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Remuneration guidelines

Resolution on guidelines for remuneration to senior executives

At the 2026 Annual General Meeting, the Board’s proposal for remuneration guidelines for the CEO and other senior executives at Karnell was adopted to remain in force until the end of the 2030 Annual General Meeting at the latest. The guidelines shall also encompass board members of Karnell, to the extent that they receive compensation outside of their board duties or are employed by the Company. The guidelines apply to agreements entered into after the Annual General Meeting of 2026 has decided to adopt the guidelines and also in the event of changes to existing agreements after this time. The guidelines do not cover remuneration decided by the general meeting. 

The guidelines’ promotion of the Company’s business strategy, long-term interests, and sustainability

For information on the Company’s business strategy, please refer to Karnell’s website, www.karnell.se. 

A successful implementation of the Company’s business strategy and the pursuit of the Company’s long-term interests, including its sustainability, requires that the Company may attract, motivate, and retain qualified senior executives. This necessitates that the Company can offer competitive remuneration. These guidelines enable the Company to offer senior executives a competitive total remuneration. 

Variable cash remuneration covered by these guidelines shall aim to promote the Company’s business strategy and long-term interests, including its sustainability. This is ensured by linking the financial and non-financial targets that determine whether variable cash remuneration should be paid with the Company’s business strategy. Further explanation of the variable cash remuneration is provided below under the heading “Variable cash remuneration”. 

The Company has implemented certain long-term share based incentive programs. All future programs will be decided by the general meeting and are therefore excluded from these guidelines. 

Forms of remuneration etc.  

The remuneration shall be market-based and may consist of the following components: fixed cash salary, variable cash remuneration, pension benefits, and other benefits. In addition, and independently of these guidelines, the general meeting may decide on, for example, share and share price related incentive programs. Fixed cash salary and variable remuneration shall be proportionate to the senior executive’s responsibilities and authority. 

Fixed salary 

The fixed salary shall consist of a fixed cash annual salary. The fixed salary shall be market-adjusted and determined taking into account responsibility, competence, and performance. The fixed salary is reviewed annually. 

Variable cash remuneration 

Fulfillment of the criteria for the payment of variable cash remuneration shall be measurable over a period of one year. The variable cash remuneration shall amount to a maximum of 50 percent of the total annual fixed cash salary. 

The senior executives’ variable cash remuneration shall be linked to predetermined and measurable criteria, which may be financial or non-financial. The criteria may also be individualised, quantified, or qualified targets. The criteria shall also be designed to contribute to the Company’s business strategy and long-term interests, for example, by being clearly anchored in the business strategy or by promoting the senior executive’s long-term development. 

Once the measurement period for the fulfillment of criteria for payment of variable cash remuneration has ended, the extent to which the criteria have been met shall be assessed or determined. The Company’s board of directors, in consultation with the remuneration committee, is responsible for the assessment regarding the variable cash remuneration for the CEO. For variable cash remuneration for other senior executives, the CEO, in consultation with the remuneration committee, is responsible for the assessment. Board members who are employed by the Company shall not receive variable cash remuneration. For financial targets, the assessment shall be based on the latest financial information published by the Company. 

The conditions for variable cash remuneration shall be designed in a way that enables the board, under exceptional economic circumstances, to limit or stop payment of variable cash remuneration when such remuneration is deemed unreasonable and incompatible with the Company’s obligations to its shareholders, employees, and other stakeholders. Furthermore, it shall be possible to limit or stop payment of variable cash remuneration if the board decides that it is appropriate for other reasons. The board shall also have the right to reclaim already paid variable cash remuneration if it is later discovered that a senior executive has violated the Company’s values, policies, standards, or instructions. 

In addition to variable cash remuneration that may be paid in accordance with the above, the Company shall be able to pay cash remuneration linked to senior executives’ acquisition of shares or other share related instruments within the framework of incentive programs, where this follows from the general meeting’s resolution on the incentive program. Such additional cash remuneration shall be limited to 50 percent of the executive’s total annual base salary. 

Pension 

Pension benefits shall only include defined supplementary pension benefits, unless the senior executives are subject to defined benefit pensions according to applicable collective agreement terms. The defined supplementary pension benefit shall not exceed 35 percent of the annual fixed remuneration. The CEO’s and other senior executive’s variable cash remuneration shall not qualify for pension benefits.  

Other benefits 

Other benefits may include, for example, life insurance, health insurance, and car benefits. Such benefits may in total amount to a maximum of 15 percent of the annual fixed salary. 

Regarding employment relationships subject to regulations other than Swedish, appropriate adjustments may be made concerning pension benefits and other benefits to comply with mandatory such regulations or established local practices, while still fulfilling the overarching purpose of these guidelines as far as possible. 

Any senior executives stationed to or from Sweden may receive additional compensation and other benefits to the extent reasonable considering the specific circumstances associated with the arrangement, while still fulfilling the overall purpose of these guidelines as far as possible. Such benefits may not exceed in total 35 percent of the annual fixed salary. 

Remuneration for board members not employed by the Company 

Board members elected by the general meeting who are not employed by the Company may, under special circumstances, receive consultancy fees or other market-based compensation for work performed on behalf of the Company in addition to board work. The board shall determine whether such consultancy fees or other market-based compensation shall be granted. 

Termination of employment

In the event of termination of employment initiated by the Company, the notice period shall not exceed twelve months. The total amount of fixed salary during the notice period and severance pay shall not exceed an amount equivalent to the annual fixed salary for 24 months. When termination occurs at the discretion of a senior executive, the notice period shall not exceed six months, without entitlement to severance pay. 

Additionally, compensation may be provided for commitments regarding non-compete agreements. Such compensation shall compensate for loss of income and shall only be provided to the extent that the former employed senior executive is not entitled to severance pay. Any new income from employment or compensation as a consultant shall be deducted from severance pay. 

Salary and employment terms for employees 

In preparing the board’s proposals for these remuneration guidelines, the salary and employment terms for the Company’s employees have been considered by providing information on employees’ total remuneration, remuneration components, and the increase and rate of increase of remuneration over time as part of the decision-making basis for the remuneration committee and the board in evaluating the reasonableness of the guidelines and the limitations therein. The development of the difference between senior executives’ compensation and other employees’ compensation will be presented in Karnell’s remuneration report. 

The decision-making process for establishing, reviewing, and applying the guidelines

The board shall prepare proposals for new guidelines at least every four years and present the proposal for decision at the Annual General Meeting. The guidelines shall remain in effect until new guidelines are adopted by the general meeting but shall be evaluated annually by the remuneration committee, which shall then, if applicable, present proposed amendments to the guidelines. The remuneration committee shall also monitor and evaluate any ongoing and during the year completed programs for variable remuneration for senior executives, the application of guidelines for remuneration to senior executives, and current remuneration structures and levels in the Company. During the board’s deliberations and decisions on remuneration-related matters, the working chairman of the board, CEO, or other persons in the group management, to the extent they are affected by the matters, shall not be present. 

Deviations from the guidelines 

The board may decide to temporarily deviate from the guidelines wholly or partially if there are specific reasons in an individual case, and a deviation is necessary to safeguard the Company’s long-term interests, including its sustainability, or to ensure the Company’s economic viability.