprises a maximum of 19 employees, including the company management in Mekonomen and certain other key employees in the Group. Participation in LTIP 2019 requires a personal shareholding in Mekonomen. After the vesting period, the participants will be allocated shares in Mekonomen free of charge, provided that certain conditions are met. These conditions are linked to continued employment in the Mekonomen Group, a personal shareholding in Mekonomen, and certain financial key ratios and performance targets. The maximum number of shares in Mekonomen that can be allocated under LTIP 2019 shall be limited to 105,000 (including any compensation for dividends), which corresponds to approximately 0.19 per cent of the total number of shares and votes outstanding in the Company.