Note 9 – Personnel expenses
Total personnel expenses and remuneration1)
|Salaries and remuneration 2)||-612||-654||-263||-285|
|Of which, salaries and other compensation to senior executives 3)||-32||-42||-20||-22|
|Of which, salaries and other compensation to other employees||-580||-612||-243||-263|
|Of which defined-benefit plans||0||0||0||0|
|Other personnel-related expenses||-89||-60||-27||-24|
1) The table also includes costs for redundancy payments and similar items in connection with organisational changes.
2) The amount includes fixed and variable remuneration.
3) Senior executives include Board members, the President/CEO and the executive Management team. Former Board members are included. Nil (0) Board members invoiced fees via own companies during 2020; see Note 35 ”Related-party transactions”. Senior executives during the year included 17 (20) individuals, of which Board members accounted for 9 (10) and the CEO for 1 (1).
Remuneration to Members of the Board and the Executive Management Team
Approved guidelines for remuneration for executive officers, resolved on by the AGM on 14 May 2020.
These guidelines cover senior executives in Hoist Finance AB (publ) (“Hoist Finance” or the “Company”). The term senior executives shall in this context mean the CEO and the other members of the executive management team, and board members to the extent they receive remuneration for services performed outside of their Board duties. The guidelines are applicable to remuneration agreed, and amendments to remuneration already agreed, after the adoption of the guidelines by the Annual General Meeting 2020. The guidelines do not apply to any remuneration decided by the General Meeting.
The guidelines’ promotion of the Company’s business strategy, long-term interests and sustainability
The remuneration in Hoist Finance shall encourage senior executives to promote the Company’s business strategy, long-term interests and sustainability and a behaviour in line with the Company’s ethical code of conduct and values. The remuneration shall also be structured to enable Hoist Finance to attract, retain and motivate employees who have the requisite skills. The remuneration shall encourage good performance, prudent behaviour and risk-taking aligned with customer and shareholder expectations. Hoist Finance’s business strategy, long-term interests and sustainability work are described on the Company’s webpage, www.hoistfinance.com.
Types of remuneration
The remuneration shall be on market terms and may consist of the following components: fixed cash salary, variable cash remuneration, pension benefits and other benefits. Additionally, the General Meeting may, irrespective of these guidelines, resolve on, among other things, share-related or share price-related remuneration.
Fixed cash salary
Salaries shall be gender- and age-neutral and cannot be discriminatory. Hoist Finance views remuneration from a comprehensive perspective and, accordingly, takes all remuneration components into account. Remuneration is weighted in favour of fixed salary, which is based on the position’s complexity and level of responsibility, prevailing market conditions and individual performance.
Variable cash remuneration
Variable remuneration for senior executives shall not exceed 100 per cent of the fixed annual cash salary. The variable remuneration consists to 40 per cent of cash remuneration and to 60 per cent of a long-term share-based incentive program, a so-called LTIP. Since LTIP is resolved by the General Meeting it is excluded from the scope of these guidelines. Variable remuneration is based on various financial and non-financial criteria, and is linked to the performance of the Hoist Finance group and the relevant business unit respectively, and to individual targets. It is hence distinctly linked to the business strategy and thereby to the Company’s long-term value creation, including its sustainability.
Variable remuneration takes into account the risks involved in the Company’s operations and is proportional to the group’s earning capacity, capital requirements, profit/loss and financial position. The payment of variable remuneration must not undermine the group’s long-term interests and is contingent upon the recipient’s compliance with internal rules and procedures. Variable remuneration is not paid to a senior executive who has participated in or been responsible for any action resulting in significant financial loss for the group or the relevant business unit.
For senior executives, payment of 60 per cent of the variable remuneration is deferred for a period of at least three years. Variable remuneration, including deferred remuneration, is only paid to the extent warranted by the group’s financial situation and the performance of the group and the relevant business unit, and the senior executive’s achievements.
