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Remuneration of the executive management

The remuneration to the senior executives shall consist of a base salary, variable compensation, long-term incentive programs, pension premium and additional benefits. The base salary reflects the position, qualification and individual performance.

The remuneration for Epiroc’s senior executives shall consist of a base salary, variable compensation, long term incentive programs, pension premium and additional benefits. The base salary shall reflect the position, qualification and individual performance and the variable compensation shall be dependent on the extent to which predetermined quantitative and qualitative goals are met. The variable compensation is limited to a maximum of 70 percent of the base salary for the President and CEO, to 60 percent for the business area executives and to 40 percent for the other senior executives. In case of termination of employment of a senior executive by the Company, the compensation amounts to between 12 and 24 months base salary depending on age, length of employment and possible income from other economic activity or employment.

Performance-based personnel option plan

It is important, and it is also deemed to be in the best interest of the shareholders, that key personnel in Epiroc have a long term interest in a good value development of the shares of the Company and align their performance in a manner that enhances such a development. The annual general meeting of Epiroc held on May 9, 2019 thus resolved, based on a proposal from the board of directors, to introduce a performance based personnel option plan for 2019. The performance based personnel option plan is directed at a maximum of 100 key employees in Epiroc, who will have the possibility to acquire a maximum of 3,058,704 shares of Class A in Epiroc.

The issuing of options depends on the value increase, expressed as Economic Value Added, of Epiroc during 2019. In an interval of SEK 750,000,000, the issue varies linear from zero to 100 percent of the maximum number of options. The participating key employees are divided into different categories, with different amounts of maximum issues of options, depending on their positions. The issuing of options will take place not later than March 20, 2020. The term of the options is seven years from granting, and the options are exercisable not earlier than three years from granting. The exercise price shall be set to an amount corresponding to 110 percent of the average of the closing rates on Nasdaq Stockholm of Epiroc’s Class A shares during a period of ten business days following the date of the publishing of the full-year summary 2019. A participant must be employed in order to exercise its options. The options are not transferable.

A prerequisite for the participation of the senior executives and division presidents (thirteen participants) in the performance based personnel option plan is an investment of a maximum of ten percent of the participants’ respective base salaries for 2019, before tax, in series A shares of Epiroc. The investments may be made in cash or by payment of shares, however not shares that are obtained as part of the performance based stock option plans for 2017 and 2018. Those who have chosen to invest in A shares will get, in addition to the proportional participation in the plan, the right to acquire, three years after the investment year, the number of shares (matching shares) that corresponds to the number of shares acquired under 2019 at a price of 75% of the market value upon which the exercise price for the shares in the 2019 plan was based, subject to continued employment and continued ownership of the shares. If the number of the acquired shares has been reduced, the right to matching shares is reduced on a share by share basis.