Kinnevik Remuneration Committee
The Remuneration Committee comprises the Chairman of the Board Dame Amelia Fawcett, and the Board members Erik Mitteregger and Charlotte Strömberg. Dame Amelia Fawcett is the Chairman of the Committee.
The following is the Board's report of the results of the evaluation carried out by the Remuneration Committee and how the remuneration policy is implemented throughout Kinnevik in line with corporate governance best practice, with specific reference to Senior Executives.
General information with respect to the remuneration for Senior Executives
The remuneration to the Senior Executives during 2018 has consisted of fixed salary and short-term variable remuneration paid in cash ("STI"), the possibility to participate in long-term share-based incentive plans ("LTI"), pensions and other customary benefits. The aim is to create incentives for Senior Executives to execute strategic plans and deliver excellent operating results as well as to align the Senior Executive's incentives with the interests of the shareholders. The intention is that all Senior Executives shall have a significant long-term shareholding in Kinnevik.
The maximum outcome for the STI for the Senior Executives during 2018 according to the guidelines for remuneration was 100 percent of the individual Senior Executive's fixed salary, and the outcome was based on pre-established targets relating to both individual performance of the Senior Executives and performance of Kinnevik. For Senior Executive's whose shareholding in Kinnevik was lower than his or her annual fixed salary, net after taxes, payment of a part of the STI was conditional upon that a portion of it was invested in Kinnevik shares.
In 2018, all employees in Kinnevik were invited to participate in a long-term share incentive plan based on reclassifiable, sub-ordinated, incentive shares in up to four classes ("LTIP 2018"). Subject to the terms and conditions of LTIP 2018, these incentive shares will be reclassified into Kinnevik Class B shares in 2021 or 2023 (depending on class).
Evaluation of programmes for variable remuneration
The Remuneration Committee follows and evaluates the STI and LTI, and the actual and expected outcome has been reported to the Board and discussed at Board meetings. The evaluation of the programmes for variable remuneration has shown that:
• the programmes for variable remuneration are an important tool in attracting, motivating and retaining the best talent for Kinnevik in Sweden and globally;
• LTIP 2018 was well-received by the Kinnevik team with a high level of participation throughout Kinnevik's organization;
• LTIP 2018's design offers an incentive that links the long term remuneration to the value creation of not only Kinnevik's total portfolio but also specifically its private portfolio, which is desirable in light of Kinnevik's focus on investments in and management of the private portfolio;
• LTIP 2018 enables Kinnevik to offer its employees a total remuneration package that is more competitive in relation to Kinnevik's peers in Sweden and globally than previous equity or share-price related long-term incentive plans; and
• the remuneration packages offered to the Senior Executives strike an appropriate balance between motivating the Senior Executives and achieving a well-balanced competitive compensation that is aligned with the shareholders’ interests.
Evaluation of the guidelines for remuneration to the Senior Executives
Both the Remuneration Committee's evaluation and the Auditor's review have concluded that the Company has during 2018 complied with the applicable guidelines, i.e. the guidelines adopted by the 2017 and 2018 Annual General Meetings.
The statement by the Company's Auditor in accordance with Chapter 8 Section 54 of the Swedish Companies Act, regarding compliance with the guidelines for remuneration to the Senior Executives during 2018 is available on page 21 in this notice document.
Under the guidelines the intention is that all Senior Executives shall have a significant long-term shareholding in Kinnevik. The Board's view is that a Senior Executive shall reach and maintain a shareholding in Kinnevik corresponding to his or her annual fixed salary, net after taxes, to be considered to have a significant shareholding. This goal shall be achieved over time through an annual re-investment of a portion of the STI. The Board have concluded that most of the Senior Executives have a significant long-term shareholding in Kinnevik.
Evaluation of remuneration structure and levels of remuneration in Kinnevik
Based on the Remuneration Committee's evaluation of the remuneration programmes, the Board has determined that the current remuneration structures and levels of remuneration have had a positive effect on Kinnevik. The Board believes that the models and award levels in the proposed programmes for variable remuneration will ensure the competitiveness of the total remuneration as well as facilitate Kinnevik's ability to attract, motivate and retain key personnel.
Stockholm, April 2019
KINNEVIK AB (PUBL)
THE BOARD OF DIRECTORS