The following guidelines for compensation to senior executives have been adopted by the general meeting of Truecaller AB (the “Company” or “Truecaller”).
Senior executives are key employees of the Company who have entered into an employment agreement with the Company or a group Company: the CEO, deputy CEO (if applicable) and other senior executives who report to the aforementioned persons. Senior executives include board members to the extent remuneration is received outside their board duties.
A prerequisite for the successful implementation of the Company’s business strategy and safeguarding of its long-term interests, including its sustainability, is that the Company is able to recruit and retain qualified personnel. Compensation to the CEO and other senior executives must therefore reflect Truecaller’s need to recruit and motivate qualified employees by means of compensation packages perceived as fair and competitive. The board of directors is empowered to depart from the guidelines below if in a specific case there is a special cause for the deviation and a deviation is necessary to serve the Company’s long-term interests, including sustainability, or to ensure the Company’s financial viability.
In the preparation of the board of directors’ proposal for these guidelines for compensation to the CEO and other senior executives, salary and employment conditions for employees of the Company have been taken into account by including in the documentation underlying the board of directors’ decision information on the employees’ total remuneration, the components of the remuneration and increase and growth rate over time.
Compensation consists of the following components:
· Fixed base pay
· Short- and long-term variable pay
· Pension benefits
· Other benefits
· Pay during the notice period for termination or resignation
FIXED BASE PAY
The fixed base pay must be market based and reflect the employee’s position, qualifications, experience and individual performance. Fixed base pay is reviewed on an annual basis.
SHORT-TERM VARIABLE PAY
Short-term variable pay must be measured against predefined financial performance targets. Non-financial objectives may also be used to sharpen focus on achieving the Company’s strategic plans. Objectives must be specific, clear, measurable, subject to deadlines and adopted by the board of directors. They shall further be designed to contribute to the Company’s business strategy, long-term interests and sustainability. The extent to which the criteria for awarding variable remuneration have been satisfied shall be evaluated/determined when the relevant measurement period has ended.
The Remuneration Committee of the board of directors is responsible for the evaluation so far as it concerns variable remuneration to the CEO and other senior executives. For variable remuneration to other executives, the CEO is responsible for the evaluation.
Levels and targets for variable pay are suggested annually by the CEO for other senior executives and approved by the board of directors. Levels and targets for the CEO are defined by the board of directors. Short-term variable pay may not exceed 30 percent of the fixed base pay, as management compensation should be focused on long term incentives.
LONG-TERM VARIABLE PAY
Long-term variable pay may encompass share-related incentive programs. These guidelines do not apply to remuneration decided or approved by the general meeting. Accordingly, these guidelines do not apply to the Company’s share- related incentive programs. Each year, the board of directors evaluates whether a long-term share-related incentive program should be proposed to the annual general meeting. The purpose of offering a share-related incentive program is to ensure that the interests of senior executives coincide with those of the Company’s shareholders. Individual, long-term ownership among key individuals can be expected to stimulate keener interest in the business and its profitability, increase motivation, and enhance the sense of belonging with the Company and thereby contribute to the Company’s business strategy, long-term interests and sustainability. Long-term share-related incentives also help to retain and attract when recruiting new executives.
MARKET BASED COMPENSATION
The Company has acquired high quality benchmark data from third party sources to secure that compensation to the CEO and other senior executives reflects what is offered to executives in comparable positions in other companies. Market rate is also secured through recruitment processes, in the cases where executives are recruited externally. The compensation to senior executives shall be reviewed annually.
Pension benefits for the CEO and other senior executives must reflect customary market terms, compared with what generally applies to executives in comparable positions in other companies, and should normally be based upon defined contribution pension plans. Retirement occurs at the relevant/applicable retirement age. Pension benefits may not exceed 35 percent of the fixed base pay.
Other employee benefits may consist of commonly accepted benefits in connection with employment such as health insurance and fitness/wellness programs. The costs for such benefits may not exceed 6 percent of the fixed base pay.
PAY DURING PERIOD OF NOTICE
As a general rule, employment agreements entered into between the Company and senior executives shall be on an indefinite basis. If the Company terminates the CEO’s employment, the period of notice shall be a maximum of six months. If the CEO resigns, the period of notice shall be six months. A period of notice applies between the Company and other senior executives that varies from three to six months, depending on whether the employee resigns or is terminated. During the notice period, the employees are entitled to unchanged salary and other employment benefits. The total compensation during a period of notice and any severance pay, if required, shall not normally exceed an amount equivalent to the fixed base pay for one year.
Changes in terms, conditions and compensation to the CEO are subject to approval from the Chairman of the board of directors. Day to day costs such as travel expenses for the CEO are approved by the CFO, and quarterly summaries are sent to the Chairman of the board of directors. New recruitments, salary changes and other significant changes for other senior executives than the CEO are subject to approval from the Chairman of the board of directors, whereas minor adjustments, and day to day costs are approved by the CEO. Payout of fixed base pay is prepared by local payroll departments and are approved before payout by the local HR representative. Payout of short-term variable pay is subject to approval from the CEO as regards other senior executives and from the Chairman of the board of directors as regards the CEO. Eligibility for share-related incentive program must be approved by the board of directors based on the proposal approved at the general meeting.
CONTROLS AND DECISION-MAKING PROCESS
The Company has a Remuneration Committee, which consists of two members of the board of directors. The Chairman of the board of directors is also Chairman of the Remuneration Committee.
The Remuneration Committee shall, in relation to the board of directors, have a preparatory function in respect of principles for remuneration, remuneration and other terms of employment regarding the senior executives. Consequently, the Remuneration Committee shall prepare a proposal in respect of guidelines for compensation to senior executives, which the board of directors shall present to, and which shall then be resolved upon by the annual general meeting. The Remuneration Committee shall also evaluate the application of the guidelines resolved upon by the annual general meeting.
The board of directors shall at least every fourth year or upon material changes to the guidelines make a proposal on guidelines to be resolved by the annual general meeting.
The guidelines shall be applied in relation to every commitment on compensation to senior executives and every change in such commitment, which is resolved after the annual general meeting at which the guidelines were adopted. Thus, the guidelines have no impact on already pre-existing contractually binding commitments. Guidelines resolved upon may also be amended by way of a resolution by any other general meeting.
Further, the Remuneration Committee shall, within the scope of the guidelines resolved upon by the annual general meeting, prepare proposals regarding remuneration to the CEO and other senior executives. The Remuneration Committee shall annually evaluate the CEO’s performance.
Further, the Remuneration Committee shall observe and evaluate programs for variable compensation to the senior executives which are ongoing or finished during the year as well as the Company’s current remuneration structure and remuneration levels. Furthermore, the Remuneration Committee shall annually prepare a remuneration report regarding the compensation to the senior executives. The remuneration report shall be made available to the shareholders on the Company’s website by the Remuneration Committee no later than three weeks prior to the annual general meeting. Within the scope and on the basis of the guidelines, the board of directors shall annually decide on the specific revised remuneration terms for each senior executive and make such other decisions on compensation to senior executives that may be required. The CEO or other senior executives shall not participate in the Remuneration Committee’s and the board of directors’ processing of and resolutions regarding remuneration related matters in so far as they are affected by such matters.
Compliance with guidelines is controlled annually through the following activities:
· Collection of documented annual targets for short-term variable pay
· Random samples of salary payout approvals
· Sample reports from payroll systems to identify any out of the ordinary payouts
The results of the controls are summarized and reported to the Remuneration Committee.