Remuneration and Incentive Programmes

According to the Swedish Companies Act, the general meeting is to decide on guidelines for remuneration to the CEO and other senior executives.

Remuneration of board members

The general meeting on 25 April 2024 resolved that until the next annual general meeting an annual fee of SEK 566,000 was to be paid to the chairman of the board and SEK 257,000 was to be paid to each of the other board members. It was also decided that an annual fee of SEK 100,000 would be paid to the chairman of the audit committee and SEK 50,000 to each of the members of the audit committee, and that an annual fee of SEK 150,000 would be paid to the chairman of the corporate governance committee, and SEK 75,000 to each of the members of the corporate governance committee. SEK 50,000 would be paid to the chairman of the remuneration committee and SEK 25,000 to each of the members of the remuneration committee.

Guidelines for remuneration of senior executives

Remuneration of the Company’s senior executives is resolved by the board in consultation with the remuneration committee, in accordance with the Code. At the extraordinary general meeting held on 4 October 2021, it was resolved to adopt the following guidelines for remuneration of the CEO and other members of the management team. The guidelines do not cover remuneration that has been resolved by the annual general meeting or remuneration through the incentive programme adopted by the general meeting on 4 October 2021 (for more information, see below).

The main principle is that remuneration is to promote the Company’s business strategy, long-term interests and sustainability, as well as counteract unhealthy risk-taking. In addition, remunerations aims to enable competitive total remuneration to senior executives in the Company.

Remuneration to the Company’s senior executives shall be market-based and consist of fixed salary, pension benefits and other benefits. Additionally, the general meeting can resolve on such matters as share and share-price-related remunerations.

For the Company’s CEO, pension premiums, including sickness insurance, are to be defined-contribution plans, and pension premiums for defined-contribution plans shall not exceed 30 per cent of the fixed annual cash salary of the CEO. Other senior executives are covered by an ITP plan in accordance with applicable collective agreement provisions. Other benefits can include life insurance, medical benefits insurance and company car benefit, which together must not exceed 10 per cent of the fixed annual salary.

From the Company’s side, the notice period for termination may be at most 12 months for the CEO and at most six months for other members of management. From the senior executive, the notice period for termination may be at most six months. No termination benefits are paid. However, remuneration for potential commitments to restrict competition could be issued, with the aim of compensating for any loss of income as a result of the commitment to restrict competition.

The tasks of the remuneration committee include preparing the Board’s resolutions on proposals for guidelines concerning remuneration of senior executives. The remuneration committee shall also follow and evaluate the programme for variable remuneration for the management team, the application of guidelines for remuneration for senior executives and the relevant remuneration structures and levels in the Company. The Board shall prepare proposals for new guidelines at least once every four years, and submit the proposal to be resolved by the annual general meeting. The guidelines apply until new guidelines have been adopted by the general meeting.

LTIP 2024

At the  general meeting of the Company on 25 April 2024, it was resolved  to adopt a long-term performance-based incentive program (“LTIP 2024“) for selected persons in the management team and a key employee. LTIP 2024 extends over a period of a total of four (4) years where, an amount has been determined, corresponding to the respective Participant’s maximum value outcome prior to initial allocation (“Gross Performance Amount”). For the key employee (the company’s actuary) the Gross Performance Amount corresponds to 70 per cent of the actuary’s total fixed annual remuneration before tax (according to the salary level as of 1 January 2024) and for the other Participants, the Gross Performance Amount corresponds to 100 per cent of the respective Participant’s total fixed annual remuneration before tax (according to the salary level as of 1 January 2024). The period for performance fulfilment extends over the 2024 financial year (“Performance Period”) and when the end of the Performance Period has passed, the initial outcome for each Participant is determined based on the fulfilment of the goals within the framework of the respective Gross Performance Amount.

The outcome partly consists of cash that is paid out to the Participants after the initial outcome has been determined at the end of the Performance Period, and partly conditional share rights (“Performance Shares”). The Performance Shares entitle the Participants to, after a qualification period of a total of three (3) years from the allotment of the Performance Shares (the “Qualification Period”), receive ordinary shares in the company free of charge. The distribution between cash and shares is 20/80, i.e., 20 per cent in cash and 80 per cent in shares. Note, however, that according to the proposed resolution, there are possibilities to make risk adjustments of the final outcome after the Qualification Period, taking into account both current and future risks. It may therefore be decided that the final outcome should be adjusted down partially or completely in accordance with the regulations that the company must follow. Note that any adjustments to the initial outcome may only apply to the Performance Shares and not the cash part.