The fulfilment of the criteria for payment of variable cash remuneration shall be measured during a period of one year. When the measurement period for the fulfilment of the criteria for the payment of variable cash remuneration has ended it shall be evaluated/determined to which extent the criteria have been fulfilled. The Remuneration Committee, and the Board of Directors with respect to remuneration to the CEO, are responsible for the assessment.
Pension benefits and other benefits
Pension and insurance are offered pursuant to national laws, regulations and market practices and are structured as collective agreements, company-specific plans or a combination of the two. Hoist Finance has defined-contribution pension plans. A few senior executives receive gross salary; in these instances, the Company does not make pension contributions. Variable cash remuneration shall not qualify for pension benefits. The pension premiums for premium defined pension shall amount to no more than 30 per cent of the fixed annual cash salary.
Other benefits may include, for example, life insurance, medicial insurance (Sw. sjukvårdsförsäkring) and company cars. Other benefits are designed to be competitive in relation to similar operations in each respective country. Such benefits may amount to no more than 10 per cent of the fixed annual cash salary.
For employments governed by other rules than Swedish rules, pension benefits and other benefits may be duly adjusted for compliance with mandatory rules or established local practice, taking into account, to the extent possible, the overall purpose of these guidelines.
Remuneration for new hires, so-called “sign-on bonus”, is only offered in exceptional cases and then only to compensate for the lack of variable remuneration in the senior executive’s previous employment contract. Sign-on bonuses are paid during the year in which the senior executive begins to work. Decisions on exceptional cases are made in accordance with the decision-making process for variable remuneration.
Issuing loans to senior executives is not permitted.
Salary and employment conditions for employees
In the preparation of the Board of Directors’ proposal for these remuneration guidelines, salary and employment conditions for employees of the Company have been taken into account by including information on the employees’ total income, the components of the remuneration and the increase and growth rate over time, in the Remuneration Committee’s and the Board of Directors’ basis of decision when evaluating whether the guidelines and the limitations set out herein are reasonable.
The decision-making process to determine, review and implement the guidelines
The Board of Directors has established a Remuneration Committee. The committee’s tasks include the preparation of the Board of Director’s decision on the proposal of guidelines for executive remuneration. The Board of Directors shall prepare a proposal for new guidelines at least every fourth year and submit it to the General Meeting. The guidelines shall remain in force until new guidelines are adopted by the General Meeting. The Remuneration Committee shall also monitor and evaluate programs for variable remuneration for the executive management, the application of the guidelines for executive remuneration as well as the current remuneration structures and compensation levels in the Company. The members of the Remuneration Committee are independent of the Company and its executive management team. The CEO and other members of the executive management team do not participate in the Board of Directors’ processing of and resolutions regarding remuneration-related matters in so far as they are affected by such matters.
Termination of employment
Upon the group’s termination of an employment contract, the maximum notice period is twelve months and no severance payment is made.
Remuneration to board members for services performed outside of their Board duties
Directors, elected at General Meetings, may in certain cases receive remuneration for services performed within their respective areas of expertise, outside of their Board duties. Compensation for these services shall be paid at market terms and be approved by the Board of Directors. Remuneration may be payable up to SEK 50,000 for a Director’s work in the board of a subsidiary.
Derogation from the guidelines
The Board of Directors 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 the Company’s long-term interest, including its sustainability, or to ensure the Company’s financial viability. Since the Remuneration Committee’s tasks include the preparation of the Board of Directors’ resolution in remuneration-related matters, any resolutions to derogate from the guidelines shall also be prepared by the Remuneration Committee.
