General guidelines for incentive pay to the Board of Directors and Management of NKT Holding A/S, cf. the Danish Companies Act, sec. 139.
1. Introduction
In accordance with the Danish Companies Act, sec. 139 the board of directors of a listed company is obliged to prepare a set of guidelines for the company’s use of incentive pay to its board of directors and management.
NKT Holding has for a number of years made use of incentive pay to its management, whereas the Board of Directors is not remunerated through incentive pay. These guidelines therefore only apply to the management of the Company. By the management is meant the management registered with the Danish Commerce and Companies Agency.
2. General guidelines
NKT Holding A/S uses incentive pay to the management of the Company with the purpose of ensuring coinciding interests between the management and the shareholders of the Company and with a view to perpetually maintaining the motivation of the management to achieve the goals set out by the Company. On this basis the management can be remunerated through incentive pay at the discretion of the Board of Directors.
The Board of Directors will - if it finds it suitable in accordance with the abovementioned purposes - prepare incentive programs for the management. Such incentive programs can consist of remuneration with stock options, warrants, phantom shares and bonus agreements.
The Company is presently using warrants and bonus agreements as part of the remuneration of the management.
3. Warrants
After decision made by the Board of Directors the management may at an annual basis be awarded warrants with a value of until 50% of the regular annual salary of the relevant member of the management. The value of the awarded warrants is calculated in accordance with the Black & Scholes formula.
No remuneration is paid for the warrants and the allotment can take place at terms and conditions, which imply an advantageous taxation for the relevant member of the management given that the Company is not allowed tax deduction for the costs involved in the allotment.
It can be stated in the terms and conditions for the warrants that the warrants are to be exercised at the earliest 3 years and no later than 6 years after the warrants have been awarded to the management. The strike price shall as a minimum correspond to the average market price of the Company’s shares in the month prior to the allotment, unless the Board of Directors establish another responsible market-related strike price. It can be decided upon that the strike price is added an indexation for every year, until exercise takes place. The Board of Directors is authorized to compensate holders of options for any possible watering down as a consequence of changes in the Company’s capital structure.
Shares used for the fulfillment of the warrant program are provided through subscription of new shares.
4. Bonus
An annual bonus payment can be awarded to a member of the management if the prerequisites, goals and conditions set out in the relevant bonus agreement are fulfilled.
The criteria for the awarding of bonus can be achievement of certain revenue or profit levels or that certain isolated assignments are completed, such as substantial acquisitions or divestments etc.
A member of the management can achieve an annual bonus with a value of until 15% of his regular annual salary. In special cases the Board of Directors is authorized to grant to the particular Managing Director an extraordinary bonus of up to 100% of the regular salary in addition to the ordinary bonus. The value of the annually awarded bonus will be stated in the annual report of the Company.
5. Specific agreements
Specific agreements regarding incentive pay to the management or changes in such existing agreements shall only be entered into when in compliance with these guidelines. Agreements or changes to such agreements, which do not comply with these guidelines must be presented to and adopted by the general meeting of the Company prior to coming into effect.
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These guidelines have been presented to and adopted by the general meeting at 25 March 2010.