Participants, cash payment and allotment of Performance Shares
A total of eight (8) persons were offered and participate in LTIP 2024. Distribution based on category is displayed in the table below. The maximum allotment of the number of Performance Shares in case of full goal fulfilment is dependent on the respective Participant’s fixed remuneration and the value of the company’s share. During the first ten (10) trading days in January 2025 (the “Measurement Period”), the company’s average volume-weighted share price (VWAP) is measured to determine the value of the share (“Translation Price”) as a basis for the number of Performance Shares to be allotted. Allotment of Performance Shares takes place as soon as possible after determination of the Translation Price and the goal fulfilment. In addition to the above, the maximum cash payment in case of full goal fulfilment is dependent on the respective Participant’s fixed remuneration.
 
The formulas:
The number of Performance Shares allotted is determined according to the following formula:
Number of Performance Shares = ((0.8 x Gross Performance Amount) x (Goal Fulfilment in %)) / (Translation Price).

In the case of decimals, the number of Performance Shares is rounded down to the nearest whole number.

The cash payment is determined according to the following formula:
Cash payment = (0.2 x Gross Performance Amount) x (Goal Fulfilment in %).

A minimum limit of SEK 35 has been set for the Translation Price. Should the Translation Price during the Measurement Period be set at SEK 35 or lower, the Translation Price when calculating the number of Performance Shares to be allotted will therefore be set at SEK 35. This means that a maximum of 218,814 Performance Shares can be allotted within the framework of LTIP 2024 if the Translation Price is equal to or less than SEK 35.

Assuming a Translation Price of SEK 75 and a Translation Price increased by 50 per cent respectively, i.e., SEK 112.50 and a maximum goal fulfilment for all Participants, the cash payment and the number of Performance Shares allotted will be as below. The number of Performance Shares at the lowest limit of the Translation Price, i.e., SEK 35, is also shown in the table below to show the highest possible outcome regarding the number of Performance Shares that can be allotted per category.

The figures above are based on 19,283,522 shares outstanding.
 
Performance goals and other terms
As mentioned above, the outcome and the size of the allotment are based on performance goal fulfilment during the Performance Period in relation to previously established performance goals. The performance goals are divided into quantitative goals and qualitative goals and there are goals set at both company and individual level and the weighting of the goals varies. Individual goals are based on relevant objectives, considering the Participants’ respective roles. Evaluation of goal fulfilment takes place after the Performance Period and the allotment of Performance Shares takes place thereafter. However, the goals are evaluated based on a multi-year perspective during the Qualification Period and the final number of Performance Shares for each Participant may be reduced in whole or in part in accordance with current regulations. The Board decides unilaterally whether the number of allotted Performance Shares is to be reduced in whole or in part. The number of Performance Shares may also be reduced in whole or in part due to risk adjustment, taking into account current and future risks linked to the company’s financial position and requirements for capital and liquidity. The number of Performance Shares held by each Participant may also be adjusted as a result of customary recalculation in the event of a bonus issue, share split, preferential rights issues and/or other events that normally cause recalculation. Recalculation is to be done on customary terms.

The table below shows the performance goals set for the company’s management and their weighting.

TSR is not included in the assessment for the cash payment. Other quantitative goals are therefore adjusted pro rata in relation to the cash payment.

For the actuary, the difference compared to the table above is only in the weighting, where the quantitative goals are instead weighted at 60 per cent and the qualitative at 40 per cent, of which 16 per cent are individual goals. The reweighting for the actuary is done pro rata.

The Performance Shares are vested on a pro rata basis during the Qualification Period. A prerequisite for vesting is that the Participant maintains his/her employment. If the employment ends during the Qualification Period, a distinction is made as to whether the employment ended as a result of a so-called “good” or “bad” leaver. In the event of a good leaver, the Participant retains all vested Performance Shares but does not continue to vest any further. In the event of a bad leaver, all Performance Shares expire. The Board establishes the definitions of good and bad leaver respectively.

The Participants will be provided with a more closely defined definition for good and bad leavers together with the other detailed terms for LTIP 2024, also containing each Participant’s individual goals, in agreements that each Participant will be given the opportunity to enter into as soon as possible after the Annual General Meeting. A prerequisite for participation in LTIP 2024 is that the Participant enters into the aforementioned agreement with the company.

