must be based on a combination of assessment of the person concerned, the business unit concerned and the Bank as a whole. When measuring results, risks to the Bank and costs related to capital and liquidity shall be taken into account. The basis for variable remuneration related to the Bank’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 remuneration 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 performance development in the Bank 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 remuneration compared with full-time employees’ remuneration. Senior management has the competence necessary to manage the Bank 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, and pension and insurance schemes. The bonus scheme for employees was terminated per 31.12.2021, and from 01.01.2022 they were compensated by a percentage increase in their base salaries. 3.1 Fixed salary Fixed salary shall be reviewed at least annually and is set on the basis of pay development in society in general, and in the finance industry in particular. 3.2 One-time allowances Any one-time allowances can be share-option based. Share options awarded under these schemes shall be at full market value. The contract period shall be five years, however, the contract period of granted options can be further extended up to three years, provided that an adjustment to the subscription price (strike) is made at the same time to compensate for the market value of the extension. The Board of Directors determines more detailed guidelines and criteria for these schemes. 3.3 Pension All employees are covered by a defined contribution pension scheme with 6% of salary from 1-7.1 G and with 12% of salary from 7.1-12 G. The pension scheme will during 2022 be adjusted according to new regulations for pension schemes. 3.4 Benefits in kind Benefits in kind that are not significant in relation to fixed salary are determined for all employees by the CEO. Benefits in kind are granted in accordance with general practice and to promote physical activity among employees. 3.5 Share-based fixed salary Employees may, upon further agreement, be given the opportunity to receive up to 33% of fixed salary in the form of shares or share-based instruments in exchange for a corresponding reduction of the ordinary salary benefits. Pension and holiday pay is calculated based on 100% of the fixed salary. Komplett Bank / Annual Report 2021 83
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