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Remuneration

Principles for salary and other remuneration for the CEO and other members of the senior management team

Adopted at Annual General Meeting 2020.

The remuneration guidelines include the CEO and the Group Executive Management (“senior executives”). The guidelines shall apply to remuneration that is being agreed upon, and to changes made to already agreed remuneration, after the guidelines have been adopted by the 2020 Annual General Meeting. The guidelines do not cover remuneration decided by the General Meeting.

The purpose of these remuneration guidelines is to provide a structure to ensure that remuneration to senior executives is in line with the company's long-term strategy. For information on the company's business strategy, see afry.com/objectives.

The compensation guidelines are based on the following basic principles:

  • Offering competitive remuneration to attract and retain senior executives with the right expertise. The remuneration levels and the composition of the remuneration components are regularly compared to the levels of comparable companies operating in the same market areas as ÅF Pöyry to ensure competitive remuneration.
  • Offering long-term incentive programmes with a focus on business strategy, long-term goals and sustainability aspects related to finance, the environment and employees
  • Annual evaluation of individual results and target achievement versus the company's financial results

The General Meeting may - regardless of these guidelines - decide on share and share price related remuneration. However, the remuneration guidelines establish certain guiding principles for the selection of long-term incentive programmes (LTIs) to ensure the link to long-term value for shareholders. In this way, the remuneration guidelines contribute to the company's long-term value creation and results.

The remuneration guidelines provide for the ability to set financial and non-financial short-term incentive structures (STIs) containing social and environmental aspects in order to further contribute to sustainability and compliance with the company's core values: brave, devoted team players.

The remuneration guidelines provide management with an incentive to create an innovative and performance-oriented culture, thereby helping to achieve the company's goal of creating sustainable technology and design solutions for future generations.

Decision-making processes for establishing, reviewing and implementing the guidelines

The Board has established a Remuneration Committee. The committee's tasks include preparing the Board's decision on proposals for guidelines for remuneration to senior executives. The Board of Directors shall draw up proposals for new guidelines at least every four years and submit for resolution at the AGM. The guidelines shall apply until new guidelines have been adopted by the AGM. The Remuneration Committee shall also monitor and evaluate programmes for variable remuneration for senior executives, the application of guidelines for remuneration to senior executives, and applicable remuneration structures and remuneration levels in the company.

  • In order to avoid conflicts of interest, the Remuneration Committee consists only of members of the Board who are independent of the company and the management
  • ÅF Pöyry handles remuneration through well-defined processes and ensures that in the treatment of and decisions in remuneration-related matters, the CEO or other senior executives do not attend, insofar as they are affected by the questions.

Remuneration

Remuneration to senior executives consists of fixed salary, pension and other benefits as well as short and long-term cash incentive programmes. In addition, the Annual General Meeting can - independently of these guidelines - decide on long-term incentive programmes.

Fixed salary

The fixed salary is set according to local market practice and in accordance with the levels in the country where the individual is employed. The fixed salary is reviewed annually in connection with the performance evaluation and taking into account the context of the labour market.

Short-term incentive programmes (STI)

The size of short-term cash incentive programmes can vary from 0 per cent to 60 per cent of annual fixed salary. Target components, weighting and target levels are determined annually by the Board of Directors to ensure that they support the business strategy. The target components, weighting and target levels can vary from year to year to reflect business priorities and they usually balance the group's financial goals (currently EBITA, EBITA margin and organic growth on own and parent unit) and non-financial targets. Details of target components, weighting and target levels and how they support the business strategy are reported in the annual remuneration report.

Following the end of the year, the Board of Directors reviews the performance and determines to what extent each of the goals has been achieved to determine the final level of disbursement. For financial targets, the assessment shall be based on the financial data that has most recently been made public. The Board of Directors has discretion to adjust the STI outcome in special circumstances to improve the alignment of pay with value creation for shareholders, and to ensure the outcome is a fair reflection of the company’s performance.

Further cash-based variable remuneration may be paid out under extraordinary circumstances, given that such extraordinary arrangements only are done on an individual level either to recruit or retain executives, or as remuneration for extraordinary efforts beyond the person’s ordinary assignment. Such remuneration may not exceed 50 per cent of the executive’s annual fixed salary. Decisions regarding such remuneration shall be made by the Board of Directors at the proposal from the Remuneration Committee.