Each Performance Share held by the respective Participant after the Qualification Period gives the right to an ordinary share in the company free of charge. The shares will be transferred as soon as possible after the end of the Qualification Period.

The Performance Shares cannot be transferred or pledged.

The Board, or a committee specially established by the Board, shall be responsible for the detailed design and management of the terms for LTIP 2024, within the framework of the terms herein. In addition to the adjustments already mentioned which the Board shall have the right to make, e.g., recalculation as a result of a bonus issue, share split, rights issue and/or other events that normally cause recalculation, as well as the right to reductions in the number of Performance Shares allotted, the Board shall also have the right to make other adjustments if there are significant changes in the company or its group or in the outside world which means that the decided terms for LTIP 2024 no longer meet the aims and motives of the proposal. This may mean that the Board may, among other things, terminate LTIP 2024 if the purposes and motives for the proposal are no longer fulfilled and decide on a cash settlement instead of a transfer of shares.

Dilution, costs, effect on EPS and previously decided programmes
The maximum number of shares that may be allocated under LTIP 2024 is 218,814, corresponding to approximately 1.13 per cent of the current outstanding shares and votes in the company. The company already has an implemented warrant programme from 2021. The exercise period in that programme is between 3 March 2025 and 30 May 2025. The programme includes a maximum of 291,200 warrants, corresponding to a dilution effect of approximately 1.49 per cent in the event that all warrants are used to subscribe for shares in the company. The company also has a performance-based share programme from 2023 outstanding (LTIP 2023) for which shares may start to be delivered in early 2027. The maximum number of shares that may be allocated under LTIP 2023 is 68,809 shares, corresponding to approximately 0.36 per cent of the current outstanding shares and votes in the company. The information on the number of shares that can be issued under each programme is subject to recalculation in accordance with the customary recalculation conditions applicable to each programme.

LTIP 2024 will be recognised in accordance with IFRS 2, meaning that the Performance Shares will be expensed as personnel expenses during the Qualification Period. Assuming a Translation Price of SEK 75 and SEK 112.50 respectively and full goal fulfilment by all Participants, the costs are assumed to amount to approximately SEK 9.6 million excluding social security contributions. SEK 1.9 million refers to costs for the cash payment and SEK 7.7 million refers to the accounting costs for the Performance Shares according to IFRS 2. Assuming a share price development during the Qualification Period from SEK 75 to SEK 112.50 and from SEK 112.50 to SEK 187.50 respectively, the social contribution costs for the cash payment amount to approximately SEK 0.6 million, i.e., the social contribution costs for the cash payment are independent of the Translation Price and the share price development. Given the aforementioned scenarios, the social contribution costs for the Performance Shares are assumed to amount to approximately SEK 4.2 and 4.6 million, respectively.

Based on the above assumptions, the total costs amount to approximately SEK 13.8 and 14.2 million, respectively. The effect on the key figure EPS (earnings per share) will then be a reduction corresponding to SEK 0.568 per share and SEK 0.584 per share respectively.

LTIP 2023

At the  general meeting of the Company on 26 April 2023, it was resolved  to adopt a long-term performance-based incentive program (“LTIP 2023“) for selected persons in the management team and a key employee. LTIP 2023 extends over a period of a total of four (4) years where an amount has been, determined corresponding to the respective Participant’s maximum value outcome prior to initial allocation (“Gross Performance Amount“). For the key employee (the company’s actuary) the Gross Performance Amount corresponds to 70% of the actuary’s total fixed annual remuneration before tax (according to the salary level as of 1 January 2023) and for the other Participants, the Gross Performance Amount corresponds to 100% of the respective Participant’s total fixed annual remuneration before tax (according to the salary level as of 1 January 2023). The period for performance fulfilment extends over the financial year 2023 (“Performance Period”) and when the end of the Performance Period has passed, the initial outcome for each Participant is determined based on the fulfilment of the goals within the framework of the respective Gross Performance Amount.

The outcome partly consists of cash that is paid out to the Participants after the initial outcome has been determined at the end of the Performance Period, and partly conditional share rights (“Performance Shares”). The Performance Shares entitle the Participants to, after a qualification period of a total of three (3) years from the allotment of the Performance Shares (the “Qualification Period”), receive ordinary shares in the company free of charge. The distribution between cash and shares is 20/80, i.e., 20% in cash and 80% in shares. Note, however, that according to the proposed resolution, there is possibilities to make risk adjustments of the final outcome after the Qualification Period, taking into account both current and future risks. The final outcome may therefore be decided to be adjusted down partially or completely in accordance with the regulations that the company must follow. Note that any adjustments to the initial outcome may only apply to the Performance Shares and not the cash part.

