Compensation policy of Brimborg ehf. Prenta þessa síðu

Tilv. : HRM-L-26
Date: 27.1.2011
Issue: 1

1. Objectives

   1.1  The objective of Brimborg’s compensation policy is to attract and retain top management and staff talent, this being a key enabler of the company’s growth and prosperity.
   1.2  This policy is also intended to give shareholders additional insight into and control over the company’s strategy regarding compensation of management and board members.
   1.3  The company believes it is desirable to link the compensation of board members and top management (CEO and his/her direct reports) with (a) their personal job performance, (b) company results and achievements at each point in time, as well as (c) long-term shareholder interests.
   1.4  The policy is binding upon the company’s board with respect to clauses concerning stock option agreements and other contracts or payments that are linked to the price of shares in the company. In other respects, the policy serves as guidance for the company and its board. Deviations from the compensation policy shall be explicitly justified in each case and recorded in the company’s books. 
   
   

2. Board member compensation

   2.1  Board members shall be compensated in accordance with the resolution of the annual general meeting of shareholders. The board makes a proposal to the AGM with respect to compensation for the next annual term, taking into consideration the responsibilities and the legal liability of board members, the time required for board duties and the results of the company.
   2.2  The Company reimburses travel expenses to board members who are required to travel internationally to attend board meetings. Rules concerning reimbursements shall be specified in the board’s operating procedures.
   
   

3. CEO compensation

   3.1  The board shall execute a written employment agreement with the CEO. This agreement shall in the general case not have a longer term than 5 years. Renewal of the agreement during its term is permitted. In relation to the commencement of the CEO’s employment, a signing bonus is permitted.
   3.2  The base pay and other compensation of the CEO shall be based on his/her abilities, responsibilities and the scope of the position, as well as general market practices in Iceland, while retaining competitiveness in the international market.
   3.3  It is permitted to negotiate bonuses and incentive payments with the CEO that are based on the results of the company, his/her job performance and other considerations as described in article 4.1.
   3.4  With the objective of aligning the interests of the CEO and the shareholders, the board is permitted to enter into a share purchase option agreement with the CEO for shares in the company and/or extend to him/her a loan for the purchase of shares in the company within the extent permitted by law.
   3.5  The company’s board performs a special annual evaluation of the CEO’s performance and specifies goals. The CEO’s base pay and incentives shall be reviewed annually, based on the before mentioned evaluation, the development of compensation levels in comparable companies and the results of the company.
   3.6  Other employment terms shall be in line with general practice at comparable companies, such as pension fund contributions, vacation benefits and notice of termination.
   3.7  When determining the notice period in the employment contract, the length of the period can be related to the term of service of the CEO, to a maximum of 12 months.
   3.8  The CEO’s employment agreement shall be construed in such a way that no additional payments are incurred at termination beyond those stipulated in the agreement. Nonetheless, it is permitted to execute a separate severance agreement upon the CEO’s termination, if this serves the interests of the company in the opinion of the board. 
   
   

4. Bonuses and incentive payments

   4.1  It is permitted to compensate key managers within the company with bonus or incentive payments, in the form of cash or shares.  Bonuses shall be based on key managers being compensated competitively, the performance of the individual employee, the results of the company, achievement of important milestones and other aspects of the operations of the company, including achievement of set targets.  Bonuses shall be conditional upon the employee remaining employed for at least 6 months following the grant of such bonus.
   
   

5. Stock options

   5.1  Issuing options on company stock to employees is permitted, with the aim inter alia of aligning employee interests as closely as possible with those of the company and of shareholders. In the general case, stock options shall have a term of 2 – 5 years and vest in increments over the period, provided that the individual remains employed by the company. When determining option strike prices, reference shall generally be made to the last trading price of stock known to the board, or the fair market value of the stock as assessed by the board.
   
   

6. Communication at the Annual General Meeting

   6.1  At the annual general meeting of shareholders, the board shall present information about issued and exercised stock options, other payments related to stock in the company, and termination payments if any.
   
   

7. Approval of compensation policy

   7.1  The compensation policy shall be reviewed and adopted annually by the general meeting of shareholders.
   7.2  The compensation policy is documented in Icelandic and English. In case of dispute, the Icelandic version shall prevail.
   7.3  The above compensation policy for Brimborg ehf. is adopted in accordance with article 59 of the Icelandic Law 138/1994 on privat limited liability stock companies.

Agreed by the annual general meeting of shareholders of Brimborg ehf.
on january 27th 2011.

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