Long-term incentive programmes (LTIP)

The Board of Directors finds it important to offer long term incentive programmes in order to attract and retain key individuals, as well as to share the success of the Company’s growth.

The long term incentive programmes that can be offered are share or share price-related programmes, convertible debenture programmes and/or long term Cash-programmes – all 3-year plans. Decisions regarding share or share price-related programmes shall be made by the General Meeting.

Details regarding all programmes and how they support the business strategy will be disclosed in the annual Remuneration Report. Following the end of the programme, the Board of Directors reviews the performance and determines the extent to which each of the targets have been achieved, to determine the final pay-out level.

The remuneration from a long term cash based incentive programme can range from 0 per cent to 50 per cent of annual fixed salary.

Pensions

Pension arrangements reflect the relevant market practice and may evolve year on year. Senior executives participate in the pension programs reflecting the market practice in the country of employment, but defined contribution pension plans with premiums are preferred. Pension benefits shall not be dependent on future employment and may not exceed 50 per cent of the executive’s annual fixed salary.

Other benefits

Benefits will be provided in line with appropriate levels indicated by local market practice in the country of employment and may evolve year on year. Other benefits may include company car, private health and life insurance, business travel insurance and liability insurance. Such benefits may not exceed 10 per cent of the executive’s annual fixed salary.

In respect of pension benefits and other benefits under employment relationships that are governed under other rules that Swedish, due adjustments may be made to comply with mandatory rules or standing local practise, whereby the overall purpose of these guidelines however shall be satisfied as far as possible.

Additional benefits and allowances may be offered in certain circumstances such as relocation in accordance with the company’s international transfers policy.

CEO is eligible to participate in programs which may be offered to other employees at any given point such as for example service years awards, birthday remembrance, etc.
Further information regarding the benefits provided in any given year will be provided in the annual Remuneration Report.

Termination of employment and severance pay

The notice period for the CEO is 12 months when notice of termination is given by the company and 6 months if given by the CEO. In the event that the company gives notice, the CEO shall receive a severance payment corresponding to up to 12 months’ salary. For other senior executives, the notice period shall not be longer than that of the CEO’s. In respect of employment relationships that are governed under other rules than Swedish, due adjustments may be made to comply with mandatory rules or standing local practise, whereby the overall purpose of these guidelines however shall be satisfied as far as possible.

The Board of Directors has a discretionary right to decide whether pay-outs shall be made under ongoing incentive programmes for individuals who leave their employment and how pay-outs shall be handled in connection with leave of absence. Any assessments made shall be accounted for in the annual Remuneration Report.

Salary and employment benefits for employees

In the Remuneration Committee’s and the Board of Directors’ preparation of the proposal for these guidelines for remuneration, including its reasonableness and limits, the salary and employment benefits for the company’s employees have been taken into account by considering the employees’ total compensation, the compensation’s components and the salary increase and rate of growth over time. Any development in the gap between the remuneration for senior executives and remuneration for other employees will be described in the annual Remuneration Report.

Right to demand repayment and deviate from the guidelines

The Board of Directors has the right to stall payment or demand repayment of pay-outs under short-term and long-term incentive programmes in exceptional circumstances or in case incorrect financial results have been reported. Any decisions regarding this (incl. how circumstances are defined and what steps are taken) will be explained in the annual Remuneration Report.

The Board of Directors may decide to momentarily deviate from these guidelines, in whole or partly, if there is particular cause and necessary to do so in order to safeguard the company’s long-term objectives, including sustainability objectives, or to safeguard the company’s financial viability. As stated above, it is part of the Remuneration Committee’s work to prepare the Board of Directors’ decisions regarding remuneration, including any deviation from these guidelines.

 

Current incentive programmes

Computer document on desk

Convertible Debenture Programme 2020

Man using calculator

Convertible Debenture Programme 2019

Person touching digital screen

Convertible Debenture Programme 2018

Möten, arbete, kontor

Convertible Debenture Programme 2017

Two persons at a desk

Convertible Debenture Programme 2016