The guidelines are forward-looking, i.e. they will apply to remuneration agreed, and amendments to remuneration already agreed, after adoption of the guidelines by the 2020 Annual General Meeting. These guidelines will not apply to any remuneration decided or approved by the General Meeting, such as ordinary Board remuneration and share-related or share price-related remuneration (the “long-term incentive plans”).
The guidelines’ promotion of Kinnevik’s business strategy, long-term interests and sustainability
In short, Kinnevik’s business strategy is to be a leading growth investor by:
- backing challenger businesses that use technology to address material everyday consumer needs;
- being a bold and long-term business builder, partnering with talented entrepreneurs;
- focusing on Fashion & Food e-Commerce, Online Marketplaces, Financial Services, Healthcare and TMT, and other large sectors in the process of significant technological disruption;
- investing in Europe, with a focus on the Nordics, the US, and selectively in other markets; and
- leveraging our experience and expertise to build leading, long-term sustainable businesses.
For more information regarding Kinnevik’s business strategy, please see Kinnevik’s website at www.kinnevik.com under the heading ”Strategy” (which can be found under the section ”About us”).
A prerequisite for the successful implementation of Kinnevik’s business strategy and safeguarding of its long-term interests, including its sustainability, is that Kinnevik is able to attract, motivate and retain the best talent in Sweden and globally. To achieve this, it is necessary that Kinnevik offers competitive remuneration to create incentives for the Senior Executives to execute strategic plans, deliver excellent operating results and to align their incentives with the interests of Kinnevik’s shareholders. These guidelines enable Kinnevik to offer the Senior Executives a competitive total remuneration. In addition, these guidelines, together with Kinnevik’s long-term incentive plans, promote Kinnevik’s business strategy, long-term interests and sustainability by establishing that variable compensation shall be based on Kinnevik’s overarching financial target to deliver targeted shareholder return, and other corporate performance targets, including in particular the value of the growth portfolio and achieving Kinnevik’s diversity targets. Furthermore, in order to ensure that the performance on which compensation is based proves to be sustainable over time, Kinnevik shall have the authority, subject to the restrictions that may apply under law or contract, to in whole or in part reclaim remuneration, other than fixed cash salary, pensions and other customary benefits, paid on incorrect grounds or information that was manifestly misstated or in the event of material breaches of Kinnevik’s Code of Conduct (“claw-back”).
Types of remuneration, etc.
The remuneration shall be on market terms and may consist of the following components: fixed cash salary, variable cash remuneration, pension benefits and other customary benefits. Additionally, the General Meeting may resolve on, among other things, long-term share incentive plans.
The fixed cash salary is reviewed each year and is based on the Senior Executive’s competence, area of responsibility and market benchmarks.
The variable cash remuneration can amount to a maximum of 100 percent of the Senior Executive’s fixed annual cash salary. Further variable cash remuneration may be awarded in extraordinary circumstances, provided that such extraordinary arrangements are only made on an individual basis, either for the purpose of recruiting or retaining Senior Executives, or as remuneration for exceptional performance beyond the individual’s ordinary tasks. Such an additional remuneration may not exceed an amount corresponding to 100 percent of the Senior Executive’s otherwise existing fixed annual cash salary.
Long-term incentive plans are resolved upon by the General Meeting – irrespective of these guidelines. The long-term incentive plans shall be structured to ensure a long-term commitment to the development of Kinnevik and with the intention that the Senior Executives shall have a significant long-term shareholding in Kinnevik. The outcome shall be linked to certain predetermined performance criteria, based on Kinnevik’s share price and value growth. For more information regarding the long-term incentive plans that are ongoing, or that have ended during the current year, please see Kinnevik’s website at www.kinnevik.com under the heading ”Remuneration” (which can be found under the section ”Governance”).
For the Senior Executives, pension benefits shall be premium defined. Variable cash remuneration shall not qualify for pension benefits. The pension premiums for premium defined pension shall amount to not more than 30 percent of the Senior Executive’s fixed annual cash salary.
Other customary benefits may include, for example, life insurance, medical insurance (Sw. sjukvårdsförsäkring) and company car. Such benefits may not amount to more than 10 percent of the Senior Executive’s fixed annual cash salary.
Termination of employment
Upon termination of employment by Kinnevik, the notice period may not exceed 12 months. Fixed cash salary during the notice period and severance pay may not together exceed an amount corresponding to the fixed cash salary for 18 months for the Chief Executive Officer and 12 months for other Senior Executives. When termination is made by the Senior Executive, the notice period may not exceed 12 months for the Chief Executive Officer and six months for other Senior Executives, without any right to severance pay.
Criteria for awarding variable cash remuneration, etc.
The variable cash remuneration shall be linked to predetermined and measurable financial and non-financial criteria, measured over a period of one year. The criteria include fulfilment of individual and corporate objectives which are linked to specific performance and potential processes and transactions. The variable cash remuneration shall be based on (i) the outcome of corporate performance targets linked to e.g. that Kinnevik delivers targeted shareholder returns, grows the growth portfolio and reaches and exceeds its investee diversity targets, and (ii) the Senior Executives’ individual targets. In order to increase alignment with the interests of Kinnevik’s shareholders, payment of part of the variable cash remuneration is conditional upon a portion of it being invested in Kinnevik shares, until the Senior Executive has a shareholding in Kinnevik corresponding to his or her fixed annual cash salary, net after taxes.
The extent to which the criteria for awarding variable cash remuneration have been satisfied shall be evaluated/determined when the measurement period has ended. The People & Remuneration Committee is responsible for the evaluation. As regards financial criteria, the evaluation shall be based on the latest financial information made public by Kinnevik. The People & Remuneration Committee will use the discretion afforded them by shareholders to ensure that rewards properly reflect the business performance of Kinnevik, and will take into account any relevant environmental, social, and governance (ESG) matters when determining outcomes.
Salary and employment conditions for employees
In preparation of the Board’s proposal for these remuneration guidelines, salary and employment conditions for Kinnevik’s employees 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, as the basis for the People & Remuneration Committee’s and the Board’s decision when evaluating whether the guidelines and the limitations set out herein are reasonable. The development of the gap between the remuneration to Senior Executives and remuneration to other employees will be disclosed in the remuneration report.
Remuneration to Board members
Board members in Kinnevik, elected at General Meetings, may in certain cases receive compensation for services performed within their respective areas of expertise, outside of their Board duties in Kinnevik. Compensation for such services shall be paid on market terms and be approved by the Board.
The decision-making process to determine, review and implement the guidelines
The Board has established a People & Remuneration Committee. The People & Remuneration Committee’s tasks include preparing the Board’s resolutions in remuneration-related matters, and preparing the Board’s proposal for remuneration guidelines for Senior Executives. The People & Remuneration Committee’s tasks also include assisting in other issues involving the composition, size and balance of the Senior Executive team, talent management, diversity & inclusion, any termination, settlement, or compromise package or similar. The People & Remuneration Committee also monitors and evaluates the programs for variable remuneration (including share-related or share price-related remuneration) for the Senior Executives, the application of these guidelines as well as the current remuneration structures and compensation levels within Kinnevik.
Remuneration under employment subject to other rules than Swedish rules may be duly adjusted to comply with mandatory rules or established local practice, taking into account, to the extent possible, the overall purpose of these guidelines.
The members of the People & Remuneration Committee are independent of the Company and the executive management. Senior Executives do not participate in the Board’s processing of and resolutions regarding remuneration-related matters in so far as they are affected by such matters.
The Board 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.
Derogation from the guidelines
The Board 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 Kinnevik’s long-term interests, including its sustainability, or to ensure Kinnevik’s financial viability.