Notes for P&L
Note 7 Employees, personnel costs and remuneration of senior executives
Accounting policy
Pension benefits to employees
The Group has defined-contribution pension plans. Defined-contribution pension plans are classified as plans whereby the company’s obligation is limited to the contributions it has undertaken to pay. In such cases, the amount of the employee’s pension depends on the contribution the company pays to the plan, or to an insurance company and the return on capital generated by the contributions. Consequently, the employee bears the actuarial risk and the investment risk. The company’s obligation regarding contributions to defined-contribution plans is recognized as an expense in profit or loss for the year in line with contributions being vested by the employee rendering services for the company over a period of time.
Severance pay
An expense for severance pay when employees leave the company is recognized only if the company is demonstrably obligated, without a realistic possibility of withdrawing, by a formal detailed plan to terminate employment before the normal point in time.
Short-term remuneration
Short-term remuneration to employees is computed without discounting and is recognized as an expense when the related services are received. A provision is recognized for the expected cost of the profit-sharing and bonus payments when the Group becomes subject to a legal or constructive obligation to make such payments as a result of the services rendered by employees and the obligation can be measured reliably.
The division between basic salary and variable compensation should be in proportion to the executive’s duties and authorization. For the Chief Executive Officer and other senior executives, variable compensation is a maximum of 100 percent of basic annual salary, apart from sign-on bonus. Pension terms should be defined contribution pension solutions. The notice period from the company’s side should not exceed six months. During the notice period of a maximum of six months, full salary and employment benefits are due. Upon termination by the company, severance pay may be payable up to an amount corresponding to a maximum of 12 months’ salary. The notice period for the Chief Executive Officer is six months on termination by the employee and termination from the company is 12 months´salary. Decisions on share and share price-related incentive programs are taken by the general meeting of shareholders. The Board shall be entitled to depart from these guidelines if there are special reasons for this in an individual case.
* Bonuses to the CEO and senior executives are not paid, only refers to reserved amounts.