Our incentive programs
Guidelines for remuneration and other employment terms and conditions for senior executives
The Group Management falls within the provisions of these guidelines. The guidelines are forward-looking, i.e. they are applicable to remuneration agreed, and amendments to remuneration already agreed, after adoption of the guidelines by the Annual General Meeting. These guidelines do not apply to any remuneration decided or approved by the General Meeting. Remuneration for employment subject to other rules than Swedish may be duly adjusted to comply with mandatory rules or local practice, taking into account the overall purpose of these guidelines. The guidelines’ promotion of the Company’s business strategy, long-term interests and sustainability
In short, the Company’s business strategy is the following.
» Expansion in the US-market with Traffic Enforcement as a Service
» Entry into new markets with Traffic Enforcement as a Service
» Developing scalable software & flexible hardware
» Extension of the service scope in existing markets
For more information regarding the Company’s business strategy, please see www.sensysgatso.com
The Company shall offer total remuneration at the prevailing market rate to enable the recruitment and retention of senior executives.
Types of remuneration, etc.
Remuneration of the Group Management shall consist of a base salary, variable remuneration, pension and other benefits and remuneration. Together, these various parts shall comprise each individual’s total remuneration. Additionally, long-term share-related incentive plans can be implemented in the Company. Such plans are resolved by the General Meeting and are therefore excluded from these guidelines. Variable remuneration covered by these guidelines shall aim at promoting the Company’s business strategy and long-term interests, including its sustainability. The base salary and variable compensation together constitute the senior executive’s annual salary. The base salary shall take into consideration each individual’s area of responsibility and experience. The variable compensation shall be linked to predetermined and measurable criteria. The variable compensation is based on the Company’s net sales and EBITDA for the financial year, and may be paid to the Group Management. For the CEO and other members of the Group Management the variable compensation can amount to a maximum 50 per cent of their annual base salary. No variable compensation is to be paid out in the event of negative EBITDA. The Board of Directors is responsible for evaluating to what extent the criteria have been satisfied. The criteria shall be designed so as to contribute to the Company’s business strategy and long-term interests, including its sustainability, by for example being clearly linked to the business strategy or promote the executive’s long-term development. The CEO shall benefit from a supplementary pension scheme with a premium that represents approximately 30 percent of the current annual salary. Other members of the Group Management shall have the right to retirement pensions as per the Swedish ITP plan or equivalent. The retirement age is 65 years. Other remuneration and benefits shall be paid at market rate and contribute to enabling each senior executive to fulfill their duties. Such benefits may be of a limited amount. For employment governed by rules other than Swedish, pension benefits and other benefits may be duly adjusted for compliance with mandatory rules or local practice, taking into account the overall purpose of these guidelines.
The CEO’s employment contract includes termination conditions. The notice period is six months. If notice is made from the Company’s side a severance pay in the form of another three months’ salary is paid. The customary notice period of three to six months applies to all other members of the Group Management. The fixed salary shall remain unchanged during the notice period. Additionally, remuneration may be paid for non-compete undertakings. Such remuneration shall compensate for loss of income and shall only be paid in so far as the previously employed executive is not entitled to severance pay. The remuneration shall be based on the fixed cash salary at the time of termination of employment and be paid during the time the non-compete undertaking applies, however not for more than 9 months following termination of employment.
Salary and employment conditions for employees
In the preparation of the Board of Directors’ proposal for these remuneration guidelines, salary and employment conditions for employees of the Company have been taken into account by including information on the employees’ total income, the components of the remuneration and increase and growth rate over time, in the remuneration committee’s and the Board of Directors’ basis of decision when evaluating whether the guidelines and the limitations set out herein are reasonable.
The decision-making process to determine, review and implement the guidelines
The Company does not have a Remuneration Committee, instead the Board of Directors handle all matters. The matters that would have been handled by a Remuneration Committee are instead handled by the Board of Directors, inter alia, preparing the Board of Directors’ decision to propose guidelines for executive remuneration. The Board of Directors also monitors and evaluates questions regarding the CEO’s terms of employment, pension benefits and variable remuneration, and resolves on corresponding terms regarding other senior executives. The Board of Directors shall prepare a proposal for new guidelines at least every fourth year and submit it to the General Meeting. The guidelines shall be in force until new guidelines are adopted by the General Meeting. The Board of Directors shall also monitor and evaluate programs for variable remuneration for the executive management, the application of the guidelines for executive remuneration as well as the current remuneration structures and compensation levels in the Company. The CEO and other members of the executive management do not participate in the Board of Directors’ processing of and resolutions regarding remuneration-related matters in so far as they are affected by such matters.
