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. A shareholder who wish to attend at the General Meeting, personally or through a proxy, shall notify the Company no later than the day specified in the notice to attend the general 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: Political economist and mathematician.
Main occupation: Professional investor.
Other directorships: None.
Work experience: Former mathematics teacher, entrpreneur in the entertainment industry and cultural producer active within regional adult education provider ABF Stockholm.
Holding of NOTE shares*: 7,080,611
Independent in relation to the company and management: Yes.
Independent in relation to the company's major shareholders: No.
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ANNA BELFRAGE

Board member
Elected: 2019.
Born: 1962.
Education: M.Sc. (Econ.).
Main occupation: Directorships and financial consultant.
Other directorships: Board member at Ellevio AB, Isofol AB, Mycronic AB and Serneke AB.
Work experience: Broad-based experience of accounting and manufacturing. 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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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: Board member at 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.
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 consultant 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 caps. Broad experience as a finance journalist, most recently as Editor-in-Chief at finance channel EFN.
Holding of NOTE shares*: 8,041
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: Sales Manager & Vice President at NOTE Norrtelje.
Holding of NOTE shares*: 700
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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 30 September 2020, including contingent holdings by closely affiliated natural and legal persons and is reported in accordance with the Market Abuse Regulation.
** 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 five 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 2019

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 six 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.

After the AGM 2019, the members of the Audit Committee are Anna Belfrage and Charlotte Stjerngren. Prior to this, the members were Anna Belfrage and Kjell-Åke Andersson.

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 2019, 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  Johan Hagberg and Bahare Hederstierna.

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 2019.

After an evaluation, the Remuneration Committee concluded that: 

  • NOTE is following the guidelines for remunerating senior management that the AGM 2019 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 2019 for group management, subsidiary presidents and other key individuals amounted to SEK 2.6 million.

REMUNERATIONS

Guidelines for remunerating senior managers
Senior managers means the Group management and the Board of Directors. The guidelines also apply to prospective remuneration to Board members in addition to the board fee. The guidelines apply to remuneration agreed to after the Annual General Meeting 2020 and to amendments to already agreed remunerations which are made thereafter. These guidelines do not apply to remuneration resolved by the General Meeting.

The AGM 2020 decided on the following guidelines for remunerating senior managers:

The guidelines’ promotion of the Company’s business, long-term interests and sustainability
In order to successfully act on the market and safeguard the Company’s long-term interests, including its sustainability, it is required that NOTE is able to recruit and retain qualified employees. The total remuneration to the Company’s employees shall therefore be marketable and competitive and be related to responsibility and competence.

Forms of remuneration, etc.
The remuneration may consist of the following components: fixed salary, variable remuneration in accordance with separate agreements, pension and other benefits. The General Meeting may in addition – irrespective of these guidelines – resolve on, for instance share or share price-based remuneration.

Fixed salary
The fixed salary shall consist of fixed cash salary and shall be reviewed yearly. The fixed salary shall reflect the demands of the position held regarding competence, responsibility, complexity and in which way the remuneration promotes the business targets. The fixed salary shall also reflect the performance of the executive and is therefore individual and differentiated.

Variable remuneration
In addition to the fixed salary, the Chief Executive Officer and other senior executives may, in accordance with separate agreements, receive variable remuneration upon fulfilment of the predetermined criteria. The variable remuneration shall be linked to one or several predetermined and measurable targets resolved by the Board of Directors. The outcome shall be linked to the fulfilment of targets of financial nature, such as earnings performance, growth and cash-flow, and if necessary, individually measurable targets and qualitative targets.

The targets are linking the managements remuneration to the Company’s result and sustainability, and therefore promote the accomplishment of the Company’s business strategy, long term interests and competitiveness. The criteria shall be valid for one financial year at a time. The fulfillment of the criteria for remuneration shall be measured yearly. In regard to financial targets, the assessment shall be based on the latest financial information made public by the Company. The criteria for variable remuneration is formulated in a way that allows the Board to, in case of exceptional financial circumstances, limit or abstain from payment of variable remuneration if such a measure is deemed reasonable.

Additional variable cash remuneration may be paid under exceptional circumstances if to reward extraordinary work contributions beyond the persons ordinary assignment. A decision regarding such remuneration shall be resolved by the Board after proposal from the Remuneration Committee. The total variable remuneration during a calendar year may not amount to more than 100% of the fixed salary.

Pension
Pension benefits, including health insurance, for the Chief Executive Officer and other senior executives shall be fixed and the premiums may not exceed 30% of the fixed salary. Variable remuneration shall not contribute to the pension. 

