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In question of interpretation the Danish text shall prevail.
Remuneration policy for the Board of Directors and the Board of Management of NKT Holding A/S and the Boards of Management of NKT’s business units including general guidelines on incentive programs
The remuneration policy of NKT Holding A/S for the Board of Directors and the Board of Management comprises principles for provision of remuneration and general guidelines for provision of incentive pay for the Board of Directors and the Board of Management (including the Boards or Management in the business units Nilfisk, NKT Cables and NKT Photonics). The “Board of Management” refers to the executive board notified to the Danish Business Authority.
NKT uses provision of remuneration to the Board of Directors and provision of remuneration and incentive pay to the Boards of Management with the object of ensuring coincidence of interest between the Company’s Board of Directors, Board of Management and shareholders, and with the object of constantly maintaining the motivation of both Boards for achieving the targets set by the Company.
In accordance with section 139 of the Danish Companies Act the Board of Directors has formulated general guidelines for the Company’s provision of incentive pay to the Board of Directors and the Board of Management of NKT Holding A/S and has submitted these guidelines for approval by the Company at the General Meeting (cf. item 3).
The Board of Directors considers the directors’ remuneration at frequent intervals based on recommendations from the Remuneration Committee of the Board. During the formulation of these recommendations the Remuneration Committee is guided by relevant comparisons with other large Danish companies. Proposals for the directors’ remuneration for the current year will be notified at the general meeting prior to adoption of the remuneration. The directors’ remuneration is approved as a separate item on the agenda at the general meeting.
Each member of the Board of Directors receives a fixed annual fee. Ordinary board members receive a fixed amount (basic fee), while the Chairman and Deputy Chairman receive multiples thereof: The Chairman receives 3 x the basic fee and the Deputy Chairman receives 2 x the basic fee. For participation in the board committees formed by NKT Holding A/S the remuneration shall be as follows:
The Chairman of the Audit Committee is remunerated with DKK 200,000, whereas the committee´s second member is remunerated with DKK 100,000.
The Chairmen of the Remuneration Committee and the Nomination Committee are remunerated with DKK 100,000 each and the second member of each committee is remunerated with DKK 50,000.
The Chairman of each working committee in Nilfisk and NKT Cables is remunerated with DKK 200,000, and the second member of each committee is remunerated with DKK 100,000, whereas the remuneration for NKT Photonics shall be DKK 150,000 to the Chairman and DKK 75,000 to the second member.
Expenses such as travel and accommodation relating to board meetings and relevant training are reimbursed.
Proposals concerning the remuneration to the Boards of Management are submitted by the Remuneration Committee. Proposals for remuneration are dealt with and decided by the Board of Directors.
The remuneration of the Boards of Management is considered annually in relation to that of other comparable companies.
The remuneration package to the Boards of Management consists of a fixed basic salary, a short-term cash bonus, a long-term incentive scheme (share based or bonus based) and other benefits in the form of usual non-monetary benefits and reimbursement of expenses relating to the employment.
The pension contribution for the Boards of Management comprises 15% of the fixed basic salary.
The Boards of Management receives special non-monetary benefits such as company car, phone, etc. Expenses incurred by the Boards of Management relating to travel, conferences, training etc. are reimbursed.
The period of notice for the Group’s Executives may not exceed 18 months. In connection with significant changes in the Company’s ownership structure, these notice periods may be extended for a transitional period by six months.
NKT Holding A/S has utilised incentive pay for the Board of Management for a number of years, whereas the Board of Directors does not receive incentive pay. These guidelines on incentive pay therefore relate solely to the Board of Management of NKT Holding A/S.
Incentive programs for the Board of Management may consist of pay by shares, stock options, warrants (hereinafter collectively “share based incentives”) and phantom shares and bonus agreements.
Up until now the Company has utilised warrants and bonus agreements as incentive pay for the Board of Management.
At the decision of the Board of Directors the Board of Management may be granted annually share based incentive pay of a value comprising up to 50% of the individual Executive’s fixed annual salary including pension. The value of stock options, warrants or the like granted is calculated using the Black & Scholes formula.
It will be determined in the decision of share based incentives whether or not any consideration is payable for the Board of Management. The incentive pay may be granted on terms entailing favourable taxation for the individual Executive, the related costs not being tax-deductible for the Company.
The conditions for the share based incentive pay may prescribe that the underlying incentive instruments may be exercised for subscription of shares not earlier than three years and not later than six years after the date granted. Furthermore, the Board of Directors can determine as a condition that any exercise is subject to a certain target achievement in the form of various “key performance indicators” (“KPI”), including increase in for example EBITDA, EBIT, return on investments to the shareholders, available funds, performance compared to competitors etc. (“Matching Shares / Performance Shares”).
Up until today the Company has utilised warrants with an exercise price at least equal to the average market price for the Company’s shares in the month prior to date granted, unless the Board of Directors determines another exercise price which is responsible in market terms. The exercise price has been added a hurdle rate to the exercise price for each year until exercise takes place but the Company reserves the right to abstain from using such hurdle rate. The subscription price is deducted the dividend, if any being paid.
The Board of Directors may decide to compensate for disadvantages arising through changes in the Company’s capital structure or resulting from submission of a purchase offer for the Company’s shares. Shares necessary for any compliance with share pay may be obtained by issue of new shares or use of own shares. The Board of Directors may decide that the warrants can be exercised through differential settlement.
The Board of Directors has the right to change or discontinue one or more incentive programs established (but not yet fully exercised) in compliance with this policy including any KPI, provided that such change is covered by the remuneration policy’s general guidelines and does not affect the overall scope and purpose.
An annual bonus may be paid to the individual Executive subject to fulfilment of conditions, targets and terms stated in the bonus agreement.
The criteria for granting of bonus may be the achievement of specified sales or earnings targets or completion of special one-off tasks such as significant acquisitions or divestments, etc.
On the basis of a bonus agreement an Executive may each year receive a bonus payment corresponding to 30% of the fixed annual salary. Furthermore, the Board of Directors may in special cases decide to award an extraordinary additional bonus of up to 100% of the fixed salary. The value of the total yearly granted bonus will appear in the Company’s Annual Report.
Specific agreements on remuneration with the Board of Management or changes to existing agreements may only be entered into within the framework of the present guidelines. Agreements or changes thereto not falling within the framework of these guidelines must be approved by the Annual General Meeting before becoming effective.
Adopted at NKT Annual General Meeting held on 25 March 2015