Komplett Bank Annual Report 2020

2.2 Guidelines for remuneration in the form of shares, subscription rights, options etc. for the next fiscal year The Company’s variable remuneration schemes shall be intended to reward behaviour and influence culture that ensures long-term value creation and sensible risk-taking. The Board of Directors makes an annual assessment of the maximum level of variable remuneration. In addition, one-time allowances may be used, for example, if this is deemed necessary to attract or retain employees. 2.2.1 Komplett Bank’s remuneration framework and the connec- tion with business strategy, long-term interests and sustainability of the Company Senior management receive variable remuneration based on an assessment of both quantitative and qualitative conditions based on a two-year period. Variable remuneration to senior manage- ment cannot exceed 50% of fixed salary and half is granted in the form of share options that are postponed over a three-year period. This provides incentives for good governance and counteracts excessive risk-taking among management. 2.2.2 Variable remuneration to senior management For senior management, employees who have a significant impact on the Company’s risk exposure, employees with control responsibilities and employees’ representatives,the remuneration is determined on the basis of an overall assessment, with the emphasis in the variable component of the remuneration being based on results achieved, balance sheet management (including asset-liability management and liquidity management), imple- mentation of the Company’s strategy plan and compliance with the adopted framework for risk tolerance. The assessment takes into consideration overall goal attainment, trends over time and the Bank’s long-term interests. The overall assessment must be based on both quantitative and qualitative factors. Qualitative factors (comprise 50% of awarded bonus): The qualitative part is discretionary and basically consists of an assessment of the achievement of the manager’s personal objectives. Examples of qualitative factors are: Ǵ Compliance with internal and external regulations Ǵ Strategic objectives/KPI within the manager’s area Ǵ Contribution to the Company’s activities as a whole. Quantitative factors (comprise 50% of awarded bonus): For the quantitative part of variable remuneration, clear criteria have been set for what is minimum objective achievement and when the objectives are met. For performance and balance sheet targets, there is a clear correlation with the Company’s plans and objectives, where performance achievement is assessed based on a 5-step matrix between 0-125%. Specific criteria have been set for the different steps in the matrix. The sustainability goals support the Bank’s plans, with clear goals, so that bonus allocation depends on whether the criterion has been achieved. Ǵ Risk adjusted results (40%) Ǵ Balance sheet development (20%) Ǵ Sustainability Goals (40%) However, the awarded bonus cannot exceed 50% of fixed salary even if the target achievement may be higher for some criteria. The specific circumstances emphasised shall be adapted to the individual’s function and area of responsibility. The assessment must be based on a combination of assessment of the person concerned, the business unit concerned and the Company as a whole. When measuring results, risks to the Company and costs related to capital and liquidity shall be taken into account. The basis for variable remuneration related to the Company’s results shall be a period of at least two years. 2.2.3 Decision process for variable remuneration to senior management The Board of Directors decides the allocation of variable remu- neration and the level thereof. Half of the variable remuneration for senior management will be given in the form of share options with a contract period (exposed and conditional) so that they are released regularly over a three-year period (i.e. release of 1/3 the first time 12 months after award) and may be reduced through established malus/clawback arrangements should the perfor- mance development in the Company allow this. The Board of Directors may, at its sole discretion, grant an extension for up to 3 years (max. 8 years from the date of award) subject to the approval of the participant. In the event of such an extension of the term, the fixed strike of the option shall increase to reflect the market value of the extension. 2.3 Pay and employment conditions in relation to other employees Senior management’s average remuneration compared to the rest of the employees is 2.9:1. The sample for which the calculation is made is the average of the senior management’s remunera- tion compared with full-time employees’ remuneration. Senior management has the competence necessary to manage the Company and have more responsibility. As a consequence, it is natural that this is reflected in their remuneration. 2.4 Severance pay and termination of employment Generally, senior management have a 6 month notice period, and only 12 months’ severance pay has been agreed for the CEO. 3. Remuneration to other employees Remuneration to other employees comprises fixed salary, benefits in kind, variable remuneration up to 20% of fixed salary, and pension and insurance schemes. 3.1 Fixed salary Fixed salary shall be reviewed at least annually and is set on the 96 Notes to the financial statements