Participants, cash payment and allotment of Performance Shares

A total of eight (8) persons  participate in LTIP 2023. Distribution based on category is displayed in the table below. The maximum allotment of the number of Performance Shares in case of full goal fulfilment is dependent on the respective Participant’s fixed remuneration and the value of the company share. During the first ten (10) trading days in January 2024, the company’s average volume-weighted share price (VWAP) (the period “Measurement Period”) is measured to determine the value of the share (“Translation Price”) as a basis for the number of Performance Shares to be allotted. Allotment of Performance Shares takes place as soon as possible after determination of the Translation Price and the goal fulfilment. In addition to the above, the maximum cash payment in case of full goal fulfilment is dependent on the respective Participant’s fixed remuneration.

The formulas:

The number of Performance Shares allotted is determined according to the following formula:

Number of Performance Shares = ((0.8 x Gross Performance Amount) x (Goal Fulfilment in %)) / (Translation Price).

In the case of decimals, the number of Performance Shares is rounded down to the nearest whole number.

The cash payment is determined according to the following formula:

Cash payment = (0.2 x Gross Performance Amount) x (Goal Fulfilment in %).

A minimum limit of SEK 35 has been set for the Translation Price. Should the Translation Price during the Measurement Period be set at SEK 35 or lower, the Translation Price when calculating the number of Performance Shares to be allotted will therefore be set at SEK 35. This means that a maximum of 199,875 Performance Shares can be allotted within the framework of LTIP 2023 if the Translation Price is equal to or less than SEK 35.

Assuming a Translation Price of SEK 70 respectively an increased Translation Price by 50 %, i.e., SEK 105 and a maximum goal fulfilment for all Participants, the cash payment and the number of Performance Shares allotted looks like below. The number of Performance Shares at the lowest limit of the Translation Price, i.e., SEK 35, is also displayed in the table below to show the highest possible outcome regarding the number of Performance Shares that can be allotted per category.

The numbers above are based on 20,000,000 outstanding shares.

Performance goals and other terms
As mentioned above, the outcome and the size of the allotment are based on performance goal fulfilment during the Performance Period in relation to previously established performance goals. The performance goals are divided into quantitative goals and qualitative goals and there are goals set at both company and individual level and the weighting of the goals varies. Individual goals are based on relevant objectives, considering the Participants’ respective roles. Evaluation of goal fulfilment takes place after the Performance Period and the allotment of Performance Shares takes place thereafter. However, the goals are evaluated based on a multi-year perspective during the Qualification Period and the final number of Performance Shares for each Participant may be reduced in whole or in part in accordance with current regulations. The Board decides unilaterally whether the number of allotted Performance Shares is to be reduced in whole or in part. The number of Performance Shares may also be reduced in whole or in part due to risk adjustment, taking into account current and future risks linked to the company’s financial position and requirements for capital and liquidity. The number of Performance Shares held by each Participant may also be adjusted as a result of customary recalculation in the event of a bonus issue, share split, preferential rights issues and/or other events that normally cause recalculation. Recalculation is to be done on customary terms.

The table below describes the performance goals set for the company’s management and their weighting.

TSR is not included in the assessment for the cash payment, other quantitative goals are therefore adjusted pro rata in relation to the cash payment.

For the actuary, the difference to the table above is only in the weighting, where the quantitative goals are instead weighted at 60% and the qualitative at 40%, of which 16% are individual goals. The reweighting for the actuary is done pro rata.

The Performance Shares are vested on a pro rata basis during the Qualification Period. A prerequisite for vesting is that the Participant maintain his/her employment. If the employment ends during the Qualification Period, a distinction is made as to whether the employment ended as a result of a so-called “good” or “bad” leaver. In the event of a good leaver, the Participant retains all vested Performance Shares but does not continue to vest any further. In the event of a bad leaver, all Performance Shares expire. The Board establishes the definitions of good and bad leaver respectively.

The Participants will take part in a more closely defined definition for good and bad leavers together with the other detailed terms for LTIP 2023, containing also each Participant’s individual goals, in agreements that will be offered to be entered into with each participant as soon as possible after the AGM. A prerequisite for participation in LTIP 2023 is that the Participant enters into the aforementioned agreement with the company.

