Remuneration

Guidelines for the remuneration of Senior Executives

The 2026 Annual General Meeting of Nolato AB, reg. no. 556080-4592, adopted the following guidelines for determining salary and other remuneration for board members and senior executives.. 

The senior executives are the CEO and other members of group management.

A review of the guidelines for compensation to senior executives has been conducted ahead of the 2026 Annual General Meeting, resulting in an adjustment of the maximum cap for variable cash compensation for the Company's CEO from 60 percent to 70 percent of base salary, and from 50 percent to 60 percent of base salary for other members of the Company's management. The increase is due to the addition of a bonus-qualifying parameter based on growth in relation to the strategic plan developed by management in 2025 for the next five years. Furthermore, new objectives have been introduced regarding the portion of variable compensation based on sustainability.

The guidelines will apply indefinitely, but no longer than until the Annual General Meeting in 2030. Once the guidelines are adopted at the 2026 Annual General Meeting, they will apply to compensation agreements and changes to already agreed compensation. These guidelines do not cover board fees and other compensation decided by the general meeting.

Promotion of the Company’s business strategy, long-term interests and sustainability

The Company's overarching goal is to create long-term growth and stable returns for shareholders. The Company develops and manufactures polymer products and systems for leading customers within well-defined market areas. Furthermore, the Company conducts targeted work in sustainability, which benefits society and the Group's business operations. The work on sustainable development is an integral part of the Company's growth strategy and value creation. The Company's sustainability efforts are systematic and goal-oriented, and the results are reported extensively in the Group's annual sustainability report. For more information about the Company's business strategy, long-term interests, and sustainability, please refer to the Company's website (www.nolato.com).

The implementation of the Company's business strategy, safeguarding of the Company's long-term interests, and meeting expectations for sustainable and responsible business practices require the Company to offer market-competitive and attractive compensation levels and employment conditions, based on the respective employment country, to retain and, when necessary, recruit members of management with the necessary competence and experience. These guidelines enable senior executives to be offered market-competitive total compensation.

The total compensation should be based on the position, individual performance, the Group's results, and should be market-competitive in the employment country.

Incentive programmes

The Company has established subscription option-based incentive programs for senior executives and other key individuals within the Group, implemented on market terms, to increase interest in the Company's operations and performance development, contribute to ownership engagement, and enhance participants' motivation and affiliation with the Company. Thus, the option programs have a clear connection to the Company's business strategy, safeguarding of the Company's long-term interests, and meeting expectations for sustainable and responsible business practices. Executives covered by the program may acquire options at market price. Subscription for B shares upon exercising subscription options may occur after three years.

These subscription option-based incentive programs, decided at the 2022 and 2025 Annual General Meetings, are further described in Note 26 of the 2025 annual report, available on the Company's website (www.nolato.com). 

Since share- and share-price-related incentive programs are decided by the general meeting, they are not covered by these guidelines.

Forms of compensation

The total compensation for members of management is based on position, individual performance, and Group results. Total compensation may consist of fixed base salary, variable compensation, pension, and other benefits. This also includes conditions for termination and severance pay. To ensure that the total compensation is market-competitive, it should be reviewed annually, taking into account the position, the Company's size, salary, and the individual's experience. Regardless of these guidelines, the general meeting may also decide on compensation related to shares or share prices.

Fixed base salary

The fixed base salary should be related to the relevant market and reflect the scope of responsibilities associated with the position. The fixed salary should form the foundation of the total compensation.

Variable compensation

Members of management may, in addition to the fixed base salary, receive variable cash compensation measured by financial key performance indicators and sustainability goals, based on how well objectives set by the board are achieved. Positive results after financing are required for variable cash compensation to be paid. The design of performance goals should promote the Company's business strategy, long-term interests, and sustainability. Annual variable cash compensation may amount to a maximum of 70 percent of the CEO's base salary and 60 percent of the base salary for other members of management.

The Company's sustainability efforts include five sustainability goals aimed at ensuring responsible supply chains, significantly reducing climate emissions, increasing the use of renewable materials, and improving workplace safety. The key performance indicators on which variable cash compensation is based include results, return on capital, sustainability, and growth. Variable compensation is calculated based on financial and other key performance indicators derived from auditor-reviewed reports. The Compensation Committee approves compensation for the CEO and other senior executives.

Participants in the Company's subscription option program are also offered variable cash compensation equivalent to half of the participant's paid option premium and the income tax incurred on the compensation, provided that employment within the Group is not terminated within three years. Variable cash compensation is not pensionable.

Pension benefits

Pension premiums for the CEO and other members of management are based on a defined contribution pension plan, designed according to levels and practices applicable in the country where the member of management is employed. Pension contributions may be made for members of management up to a maximum of 35 percent of the fixed annual salary, based on fixed annual salary and age. The retirement age for the CEO and other members of management is 65 years.

Other benefits

Other benefits, such as health insurance and company car benefits, may be provided in accordance with the terms applicable in the country where the member of management is employed. Such benefits should, however, be as minimal as possible and may amount to a maximum of 10 percent of the fixed annual salary unless mandatory regulations or established local practices require additional benefits.

Notice period and severance pay

Members of management should be offered conditions in accordance with the legislation and practices applicable in the country where they are employed. Upon termination of employment, the notice period may not exceed 24 months. Salary during the notice period and severance pay may not collectively exceed an amount equivalent to the fixed salary for 24 months. In the event of termination by the executive, the notice period may be no more than six months without entitlement to severance pay. During the notice period, members of management should be prohibited from engaging in competing activities.

If a board member performs work for the Company beyond board duties, consultancy fees and other compensation for such work may be paid following a special decision by the board. No compensation beyond the board fee decided by the general meeting is paid for board work.

Salary and terms of employment for employees

Salary and terms of employment for employees have been taken into account in the drafting of the Board’s proposal for these remuneration guidelines. In the evaluation of the fairness of the guidelines and the limitations that emanate from these the following has formed the basis for the Remuneration Committee’s and the Board’s decision-making:

1. Information on the employees’ total compensation.
2. Compensation components.
3. The increase in compensation and the rate of growth over time.

The development of the gap between the remuneration to the CEO and the deputy CEO and remuneration to other employees who are not senior executives will be disclosed in the remuneration report.

The decision-making process for adopting, reviewing and implementing the guidelines

At least every four years, the board must prepare proposals for new guidelines and present them for decision at the Annual General Meeting. Until new guidelines are adopted by the general meeting, the current guidelines will apply. The board has established a Compensation Committee, whose tasks include preparing the board's decisions on proposals for these guidelines, compensation principles, and other employment conditions for members of management. The Compensation Committee must also monitor and evaluate programs for variable compensation for management, the application of guidelines for compensation to senior executives, and prevailing compensation structures and levels within the Company. The chairman of the board may chair the committee. Other members of the committee must be independent in relation to the Company and management.

If the CEO or other members of the Company's management are affected by compensation-related matters, they do not participate in the board's deliberations and decisions regarding such matters.

If the Compensation Committee engages an external contractor for work, the committee must ensure that there is no conflict of interest with other assignments that the contractor may have for the Company or its management.

Temporary deviation from the guidelines

The board has the right to temporarily deviate from these guidelines in whole or in part if the board deems that there are special reasons justifying it in specific cases and such deviation is deemed necessary to safeguard the Company's long-term interests, meet expectations for sustainable and responsible business practices, or ensure the Company's financial viability. If the board makes such a deviation, it must be reported at the next Annual General Meeting. The Compensation Committee's tasks include preparing the board's decisions on any deviation from the guidelines.