Remuneration paid to the Board of Directors and Group management in 2011
The stated holding of shares in Hafslund relates to Hafslund Class B shares with the exception of the following individuals and related parties who also own Class A shares: Christian Berg (3,000), Tore Schiøtz (6,200), Finn Bjørn Ruyter (5,000) and Kristin Bjella (800). The loans which have been extended to senior executives are interest-free and are written down by a tenth of the original amount per year. The benefit is included under “Fixed salary etc.”, and the interest benefit is reported. Including fees for participation in the Audit Committee and Compensation Committee, the total amount payable in fees to Hafslund ASA’s Board of Directors in 2011 amounted to NOK 2.5 million,
Other terms and conditions, CEO
The President and CEO has a six-month period of notice. On leaving the company he is entitled, upon certain conditions being met, to continue receiving salary payments for 18 months after the notice period has come to an end. On voluntary retirement the CEO receives, upon certain conditions being met, an amount equal to the present value of a paid-up pension policy on salary exceeding 12 times the National Insurance Scheme’s basic amount (G) for the time he has held the position. The retirement age is 67 with a mutual right to terminate employment with early retirement pension at 60, provided 10 years have been served in the position. The early retirement pension is set at 67 percent of basic salary from the age of 60 until reaching the normal retirement age. The CEO is entitled to a bonus capped at 50 percent of fixed salary. The bonus is determined annually based on Group, company, business and objective individual targets plus a subjective individual evaluation.
Terms and conditions relating to other members of Group management
Other members of Group management are entitled, under certain circumstances, to 12–18 months’ salary on leaving the company. Remuneration consists of a fixed salary and a bonus scheme capped at 30, 50 or 75 percent of the fixed salary. The bonus is determined annually based on Group targets, company targets/business targets, objective individual targets and a subjective individual evaluation. Partly for historical reasons, remuneration deviates in some cases from the Group’s guidelines for senior executive pay. Group management, with the exception of Finn Bjørn Ruyter, are members of the ordinary defined-benefit pension schemes. Ruyter was employed after the defined-benefit pension scheme was closed to new members, and is covered by the same defined contribution scheme as other new employees.
For supplementary information on corporate governance please refer to:
- Hafslund’s guidelines on corporate governance, which are available at hafslund.com
- Hafslund’s guidelines on corporate social responsibility, which can be viewed at hafslund.com
- The Group’s Articles of Association, which are displayed at hafslund.com
Remuneration paid to the Board of Directors and Group management in 2011
|Name||Position||Salary and board fees||Bonus (2)||Pay at termination of employment (3)||Benefits in kind||Pension scheme contributions||Loan 31.12.11||Number of shares 31.12.11|
|Christian Berg (4)||President and CEO (until January 6th 2012)||3 211 290||365 395||145 655||1 107 004||582 905||18 656|
|Finn Bjørn Ruyter (8)||Senior Vice President||2 478 565||316 045||146 116||50 208||530 000||5 000|
|Per Kristian Olsen (5)||Senior Vice President||2 296 207||4 467 167||90 186||1 017 002||562 905||10 856|
|Jan Presttun||Senior Vice President||1 983 567||203 406||121 760||134 339||462 905||3 056|
|Kari Ekelund Thørud||Senior Vice President||2 040 126||308 720||149 382||225 270||472 905||427|
|Tore Schiøtz (6)||Senior Vice President||2 237 479||1 461 300||4 640 004||440 670||1 048 449||452 905||9 429|
|Tove Pettersen||Senior Vice President||1 445 592||2 623 904||116 917||202 220||52 905||4 256|
|Karen Onsager||Senior Vice President||1 726 077||123 070||135 473||214 212||344 571||427|
|Anders Østby||Senior Vice President||1 182 229||203 571||80 619||249 286||233 333||437|
|Jens Auset||Senior Vice President||1 248 478||199 288||70 768||295 842||597 905||3 056|
|Birger Magnus (7)||Chairman of the Board||446 000|
|Ole Ertvaag||Board member||210 500|
|Hanne Harlem||Board member (until April)||107 000|
|Hans Kristian Rød (1)||Board member||210 500|
|Kristin Bjella (7)||Board member||257 166||1 000|
|Maria Moræus Hanssen (7)||Board member||224 000|
|Susanne Jonsson (1) og (7)||Board member||257 166|
|Odd Håkon Hoelsæter||Board member (from May)||113 500|
|Per Orfjell (7)||Employee representative||1 029 300||79 156||176 788||182 905||252|
|Per Luneborg||Employee representative||564 101||8 760||-||277|
|Tyra Marie Hetland (7)||Employee representative||814 181||6 760||15 850||100|
1) Jonsson and Rød and their related parties do not own any shares in Hafslund. Fortum, on the other hand, which Jonsson og Rød represent, owns 37,853,110 Class A shares and 28,706,339 Class B shares in Hafslund.
2) Applies to bonuses earned in 2011 and paid in 2012
3) The amounts were paid in 2012 in connection with the cessation of employment relationships
4) Christian Berg stepped down as President and CEO on 6 January 2012 and ceased employment on 9 April 2012. Berg has received his standard salary until the cessation of his employment on 9 April. In connection with the cessation of the employment relationship the accrued occupational pension which is reported as accrued pension costs annually in the table above was paid.
5) In addition to his final pay, Per Kristian Olsen will also receive a lump sum of NOK 990,385 for pension earnings up to 67 years of age. This amount is included in the pension cost column.
