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Sve Suo Eng
Sve Suo Eng

Remuneration guidelines

GUIDELINES FOR REMUNERATION TO SENIOR EXECUTIVES

1. GENERAL
The Board proposes the following guidelines for remuneration to the CEO and other senior executives within Karnell Group AB (publ) (“Karnell” or “the Company”). These 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 2022 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.

1.1 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.

Successful implementation of the Company’s business strategy and the pursuit of its long-term interests, including sustainability, require the Company to 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 competitive total remuneration.

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

The Company has implemented certain share-related incentive programs. All future such programs will be decided by the General Meeting and are therefore excluded from these guidelines.

2. PRINCIPLES FOR VARIOUS TYPES OF REMUNERATION
The remuneration shall be market-based and may consist of the following components: fixed remuneration, variable remuneration, pension, and other benefits. In addition, the General Meeting may decide on, for example, share-related compensation. The fixed and variable remuneration shall be proportionate to the senior executive’s responsibilities and authority.

2.1 Fixed remuneration
The fixed remuneration, meaning the basic salary, shall consist of a fixed cash compensation. The fixed remuneration shall be market-adjusted and determined taking into account responsibility, competence, and performance. The fixed remuneration is reviewed annually.

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

The senior executives’ variable remuneration shall be linked to predetermined and measurable criteria, which may be financial or non-financial. The criteria may also be individualized, 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 remuneration has ended, the extent to which the criteria have been met shall be assessed or determined. The Board of Directors, in consultation with the Compensation Committee, is responsible for the assessment regarding the variable remuneration for the CEO. For variable remuneration for other senior executives, the CEO, in consultation with the Compensation Committee, is responsible for the assessment. Board members who are employed by the Company shall not receive variable remuneration. For financial targets, the assessment shall be based on the latest financial information published by the Company.

The conditions for variable remuneration shall be designed in a way that enables the Board, under exceptional economic circumstances, to limit or stop payment of variable remuneration when such compensation 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 remuneration if the Board decides that it is appropriate for other reasons. The Board shall also have the right to reclaim already paid variable remuneration if it is later discovered that a senior executive has violated the Company’s values, policies, standards, or instructions.

2.3 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 variable remuneration shall not qualify for pension benefits. Other senior executives’ variable remuneration shall qualify for pension benefits unless otherwise stated in the individual agreements of the senior executives.

2.4 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 remuneration.

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 overarching purpose of these guidelines as far as possible. Such benefits may not exceed in total 35 percent of the annual fixed remuneration.

3. REMUNERATION FOR BOARD MEMBERS NOT EMPLOYED BY THE COMPANY
Elected board members who are not employed by the Company may, in special cases, receive consultancy fees or other market-based compensation for work performed on behalf of the Company in addition to their board duties. The Board shall determine whether such consultancy fees or other market-based compensation shall be granted.

4. TERMINATION OF EMPLOYMENT
In the event of termination of employment initiated by the Company, the notice period shall not exceed twelve months. The total sum of fixed remuneration during the notice period and severance pay shall not exceed an amount equivalent to the annual fixed remuneration 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.

5. 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 compensation, compensation components, and the increase and rate of increase of compensation over time as part of the decision-making basis for the Compensation 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.

6. 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 Compensation Committee, which shall then, if applicable, present proposed amendments to the guidelines. The Compensation Committee shall also monitor and evaluate any ongoing and completed programs for variable remuneration for senior executives during the year, the application of guidelines for remuneration to senior executives, and current compensation 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 corporate management, to the extent they are affected by the matters, shall not be present.

7. 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.

8. PUBLIC DISCLOSURE OF GUIDELINES
These guidelines shall be made available on the Company’s website no later than two weeks after the Annual General Meeting and throughout the validity of the guidelines.