CORPORATE GOVERNANCE

Corporate Governance practices refer to the decision-making systems through which owners directly or indirectly control a company. In a stock corporation like NOTE, authority, management and control are distributed between the shareholders, the Board of Directors, the CEO and the management group in accordance.

The regulatory structure applied for governing and controlling NOTE is primarily the Swedish Companies Act, stock market rules for issuers, the Swedish Code of Corporate Governance (the Code), other legislation and regulations, and internal guidelines and policies.

ARTICLES OF ASSOCIATION

The Articles of Association are approved by the Annual General Meeting (AGM) and includes a number of mandatory duties of a more fundamental nature in accordance with applicable legislation. Resolutions on amending the Articles of Association are taken at Annual or Extraordinary General Meetings.

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SHAREHOLDERS’ MEETING

The Shareholders’ Meeting is the company’s highest decisionmaking body; it is there that shareholder influence in the company is exercised. Shareholders who wish to participate at Shareholders’ Meetings, personally or through a proxy, must be entered in the share register five weekdays prior to the Meeting and must register with the company in accordance with the notice to attend the Meeting. Notice to attend Shareholders’ Meetings is given through announcements and on the company’s website.

NOTE’s Annual General Meeting, AGM, (Ordinary General Meeting) is held during the first half of the year. The time and location of the Meeting is announced publicly, no later than to coincide with the release of the company’s third-quarter report. The notice of the AGM is published no earlier than six weeks, but no later than four weeks, before the AGM.

At the AGM, the shareholders decide, among other things, on the following: election of the Board of Directors and, where appropriate, the auditors; the manner in which the Nomination Committee is to be appointed; and discharge from liability for the Board of Directors and President for the past year. Decisions are also taken regarding adoption of the financial statements, allocation of profit, fees for the Board of Directors and the auditors, as well as guidelines for compensation to the President and other senior executives.

BOARD OF DIRECTORS

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JOHAN HAGBERG

Chairman
Elected: 2017.
Born: 1971.
Education: Economist and mathematician.
Main occupation: Investor.
Other directorships: None.
Work experience: Former mathematics teacher, entrpreneur in the entertainment industry and Cultural Producer at ABF Stockholm.
Holding of NOTE shares*: 7,037,306
Independent in relation to the company and management: Yes.
Independent in relation to the company's major shareholders: No, Johan holds around 20 % of the shares of NOTE.
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KJELL-ÅKE ANDERSSON

Board member
Elected: 2010.
Born: 1946.
Education: M.Sc. (Eng.).
Main occupation: Board work and consulting within business management.
Other directorships: Chairman of Cervitrol AB and Domitech AB. Member of Mekatronik Konsult i Lund AB.
Work experience: 40 years within the industry, whereof just over 30 years within the EMS business. Different positions, for example as engineer within development, production manager and CEO, at Electrolux and NOTE among others.
Holding of NOTE shares*: 900,000
Independent in relation to the company and management: Yes.
Independent in relation to the company's major shareholders: Yes.
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ANNA BELFRAGE

Board member
Elected: 2019.
Born: 1962.
Education: M.Sc. (Econ.).
Main occupation: Financial consultant and board work.
Other directorships: Board member at Mycronic AB, Serneke AB and Isofol AB.
Work experience: Extensive experience in finance, industrial manufacturing and management. Previous positions include serving as CFO of ABS Group, Beijer Electronics Group and Södra Skogsägarna.
Holding of NOTE shares*: 0
Independent in relation to the company and management: Yes.
Independent in relation to the company's major shareholders: Yes.
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KAJ FALKENLUND

Board member
Elected: 2019.
Born: 1958.
Education: University studies in subjects such as mathematics, physics and mechanics.
Main occupation: COO/Deputy CEO at SkulFlex Holding AB.
Other directorships: Deputy Board member at SVETAK.
Work experience: Eleven years as CEO of Skultuna Flexible AB. Long-term experience as Global VP of Supply Managment, most recently with ABB.
Holding of NOTE shares*: 0
Independent in relation to the company and management: Yes.
Independent in relation to the company's major shareholders: Yes.
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BAHARE HEDERSTIERNA

