Remuneration

Description of ASSA ABLOY’s system of variable remuneration to senior executives and of each outstanding equity- and equity-price-related incentive programme.

Below follows a description of ASSA ABLOY’s system of variable remuneration to senior executives and of each outstanding share- and share-price-related incentive programme in accordance with the Swedish code of Corporate Governance, Section 10.3. The remuneration complies with the 2012 Annual General Meeting’s remuneration guidelines for senior executives.

The President and CEO and other members of the Executive Team are considered senior executives.

System of variable remuneration to senior executives

The variable part of the remuneration to senior executives is paid partly in cash and partly in the form of shares.

Senior executives should have the opportunity to receive variable cash remuneration based on the outcome in relation to financial targets and, when applicable, individual targets. This remuneration should be the equivalent to a maximum 75 percent of the basic salary (excluding social security expenses).

In addition, senior executives should, within the framework of the long-term incentive programme (LTI 2012), have the opportunity to receive variable remuneration in the form of shares based on the outcome in relation to determined target levels in respect of earnings per share during 2012. This remuneration model also includes the right, when purchasing a share under certain conditions, to receive a free matching share from the company. This remuneration should, if the share price is unchanged, be equivalent to a maximum 75 percent of the basic salary (excluding social security expenses).

For a more detailed description of the remuneration to senior executives can be found in the remuneration guidelines adopted at the 2012 Annual General Meeting.

BoD proposal remuneration guidelines 2012.

 

Outstanding incentive programmes

Long-term incentive programme

LTI 2012

At the 2012 Annual General Meeting, it was decided to implement a new long-term incentive programme (LTI 2012) for senior executives and other key staff in the Group.

For each Series B share acquired by the CEO within the framework of LTI 2012, the company assigns one matching stock option and four performance-based stock options. For each Series B share acquired by senior executives, the company assigns one matching stock option and three performance-based stock options. For other participants, the company assigns one matching stock option and one performance-based stock option.

Each matching stock option entitles the holder to receive one free Series B share in the company after three years, provided that the holder is still employed in the Group when the interim report for the first quarter 2015 is published and has retained the shares acquired within the framework of LTI 2012.

Each performance-based stock option entitles the holder to receive one free Series B share in the company three years after assignment, provided that the above conditions have been fulfilled. In addition, the maximum level in a range determined by the Board for the performance of the company’s earnings per share in 2012 must have been fulfilled.

BoD proposal LTI 2012.

LTI 2011

At the 2011 Annual General Meeting, it was decided to implement a new long-term incentive programme (LTI 2011) for senior executives and other key staff in the Group.

For each Series B share acquired by the CEO within the framework of LTI 2011, the company assigns one matching stock option and four performance-based stock options. For each Series B share acquired by senior executives, the company assigns one matching stock option and three performance-based stock options. For other participants, the company assigns one matching stock option and one performance-based stock option.

Each matching stock option entitles the holder to receive one free Series B share in the company after three years, provided that the holder is still employed in the Group when the interim report for the first quarter 2014 is published and has retained the shares acquired within the framework of LTI 2011.

Each performance-based stock option entitles the holder to receive one free Series B share in the company three years after assignment, provided that the above conditions have been fulfilled. In addition, the maximum level in a range determined by the Board for the performance of the company’s earnings per share in 2011 must have been fulfilled. This condition has been fulfilled.

BoD proposal LTI 2011

LTI 2010

At the 2010 Annual General Meeting, it was decided to launch a long-term incentive programme (LTI 2010) for senior executives and other key staff in the Group.

For each Series B share acquired by the CEO within the framework of LTI 2010, the company assigns one matching stock option and four performance-based stock options. For each Series B share acquired by senior executives, the company assigns one matching stock option and three performance-based stock options. For other participants, the company assigns one matching stock option and one performance-based stock option.

Each matching stock option entitles the holder to receive one free Series B share in the company after three years, provided that the holder is still employed in the Group when the interim report for the first quarter 2013 is published and has retained the shares acquired within the framework of LTI 2010.

Each performance-based stock option entitles the holder to receive one free Series B share in the company three years after assignment, provided that the above conditions have been fulfilled. In addition, the maximum level in a range determined by the Board for the performance of the company’s earnings per share in 2010 must have been fulfilled. This condition has been fulfilled.

BoD proposal LTI 2010

Other equity-based incentive programmes

ASSA ABLOY has issued convertible bonds to employees in the Group.

In 2007, it was decided to implement a global incentive programme for employees in the Group, Incentive 2007, pursuant to which ASSA ABLOY AB has issued convertible bonds. Any conversion of Incentive 2007 can take place in a 30-day period in May and June 2012. Full conversion at a conversion rate of EUR 18.00 for Series 1, EUR 20.50 for Series 2, EUR 23.00 for Series 3 and EUR 25.40 for Series 4 will add a total of 4,679,610 Series B shares.
The dilutive effect of full conversion of Incentive 2007 amounts to 1.3 percent on the share capital and 0.9 percent on the total number of votes.

At the end of March 2012, Incentive 2007 amounted to EUR 100 M.

Around 1,400 employees in some 15 countries are participating in Incentive 2007.

BoD proposal Incentive 2007