Executive Remuneration

Executive Remuneration

Executive Remuneration

The guiding principles for remuneration are found in the Remuneration Guidelines, which are set out below. These Guidelines were adopted by the Annual General Meeting on 18 May 2021.

Below is also information on MTG’s outstanding long-term incentive plans.

Further information on remuneration can be found in the 2020 Remuneration Report (please see further down below) and in the 2020 Annual Report (which is available here).

Remuneration Guidelines

Guidelines for determining remuneration for MTG’s CEO and other senior executives in the MTG Group (the “Senior Executives”), as well as members of the Board if they are remunerated outside their directorship, adopted by MTG’s Annual General Meeting on 18 May 2021.

These Remuneration Guidelines shall be applied to employment agreements entered into after the 2021 Annual General Meeting and to changes made to existing agreements thereafter. These guidelines shall be in force until new guidelines are adopted by the General Meeting. The intention is for the guidelines to remain in place for up to four years, the Board will however propose new guidelines if material changes of the guidelines becomes necessary. These guidelines do not apply to any remuneration decided or approved by the General Meeting such as long-term share or share price related incentive plans and ordinary Board remuneration.

The Board has established a Remuneration Committee. In order to avoid any conflict of interest, the Remuneration Committee consist only of members that are independent of the company and its management. The remuneration is managed through well-defined processes ensuring that no individual is involved in the decision-making process related to their own remuneration. The Remuneration Committee’s tasks include preparing the Board’s decision to propose guidelines for executive remuneration. The Board shall prepare a proposal for new guidelines at least every fourth year and submit it to the Annual General Meeting. The guidelines shall be in force until new guidelines are adopted by the General Meeting. The Remuneration Committee shall also monitor and evaluate programs for variable remuneration to the executive management, the application of the guidelines for executive remuneration as well as the current remuneration structures and compensation levels in the company.
MTG is a strategic operational and investment company that combines investment expertise with hands-on operational engagement. MTG’s Vision is to become the home of gaming and esports entertainment. MTG’s Mission is to grow the gaming and esports ecosystems and benefit the communities through relevant products and storytelling with craftmanship, innovation and sustainability at its center. MTG’s Strategy is to drive profitability and organic growth in group companies and invest in high-potential gaming and esport businesses that complement MTG’s brands and products.

A prerequisite for the successful implementation of the company’s business strategy and safeguarding of its long-term interests, including its sustainability, is that the company can recruit and retain qualified personnel. To this end, it is necessary that the company offers competitive remuneration. The remuneration structures shall encourage employees to do their utmost to safeguard shareholders’ interests and thereby the company’s sustainability and long-term value creation.

More information on MTG’s strategy can be found on the MTG’s website and in the most recent annual report, www.mtg.com.

Remuneration principles

The Remuneration Guidelines provides a structure that aligns remuneration with the successful delivery of our long-term strategy: to drive profitability and organic growth in our portfolio companies and invest in high-potential gaming and esport business. The guidelines set guiding principles for selection of LTIP performance measures and LTIP performance periods to ensure the link to the shareholder value and as such the guidelines contributes to the long-term success and value creation of the company. The guidelines provides for the ability to set relevant financial and non-financial STI measures including governance, social and environmental, further contributing to alignment between the guidelines and sustainability as well as the company values, which are Bold, Smart, Engaging and Fun. The performance measures for the STI are determined by the Remuneration Committee based on the business priorities for the year. Each year stretch objectives are set in the light of the Company’s annual business plan and the operating environment. The guidelines provides incentives for the CEO and the other Senior Executives to drive innovative and performance based culture which contributes to achieving our company mission. The remuneration of the CEO and the other Senior Executives consist of base salary, short-term and long-term incentives, pension and other benefits.

Base salary

Attracts and retains the CEO and the other Senior Executives taking into account of their individual responsibilities, their personal contribution, the size of role and business complexity. The base salary for the CEO and the other Senior Executives shall be competitive. The base salary is reviewed annually, typically with effect from 1 January. The Remuneration Committee looks at pay practices in selected comparison groups, the benchmarks are conducted through independent advisors. Decisions on salary also take into account the performance and experience of the individual, changes in the size and scope of the role, and the level of salary awards across the business.

Short Term Incentive (STI)

Drives and rewards achievement of our stretching annual financial, strategic, operational and sustainability targets aligned with our business strategy. The STI is capped at 125% of the individual’s base salary. Performance measures and weightings are reviewed at the start of each year to take account of current business plans and to ensure they continue to support the short-term business strategy. These measures can vary from year to year to reflect business priorities and typically the measures includes a balance of the Company’s financial performance measures (for example profitability, revenue and cash flow measures) and non-financial measures (for example key operational, strategic, environmental, social, governance or other sustainability related measures) provided that in any given year majority of weighting will be on financial performance measures. Through the combination of the financial measures with the non-financial measures the STI will contribute to the long-term interests and sustainability of the company. Details of actual performance measures applied for each year and how they support the business strategy will be disclosed in the annual Remuneration Report. Performance against targets is monitored and determined based on assessment of performance level versus each target level. The Board reviews the performance and determines the extent to which each of the targets have been achieved, to determine the final pay-out level. As regards to the financial criteria, the evaluation shall be based on the latest financial information made public by MTG. The Board has discretion to adjust the formulaic STI outcome in changed circumstances to improve the alignment of pay with value creation for shareholders, and to ensure the outcome is a fair reflection of the company´s performance, and will take into account any relevant environmental, social, and governance (ESG) matters when determining outcomes. To further strengthen the connection to the shareholders’ interest and the company’s long-term value creation, payment of part of the STI may be deferred and delivered in MTG shares and such shares to be retained for an agreed period of time. Awards are subject to claw-back in cases where the final payment is made based on performance that is proven to be manifestly misstated. The Board may decide to reclaim whole or a part of the final payment. In its decision to reclaim any amount the Board may, in its sole discretion, reduce the amount to be reclaimed based on the employee’s lack of direct involvement in the performance and reporting of performance which has been manifestly misstated.

