General Guidelines for Incentive Pay to the Management Board of Netop Solutions A/S
Background:
Section 69 b of the Danish Public Companies Act came into effect on 1 July 2007. It requires the board of directors of a listed company to define general guidelines for the company’s incentive pay before entering into a specific agreement on incentive pay with any member of the company’s board of directors or management board. Such general guidelines must set out the framework for incentive pay to members of the company’s board of directors and management board.
The guidelines must be considered and approved by the company’s shareholders at the annual general meeting.
Specific agreements on incentive pay to members of the management board approved prior to the annual general meeting to be held on 30 April 2008 and which are unchanged, are not subject to the new provisions of section 69 b of the Danish Public Companies Act. Netop Solutions A/S has for a number of years used incentive pay to, among others, members of the company’s Management Board, including by way of warrants as well as performance related pay/bonus pay.
Upon approval of the general guidelines for incentive pay, incentive pay may be awarded to the members of the company’s Management Board. The members of the Board of Directors of Netop Solutions A/S do not receive incentive pay and are thus not covered by the guidelines.
Incentive pay is awarded to individual members of the Management Board for the purpose of achieving maximum value creation for the company. Incentive pay must not exceed 50% of any individual’s annual salary, as calculated on the basis of the value of the incentive pay on acquisition (award). Incentive pay must not exceed an aggregate value to the company of DKK 2,000,000 per financial year as calculated on the basis of the value of the incentive pay on acquisition (award).
Incentive pay may consist of the following:
1. Warrants
2. Bonus schemes
3. Performance-related contracts.
Warrants must be exercised within a period of up to five years from the vesting date. The exercise price must at least equal the market price of the company's shares at the date of issue. Individual executives shall not pay any onsideration for the share instrument unless the Board of Directors specifically resolves otherwise.
A bonus scheme or performance-related contract may have a term of one or more years and/or it may be subject to a specific event occurring in respect of Netop Solutions A/S. Retention bonuses, loyalty bonuses or the like may also be applied. Bonus amounts under current bonus schemes are paid in cash.
Payment under an incentive pay scheme will depend on whether the conditions and targets defined in the relevant scheme have been fully or partly met. These may be personal targets related to the performance of the individual member of the Management Board, the performance of Netop Solutions A/S or the occurrence of a specific event.
The Board of Directors may change or phase out one or more incentive schemes introduced pursuant to these guidelines. In an evaluation of whether this should be done, the criteria that formed the basis of the establishment of the plan will be taken into account. However, such changes can only be made within the framework of these general guidelines. More extensive changes must be approved by the shareholders in general meeting.