Remuneration to the Board of Directors 1)
|Chair of the Board:||2020||2019||2020||2019|
|Other Board members:|
|Gunilla Öhman 2)||-||242||-||242|
|Jörgen Olsson 3)||-||338||-||338|
|Joakim Rubin 4)||240||633||240||633|
|Cecilia Daun Wennborg||690||673||690||673|
|Marcial Portela 5)||184||483||184||483|
|Robert Kraal 6)||521||306||521||306|
|Henrik Käll 7)||369||-||369||-|
1) Director and Committee member fees comprise a fixed annual amount, excluding social fees. No member fees was paid for subsidiaries pursuant to an AGM resolution. As from the 16 May 2018 AGM, all director fees are paid as salary.
2) Gunilla Öhman stepped down from the Board in conjunction with the 16 May 2019 AGM.
3) Jörgen Olsson stepped down as CEO on 14 March 2018. He stepped down from the Board in conjunction with the 16 May 2019 AGM.
4) Joakim Rubin stepped down from the Board in conjunction with the 14 May 2020 AGM.
5) Marcial Portela stepped down from the Board in conjunction with the 14 May 2020 AGM.
6) Robert Kraal joined the Board as per the 16 May 2019 AGM.
7) Henrik Käll joined the Board as per the 14 May 2020 AGM.
Salaries and benefits 1)
|Fixed salary||PerformancE-based compensation 3)||Allocated value LTIP 4)||Benefits 5)||Pension benefits 6)||Total|
|Chief Executive Officer :|
|Executive Management Team 2):|
|7 (9) people excluding the CEO||20,685||25,981||-||3,448||-||3,768||93||565||2,801||2,763||23,579||36,525|
1) Excluding social fees.
2) 2019 fixed salary includes redundancy payment of SEK 3,588 thousand for Björn Hoffmeyer.
3) Variable remuneration relating to the 2019 financial year includes the part of the share-based incentive programme that will be paid in cash.
4) The value stated refers to a preliminary calculation of the performance amount for 2019 which will be paid in shares. The final outcome will be determined in the first quarter of 2020. In order to receive these shares an additional three years of service are required. The total cost has not yet been expensed as the cost is allocated over the vesting period in accordance with IFRS 2, see the section under the heading “share-based incentive program”. In 2020 it was decided that no remuneration would be paid under the 2019 share-based incentive programme.
5) Benefits have been included in the taxable fringe benefit, excluding social fees. Benefits primarily comprise a company car, housing, health insurance and other benefits associated with foreign posting.
6) The amounts pertain to pension costs during the year for senior executives. Pension costs comprise pension premiums for defined-contribution pension plans expensed during the year (costs for services rendered during the current and previous years and settlements as defined by IAS 19). 100 per cent of total pension costs is attributable to defined contribution pension plans.
The AGM of Hoist Finance held on 14 May 2020 resolved that annual directors’ fees are to be paid as follows:1)
|Chair of the Board||1 475 000 SEK|
|Board member||490 000 SEK|
|Chair, Risk and Audit Committee||200 000 SEK|
|Member, Risk and Audit Committee||125 000 SEK|
|Chair, Remuneration Committee||50 000 SEK|
|Member, Remuneration Committee||50 000 SEK|
|Chair, Investment Committee||175 000 SEK|
|Member, Investment Committee||100 000 SEK|
1) For the period through the next AGM.
The CEO’s basic salary, Long-term Incentive Plan and other terms of employment are proposed by the Board’s Remuneration Committee and adopted by the Board of Directors. The CEO’s salary amounted to SEK 5,333 thousand (5,377), in line with Hoist Finance’s remuneration policy. The CEO’s salary is paid in Swedish kronor. The performance-based compensation amounts to maximum 100 per cent of fixed salary. The CEO has a 12-month notice period. There is no agreement in place on redundancy payments.
The pension premium for Klaus-Anders Nysteen is 30 per cent (30) of fixed salary.
It is a defined-contribution pension.
Executive Management Team (EMT)
The Board’s Remuneration Committee prepares for the Board’s decision changes to remuneration rates and bonus programme results and other changes to EMT compensation agreements. During 2020, 4 EMT members had agreements concerning variable salary increments capped at 100 per cent of fixed salary. Three EMT members have had an agreement where the variable remuneration for a limited time exceeds 70 per cent of the fixed salary. Benefits primarily comprise a company car and health insurance benefits.
