The following principles for remuneration of senior executives were adopted by the 2020 Annual General Meeting:

• Trelleborg will offer market-based terms of employment that enable the company to recruit, develop and retain senior executives.
• The remuneration structure is to comprise fixed and variable salary, pension and other remuneration, which together form the individual’s total remuneration package.
• Trelleborg continuously gathers, evaluates and adapts information on market-based remuneration levels for relevant industries and markets.
• Principles for remuneration may vary depending on local conditions.
• The remuneration structure will be based on such factors as position, expertise, experience and performance.

Senior executives comprise the President and other members of Group Management. The principles are supplemented by a policy governing benefits for senior executives as well as a global Remuneration Policy covering all managers and senior salaried employees. In 2020, total remuneration of Group Management amounted to sek 43,747,000 (57,009,000), excluding pension premiums, and sek 55,414,000 (71,341,000), including pension premiums.

President
During 2020, the President and CEO received a fixed salary and other remuneration as shown in the table overleaf. Pursuant to agreements, the President has the possibility of earning an annual variable salary. The annual variable salary has a fixed ceiling for the full-year 2020, corresponding to a maximum of 65 percent of the fixed salary. In 2020, the annual variable salary was based on financial targets. The annual variable salary does not constitute pensionable income and does not form the basis for the calculation of vacation pay. For 2020, an annual variable salary of sek 2,057,000 (4,834,000) was paid to the President. Pensionable age for the President is 65; however, both the company and the President have the right, without a special cause, to request an early retirement from the age of 60, with a mutual six-month notice of termination.

Should the President enter into an early retirement, the employment agreement and the pension agreement will be null and void. The pension agreement is a defined-contribution scheme, and the premium comprises 45 percent of the fixed salary. Pension premiums were paid in 2020 as shown in the table to the right. For the President, a notice period of 24 months applies should termination of employment be initiated by the company. Should a termination of employment be initiated by the President, the notice period shall be six months.

Other senior executives
The principles for remuneration of other senior executives was based on a fixed and annual variable salary as well as certain benefits. The annual variable component had a fixed ceiling accounting for a maximum of 40–55 percent of the fixed annual salary. In 2020, the annual variable salary was based on profit before tax and operating cash flow.

For other senior executives, the entire pension plan was based on a defined-contribution model, whereby the pension premium varied between 10 and 40 percent of the fixed salary. This has applied to other senior executives in all countries other than Italy, where the premium level was slightly higher. For other Swedish senior executives, the maximum level of 35 percent in accordance with the policy was applied in 2020.

Certain senior executives have extended notice periods when a termination of employment is initiated by the company, normally 12, 18 or 24 months. Should a termination of employment be initiated by a senior executive, the notice period is six months. The President and other senior executives have also been entitled to other benefits, primarily a company car and medical expenses insurance.

Purpose
The long-term incentive programs shall be designed to contribute to Trelleborg’s business strategy and long-term interests including its sustainability. The ultimate target is to increase the shareholder value by promoting, developing and retaining senior executives.

Target figures
The target value for the long-term incentive program is an annual improvement of 10 percent of the Trelleborg Group’s earnings per share. This target shall exclude the Group’s items affecting comparability and the impact of any share buyback programs. For the 2018–2020 programs, the basis for the target figure was set as the outcome of earnings per share for 2017. This principle has remained unchanged for the rolling three-year programs that commenced thereafter. All programs have an outcome limited to 33.3 percent of the maximum annual variable salary per year in the program.

Outcome and payment
The outcome of the programs are calculated annually, accumulated over the respective three-year period and potential payments are made in the first quarter of the year after the program expires. Therefore, a payment was made in the first quarter of 2020 for the program approved in 2017. For the program approved for 2018, payment will be made in the first quarter of 2021, for the program approved for 2019, payment will be made in the first quarter of 2022, and for the program approved for 2020, payment will be made in the first quarter of 2023. These payments do not constitute pensionable income and do not form the basis of calculation of vacation payment.

In 2020, consolidated earnings were not charged (10,252,000) as the targets were not achieved.

Other incentive programs
The Group has no other ongoing incentive programs such as convertible debentures, warrant programs, share incentive programs or similar at the present time.