Other benefits
Other benefits, which may include car benefit, travel benefit and health care insurance, shall be marketable and constitute a limited share of the total remuneration.

Termination of employment
The notice period for termination for the Chief Executive Officer and other senior executives shall be 6 months when termination is made by the senior executive. When termination is made by the Company, the notice period shall not exceed 12 months. When termination is made by the Company, dismissal pay and severance pay shall not all in all exceed an amount equal to 24 months fixed salary.

Additional remuneration may be paid for non-compete undertakings. Such remuneration shall compensate for loss of income and shall only be paid in so far as the previously employed executive is not entitled to severance pay. The remuneration may not exceed 100% of the fixed salary at the time of termination of employment and be paid during the time the non-compete undertaking applies, however not for more than 24 months following termination of employment.

Remuneration to the Board of Directors
The Board of Directors of NOTE, elected by the General Meeting, may under certain circumstances and during a limited period be paid for services within their field of competence which is not board work. The remuneration for such services (including services conducted by a company wholly owned by the Board member) shall be marketable and the services shall contribute to NOTE’s business and long-term interest, including sustainability.

Salary and employment conditions for employees
In the drafting process of the Board of Directors’ proposal of these guidelines, the salary and employment terms of the Company’s employees have been taken into account by the inclusion of information on the employees’ total income, the components of the remuneration and the remunerations increase and growth rate over time in the Remuneration Committee’s and the Board of Directors’ basis of decision when evaluating whether the guidelines and the limitations set out herein are reasonable.

Decision procedure
The Board of Directors has established a Remuneration Committee, which shall, among other tasks, prepare principles for remuneration to the senior executives and the Board of Directors’ proposal on guidelines for remuneration to senior executives. The Board of Directors shall prepare a proposal for new guidelines at least every fourth year and present it to the General Meeting. The guidelines shall be in force until new guidelines are adopted by a General Meeting.

The Remuneration Committee shall also monitor and evaluate programmes for variable remuneration for the executives, the application of the guidelines for salary and other remuneration to the executives as well as the current remuneration structures and compensation levels in the Company. Remuneration to the Chief Executive Officer shall be resolved by the Board of Directors within the scope of the approved guidelines after processing and recommendation from the Remuneration Committee. Remuneration to other senior executives shall be resolved by the Chief Executive Officer within the scope of the approved guidelines and after reconciliation with the Remuneration Committee. The Chief Executive Officer or other senior executives do not participate in the Board of Directors’ processing of, and resolutions regarding, remuneration-related matters if they are affected by such matters.

Deviations from the guidelines
The Board of Directors may temporarily resolve to deviate from the guidelines, in whole or in part, if in a specific case there is special cause for the deviation and a deviation is necessary to serve the Company’s long-term interests, including its sustainability, or to ensure the Company’s financial viability.

Regarding employments which are subject to other legislation than Swedish legislation, appropriate adjustments regarding pension benefits and other benefits may be done in order to comply with mandatory statues or local customs, whereby these guidelines’ comprehensive purpose shall be catered as far as practically possible.

Information regarding outstanding remunerations
On 10 June 2019, new rules were implemented in the Swedish Companies Act, inter alia regarding the wording of the guidelines for remuneration. According to the transitional provisions, the proposal for guidelines for remuneration shall contain information regarding outstanding remuneration. There are no outstanding remunerations to senior executives save for the obligation to continuously pay remuneration such as fixed salary, pension and other benefits. For further information regarding remuneration to senior executives, see note 8 in the Annual Report.

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.

 

GROUP MANAGEMENT

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JOHANNES LIND-WIDESTAM

Chief Executive Officer & President
Employed by NOTE since 2018
Holding of NOTE shares*: 126,500
Holding of NOTE options**: 465,000
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*: 10,000
Holding of NOTE options**: 0
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*: 200,000
Holding of NOTE options**: 65,000
Phone: +46 (0)70 977 06 86
E-mail: henrik.nygren@note.eu

KAMRAN SHAHABI

Director Business Development & Sales
Employed by NOTE since 2014
Other significant assignments: None
Holding of NOTE shares*: 1,000
Holding of NOTE options**: 0
Phone: +46 (0)70 279 59 87
E-mail: Kamran.Hugo.Shahabi@note.eu
* As per 30 September 2020, including contingent holdings by closely affiliated natural and legal persons and is reported in accordance with the Market Abuse Regulation.
** Warrants.

AUDITORS

At the AGM 2020, 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 2021.

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NIKLAS RENSTRÖM

Authorized auditor PwC