Guidelines on Remuneration

GUIDELINES ON PAY AND OTHER REMUNERATION FOR SENIOR EXECUTIVES

These guidelines have been prepared by the board of directors of Selvaag Bolig ASA pursuant to section 6-16a of the Norwegian Act on Public Limited Companies and are to be considered and adopted by the company’s general meeting on 27 April 2021, see section 5-6, paragraph 3, of the Act on Public Limited Companies.

These guidelines apply to the group management (CEO, COO and vice presidents) and employee-elected directors of Selvaag Bolig ASA. They apply for the 2021 accounting year and until new guidelines are adopted by the general meeting.

In order to implement its strategy, meet its sustainability goals and look after its long-term interests, the company must recruit, develop and retain executives with relevant experience. It is therefore important that the company offers competitive remuneration. These guidelines will provide a clear framework for remunerating senior executives.

Main principles of the company’s pay policy for senior executives

Pay for senior executives of Selvaag Bolig and group companies will be determined on the basis of the following main principles.

  1. Remuneration will be competitive but not market-leading

Remuneration will primarily be tailored to attracting and retaining able executives. Remuneration (the total of pay received and benefits) will be on a par with that for comparable senior positions in similar enterprises.

  1. Remuneration will be motivating

The main element in the remuneration for senior executives should be fixed base pay, even though variable supplementary benefits are used to motivate executives to strive to improve the company’s results in both the short and the long term. Clear alignments must exist between the goals determining variable remuneration and the company’s objectives. The criteria must be based on circumstances which the executive is able to influence, and a clear period must be specified which determination of the variable remuneration will relate to. Part of the total remuneration may also be related to the company’s share purchase programme.

 

Types of remuneration and principles for benefits which can be offered in addition to fixed pay

Remuneration of senior executives comprises fixed basic pay, bonus scheme, share incentive, pension scheme and other benefits. A specific ceiling should be set on variable remuneration for the relevant recipient. The company has sought to structure a plan which combines basic pay, short-term bonuses and share incentives to (i) motivate senior executives to strive to realise the company’s strategic and financial goals (ii) attract and retain able executive and (iii) offer competitive remuneration.

Fixed basic pay is the main element in the remuneration. The individual benefits which can be awarded in addition to fixed basic pay are outlined below. Unless specifically mentioned, no special conditions, terms or award criteria are specified for these benefits.

Variable remuneration

Variable remuneration is related to value creation for shareholders over time and structured to create an ownership culture which ensures alignment between shareholders and senior executives. Variable remuneration is determined by the attainment of key performance indicators (KPIs) and goals at both individual and company level. Senior executives, both individually and as a group, can influence the attainment of the KPIs and the goals.

Bonus scheme

Selvaag Bolig has established a bonus scheme for senior executives which is based on the company’s financial and operational results as well as the individual executive’s personal goals. The annual bonus is limited to 100 per cent of basic pay. The scheme is reviewed at least annually.

Share purchase programme

Selvaag Bolig has established a share purchase programme where senior executives can opt to buy shares in the company for an amount up to the individual’s annual pay. The shares are discounted by 30 per cent and have a three-year sale restriction. Ownership is intended to create added value for the company through increased engagement and loyalty. The programme is described in the company’s annual report.

Pension schemes and insurance

The company has established an occupational pension scheme in accordance with Norwegian law. It is a defined contribution scheme. All senior executives are members of the company’s ordinary pension scheme. The company may sign early retirement pension agreements for senior executives, but has not so far done so.

Benefits in kind

Senior executives may be offered benefits in kind which are normal for comparable positions. Examples include phone, broadband, newspapers, company car/car scheme and parking.

Conditions for dismissal and termination benefits

The CEO has no period of notice. Other senior executives are entitled to six months notice. The CEO is entitled to 12 months severance pay in the event of dismissal. This is because the board can ask the CEO to leave immediately.

Agreements on severance pay can be entered into with other senior executives to ensure that the composition of the management team accords with the company’s requirements. Possible severance agreements are drawn up in a way which is acceptable both internally and externally. In addition to pay and other benefits during the period of notice, such arrangements must not confer the right to severance pay for a period exceeding 12 months.

Employee-elected directors

Remuneration for board work by employee-elected directors is proposed by the nomination committee and approved by the general meeting in the same way as for shareholder-elected directors. For further details of remuneration of employee-elected directors, see note 22 to the annual financial statements.

Preparations and decision process for establishing, reviewing and implementing the guidelines

The board has established a compensation committee. Its work includes preparing the board’s consideration of pay, remuneration schemes and annual criteria for variable remuneration of senior executives. It also prepares guidelines for remuneration of senior personnel. The board is required to draw up new guidelines at least every fourth year and present this proposal for approval by the general meeting. These guidelines will apply until new ones are approved by the general meeting. For each fiscal year fin future, the board will prepare a report on senior executive pay and make this available to shareholders on the company’s website at least three weeks before the annual general meeting (AGM).

Remuneration of the CEO will be determined by the board pursuant to approved guidelines after preparation by and proposals from the compensation committee. Remuneration of other senior executives is determined by the CEO pursuant to approved guidelines and after consultation with the compensation committee should this be considered necessary.

Taking account of pay and employment terms for other employees

When preparing the guidelines, account must be taken of the pay and employment terms for employees in the group. The level of remuneration is assessed in light of information about total income of employees, the components in their remuneration, and increases and growth over time. Information on pay and employment terms in the group forms part of the decision base for the compensation committee and board when they assess whether the guidelines and the limits specified in these are reasonable.

Deviations from these guidelines

The principles in these guidelines are binding for the company once approved by the general meeting.

Nevertheless, the board can decide to deviate wholly or partly from the guidelines in individual cases where special conditions make this necessary. The compensation committee prepares the board’s assessment on issues relating to remuneration, including deviation from these guidelines. Possible deviations must be reported to the following AGM.

Report on executive remuneration policy in preceding accounting year

Agreements entered into with senior executives during the 2020 accounting year accord with the principles for determining pay and other remuneration of senior executives considered by the AGM in 2020. Bonus payments to members of the executive management in 2020 averaged 90 per cent of the maximum possible amount.

Despite certain changes to the structure of senior management remuneration, the board has not identified any significant negative consequences from agreements on pay and other remuneration in 2020, and takes the view that the guidelines on variable remuneration and the share programme promote value creation for the group.

For further information on management remuneration, see note 22 to the annual financial statements.

Oslo, 31 March 2021

The board of directors of Selvaag Bolig ASA