Annual Report 2010 - Scana Industrier ASA

66Annual Report 2010 Scana Industrier ASAStatement on the setting of salaries and otherremuneration for the general manager and othersenior employeesIn accordance with the Public Limited Companies Act § 6-16a, theBoard shall draw up a statement on the setting of salaries and otherremuneration for the general manager and other senior employees.The statement shall contain guidelines for setting salaries and otherremuneration, and include the main principles of the company’swages policy in relation to management.allocated to parties that the Board regards as central in relation to thecompany’s value development.Pension plans shall in principle be the same for managers as thosegenerally determined for employees in the business.Bonus schemes for the management team shall be partly linked tothe company’s profits, and partly to the judgements of the Board. Thejudgements of the Board shall take into account, among other things,the quality of the HSE work in the company and the results accordingto the company’s HSE statistics.§ 6-16a of the said Act also imposes a duty on the Board to give astatement on the wage policy for management that has been followedin the preceding financial year.Scana Industrier ASA defines senior employees as the group chiefexecutive and members of the group management team, as well asthe managing directors of the group’s subsidiaries. The guidelines canalso be made to apply to other key personnel in the group.1. The main principles of the company’s wage policy formanagement for the financial year 2010The main principle behind the company’s wage policy formanagement is that the basic salary shall promote added value in thecompany and contribute to related interests between the owners andsenior employees. The basic salary shall not be of such a nature or ofsuch a scope that the company’s reputation will be harmed.As a leading player in its field, Scana Industrier ASA is dependenton offering salaries that can attract the most competent managers.The policy of the Board is that in order to secure the best possibleleadership, salaries must be offered at levels that the individual issatisfied with, and which are competitive in an international market.2. Salaries and other benefits for the financial year 2010It is company policy that the salaries of management are mainly paidas a fixed monthly salary that reflects the level of the individual’sposition and experience.The basic salary for senior employees consists of a fixed and avariable component, which are determined on a case by case basis.The fixed salary is determined according to the following:- Experience and expertise- The size of the company- Competitive situationThe variable salary is paid based on results achieved and individualassessment:- Operating margin achieved- Order intake- Working capital- Personal appraisalOther target figures may apply based on the main duties of theindividual activity. The total value of the variable salary shall notnormally exceed the value of the fixed salary.The general manager’s remuneration is determined by the Board.Salary adjustments for other senior employees are determined by thegeneral manager with subsequent reporting to the Board.The setting of salaries for senior employees shall follow the sameprinciples that apply to other employees with regard to annualceilings for salary adjustments, adjustment dates and a total salarycompensation consisting of a fixed and variable salary.In addition to the basic salary, other remuneration may be paid tosenior employees, including payments that relate to shares andremuneration schemes based on share values. The Board canoffer share schemes to the management team. Options may beEarly retirement plans can be entered into with senior employees, witha mutual entitlement to demand retirement that entails a retirementpension on the employee’s 62nd birthday.Termination payment plans that are established upon departure fromthe company will be viewed in conjunction with confidentiality clausesand clauses that restrict competition in the individual’s contract ofemployment, whereby they only compensate for such limitations in theindividual’s right to take up new employment. Termination paymentplans shall in principle have deductions for income earned elsewhere.Options:Share option programme decided in 2007:In the Board meeting held on 14 August 2007, the Board of ScanaIndustrier ASA decided to allocate options to group management andthe managing directors in accordance with the authorisation grantedat the general meeting of shareholders on 3 May 2007.The options were allocated on 14 and 17 August 2007 at a rate ofNOK 16.60, which was the share price on the date of allocation.After a decision by the general meeting of shareholders on 29 April2009, the exercise price was changed to NOK 6.50. 360,000 shareoptions were redeemed in 2010 after publication of the result aftersecond quarter of 2010. Two of the employees who were includedin the programme have decided to leave. This reduces the numberof options by 100,000. The final redemption takes places after thepresentation of the fourth quarter of 2010. Provisions of NOK 2.5million were made in 2010 in relation to the share option programme inaccordance with the earnings period.Share option programme decided in 2010:The annual general meeting of Scana Industrier ASA decided on28 April 2010 to allocate options to group management and themanaging directors.The options were allocated on the same day at a rate of NOK 9.50,which was the share price on the date of allocation. In 2010, 635,000share options were allocated. One of the employees that was includedin the programme has decided to leave. This reduces the numberof options by 20,000. The options can only be redeemed after thepresentation of the second quarter of 2012 and over the followingthree years. The final redemption period takes places after the fourthquarter of 2014. Provisions of NOK 0.6 million were determined in2010 in relation to the share option programme in accordance with theearnings period.Valuation method:The share option programmes are valued in line with the Black andScholes model. Risk-free interest is in accordance with NorgesBank’s interest rate on the date of allocation. The risk-free interest isinterpolated over the earnings period. The volatility is based on sharetrading in the past three years, which is 50 per cent. No account hasbeen made for sharing.A condition was made as part of the share option programme in 2007,that no one who is allocated options leaves during the earnings periodand that everyone redeems the options after the third quarter of 2010.In relation to the share options programme adopted in 2010, the sameconditions shall apply except that everyone must redeem the optionsafter the second quarter of 2012.