Board member
Elected: 2015.
Born: 1981.
Education: M.Sc. (Econ.).
Main occupation: Vice President Global Sales of Knorr Bremse GmbH.
Other directorships: None.
Work experience: Fifteen years within purchasing and supply chain in the vehicle industry. Broad experience of various global leadership roles in Sourcing at Volvo Cars and Volvo Trucks, most recently as Strategic Purchasing Manager for electronics at Knorr Bremse GmbH.
Holding of NOTE shares*: 5,000
Independent in relation to the company and management: Yes.
Independent in relation to the company's major shareholders: Yes.
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CLAES MELLGREN

Board member
Elected: 2019.
Born: 1959.
Education: M.Sc. (Eng.).
Main occupation: Business angel and non-executive director.
Other directorships: AQ Group (Nasdaq Mid Cap) and Automation Region.
Work experience: Founder of AQ Group and was the company's CEO between 2010 and 2018. Previously active as production, logistics and site manager at various ABB units in Västerås, Sweden.
Holding of NOTE shares*: 722,000
Independent in relation to the company and management: Yes.
Independent in relation to the company's major shareholders: Yes.
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CHARLOTTE STJERNGREN

Board member
Elected: 2019.
Born: 1976.
Education: M.Sc. (Econ.) and LL.B.
Main occupation: Partner and Investor relations advisor at Cord Communications.
Other directorships: None.
Work experience: Over ten years of experience as a financial analyst investment bank Carnegie, focusing on telecom, IT and small companies. Broad experience as a finance journalist, most recently as editor-in-chief of the financial channel EFN.
Holding of NOTE shares*: 0
Independent in relation to the company and management: Yes.
Independent in relation to the company's major shareholders: Yes.

EMPLOYEE REPRESENTATIVES

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CHRISTOFFER SKOGH

Board member, employee representative Unionen.
Appointed: 2017.
Born: 1975.
Education: Senior high school, social science.
Assignment: Business Development Manager for NOTE.
Holding of NOTE shares*: 100
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JOHAN LANTZ

Deputy Board member, employee representative Unionen.
Appointed: 2017.
Born: 1972.
Education: M.Sc. (Econ.).
Assignment: Business Development Manager for NOTE.
Holding of NOTE shares*: 0

* As per 31 July 2019, including contingent holdings by closely affiliated natural and legal persons.
** Call options issued by Creades AB.
*** Warrants.

WORK OF THE BOARD

COMPOSITION OF THE BOARD

In accordance with the Articles of Association, the Board of Directors shall consist of no less than three and no more than ten ordinary members. The Board members are elected annually at the AGM for the period until the end of the following AGM.

The Board consists of seven members and has a general composition of sector knowledge and competence from Board work and management of listed companies as well as finance, accounting, structural change as well as sales and strategic purchasing.

The employees have appointed one member and one deputy to the Board. The company’s CFO attends the Board meetings and serves as secretary.

THE BOARD’S DUTY AND RESPONSIBILITIES

The duty of the Board of Directors is to manage the company’s affairs on behalf of the shareholders. The Board of Directors judges the group’s financial situation on an ongoing basis, prepares budgets and annual financial statements. The Board of Directors is also responsible for formulating and monitoring the company’s strategies through plans and objectives, decisions on acquisitions and divestments of operations, major investments, appointments and replacements of the CEO and senior management and ongoing monitoring of operations in the year.

Each year, the Board of Directors adopts an approvals list, finance policy, instructions for financial reporting and for the Board of Directors, and rules of procedure, which formalise matters including the division of responsibilities between the Board of Directors and the CEO, alongside the Instructions for the CEO. The Chairman of the Board leads the Board of Directors’ work and ensures that it is conducted in accordance with the Swedish Companies Act, applicable regulations for listed companies, including the Code and other laws and ordinances. The Chairman is also responsible for maintaining ongoing contact with the group management, and for ensuring that the Board’s decisions are implemented appropriately.

The Board’s work is evaluated yearly through a survey that is compiled and reported to the Board of Directors and the Nomination Committee.

WORK OF THE BOARD OF DIRECTORS IN 2018

Each scheduled Board meeting conducts a review of operations, results of operations and financial position of the group and outlook for the remainder of the year. In addition, the Board takes a standpoint on overall issues such as the company’s strategy, marketing and sales, financing, budget and long-term operational planning.

