Remuneration

Any performance-related portion of salary should be linked to the earnings performance that person can influence. Remuneration to the CEO and other senior executives are resolved by the Board on the basis of a proposal from the Remuneration Committee.

Remuneration and other benefits 2016
KEUR Basic salary/ Director fees Variable remune-
ration
Other benefits1 Pension expenses Total
Melker Schörling, Chairman of the Board 146.2 - - - 146.2
Gun Nilsson 77.6 - - - 77.6
Jill Smith 71.3 - - - 71.3
Ulrika Francke 55.4 - - - 55.4
Ulrik Svensson 74.8 - - - 76.6
Ola Rollén, President and Chief Executive Officer 2,460.2 1,230.2 - 492.0 4,182.4
Other senior executives (eleven people) 6,244.9 3,548.0 205.0 417.6 10,415.5
Total 9,132.2 4,778.2 205.0 909.6 15,025.0

1) Other benefits comprise company car, housing rent and insurance (excluding pension insurance).

Principles

The following principles for remuneration to senior executives in Hexagon were adopted by the Annual General Meeting 2015.

The remuneration shall consist of basic remuneration, variable remuneration, other benefits and pension. By other senior executives is meant members of the group management. The total remuneration shall be in accordance with market practice and competitive. The variable part of the salary shall be maximised at 150 per cent of the basic remuneration, related to the earnings performance on which the individual may have an impact on and based on the outcome in relation to individual targets.

The variable remuneration shall not qualify for pension. Each year the Board of Directors shall consider to recommend the Annual General Meeting to resolve on a share or share rate related incentive program. The notice period shall normally be six months on the part of the employee. At dismissal by the company, the notice period and the period during which severance payment is paid, all in all, shall not exceed 24 months. As a general guideline, pension benefits shall be fee based. At present, all senior executives have fee based pension plans. Deviations from this general guideline may be made when appointing new senior executives whose employment agreements already comprise benefit based pension plans. The pension age for senior executives is individual, however, not lower than 60 years.

The guidelines shall apply to employment agreements entered into after the resolution by the Annual General Meeting, and to any amendments of existing agreements. The Board of Directors shall have the right to deviate from the guidelines if, in an individual case, there are particular reasons for this.

Remuneration of Group Management

Remuneration to the President and Chief Executive Officer, as well as other senior executives, comprises basic salary, variable remuneration, pension and other benefits where variable remuneration is based on the Group’s profitability. The Chief Executive Officer of Hexagon AB did not receive any director fees in 2015. Pensions and other benefits received by the President and other senior executives are paid as part of their total remuneration.

Remuneration of Board of Directors

Remuneration to the Board of Directors is resolved by the Annual General Meeting upon proposal from the Nomination Committee. During 2015, the Chairman of the Board and Board Members received remuneration totalling 400.3 KEUR.

Remuneration of External Auditors

Remuneration for services in addition to auditing services primarily refers to work related to acquisitions and tax.

Pension

Pension expense comprises defined-contribution pension schemes, and is the expense affecting earnings for the year. The Chief Execu­tive Officer’s pensionable age is 65. Pension premiums are payable at 20 per cent of pensionable salaries. The pensionable age of other senior executives is 65, except for one person where the pensionable age is 60. Pension premiums for the senior executives are not higher than 25 per cent of pensionable salary. Pensionable salary means basic salary.

Severance Pay

The notice period for the CEO is six months. Upon termination by the Company or in case of change of principal ownership the CEO is entitled to severance pay equal to eighteen months of salary. The period of notice for senior executives is a maximum of eighteen months. During the notice period, regular salary is the only severance pay.