The principles for remuneration of senior executives are approved by the shareholders at the Annual General Meeting.

On the Annual General Meeting 2021, the following guidelines were adopted:

Scope

The guidelines below apply to remuneration to members of the board of directors, the CEO, and other senior executives i.e. members of the company’s executive management team. The guidelines apply to remuneration that is agreed upon after the meeting’s decision to adopt the guidelines and in the event of changes being made to existing agreements after this date. However, the guidelines do not include remuneration decided by the general meeting e.g. board of directors’ fee.

The guideline’s promotion of the group’s business strategy, long-term interests, and sustainability

Remuneration and other terms of employment for members of the executive management within the group shall be balanced, in accordance with market practice and competitive on the geographical market where the member of the executive management operates, with respect to structure, scope and compensation levels. The reason for this is to both in a short- and long-term perspective enable the group to attract and retain competent members of the executive management and other employees, which is a prerequisite to be able to implement the group’s business strategy, safeguard its long-term interests and achieve the group’s sustainability goals.

Remuneration

Remuneration must be paid as a fixed salary, variable remuneration, pension, and other benefits such as e.g. car benefit.

The fixed salary should be based on the level of responsibility in relation to finance, decision making, strategy, global or local organization. The salary level must be comparative to the external market median for equivalent positions to ensure adjustment to the market.

The variable remuneration may consist of a long-term and short-term incentive program. Incentive programs should never individually exceed 60 percent of the fixed salary upon full goal fulfillment.

Pension benefits shall be based on defined contribution plans and as main principle be paid in accordance with pension rules in each country. As a main principle, pension premiums are based solely on fixed salary. Members of the executive management who are employed in Sweden shall have a defined benefit retirement pension (ITP 2) if they are born in 1978 or earlier of up to 30 income base amounts. For parts of the salary above such amount, pension premiums shall be paid with a fixed percentage of 30 % in accordance with the same principles as applicable to the defined contribution retirement pension plan (ITP 1). Members of the executive management born in 1979 or later, shall have a defined contribution retirement pension (ITP 1). The pension premium shall, in total, not exceed 35 % of the pensionable salary. Certain adjustments may occur in individual cases in accordance with local market practice.

Other customary benefits may include, among other things, health insurance and car benefits and must be paid in accordance with current policy.

Criteria for payment of variable remuneration

Executive management members should be able to have a variable remuneration divided into a short-term incentive programme of one year and a long-term incentive programme over three years. Both programmes should be based on individual performance and be connected to pre-determined and measurable criteria, which also should contribute to the company’s strategy and goals, such as sales, operating margin and return on capital employed (ROCE). The criteria shall be adopted, followed up and reviewed on an annual basis by the board.

The purpose of the variable remuneration is to motivate the executive management to achieve the set goals and thereby contribute to meeting the company’s business strategy, long-term interests, and sustainability goals.

Termination of employment

Employment agreements between the company and the executive management shall generally be for an indefinite period. Executive management members receive remuneration throughout the duration of their employment and during the notice period. The notice period can vary between 6-12 months. In addition, members of the executive management shall be entitled to severance pay upon termination by the company. The fixed salary during the notice period and the severance pay shall, in total, not exceed an amount corresponding to the fixed salary over two years.

Consideration of salaries and terms of employment in preparation of the guidelines

In preparing the board of directors’ proposal for these guidelines, salaries, and terms of employment for the company’s employees have been considered by evaluating the employee’s median salary, salary development and terms of employment in relation to these guidelines. Haldex evaluate the salaries and remuneration for all white-collar employees annually based on their responsibility, width of their role and staff responsibilities etc.

Consulting fees

In special cases, and during a limited period, board members can be remunerated for services within their respective area of expertise, which do not constitute of work for the board. A market-based fee shall be paid for these services.

Decision making

The board of directors have established a remuneration committee, which among other things, is responsible for preparing the board of director’s proposal for guidelines regarding remuneration to the executive management submitted for resolution at the annual meeting, at least every fourth year. The guidelines shall remain in force until new guidelines are adopted by the general meeting. The compensation committee is also responsible for implementing the guidelines within the company (including to decide on potential deviations from the guidelines), to follow up and review the application of the guidelines in the company and evaluate and propose new forms of remuneration for the executive management and other key personnel. To the extent that a share-based compensation is proposed, the proposal shall be submitted for a resolution at the general meeting.

To avoid conflicts of interest, the CEO or other members of the executive management should not attend at the board’s decision regarding remuneration issues insofar as they are affected by the matter.

Deviation from the guidelines

The board may deviate from above guidelines, in whole or partly, if there are special reasons in an individual case and a departure is necessary to meet the company’s long-term interests and sustainability or to ensure the company’s financial viability.