1.1 The Board of Directors of Nets A/S, CVR-no. 37 42 74 97, (the “Company”) has adopted this remuneration policy (the “Remuneration Policy”) which describes the principles for payment of remuneration to the Board of Directors and the Executive Management and sets out the incentive guidelines for incentive-based remuneration to the Board of Directors and Executive Management in accordance with Section 139 of the Danish Companies Act (in Danish “selskabsloven”).
1.2 The Executive Management means the executive managers registered with the Danish Business Authority.
2 General principles
2.1 The overall objective of the Remuneration Policy is to attract, motivate and retain qualified members of the Board of Directors and the Executive Management and to provide the framework for remuneration paid to members of the Board of Directors and the Executive Management of the Company.
2.2 The remuneration shall be designed to create a suitable alignment of the interests of the Board of Directors and the Executive Management with the interests of the Company and its shareholders, to support the achievement of strategic long and short-term goals of the Company as well as to promote value creation for the benefit of the shareholders. The incentive pay shall reward individual effort and performance and ensure that the aggregate remuneration paid to a member of the Executive Management is in line with market practice of comparable listed companies.
2.3 In extraordinary circumstances and on an individual basis, the Board of Directors may decide to deviate from the specific requirements of the Remuneration Policy in order to attain the overall objectives of the Remuneration Policy. The Board of Directors must in such case disclose information of this deviation at the first general meeting where such disclosure will not be to the detriment of the Company’s interests.
3 Remuneration of the Board of Directors
3.1 Members of the Board of Directors shall receive a fixed annual fee approved each year at the annual general meeting for the current financial year. The annual fee shall be in line with market practice taking into account the required competencies, effort and nature of the work.
3.2 All members of the Board of Directors receive the same fixed annual fee, while the Chairman may receive up to four times that fee and the Deputy Chairman may receive up to three times that fee. The size of the fixed annual fee shall depend on the competencies, effort and scope of the required work.
3.3 The members of the Board of Directors receive compensation for their work in the Audit Committee, Remuneration Committee and Nomination Committee and any other committee established by the Board of Directors from time to time. Any such compensation shall be determined by the Board of Directors after consideration of the exact scope and workload related to the work. The fixed fee shall be disclosed in the annual report and approved at the following annual general meeting.
3.4 In the event a member of the Board of Directors is instructed to take on a specific task on an ad hoc basis outside the scope of ordinary duties of the Board of Directors, the member may be offered an additional fixed fee, determined by the Board of Directors, for the work carried out related to such task. The additional fixed fee shall be disclosed in the annual report and approved at the following annual general meeting.
3.5 Expenses, such as travel and accommodation in connection with board meetings as well as relevant training, may be reimbursed by the Company. If members of the Board of Directors have to travel overseas to attend meetings of the Board of Directors, such members may receive a fixed travel allowance.
3.6 The remuneration of the members of the Board of Directors does not include any incentive-based remuneration, however, for the avoidance of doubt, employee-elected members of the Board of Directors may due to their employment be covered by general incentive schemes applicable to the employees of the Nets group.
4 Remuneration of the Executive Management
4.1 Fixed base salary, benefits and pension
4.1.1 Each member of the Executive Management receives an annual fixed base salary. The fixed base salary shall be in line with market practice and based on the scope of the work required, and the performance and responsibilities of the individual member. The fixed base salary is subject to annual reassessment.
4.1.2 The members of the Executive Management may be granted customary non-monetary benefits such as company car, insurance, free telephone, internet access, newspaper subscription, etc.
4.1.3 The members of the Executive Management shall be entitled to receive a pension contribution to be determined by the Board of Directors.
4.1.4 The members of the Executive Management will receive no remuneration for board positions or directorships held in the Company’s subsidiaries or associated companies.
4.2 Incentive-based remuneration
4.2.1 In addition to a fixed base salary, the Executive Management participates in variable remuneration schemes consisting of a (i) cash-based short-term incentive scheme, and (ii) a share-based long-term incentive scheme. When determining the composition of the incentive-based remuneration and the ratio between the incentive-based remuneration and the fixed base salary, the Board of Directors must carefully consider the overall objectives of the Remuneration Policy and aim to avoid undesirable incentives for the Executive Management.
The components of each scheme are further described below.
