- Remuneration policy
- Remuneration in 2016
- Resignation and retention
- Initiatives in 2017
- Board remuneration
- Board options
- Remuneration committee - terms of reference
- Further details about remuneration
1. Remuneration policy
Remuneration at NORDEN is determined based on a remuneration policy (see "General Guidelines for incentive based remuneration" below) applying to the Board of Directors and the Executive Management adopted at the annual general meeting in April 2014.
The policy is implemented by a remuneration committee answering to the Board of Directors.
The purpose of NORDEN's remuneration policy is to attract and retain qualified managers, thus securing the basis for long-term value creation for the shareholders.
Upon recommendation from the remuneration committee under the Board of Directors, the Board of Directors decides on the implementation of the remuneration policy in order for it to match NORDEN's needs, results and challenges.
In addition to a fixed salary, the policy offers the possibility of cash bonus and share options. The share-based programmes are particularly designed to promote the long-term conduct of managers and employees and ensure the community of interests between shareholders and employees.
The award of incentives is balanced with regard for the Company's results and objectives, the competitive envrionment, market stituation and outlook, the purpose of the individual instruments as well as personal performance.
2. Remuneration in 2016
In 2016, the Executive Management’s remuneration was a combination of fixed salary, variable bonus and share-based payment.
The Executive Management has no pension plan paid by the Company, but receives benefits such as company phone and car.
Fixed salary for the Executive Management totalled USD 2.1 million in 2016, whereas total remuneration including bonuses and options amounted to USD 2.9 million in 2016 against USD 5.8 million in 2015. In 2016, Jan Rindbo received a bonus of USD 0.4 million including retention bonus, while Martin Badsted and Ejner Bonderup both received a bonus of USD 0.1 million. The value of share options granted to the Executive Management amounted to USD 0.2 million (USD 0.4 million). In determining the exercise price, a 10% margin is added to the market price at the grant date so that the options are not of value to the receivers until the shareholders have received a 10% return. At the grant date, the theoretical value of the options corresponded to 12% of the Executive Management’s fixed salary. The limit according to NORDEN’s remuneration policy is 150%. The Executive Management is required to reinvest 25% of any gain on their options in NORDEN shares and to keep these shares for a number of years. For a more detailed description of the share option programmes, see note 32 to the financial statements.
3. Resignation and retention
The Executive Management's term of notice to the Company is 6 months, while NORDEN's term of notice to the members of the Executive Management is 12 months. NORDEN's terms of
notice to the Company’s Senior Vice Presidents are 3-9 months while their terms of notice to the Company are 1-4 months.
If members of the Executive Management step down following a change of control (merger, takeover, etc.), they will receive a special severance payment in addition to their normal salary, and in some cases bonus, in the notice period. This severance payment equals 12 months’ salary. Jan Rindbo’s employment contract includes a retention bonus in each of the years 2015-17 in the form of shares in NORDEN at an annual value of DKK 1 million. Retention bonuses in addition to these do not exist for the Executive Management or the Senior Management. The Executive Management, parts of the Senior Management and selected Vice Presidents are subject to non-competition clauses of 6-12 months. The Company will pay out compensation corresponding to the full base salary of the person in question, in some cases with certain supplements, during the period in which the clauses apply.
4. Initiatives in 2017
In March 2017, the Board of Directors granted 358,191 share options to selected executives and employees (see Sharetransaction announcement No 2/2017 and No 3/2017). In determining the exercise price, a 10% margin is added to the market price at the grant date so that the options are not of value to the receivers until the shareholders have received a 10% return. The theoretical market value of the options has been calculated at USD 1.2 million according to the Black-Scholes model.
5. Board remuneration
Each member receives a base fee, and the Chairman and Vice Chairman also receive a supplement fee.
The fee structure was changed in 2015 for it to better reflect efforts made in connection with committee work. In addition, the Chairman and Vice Chairman receive a supplement fee. In 2016, the Board of Directors reduced board remuneration by a further 21%. The change took effect from the middle of 2016, and total remuneration of the Board of Directors in 2016 amounted to USD 0.7 million. The Board of Directors proposes unchanged remuneration in 2017.
6. Board options
The Board of Directors does not possess share options or warrants.
7. Remuneration committee - terms of reference
The Board of Directors has a remuneration committee responsible for supervising the implementation of NORDEN's remuneration policy. The committee is made up of Klaus Nyborg (committee chairman), Karsten Knudsen and Tom Intrator.
The remuneration policy reflects the fact that incentive-based remuneration is customary among the shipping companies, which compete across borders for the best employees. Therefore, NORDEN must be able to offer a base salary conforming to market standards as well as incentives to high-performing individuals. The most important incentives are bonuses and share options. NORDEN does not wish to lead in terms of salaries, but the recruitment and retention of qualified employees is essential in order to ensure maximum return on the Company’s large investments. Therefore, remuneration has to be a competitive element in NORDEN’s overall employee package, which also includes good career, secondment and supplementary training opportunities, short chains of command, extensive delegation and responsibility, a strong corporate culture, value-based management, etc.
8. Further details about remuneration
Further details about remuneration can be found in the Annual Report 2016 pages 30-31.