(Información remitida por la empresa firmante)
The Board of Directors proposes that the Annual General Meeting resolves to implement a new long-term incentive program for senior executives and key employees within the ASSA ABLOY Group (LTI 2023). LTI 2023 is based on similar principles as LTI 2020, LTI 2021 and LTI 2022. LTI 2023 is proposed to include a maximum of 150 senior executives and key employees within the ASSA ABLOY Group. In order to participate in LTI 2023 the participants will have to hold Series B shares in ASSA ABLOY within the scope of LTI 2023 (saving shares). For every saving share held, the company will grant so called performance awards free-of-charge in accordance with the terms stipulated below.
The rationale for the proposal
The purpose of LTI 2023 is to strengthen the ASSA ABLOY Group’s ability to retain and recruit competent employees, to contribute to ASSA ABLOY providing a total remuneration that is on market conditions and competitive, and to align the interests of the shareholders with the interests of the employees concerned. Through a share-based long-term incentive program, the employees’ remuneration is tied to ASSA ABLOY’s future earnings and value growth. In light of the above, the Board of Directors believes that the implementation of LTI 2023 will have a positive effect on the long-term value growth of the Group, including its sustainability, and consequently that LTI 2023 is beneficial to both the shareholders and the company.
Personal investment in saving shares
In order to participate in LTI 2023, the participants will have to hold saving shares. The saving shares can either be Series B shares in ASSA ABLOY that have vested or been used as saving shares under LTI 2020 or previous years’ long-term incentive programs, or Series B shares in ASSA ABLOY purchased on the market in connection with the notification to participate in LTI 2023.
The personal investment shall amount to a value corresponding to a minimum of 5 percent (all participants) and a maximum of 15 percent (CEO and other senior executives) or 10 percent (other participants), respectively, of the participant’s fixed base salary. If the participant has access to inside information and is therefore prevented from making the personal investment in connection with the application to participate in LTI 2023, the personal investment shall be made as soon as possible, but no later than before the next Annual General Meeting.
For employees who have not participated in previous LTI programs, the participation in LTI 2023 is, in addition, subject to renunciation of customary salary review for the year 2023.
Participants in LTI 2023 and allocation
LTI 2023 is proposed to include a maximum of 150 senior executives and key employees within the ASSA ABLOY Group, divided in three categories.
For each saving share that the CEO of the Group holds under LTI 2023, the company will grant six performance awards. For each saving share that other senior executives (currently nine individuals) hold under LTI 2023, each such individual will be awarded five performance awards. For each saving share that other participants (140 individuals) hold under LTI 2023, each such individual will be awarded four performance awards.
Performance condition
The number of performance awards that gives right to receive Series B shares in the company depends on the annual development of ASSA ABLOY’s earnings per share2 based on the target levels, as defined by the Board of Directors, during the measurement period 1 January 2023 – 31 December 2025, where each year during the measurement period is compared to the previous year. The outcome is calculated yearly, whereby one third of the performance awards is measured against the outcome for 2023, one third is measured against the outcome for 2024 and one third is measured against the outcome for 2025.
The outcome for each year is measured linearly. Unless the minimum level is achieved for the year, none of the relevant performance awards will give right to Series B shares, and if the maximum level is achieved each performance award linked to the relevant year will give right to one Series B share. The Board of Directors intends to present the fulfilment of the performance based condition in the Annual Report for the financial year 2025.
Other conditions
In addition to the above conditions, the following shall apply for the performance awards.
— The performance awards shall be granted free-of-charge after the 2023 Annual General Meeting.
— Each performance award entitles the holder to receive one Series B share free-of-charge three years after allotment of the award (vesting period), provided that the holder, with some exceptions, at the time of the release of the interim report for the first quarter 2026 still is employed by the ASSA ABLOY Group and has maintained the saving shares held under LTI 2023.
— To make the participants’ interest equal with the shareholders’, the company will compensate the participants for distributed dividend during the vesting period by increasing the number of Series B shares that each performance award gives right to after the vesting period.
— The performance awards are non-transferable and may not be pledged.
— The performance awards can be granted by the company or by any other company within the Group.
Preparation and administration
The Board of Directors shall be responsible for preparing the detailed terms and conditions of LTI 2023, in accordance with the mentioned terms and guidelines. To this end, the Board of Directors shall be entitled to make adjustments to meet foreign regulations or market conditions. The Board of Directors may also make other adjustments if significant changes in the ASSA ABLOY Group, or its operating environment, would result in a situation where the decided terms and conditions for LTI 2023 no longer are appropriate.
In the event that the Board of Directors considers that the delivery of Series B shares under LTI 2023 cannot be achieved at reasonable cost, with reasonable administrative efforts or due to specific market conditions, participants may instead be offered a cash settlement.
Scope and cost of the program
LTI 2023 may, if the share price for the company’s Series B share remains the same during the program’s term, result in a maximum amount corresponding to 90 percent (CEO), 75 percent (other senior executives) or 40 percent (other participants), respectively, of the participants annual base salary (excluding social security costs). Such outcome is subject to a maximum personal investment, meaning that the participant must hold saving shares at a value that corresponds to 15 percent (CEO and other senior executives) or 10 percent (other participants), respectively, of the participants annual base salary and that the performance based condition has been fully achieved. Full vesting is further subject to the saving shares being retained and that the participant, with some exceptions, is still employed during the vesting period.
The total number of saving shares, which corresponds to the participant’s total maximum personal investment, and thus the total number of performance awards being allotted, depends on the share price for the company’s Series B share at the time of allotment of performance awards under LTI 2023. The total number of outstanding shares in the company amounts to 1,112,576,334 shares.
Provided that the share price for the company’s Series B share is traded at around SEK 246 at the time of allotment of performance awards under LTI 2023, LTI 2023 will, in accordance with the principles and assumptions set out above, comprise a maximum of 750,000 Series B shares in total, which corresponds to approximately 0.1 percent of the total outstanding shares and votes in the company.
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