- Remuneration policy
- Remuneration in 2012
- Initiatives in 2013
- 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 below "General Guidelines for incentive based remuneration") applying to the Board of Directors and the Executive Management adopted at the annual general meeting in April 2013.
The policy is implemented by a remuneration committee answering to the Board of Directors.
The policy aims for NORDEN to attract and retain qualified managers, thus securing the basis for long-term value creation for the shareholders. Elements of the remuneration policy include: competitive base salary and pension scheme, cash bonuses, share options and the possibility of employee shares. The share-based programmes are particularly designed to promote the long-term conduct of managers and ensure the alignment of interests between shareholders and management. The Board of Directors decides on the implementation of the remuneration policy upon recommendation from a remuneration committee committee under the Board of Directors, which in cooperation with the Executive Management ensures that remuneration matches NORDEN's needs, results and challenges.
2. Remuneration in 2012
Again in 2012, the challenge has been to ensure that NORDEN's remuneration enables the Company to recruit and retain competent managers and employees, but at the same time, it is important that NORDEN maintains a competitive level of costs – not least in times with challenging market conditions.
In January 2012, the Company granted all employees with at least one year’s seniority 161 shares each. A change in legislation has eliminated the possibility of granting employees shares which are tax-free for the recipients. Therefore, this was as for now the last time NORDEN could make employees co-owners of the Company in this way. See announcement No 2
In March 2012, the Board of Directors granted 350,000 share options to selected managers and employees. In determining the exercise price, a 20% margin was added to the market price at the grant date so that the employees only profit once the shareholders have received a 20% return.The theoretical market value of the options has been calculated at USD 2.4 million according to the Black-Scholes model. Senior Management is required to reinvest 25% of any gain on their options in NORDEN shares and to keep these shares for 2 years. See announcement No 5
On land, fixed salaries were raised by approximately 2-3% at the head office and 4-5% at the overseas offices of which several are placed in countries with higher inflation and wage drift. At sea, wages and salaries for Danish officers rose by approximately 1.2% whereas the wage drift for Philippine and Indian officers was 3%. The total payroll cost on land and at sea was also affected by new recruitments.
3. Initiatives in 2013
In March 2013, the Board of Directors will grant 400,000 share options to the Executive Management and selected managers and employees. In determining the exercise price, a 10% margin is added to the market price at the grant date so that the employees only profit once the shareholders have received a 10% return. The terms are otherwise unchanged. The theoretical market value of the options has been calculated at USD 1.6 million according to the Black-Scholes model.
To keep costs low in difficult markets, modest regulations of fixed salaries for employees on land and at sea have been made at the same level as that of 2012. Possible bonus allotment for 2013 will be determined at the end of the year.
4. Board remuneration
The ordinary emoluments of the members of the Board of Directors are determined by the shareholders at the general meeting. For 2012, the annual general meeting decided (24 April 2013) that the Board’s remuneration is just above USD 1 million. Each member receives a base fee, and the Chairman and Vice Chairman receives a supplement fee.
5. Board options
The Board of Directors does not possess share options or warrants.
6. Remuneration committee - terms of reference
The Board of Directors has appointed a remuneration committee. The committee's responsibility is to oversee the implementation of NORDEN’s remuneration policy. The members of the committee are – Mogens Hugo (Chairman), Karsten Knudsen and Arvid Grundekjøn.
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.
7. Further details about remuneration
Further details about remuneration can be found in the pdf Annual Report 2012 - pages 32, 34 and 36.