Fees and remunerations

Remuneration to the members of the board of directors

Fees and other remuneration to the members of the board of directors, including the chairman, are resolved on by the shareholders’ meeting. At the shareholders’ meeting held on 23 May 2018, it was resolved that the fee to the chairman of the board should be SEK 700,000 and that the fee to the other members should be SEK 290,000.Furthermore, SEK 110,000 shall be paid to the each chairman of the audit committee, remuneration committee and quality and sustainability committee, respectively, and SEK 25,000 shall be paid to each of the other committee members.

Guidelines for remuneration to the executive management

At the annual shareholders’ meeting on 23 May 2018, guidelines were adopted on remuneration for the CEO and other members of the executive management. According to the guidelines, Ambea shall offer remuneration that is in line with market practice and is based on one fixed and one variable part. Remuneration to the CEO and other members of the executive management shall be comprised by fixed salary, variable remuneration and pension. The division between fixed salary and variable remuneration shall be proportionate to the members of the executive management’s level of responsibility and authority. The variable remuneration shall be based on the financial performance of the group and the individual outcome is decided based on the fulfillment of individual quality and development targets.

The members of the executive management may receive pension benefits in the range of 20 to 30 percent of their respective salary, or in accordance with the applicable occupational pension plan or in accordance with collective bargaining agreements. Agreements concerning pensions shall be based on premium based solutions and be in accordance with the levels, practice, individual agreements and collective bargaining agreements applicable to the group.

Members of the management are entitled to a notice period of six months, if the employment is terminated by the employer, and six months, if the employment is terminated by the employee. Upon termination by the employer, members of the management are, in addition to their fixed monthly salary during the notice period, entitled to severance pay equal to an amount ranging from three to twelve months’ fixed salary.

Under special circumstances, the board of directors may deviate from the above guidelines

Incentive program

The company has four long-term incentive programs of which two are so called share savings programs and two are warrant programs.

At the annual shareholders’ meeting held on 23 May 2018 it was resolved to implement two long-term incentive programs in terms of a share savings program addressed to no more than 72 employees who serve the Council of Ambea (Sw. Ambearådet) and a warrant program addressed to 13 members of the management.

At the extraordinary shareholders’ meeting held on 16 March 2017, it was resolved to implement two long-term incentive programs in terms of a share savings program, addressed to no more than 57 employees who serve the Council of Ambea and a warrant program addressed to 14 members of the extended management. The programs have been established in order to motivate and retain competent employees and increase the coherence between the employees’ and the company’s objectives.

Share savings programs

Share savings program 2018

At the annual shareholders’ meeting held on 23 May 2018, it was resolved to implement a share savings program addressed to certain employees of the Council of Ambea. There are no more than 72 employees that are entitled to participate in the program. Participation requires that the participants acquire shares in Ambea by using their own resources, alternatively allocate already owned shares to the program, so called savings shares. The share saving program provides that the shares which are already held are not also used as a personal investment within the scope of the 2017 share based incentive program.

Participants, with some exceptions, that keep their own original saving shares during the duration of the program, from the allotment date and up to and including the day of the publication of the interim statement for the period 1 January – 31 March 2021 and, in addition thereto, with some exceptions, maintain their employment within the Ambea group, will at the expiration of the period obtain without consideration up to two (2) new so-called performance shares, for each saving share. In order for the performance shares to be allotted at all, the development in the Ambea group’s quality index has to be positive over the vesting period, and the number of performance shares that each saving share entitles to is determined by Ambea’s annual growth within its operating results. If the highest level is reached, every participant receives two performance shares per share award.

The costs for the share savings program will be accounted for in accordance with IFRS 2. The costs are expected to amount to approximately SEK 3.0 million, excluding social security contributions. The costs for social security contributions are expected to amount to approximately SEK 0.9 million, assuming, inter alia, an annual share price increase of 10 percent, a maximum allotment of 96,048 performance shares and an annual employee turnover of 10 percent.

Share savings program 2017

At the extraordinary shareholders’ meeting held on 16 March 2017, it was resolved to implement a share savings program addressed to certain employees of the Council of Ambea. There are no more than 57 employees that are entitled to participate in the program. Participation requires that the participants acquires shares in Ambea by using its own resources, alternatively allocates already owned shares to the program, so called savings shares. Such investments in savings shares cannot be more than SEK 50,000.

Participants, with some exceptions, that keep the shares during the duration of the program, from the first day of trade on Nasdaq Stockholm to and including the day of the announcement of the interim statement for the period 1 January – 31 March 2020 and, in addition thereto is employed by Ambea during the entire period, will at the expiration of the period obtain without consideration up to two new so-called performance shares, for each savings or investment share. In order for the performance shares to be allotted at all, the development on Ambea’s quality work needs to be positive, as the quality work is a fundamental condition for the company’s operations. Further, if the company achieves its financial targets, full allotment will be made within the framework of the share savings program, following a resolution by the board of directors.

The costs for the share savings program will be accounted for in accordance with IFRS 2 – Share Based Payments and is expected to amount to approximately SEK 1.9 million for the total duration. The costs for social security contributions are expected to amount to approximately SEK 0.9 million, assuming, inter alia, an annual share price increase of 10 percent, a 50 percent fulfillment of the performance requirements and an annual employee turnover of 10 percent.

Warrant programs

Warrant program 2018

At the annual shareholders’ meeting held on 23 May 2018, it was resolved to issue warrants. Maximum 13 members of the senior executives are entitled to participate in the program and the participants are divided into four categories.

In total, the share issue comprises no more than 429,000 warrants, entitling to subscription of the corresponding amount of new ordinary shares in the company. The participants have been invited to acquire warrants at market value, calculated in accordance with the Black-Scholes valuation model. The allocation is dependent on which category the participant belongs to.

The warrants have an exercise price per share corresponding to 115 percent of  the average volume weighted price of the company’ closing price 10 trading days following the annual shareholders’ meeting 2018, however not less than SEK 75 per share. The warrants may be exercised during two periods; during two weeks from the day of publication of the interim statement for the period 1 January – 31 March 2021 as well as during two weeks from the day of publication of the interim statement for the period 1 January – 31 September 2021. If, at the time of subscription of shares, the closing price, on the trading day immediately preceding the subscription, exceeds 200 percent of the exercise price, the exercise price shall be increased by the above mentioned price to the extent that it exceeds 200 percent of the exercise price.

Warrant program 2017

At the extraordinary shareholders’ meeting held on 16 March 2017, it was resolved to issue warrants. Maximum 14 members of the extended management are entitled to participate in the program and the participants are divided into four categories.

In total, the share issue comprises no more than 446,000 warrants, entitling to subscription of the corresponding amount of new shares in the Company. The participants will be invited to acquire warrants at market value, which in total amounts to approximately SEK 2,635,860[1]. The allocation is dependent on which category the participant belongs to.

The warrants have an exercise price per share corresponding to 120 percent of the share price in the Offering and may be exercised during two periods; during two weeks from the day after the publication of the interim report for the first quarter of the fiscal year 2020 and during two weeks from the day after the publication of the interim report for the third quarter of the fiscal year 2020. Should the price per share in the Company at subscription exceed 200 percent of the exercise price, the exercise price shall be increased by a corresponding excess amount. Thus, the maximum profit at exercise of the warrants is limited to SEK 60 per warrant.

 

[1] The warrants have been valued using the Black-Scholes valuation model.