4.3 Cash-based short-term incentive scheme
4.3.1 Under the short-term incentive programme (”STIP”), the Executive Management are eligible to receive an annual cash bonus subject to certain predefined financial and/or non-financial targets being met. Each financial year, the Board of Directors determines the size and targets of the STIP for that particular financial year. Target achievement is measured for each financial year and the cash bonus, if any, is paid during the following financial year after approval by the Board of Directors. The annual cash bonus under the STIP will amount to no more than 150% of the annual fixed salary (excluding pension contributions and benefits) of the member of the Executive Management in question.
4.4 Share-based long-term incentive scheme
4.4.1 Under the long-term incentive programme (”LTIP”), the Executive Management may be eligible to receive an annual grant of share-based instruments (e.g. share options, warrants or restricted share units) based on the sole discretion of the Board of Directors. The share-based instruments may vest depending on and in proportion to achievement of certain key performance indicators (“KPIs”) measured over a performance period subsequent to grant to be determined by the Board of Directors. A performance period will normally have a duration of three financial years. The KPIs are determined by the Board of Directors in their sole discretion and may be based on financial and non-financial targets in the context of a group, business unit and/or individual level. The value of the share-based instruments granted under the LTIP to a member of the Executive Management may not in any given financial year exceed 120% of that executive’s annual base salary at the time of grant. Upon vesting, the executive may exercise each share-based instrument over a period to be determined by the Board of Directors; however, normally not exceeding a two-year period. Each share-based instrument vesting entitles the executive to one or more shares in the Company at a predefined exercise price set by the Board of Directors for each grant of share-based instruments. If vested share-based instruments are not exercised within the exercise period, they will lapse without compensation.
4.5 Share-based retention programme
4.5.1 Upon completion of the initial public offering (the “IPO”), the Company will implement a non-recurring share-based retention program for, among others, the members of Executive Management. The award of shares under the retention programme will, among other things, be subject to the participant in question having retained a specific minimum holding of shares in the Company at the end of a 720-day period subsequent to the first day of trading on Nasdaq Copenhagen A/S. The value of the shares awarded will be a fixed amount equal to 24 months’ base salary (based on the salary in the last calendar month prior to the IPO and excluding pension contribution and benefits and adjusted for non-recurring salary payments). The retention programme will be established in connection with the IPO as a one-time programme with a view to bridge the intermediate period between the IPO and the first three-year vesting period under the LTIP.
4.6 Adjustment, repayment and amendment
4.6.1 The Board of Directors may lay down specific terms governing:
a) the lapse of an incentive scheme, including lapse in the event that the member of Executive Management resigns;
b) repayment, in full or in part, of variable remuneration that was paid on the basis of information, which subsequently proves to be manifestly misstated (“claw back”);
c) accelerated vesting or exercise, or adjustment of incentive-based remuneration in case of a take-over in whole or in part, significant divestments, demerger, merger etc.; and
d) adjustment of the exercise price, performance targets, etc. in the event of changes to the capital structure, certain dividend distributions or other material events, which would otherwise influence adversely the value or effect of the incentive-based remuneration.
5 Extraordinary incentives
5.1 In individual cases, the Board of Directors may at its discretion grant a one-off bonus or other extraordinary incentive remuneration, e.g. extraordinary cash bonus, retention bonus, severance payment, sign-on bonus or other incentives. Such extraordinary grant may be incentive-based and may consist of cash and/or a share-based remuneration.
5.2 The value of such extraordinary grants may not exceed an amount corresponding to 200% of the annual fixed base salary of the recipient in the year of award.
6 Termination and severance payment
6.1 The terms regarding termination and resignation of members of the Executive Management is determined by the Board of Directors.
6.2 Severance payments cannot exceed the aggregate remuneration paid to the member of the Executive Management during the last two years.
7 Remuneration Committee
7.1 The Board of Directors’ Remuneration Committee must ensure that the Company at all times maintains a Remuneration Policy of the members of the Board of Directors and the Executive Management, including incentive guidelines for incentive-based variable remuneration to the Board of Directors and Executive Management in accordance with Section 139 of the Danish Companies Act.
7.2 The Remuneration Committee shall evaluate and make recommendations for the remuneration of the members of the Board of Directors and the Executive Management and ensure that such remuneration is consistent with the Remuneration Policy.
8.1 This Remuneration Policy is available on the Company’s website, www.nets.eu.
This Remuneration Policy has been approved by the Board of Directors of Nets A/S and adopted at the extraordinary general meeting on 9 September 2016.