Remuneration policy for the Board of Directors and Executive Management
Pursuant to Article 139 of the Danish Companies Act, the Board of Directors of a listed company is required to define general guidelines for the company’s incentive pay to the Board of Directors and Executive Management, which must be approved by the general meeting of the company before a specific agreement on incentive pay with any member of the company’s Board of Directors or Executive Management is entered into.
According to Recommendations on Corporate Governance the Board of Directors is also recommended to adopt a remuneration policy applicable to the Board of Directors and the Executive Management and that the policy is approved by the general meeting. This remuneration policy is prepared in accordance with Article 139 of the Danish Companies Act and the Recommendations on Corporate Governance and applies to the members of the Board of Directors and Executive Management of NeuroSearch A/S registered with the Danish Business Authority. Any agreements between NeuroSearch and the Board of Directors or the Executive Management concerning fixed remuneration or incentive pay must be subject to this policy.
Board of Directors
The ordinary members of the Board of Directors receive a fixed base fee as consideration for their Board duties. The Chairman of the Board of Directors receives a fixed fee equalling double the base fee received by the ordinary Board members. In addition, the Board members may receive a fixed fee for their work on committees established by the Board of Directors and the Board members may receive separate fees for completion of specific projects, e.g. a sale of the company or material assets. The remuneration of the Board of Directors is determined on the basis of standards in the market and reflects demands to competencies and efforts in light of the scope of their work and the number of board meetings. Each year the general meeting approves the fees to the Board of Directors.
The aim with the fixed salary of the Executive Management is to attract and retain the best qualified members to the Executive Management. The elements of the fixed remuneration are determined based on market standards and the company's specific needs from time to time.
As a part of the fixed salary the company may offer other standard benefits, such as a company car scheme and free telephone.
The Board of Directors and the Executive Management evaluate the fixed salary annually based on the results from the previous period and with due consideration to the trend within the market standards.
To create alignment of interests between the Executive Management and the company’s shareholders and to consider both short-term and long-term targets, NeuroSearch considers it expedient to set up incentive plans for the members of its Executive Management. Such incentive plans may only consist of non-share-based bonus agreements, which may be continuous, one-off and event-based.
The Board of Directors may enter into agreements with the Executive Management about cash bonus plans. Cash bonus plans consist of a maximum bonus fixed annually which the Executive Management will receive if all targets for the relevant year are met. The maximum cash bonus shall be equivalent to 100% of the fixed salary of each member of the Executive Management.
Payment of bonus depends on whether the conditions and targets defined in the agreement have been fully or partly met. This may be personal targets related to the performance of the individual member of the Executive Management or the performance of NeuroSearch.
In exceptional cases, other agreements that may lead to payment of a bonus of up to one year’s fixed salary may be made. Such agreements are typically expected to be made so as to take effect upon the occurrence of a specific event, for instance the acquisition of a controlling interest in the company, the completion of a takeover bid, the continuing employment of the Executive Management until a specific point in time, defined either as a date or a period after the occurrence of a specific event.
Change and phase-out of incentive plan
The Board of Directors may change or phase out one or more incentive plans introduced pursuant to this policy. In the evaluation of whether this should be done, the criteria that formed the basis of the establishment of the plan will be taken into account. However, such changes can only be made within the framework of this policy. More extensive changes must be approved by the shareholders.
There is a provision in the company’s Articles of Association stating that the shareholders have adopted guidelines for incentive pay for members of the Executive Management pursuant to Article 139 of the Danish Companies Act. This policy will also be published on the company's website.