During the year, the Board held eight Board meetings where minutes were taken. Employees of the company participated in Board meetings to submit reports. The company’s Auditor attended one Board meeting in the year.

AUDIT COMMITTEE

The members of the Audit Committee are appointed at the Board meeting following election for one year at a time. The main duty of the Audit Committee is to consult on matters for the Board of Directors’ decision. The Audit Committee is not authorised to reach decisions independently. Reporting to the Board on issues considered at Audit Committee meetings is either in writing or orally at the following Board meeting.

Since the last Board meeting following election, the Audit Committee members are John Hedberg and Kjell-Åke Andersson. John Hedberg was replaced by Johannes Lind-Widestam after the summer, and in January 2019, Johannes Lind-Widestam was succeeded by Anna Belfrage.

The duties of the Audit Committee are to:

  • Work on quality-assuring financial reporting.
  • Discuss the audit and the view of the company’s risks with the Auditor.
  • Follow up on external Auditors’ reviews and appraise their work.
  • Set guidelines for services in addition to auditing that the company may purchase from the Auditor.
  • Support the Nomination Committee in preparing proposals for Auditors and their remuneration.
  • Ensure that the company has systems for internal control.

The Audit Committee has a close and regular collaboration with the group’s corporate finance function regarding internal and external reporting of financial information. There is also a collaboration developed on matters of internal control, selection and appraisal of auditing principles and models.

In the financial year 2018, the Audit Committee monitored compliance with the adopted guidelines and held three meetings, with the company’s Auditors, to discuss audit issues and internal controls. The Auditors’ written reports were distributed to the Board of Directors after review and comments from the company.

The following main issues were considered:

  • Following up on the Auditor’s reporting on the financial statement and ongoing reviews.
  • Appraisal of the Auditor’s measures during the year.
  • Following up on the internal audit function’s review in the year. The focus has  been on valuations of inventories, accounts receivable—trade and goodwill, and auditing foreign subsidiaries.

REMUNERATION COMMITTEE

The members of the Remuneration Committee are appointed at the Board meeting following election for one year at a time. Since the last Board meeting following election, the Remuneration Committee consists of the Board of Directors.

The duties of the Remuneration Committee are to:

  • Consult on matters regarding remuneration principles, remuneration and other employment terms for group management.
  • Monitor and evaluate programmes for performance-related pay for group management, subsidiary Presidents and other key staff.
  • Monitor and evaluate application of the guidelines for remuneration to senior management that the AGM has resolved on and applicable remuneration structures and remuneration levels in the company.

In the financial year, the Board of Directors discussed remuneration issues and monitored compliance with adopted guidelines. The following main issues were considered:

  • Evaluation and approval of remuneration structures for the group management.
  • Specifying the profitability-based, variable remuneration programme for group management, subsidiary presidents and other key individuals, which ran during 2018.

After an evaluation, the Remuneration Committee concluded that: 

  • NOTE is following the guidelines for remunerating senior management that the AGM 2018 resolved on.
  • Applicable remuneration structures and levels are reasonable against the background of the company’s operations.
  • Compensation from the profitabilitybased, variable remuneration programme that ran during 2018 for group management, subsidiary presidents and other key individuals amounted to SEK 2.7 million.

REMUNERATIONS

Guidelines for remunerating senior managers
Senior managers means the President and members of NOTE AB’s management.

The AGM 2019 decided on the following guidelines for remunerating senior managers:
Basic salary will consider individual responsibilities, experience and performance and will be subject to annual review. Performance-related pay is dependent on individual satisfaction of quantitative and qualitative goals subject to a maximum of 100 percent of basic salary.

Pensionable age is 65. NOTE offers benefits similar to the ITP scheme (supplementary pensions for salaried employees). The dismissal pay and severance pay of a senior manager may not exceed an aggregate maximum of remuneration over 24 months.

In individual cases, and special circumstances, the Board of Directors may depart from the above remuneration guidelines. If such departure occurs, the relevant information, and reason for the departure, should be reported at the following Annual General Meeting.