Each Performance Share held by the respective Participant after the Qualification Period gives the right to an ordinary share in the company free of charge. The shares will be transferred as soon as possible after the end of the Qualification Period.

The Performance Shares cannot be transferred or pledged.

The Board, or a committee specially established by the Board, shall be responsible for the detailed design and management of the terms for LTIP 2023, within the framework of the terms herein. In addition to the adjustments already mentioned which the Board shall have the right to take, e.g., recalculation as a result of a bonus issue, share split, rights issue and/or other events that normally cause recalculation, as well as the right to reductions in the number of Performance Shares allotted, the Board shall also have the right to make other adjustments if there are significant changes in the company or its group or in the outside world which means that the decided terms for LTIP 2023 no longer meet the aims and motives of the proposal. This may mean that the Board may, among other things, terminate the LTIP in 2023 if the purposes and motives for the proposal are no longer fulfilled.

Dilution, costs, effect on EPS and previously decided programs
The maximum number of shares that may be allocated under the LTIP 2023 is 199,875 shares, corresponding to approximately 1.00% of the current outstanding shares and votes in the company. The company already has an implemented warrant program from 2021. The exercise period in that program is between 3 March 2025, and 30 May 2025. The program includes a maximum of 440,000 warrants, corresponding to a dilution effect of approximately 2.15% in the event that all warrants are used to subscribe for shares in the company.

LTIP 2023 will be accounted in accordance with IFRS 2, meaning that the Performance Shares will be expensed as personnel costs during the Qualification Period. Assuming a Translation Price of SEK 70 and SEK 105 respectively and full goal fulfilment by all Participants, the costs are assumed to amount to approximately SEK 8.9 million excluding social security contributions. SEK 1.8 million refers to costs for the cash payment and SEK 7.1 million refers to the accounting costs for the Performance Shares according to IFRS 2. Assuming a share price development during the Qualification Period from SEK 70 to SEK 105, respectively from SEK 105 to SEK 175, they amount to the social contribution costs for the cash payment amounting to approximately SEK 0.6 million, i.e., the social contribution costs for the cash payment are independent of the Translation Price and the share price development. Given the aforementioned scenarios, the social costs for the Performance Shares are assumed to amount to approximately SEK 3.4 and 3.8 million, respectively.

Based on the above assumptions, the total costs approximately amount to SEK 12.8 and 13.2 million, respectively. The effect on the key figure EPS (earnings per share) will then be a reduction corresponding to SEK 0.641 per share and SEK 0.66 per share respectively.

LTIP 2021

At the extraordinary general meeting of the Company on 4 October 2021, it was resolved to issue warrants in the 2021/2025 series as part of a long-term incentive programme for the Company’s CEO, other senior executives and key employees (“LTIP 2021”). LTIP 2021 was approved at the extraordinary general meeting of Resurs Holding on 2 November 2021.

LTIP 2021 comprises a maximum of 440,000 warrants and the Company retains subscription rights. The Company has the right to transfer warrants to participants in LTIP 2021 and on 14 December 2021 LTIP 2021 comprised a total of 240,000 warrants that eight (8) senior executives and key employees at the Company had acquired from the Company at the market price calculated according to the Black & Scholes formula. Warrants that are not initially transferred to the participants or that are subsequently repurchased by the Company may be transferred to future employees or employees who have been promoted.

Full exercise of the warrants transferred to date would amount to dilution of approximately 1.1 per cent. If all of the warrants issued in the LTIP 2021 framework were transferred to participants and thereafter exercised to subscribe for shares, dilution would amount to approximately 2.15 per cent.

Each warrant carries entitlement to subscribe for one (1) share in the Company at a subscription price of SEK 79.10 per share, which corresponds to 130 per cent of the volume-weighted average price according to Nasdaq Stockholm’s official share price list for the Company for a period of five trading days from the first day of trading of the Company’s shares on Nasdaq Stockholm. If, when shares are subscribed for, the price paid for the Company’s shares when Nasdaq Stockholm closes on the trading day immediately preceding subscription exceeds 146.15 per cent of the subscription price, then the subscription price shall be increased by an amount corresponding to the amount of the aforementioned closing price that exceeds 146.15 per cent of the subscription price. Shares can be subscribed for using the warrants during the period from and including 3 March 2025 up to and including 30 May 2025.