Remuneration to senior executives
These guidelines for executive remuneration (the “Guidelines”) concern the remuneration for Sleep Cycle AB (publ)’s (“Sleep Cycle” or the “Company”) senior executives, including the CEO. The guidelines are forward-looking, i.e. they are applicable to remuneration agreed and amendments to remuneration already agreed after adoption of the guidelines by the annual general meeting 2021. These Guidelines do not apply to any remuneration decided or approved by the general meeting.
The Guidelines’ promotion of the Company’s business strategy, long-term interests and sustainability
In short, Sleep Cycle’s business strategy is to empower people to sleep better to improve global health. Sleep Cycle develops a sleep health solution and sleep tracking application. Sleep Cycle’s vision is to become the leading sleep health solution globally. For more information regarding the Company’s business strategy, please see www.sleepcycle.com. It is a prerequisite for the successful implementation of the Company’s business strategy and safeguarding of its long-term interests, including its sustainability, that the Company is able to recruit and retain qualified personnel and senior executives. To this end, it is necessary that the Company offers competitive remuneration. These Guidelines enable the Company to offer the senior executives a competitive total remuneration, while at the same time promoting the Company’s business strategy and long-term interests, including its sustainability. Long-term share and share price-related incentive plans have been implemented in the Company. Such plans have been resolved by the general meeting and are therefore excluded from these guidelines.1 The board of directors assesses that the possibility of a well-balanced fixed remuneration together with the possibility for variable remuneration as well as participation in possible share-related incentive plans resolved by the general meeting will enable Sleep Cycle to recruit and retain qualified personnel and senior executives by being a competitive employer.
Forms of compensation
The remuneration shall be on market terms and may consist of the following components: fixed cash salary, variable cash remuneration, pension benefits and other benefits. Additionally, the general meeting may resolve on share and share price-related remuneration.
The senior executives' fixed salary is revised each year and shall be competitive and based on the individual's competence, responsibility and performance.
Variable cash remuneration covered by these Guidelines shall aim at promoting the Company’s business strategy and long-term interests, including its sustainability. Variable cash remuneration shall be based on predetermined and measurable criteria, which can be financial or non-financial, shall directly or indirectly be linked to the achievement of Sleep Cycle’s business strategy and shall be measured over a period of one or several years. They may also be individualized, quantitative or qualitative objectives. Further variable cash remuneration may be awarded in extraordinary circumstances, either for the purpose of recruiting or retaining senior executives or as remuneration for extraordinary performance beyond the individual’s ordinary tasks, provided that such extraordinary circumstances are limited in time and only made on an individual basis. The total variable cash remuneration may amount to not more than 100 per cent of the senior executive’s fixed annual cash salary. To which extent the criteria for awarding variable cash remuneration have been satisfied shall be determined and evaluated when the measurement period has ended and, for financial objectives, be based on the latest financial information made public by the Company. The remuneration committee evaluates variable cash remuneration to the CEO and the CEO evaluates variable cash remuneration to other executives.
Pension and other customary benefits
Pension benefits shall be premium defined and are secured by premium payments to insurance companies. Variable cash remuneration shall not qualify for pension benefits. Other possible benefits shall be customary and facilitate the senior executive’s ability to perform its tasks, such as occupational health care, health insurance (Sw. sjukvårdsförsäkring), and company cars. The size of the pension premiums and other customary benefits may amount to not more than 30 percent of the fixed annual cash salary. Sleep Cycle may instead choose to provide exchange pension for salary (Sw. löneväxling), upon request by a senior executive, provided that the total cost for the Company remains largely the same. For any member of the group management not resident in Sweden, appropriate adjustments for compliance with mandatory rules or established local practice may be made, taking into account, to the extent possible, the overall purpose of these Guidelines.
Termination of employment
Upon termination of employment, the notice period may not exceed twelve months. Fixed cash salary during the notice period and severance pay may not together exceed an amount corresponding to the fixed cash salary for one year. When termination is made by the executive, the notice period may not exceed twelve months without the right to severance pay. Additionally, remuneration may be paid for non-compete undertakings. Such remuneration shall compensate for the loss of income and shall only be paid in so far as the previously employed executive is not entitled to severance pay. The remuneration shall amount to not more than 60 percent of the average monthly remuneration (both fixed and variable) paid by the Company during the 12 months preceding the time of termination of the employment and be paid during the time the non-compete undertaking applies, however not for more than 12 months following termination of employment for the senior executives.
Salary and employment conditions for employees
In the preparation of the board of directors’ proposal for these Guidelines, salary and employment conditions for employees of the Company have been taken into account by including information on the employees’ total income, the components of the remuneration and increase and growth rate over time.
Derogation from the Guidelines
The board of directors may temporarily resolve to derogate from the Guidelines if in a specific case there is special cause for the derogation and a derogation is necessary to serve the Company’s long-term interests, including its sustainability, or to ensure the Company’s financial viability.
The decision-making process to determine, review and implement the guidelines
The board of directors has established the remuneration committee. The remuneration committee’s tasks include preparing the board of directors’ decision to propose guidelines for executive remuneration. The board of directors shall prepare a proposal for new guidelines at least every fourth year and submit it to the general meeting. The Guidelines shall be in force until new guidelines are adopted by the general meeting. The remuneration committee shall also prepare resolutions on remuneration-related matters, including resolutions to derogate from the Guidelines, monitor and evaluate programs for variable remuneration for the executive management, the application of the Guidelines for executive remuneration as well as the current remuneration structures and compensation levels in the Company.