As of 31 December 2020, the EMT was comprised of 7 people (9), exclusive of the CEO.
Five EMT members have a six-month notice period and two EMT member have a three-month notice period.
Pension benefits, EMT
At year-end, four EMT members have followed Hoist Finance’s pre-determined pension scheme, for which fixed salary is the pensionable compensation amount.
One EMT member receives 10 per cent of fixed salary and one receives 13 per cent of fixed salary.
Pension provisions for one EMT member are not posted in the company.
Share-based incentive programme (LTIP)
Variable remuneration for senior executives is comprised of a longterm share-based incentive programme (LTIP). Variable remuneration takes into account the risks involved in the company’s operations and is proportional to the Group’s earning capacity, capital requirements, profit/loss and financial position, as well as individual targets.
Variable remuneration is based on results achieved during the performance year (calendar year 2020) and final performance amounts are determined when the year-end report is published. Of the remuneration amount, 40 per cent is paid in cash (governed by IAS 19 regulations) and 60 per cent through share grant (governed by IFRS 2). The original valuation date for the programme is January 2020, when Hoist Finance and the counterparty agreed on the programme’s terms and conditions.
Remuneration is measured during the performance year at an estimated monetary value. The amount to be paid is then expressed in the number of share options granted during the time prior to the vesting period. The number of shares granted is based on the share price as determined in February the year after the performance year. The shares vest in equal 1/3 parts (i.e., the first, second and third year following the AGM’s approval of the annual report). In practical terms, payment is made in equal parts in May 2022, May 2023 and May 2024. The share price for the 2020 LTIP programme has not been settled. The cost of the share options is allocated on a straight-line basis across the three stipulated periods, with a true-up for the rights lost by participants who terminate their employment during the vesting periods.
The options are converted automatically to ordinary shares on the vesting day, at an exercise price of nil. Participants are entitled to receive dividends on the granted shares. The right expires in the event the participant terminates their employment during the vesting period, except in limited cases approved by the Board on a case-by-case basis.
In 2020 the costs posted for the share option portion of the Group’s LTIP programme totalled SEK 0m (1.3), excluding social fees. However, it was decided that, due to uncertainty surrounding the Covid-19 pandemic, no remuneration would be paid under the 2019 share-based incentive programme. In December 2020 the Company also decided that no variable remuneration would be paid under the 2020 incentive programme.
The table below shows the number of granted and outstanding share options at the beginning and end of the financial year:
|Number of options||Number of options|
|outstanding at beginning of the period||118,242|
|+ Granted during the year||118,242|
|– Vested during the year|
|– expired during the year||-118,242|
|outstanding at end of the period||-||118,242|
|outstanding share options at end of the period: |
weighted average remaining contractual duration
To hedge the 2019 incentive programme, Hoist Finance entered into a share swap agreement with a third party. Under the agreement the third party is obliged to acquire and transfer shares to participants in its own name to fulfil the Company’s obligation to deliver shares and to cover social fees arising from vesting. Social fees are calculated based on the fair value of the share options and are expensed as incurred. As no remuneration will be paid under the 2019 share-based incentive programme, the shares acquired by the third party under the share swap agreement will revert to Hoist Finance no later than the May 2023 date of expiration.
|Average number of employees during the year, Group||2020||2019|
The average number of employees is calculated based on the number of full-time employees (FTEs) during the year. The Group also has contracted consultants, the number of which varies during the year depending on requirements.
As at 31 December 2020 the Group had 1,631 FTEs (1,575).
|Gender distribution, senior executives||31 Dec 2020||31 Dec 2019|
|Board of Directors||50||78||14||22||54||83||11||17|
|of which, Parent Company||3||43||4||57||4||50||4||50|