6) In connection with the decision for a controlled downscaling of the Venture business area at the end of 2010, a special agreement was entered into with Tore Schitz. The purpose of the agreement was to ensure optimum release of capital of the values that were engaged through a “performance-based stay on bonus”, in a period where it was decided to downscale the business area. This agreement replaced the ordinary termination payment agreement. In addition to his final pay (6 months’ notice + 18 months’ termination pay), Tore Schitz has also received compensation of NOK 293,780 and NOK 698,966 for the discontinuance of pension earnings and payments in kind respectively, covering 24 months. The amounts are included in the columns “payments in kind” and “pension costs” above.
7) Includes remuneration for work in the audit committee and compensation committee.
8) Senior Vice President Finn Bjørn Ruyter became acting President and CEO from 6 January 2012.
Declaration regarding determination of salary and other remuneration for senior executives
The Board of Directors of Hafslund ASA will at the Annual General Meeting 2011 present the following declaration regarding determination of salary and other remuneration for senior executives pursuant to Section 6-16a of the Public Limited Companies Act, based on the Group’s previously adopted guidelines for determination of compensation for senior executives in Hafslund.
The board’s Compensation Committee
The board of Hafslund ASA has a special Compensation Committee. The Compensation Committee will advise the board in all matters pertaining to the company’s remuneration to the CEO. The committee will keep up to date on and propose guidelines for determination of remuneration to senior executives in the Group. In addition, the committee will function as the advisory body for the CEO as regards compensation schemes that cover all employees to a significant degree, including Hafslund’s bonus system and pension scheme.
Guidelines regarding determination of salary and other remuneration for senior executives at Hafslund
Remuneration to the CEO
Remuneration to the CEO must be competitive in relation to responsibilities and the industry. The remuneration must furthermore act as an incentive to long-term creation of value through development of the enterprise, positive profit and share price performance, and reflect the experience and expertise level of the employee. Remuneration will consist of fixed salary, performance-based salary of up to 50 per cent of the basic salary, pension and interest and instalment-free loans. The CEO will receive benefits in kind on the same level as other senior executives in the Group. The period of notice must equal at least six months.
Remuneration for senior executives and other executives
Remuneration for the Group management is adopted by the CEO, but must be put before the board for approval if the remuneration deviates from these guidelines. Remuneration for other executives is adopted by the relevant senior vice presidents. Remuneration to senior executives and other executives must be based on the guidelines below.
Fixed salary is based on the duties performed and level of responsibility, as well as the incumbent’s expertise and length of service in the position. Salaries must be competitive in relation to responsibility and industry levels.
Interest-free loans that are written down over 10 years in accordance with adopted guidelines can be given for purchase of a car. In addition, an annual operating subsidy can be awarded, as determined by the administration. Should the senior executive not have need for a car, the loan can still be taken out on the same terms against other satisfactory collateral.
Benefits in kind
Benefits in kind must mainly be in connection with expenses for broadband connection (home office), mobile telephone and newspapers.
Senior executives are entitled to vacation in line with the provisions of the Annual Holidays Act and the current internal rules of the Group. Vacation pay is calculated on the basis of basic salary. Additional benefits are not included in the calculation.
A bonus system has been established to create an incentive for additional effort and value creation. The bonus will be disbursed on the basis of the added value created by the employee or group of employees.
The bonus scheme is limited upwards to 50 per cent of fixed salary depending on the level of the position. The main rule is a ceiling of 30 per cent of basic salary for the Group management (level 1) and a ceiling of 20 percent of basic salary for level 2. Any exceptions from the main rule must be specifically agreed with the CEO or the board. The bonus is set annually and the Group targets are set by the board. The measured criteria in addition to the Group targets for the individual employee, as well as weighting of targets are set by the employee’s immediate supervisor based on:
- Group targets x per cent of maximum bonus
- Company targets/enterprise targets x per cent of maximum bonus.
- Individual objective targets x per cent of maximum bonus.
- Subjective individual assessment up to x per cent of maximum bonus.
The targets and the weighting must be adapted to the needs of the individual company/enterprise.
The annual bonus will be disbursed after presentation of the Group’s annual financial statements. Disbursed bonus is not included in the calculation of vacation pay and pension benefits. Should legislation require such benefits to be calculated on the basis of salary including bonus, the bonus will be reduced by as much as necessary to limit bonus including other benefits to the total value determined by the provisions above.
The CEO and Group management are covered by the Group’s share schemes for all employees. To strengthen the bonds between the employees and the Group, the company should annually consider giving all employees the opportunity to buy shares in Hafslund. The share offer should be viewed in the context of the total salary settlement for the Group. In 2011 all employees were offered the chance to purchase 100 B shares at a 20 percent discount, financed by an interest-free loan. 538 employees made use of the offer and the shares were issued at a rate of NOK 62.50 per share.
The Group does not use option schemes.
The CEO and Group management shall have a pension scheme in accordance with the current pension scheme for the Group, unless otherwise agreed with the board. The retirement age for these individuals should normally be 67. The CEO and Group management are entitled to take early retirement in accordance with the current AFP agreement.
Period of notice and pay after termination of employment
The CEO and Group management should have a six-month period of notice. In specific cases and depending on the position concerned, salary payments may continue to be made for 12–18 months after employment has been terminated. As regards the implementation of the Group’s executive salary policy for 2010, the Group’s guidelines were adopted most recently on 20 March 2007. The guidelines were first adopted on 27 October 2006. Following the adoption of the guidelines, the Group has started the work of implementing them, but will continue to respect agreements made previously. Salary, bonus and other benefits to senior executives for 2011 have been presented in the 2011 annual report.