Derogation from the guidelines
The Board of Directors may temporarily resolve to derogate from the guidelines, in whole or in part, if in a specific case there is special cause for the derogation and a derogation is necessary to serve the Company’s long-term interests, including its sustainability, or to ensure the Company’s financial viability. As set out above, the Board of Directors’ tasks include preparing the resolutions in remuneration-related matters. This includes any resolutions to derogate from the guidelines. Remuneration to senior executives can be found in note 2.
Sensys’ incentive program and variable remuneration (from Annual Report 2022)VARIABLE REMUNERATION GROUP MANAGEMENT
Group management consists of the CEO and other Senior Management (CFO, CCO and CTO).
The agreement for the CEO applies since 2017. The variable remuneration is based on net sales and EBITDA, and is subject to an upper limit of 50% annual salary. Based on the performance measurement of 2022 an amount of TSEK 1,559 (1,086) has been accrued and will be paid out in 2023.
A remuneration of TSEK 1,086 has been paid out during 2022, relating to the performance of the financial year 2021.
The variable remuneration for other Senior Management is based on net sales and EBITDA, and is subject to an upper limit of 50% annual base salary. Based on the performance measurement of 2022 an amount of TSEK 1,476 (1,663) has been accrued and will be paidout in 2023. A remuneration of TSEK 1,663 (409) has been paid out during 2022, relating to the performance of the financial year 2021.
Share based payment
The company has two share based payment programs.
The program of 2017-2020 was granted to the CEO, free of charge. The share options are subject to three year vesting (October 2017 - September 2020) that entitle to acquire not more than 6,000,000 shares in the Company. The exercise price of the share options is SEK 0.81. The maximum number of shares that may be issued pursuant to an exercise of options under the program is 7,980,000 shares (including exercise of warrants for hedging of social security costs), corresponding to a maximum dilution of approximately 0.7 percent. In 2022 the two year exiercise period ended for the share options granted under Plan 2017-2020. In 2022 the two year exiercise period ended for the share options granted under Plan 2017-2020. The share option plan has been exercised by the CEO. Due to the high cost assiciated with the execution of this Share Option Plan the board and the CEO have agreed to transform the value into a short term incentive related to organizational development. The short term incentive can be awarded taking into consideration the maximum agreed short term incitenive for the CEO of 50% of base salery. For the year 2022 the CEO was awarded 580TSEK for the development of the organisation.
In 2021 the general meeting of shareholders approved the implementation of a long-term incentive program in the form of a stock-option plan for up to 50 key executives and employees (“LTIP 2021”). LTIP 2021 is a program that spans over three award years and under which the participants will be granted, free of charge, share-options that entitle the acquisition of up to 44.0 million shares in the Company subject to three-year vesting periods. As part of the implementation a total of up to 55.0 million shares (including 11 million shares acquired through warrants for the hedging of social security costs) may be issued.
In 2021 37.7 million share-options were granted to employees with an exercise price of SEK 1.28. The company wishes to promote share ownership but also to minimize dilution and therefore intends to “net settle” exercised options, i.e. the participating employee receives the value of the option gains in shares.
The value of the share-options have been calculated based on the Black and Scholes Model using a volatility based on the average deviation in the share price in 2021 up to the grant date. The used volatility in the model amounted to 37.5 percent. The total cost recorded in the result of 2022 amounted to SEK 3.4 million of which SEK 2.7 million has been recorded in equity and 0.7 million as a social security liability on the balance sheet.
The CEO has been awarded 5,500,000 share options and other Senior Management have been awarded 2,750,000 share options each.
Variable remuneration in subsidiaries
Other group executives
The other group executives are employed or contracted in the subsidiaries.
Variable remuneration for other group executives and management
The agreement for the senior executives and management team applies since 2017. The variable remuneration is based on regional performance and group performance. The remuneration is subject to an upper limit of 50% annual salary.
There are separate agreements for variable remuneration of other employees in the different subsidiaries.