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Statement on Remuneration
Statement on remuneration
Pursuant to the Norwegian Public Limited Liability Companies Act, section 6-16 a, the Board will present the following statement regarding remuneration of Norwegian’s Management to the 2020 Annual General Meeting.
The purpose of executive remuneration in Norwegian is to stimulate a strong and lasting performance-oriented culture, enabling Norwegian to deliver on its strategy. The total compensation level should be competitive compared to similar organizations. The Board determines the remuneration of the CEO, and the guidelines for remuneration of the Management. The grandfather principle applies for Management, this means Chair approves CEO's direct reports. The remuneration of the Board and the Executive Management must not have negative effects on the Group, nor damage the reputation and standing of the Group in the public eye.
Compensation made to the Management going forward will be based on Norwegian’s performance.
Principles for base salary
The fixed salary should reflect the individual’s area of responsibility and performance over time. Norwegian offers base salary levels which are competitive in the market in which we operate. Salaries are benchmarked versus salary statistics provided by global 3rd party human resource and related financial services consulting firms.
Variable compensation and incentive schemes
Norwegian's short-term incentive (STI):
The STI is a short-term incentive with a timeframe of one year. The STI is a global incentive program designed to motivate, recognize and reward executives for the contributions they make towards meeting Norwegian’s financial and business targets. The objectives of the program are to (i) clearly communicate to the executives the targets, (ii) communicate to the executives how bonus payment is linked to Norwegian’s performance, (iii) drive the Norwegian organization’s ability to meet or exceed Norwegian’s performance targets, (iv) encourage more cross functional cooperation and “one Norwegian mind-set”, and (v) improve Norwegian’s ability to attract, retain and motivate employees.
Target bonus for the CEO is 75% of gross base salary. Max bonus is 127.5% of gross base salary.
The intended bonus scheme for 2020 will not be made effective primarily due to the financial impact of Covid-19.
Norwegian's long-term incentives (LTI):
Employee Share Savings Plan
Norwegian offers employees hired in a Scandinavian legal entity participation in an employee share savings plan. The objective of the plan is to align and strengthen employee and shareholder’s interests and remunerate for long-term commitment and value creation.
Under this plan, Norwegian will match 50% of the individuals’ investment, limited to NOK 6,000 per annum. Provided that the employee contributes NOK 12,000 annually, Norwegian’s
contribution is NOK 6,000. The grant has a one-year vesting period. If shares are kept for two
calendar years, the participants will be allocated bonus shares proportionate to their purchase.
One bonus share will be earned for every tenth share allocated under this scheme.
Share option plan
The Board has established annual share option plans for leading employees. It is the Company's opinion that share option plans are positive for long-term value creation in the Group.
The intention of this plan is to (i) attract and retain employees whose service is important to the Company's success, (ii) motivate such employees to achieve long-term goals of the Company, (iii) provide incentive compensation opportunities to such employees which are competitive with those of other companies, and (iv) to secure such employees share a common financial interest with the other shareholders of the Company.
The Board can offer share options to leading employees when shareholders have given authority to run options plans:
- The exercise price per share shall be the average price of the NAS share on trading days
during the first 10 calendar days after presentation of Norwegian’s 2nd quarter financial
results plus 10% (rounded to the nearest NOK 0.1).
- 1/3 of options granted can be exercised at the earliest after 1, 2, and 3 years respectively,
and the options shall expire after 7 years.
- Any calendar year, each optionee’s aggregated gross profit from exercise of options under all share option programs shall not exceed 5 years’ gross base salary.
- If an optionee leaves the Company, the non-vested options will forfeit. Outstanding
options exercisable at the date of such termination shall be exercisable no later than the
first exercise period thereafter.
Principles for benefits
In addition to fixed and variable salary, other benefits such as insurance, newspaper, Internet and telephone might be provided. The total value of these benefits should be modest and only account for a limited part of the total remuneration package.
Principles for company car and car allowance vary in accordance with local conditions.
Executives participate in the same pension plans as other employees within the unit in which they are employed.
Executives in the Norwegian entities participate in a defined contribution pension plan. The
annual accrual is 5% of the annual base salary from 1-7.1 G and 8% from 7.1-12 G (G is the base
amount of Norwegian Social Security).
No executives have a retirement agreement.
The notice period for the CEO is 9 months. The notice period for the rest of the Executive
Management is 3 or 6 months. The CEO has 15 months' (base salary) severance pay. The CFO has 6 months' (base salary) severance pay. The employee is not entitled to severance payment in the event he himself terminates the employment. The CEO and the CFO have a change of controlclause in their employment contracts.
Details of the remuneration of individual members of the Executive Management are available in the notes to the consolidated accounts.
There were made no changes to the guidelines or principles of management remuneration during 2019.