Remuneration guidelines
The remuneration of the CEO (and Kindred’s Executive Management team) is based on the remuneration guidelines as adopted by the AGM on 12 May 2021.
Remuneration principles to support Kindred’s long-term business strategy and sustainability
A successful implementation of our remuneration policy will ensure that Kindred can attract and retain the best people, enabling us to execute our business strategy and serve our long-term interests, including our sustainability goals. The policy of the Board is to attract, retain and motivate the best management by rewarding them with competitive compensation packages linked to the Group’s financial and strategic objectives. The compensation packages are designed to be competitive, but importantly, also fair and reasonable in comparison with companies of a similar size, industry and international scope, and to strike the appropriate balance between risk and reward.
The short-term and long-term incentive plans are designed to support key business strategies and financial objectives and contribute to creating a strong, sustainable performance for the Group. The performance measures used for short and long-term incentive plans are closely linked to our strategic objectives for sustainable growth. Performance measures, as well as any corresponding targets, are reviewed annually by the Committee to ensure that they continue to drive the right behaviours in executive managers and create value for our shareholders.
Remuneration guidelines by element
The components of remuneration for the Executive Management team comprise base salary, short-term and long-term incentive plans, pension and other benefits. The remuneration guidelines do not apply to share-based incentive plans, which are subject to a separate resolution at the AGMs.
In the preparation of the Board of Directors’ proposal for these remuneration guidelines, salary levels, incentive structures and employment conditions for other employees of the company have also been considered.
Base salary
Executive managers receive base salaries based on position, responsibilities, performance and competencies.
Short-term incentives
Short-term incentives for the Group typically take the form of annual bonuses and are paid in cash. Maximum variable cash-based incentives are capped at 150 per cent of base salary.
Awards for any short-term incentive plans are contingent on financial measures, such as EBITDA (aggregated across the Group), as well as customer experience, sustainability measures and business critical objectives. The Remuneration Committee selects the performance measures, targets and relative weightings at the start of each year to ensure strong alignment with business strategy and that targets are sufficiently stretching. The measures and targets are then reviewed and approved by the Board. Achievement of targets is assessed and formal approval for payment of awards is sought following the publication of the relevant period’s financial results.
Long-term incentives
Long-term incentives for the Group align the interests of executives with those of shareholders by granting performance shares and share options as a reward for delivery of long-term performance objectives and for creating value for stakeholders. Performance measures, weightings and targets for these selected measures are set at the start of the three-year performance/vesting period by the Remuneration Committee to ensure they continue to support Kindred’s long-term strategy. The measures and targets are then reviewed and approved by the Board. Performance measures may include, but are not limited to, financial and share-price related measures.
Pension
Pension arrangements for the CEO and the other members of the Executive Management team are provided in the form of defined contribution plans and are competitive and appropriate in the context of market practice in the applicable country of executives’ employment or residence and total remuneration.
Other benefits
Other benefits that may be provided are in accordance with market practice in the applicable country of executives’ employment or residence and may change from time to time. Executive Management team members may be eligible for benefits such as health insurance, life insurance, travel allowance, relocation support (where applicable) and to participate in whatever all-employee plans may be offered at any given point.
Share ownership guidelines
The Board of Directors believes that the Executive Management team will most effectively pursue the long-term interests of our shareholders if they are shareholders themselves. As a result, share ownership guidelines were introduced in 2021. We updated this further in 2022 and our current policy in force requires that the CEO and other members of the Executive Management team build up and maintain the equivalent of 200 per cent of their net annual base salary in Kindred shares in order to comply with these guidelines. They need to do this within six years of their date of appointment or adoption of the policy, whichever is the later. Until the minimum threshold of 200 per cent is met, executives must retain 100 per cent of any long-term incentive plan vest in net shares.
Employment contract, termination of employment and severance pay
Executive contracts are typically with indefinite duration but may be offered on occasion for a fixed term. Upon termination of employment, the notice period may not exceed 12 months. Fixed cash salary during the notice period and any severance pay may, combined, not exceed an amount equivalent to two years’ salary.
Upon termination of employment, a non-compete clause may restrict the employee from engaging in a competing business. The non-compete clause restriction covers no more than 12 months following termination of employment. During the non-compete clause period, Kindred may pay the former employee an amount corresponding to no more than 60 per cent of 12 months’ salary.
The decision-making process to determine, review and implement the remuneration guidelines
The Board of Directors has established a Remuneration Committee. The Committee’s tasks include preparing the Board of Directorsʼ decision to propose remuneration guidelines for the CEO and the Executive Management. Proposals for new remuneration guidelines shall be prepared at least every fourth year and submitted to the AGM. The remuneration guidelines shall be in force until new guidelines are adopted by the AGM. The Remuneration Committee shall also monitor the annual implementation of these guidelines. In order to avoid any conflict of interest, remuneration is managed through well-defined processes ensuring no individual is involved in the decision-making process related to their own remuneration.
Malus and clawback
The Board of Directors, under exceptional circumstances, may limit or cancel payments of variable remuneration provided that such actions are deemed reasonable (malus). The Board of Directors shall also have the possibility, under applicable law or contractual provisions and subject to the restrictions that may apply under law or contract, to in whole or in part reclaim variable remuneration paid on incorrect grounds (clawback). There were no such situations that occurred during 2023.
Deviation from the guidelines
The Board of Directors may temporarily resolve to deviate from the guidelines, in whole or in part, if in an individual case there are special circumstances where a deviation is necessary in order to serve the Group’s long-term interests, including its sustainability, or to ensure the Group’s financial viability. As set out above, the Remuneration Committee’s tasks include preparing the Board of Directors’ resolutions in respect of remuneration-related matters for the CEO and the Executive Management. This includes any resolutions to temporarily deviate from the guidelines.