Share related incentive programme 2019/2022
At the EGM 2019, the shareholders resolved to implement a long term incentive programme comprised of warrants for the Chief Executive Officer Johannes Lind-Widestam. The purpose of the incentive programme is to create even greater participation for Johannes Lind-Widestam with regards to NOTE’s development.

In total, the issuances comprise of 400,000 warrants, entitling to subscription of the same number of new shares in NOTE, equivalent to a dilution effect of around one (1) percent of the total number of outstanding shares and votes. The participants have acquired warrants at a market value corresponding in total to some 200,000.

Subscription for shares through exercise of the warrants shall be made from the period commencing on 10 February-3 March 2022 at an exercise price corresponding to 130 percent of the during the period 21 January-11 February 2019 volume-weighted average price for NOTE’s shares on Nasdaq Stockholm.

Share related incentive programme 2018/2021
At the AGM 2018, the shareholders resolved to implement a long term incentive programme comprised of warrants which current and future members of the group management and key employees have been offered to acquire. The purpose of the incentive programme is to create even greater participation for the participants with regards to NOTE’s development.

In total, the issuances comprise of 630,000 warrants, entitling to subscription of the same number of new shares in NOTE, equivalent to a dilution effect of around two (2) percent of the total number of outstanding shares and votes. The participants have acquired warrants at a market value corresponding in total to some 299,000.

Subscription for shares through exercise of the warrants shall be made from the period commencing on 18 May-11 June 2021 at an exercise price corresponding to 130 percent of the during the period 26 April-16 May 2018 volume-weighted average price for NOTE’s shares on Nasdaq Stockholm.

NOTE has reserved the right to re-purchase of warrants if any participant wishes to transfer the warrants.

Share related incentive programme 2017/2020
At the AGM 2017, the shareholders resolved to implement a long term incentive programme comprised of warrants which current and future members of the group management and key employees have been offered to acquire. The purpose of the incentive programme is to create even greater participation for the participants with regards to NOTE’s development.

In total, the issuances comprise of 600,000 warrants, entitling to subscription of the same number of new shares in NOTE, equivalent to a dilution effect of around two (2) percent of the total number of outstanding shares and votes. The participants have acquired warrants at a market value corresponding in total to some SEK 500,000.

Subscription for shares through exercise of the warrants shall be made from the period commencing on 12-31 May 2020 at an exercise price corresponding to 130 percent of the during the period 20 April-11 May 2017 volume-weighted average price for NOTE’s shares on Nasdaq Stockholm.

NOTE has reserved the right to re-purchase of warrants if any participant wishes to transfer the warrants.

GROUP MANAGEMENT

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JOHANNES LIND-WIDESTAM

Chief Executive Officer & President
Employed by NOTE since 2018
Holding of NOTE shares*: 71,000
Holding of NOTE options**: 565,000
Phone: +46 (0)70 541 72 22
E-mail: Johannes.LindWidestam@note.eu
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DAVID KRANTZ

Chief Procurement Officer
Employed by NOTE since 2017
Holding of NOTE shares*: 0
Holding of NOTE options**: 100,000
Phone: +46 (0)76 812 15 31
E-mail: david.krantz@note.eu
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HENRIK NYGREN

Chief Financial Officer
Employed by NOTE since 2006
Other significant assignments: None
Holding of NOTE shares*: 100,000
Holding of NOTE options**: 165,000
Phone: +46 (0)70 977 06 86
E-mail: henrik.nygren@note.eu
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FREDRIK SCHULTZ

Chief Sales Officer
Employed by NOTE since 2015
Other significant assignments: Board member at Ivisys AB.
Holding of NOTE shares*: 50,000
Holding of NOTE options**: 165,000
Phone: +46 (0)70 244 05 46
E-mail: fredrik.schultz@note.eu
* Includes contingent holdings by closely affiliated natural and legal persons.
** Warrants.

AUDITORS

At the AGM 2019, Öhrlings PricewaterhouseCoopers AB (PwC) was appointed auditor of NOTE AB. PwC has appointed Niklas Renström as auditor in charge. The next scheduled election of auditors is in 2020.

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NIKLAS RENSTRÖM

Authorized auditor PwC