Unformatted text preview: viours, as well as alignment of interests between the employees and the company.
The arrangements are transparent and in line with good corporate governance.
The total remuneration package for the Group CEO and Executive Management consists of the following main elements: Base Salary (main
element), Annual Bonus, Long Term Incentive (LTI), Employee Share Programme, Pension- and Insurance arrangements, Severance Pay and
other general Benefits.
The Base Salary is mainly determined on the basis of the role, relevant market and performance. Performance relates to sustainable
performance, i.e. delivery according to our business ambitions, demonstrated leadership and “The Telenor Way” (the Group’s values, ethics,
codes of conduct and governance principles) of doing business, as well as building and developing organisational capabilities. The Base
Salary is reviewed annually.
The Annual Bonus is based on achievement of company and individual targets, with ambitious performance levels set up front. The payment
for achievement of the target performance level is 37.5% of the annual bonus basis (annual Base Salary including the fixed LTI award) for
the Group CEO and Executive Management. Maximum potential for exceeding target performance is 50% of annual bonus basis. The bonus
payments are subject to vacation pay, but not included in the pensionable earnings. The Group CEO and Executive Management are subject
to a minimum shareholding requirement corresponding to the value of one annual Base Salary. If the executives do not hold shares in Telenor
ASA at the minimum shareholding level when the Annual Bonus is paid out, up to 20% of the Bonus payment must be invested in shares in
The LTI programme is a fixed monetary compensation of 30% and 25% of the annual Base Salary for the Group CEO and Executive
Management, respectively. If the executives are on an international assignment, the LTI award is based on the net salary and the
compensation is reduced to 12.5%. The participant is required to invest the net after tax amount into Telenor shares, bought in the market
and with obligation to hold for a lock-in period of four years. If the participant leaves Telenor during the lock-in period, the participant has to
repay to Telenor an amount equal to the quoted market value of shares held. If the participant leaves Telenor during the lock-in period due
to circumstances within Telenor, the participant is not obliged to repay the value of the shares held. /page 79/
telenor annual report 2011
notes to the financial statements / telenor group The participant in the LTI programme is entitled to an LTI bonus after the first two years of the Programme period. This opportunity
applies at the end of 2013, given that the gross return on the Telenor share has developed better relative to the STOXX® Europe 600
Telecommunications index (SXKGR) over the two year period 2012–2013, i.e. the average daily closing price of the share for December 2011 compared to the corresponding period in 2013. The LTI bonus implies that:
• If the Telenor share performs less than the index, no LTI bonus is awarded. • If the Telenor share performs better than the index, the LTI bonus is equal to the current value of the initial LTI shares. • If the Telenor share performs minimum 15 percentage points better than the index, the LTI bonus is three times the current value of the initial LTI shares.
If the executives are on an international assignment, any LTI Bonus is net and hence, following the same methodology as the initial LTI award,
reduced to half of the current value.
The total variable pay is capped at 50% of the fixed compensation, in line with the Government’s policy on the remuneration of leading
personnel. The participant is obliged to invest the whole net LTI bonus, if any, in Telenor shares with further obligation to hold during the
defined lock-in period of the Programme. If the participant leaves Telenor during the lock-in period, the participant has to repay to Telenor an
amount equal the quoted market value of shares held. If the participant leaves Telenor during the lock-in period due to circumstances within
Telenor, the participant is not obliged to repay the value of the shares held.
The Group operates a general Employee Share Programme for employees, which is also applicable for executives, offering employees the
opportunity to purchase Telenor-shares for 1, 2, 3, or 4 percent of the annual gross Base Salary with a discount of maximum NOK 1,500. If the
Telenor ASA share performs better than the STOXX® Europe 600 Telecommunications index (SXKGR) over a 2 year period, the employees will
be granted a share programme bonus equal to the conditions as for the LTI bonus, except for the lock-in condition, given that the individual is
still employed in the Telenor Group.
The Group applies a defined contribution pension arrangement for individuals hired externally as of 2006. According to this arrangement, the
retirement age for Group Executive Management members is 65. The pension is based on the balance of accrued company...
View Full Document
This document was uploaded on 03/21/2014.
- Spring '14