Extraordinary arrangements

By way of exception, additional one-off arrangements can be made on a case by case basis when deemed necessary, under the condition that such extraordinary arrangement is made for recruitment or retention purposes, subject to Board approval. Each such arrangement shall be capped at, and never exceed, 200% of the individual’s annual base salary.

Long Term Incentive Programme (LTIP)

The Board may offer LTIPs in order to attract and retain key individuals, as well as to share the success of the company’s growth. The LTIPs that can be offered are 3-4 –year plans which are share or share price related programmes (such as performance share plans and/or warrant plans), which will be put forward to the General Meeting to resolve on – irrespective of these guidelines. Share and share price related LTIPs shall be structured to ensure a long-term commitment to the development of MTG and with the intention that the Senior Executives shall have a significant long-term shareholding in MTG. The outcome shall be linked to certain pre-determined performance criteria, based on MTG’s share price and value growth. The Board may also offer Senior Executives, that have a direct impact on the value creation in MTG’s verticals and subsidiaries, participation in local Management Incentive Programs, i.e. cash based LTIPs linked to pre-determined levels for the value creation of a specific vertical or subsidiary within MTG. The maximum outcome shall have a predetermined cap.

More information regarding the ongoing LTIPs, including the criteria which the outcome depend on, can be found on MTG’s website and in the most recent annual report, www.mtg.com.

Pension

Provides competitive and appropriate retirement arrangement in the context of the market practice in the applicable country of the executives’ employment or residence and total remuneration. The pension arrangements shall be provided in the form of a defined contribution or as a cash allowance and shall amount to no more than 20% of the individual’s annual base salary.

Other benefits

Provides competitive level of benefits and supports recruitment and retention. Other benefits may include car allowance, company car and housing. The combined value of these benefits shall normally constitute a limited value in relation to the total remuneration package and shall correspond to market practice. Additional benefits may be received by Senior Executives in certain circumstances such as relocation or international assignment, taking into account the overall purpose of these guidelines.

Termination of employment and severance pay

In general, executive contracts have indefinite duration. The notice period can be up to one year for either party and non-compete restrictions can go up to one year. The Company may require the individual to continue to fulfil current duties during the notice period or may assign garden leave.

In case of termination of a Senior Executive’s employment agreement, the STI is evaluated and paid pro-rata for the period up to the termination date where applicable. It should be noted that these cases are handled according to the discretionary right of the Board.

Salary and employment conditions for employees

In the preparation of the Board’s proposal for these guidelines, salary and employment conditions for employees of the company have been taken into account by including information on the employee’s total income, the components of the remuneration and increase and growth rate over time, in the Board‘s basis of decision when evaluating whether the guidelines and the limitations se out herein are reasonable.

Deviations from the Guidelines

The Board 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. The Remuneration Committee’s tasks include preparing the Board’s resolutions in remuneration-related matters. This includes any resolutions to deviate from the guidelines.

Remuneration Reports
2020 Remuneration Report

Share based long-term incentive plans

MTG has the following outstanding share based long-term incentive programs:

LTIP 2021

The extraordinary general meeting on 21 January 2021 approved a long-term incentive plan with approximately 17 participants. The participants are required to hold shares in MTG equivalent to at least 5 per cent and up to 20 per cent of the gross annual base salary of each participant, either shares already held or shares purchased on the market in connection with the notification to participate in LTIP 2021.

For each share held, the participant receives rights to receive class B shares free of charge (the “Share Rights”), which shall vest depending on the fulfilment of pre-determined performance criteria (see below) and the maximum number of Share Rights that may be granted under the LTIP 2021 is 363,331 (prior to any recalculation), representing approximately 0.38 per cent of the outstanding shares and 0.36 per cent of the outstanding votes.

The Share Rights shall vest free of charge after a three-year period, ending on 31 December 2023 and the number of Share Rights that vest shall be determined based on the annual total shareholder return (i.e., the value increase plus (i) any dividends paid during such period and (ii) the theoretical value of any subscription rights allotted to shareholders in any rights issue, including the rights issue resolved on by the board of directors on 17 December 2020) of class B shares at the end of the vesting period (the “TSR”). The TSR shall be determined based on an initial share price equivalent to the VWAP during the period from 1 October 2020 to 31 December 2020, and a final share price equivalent to the VWAP during the period from 1 October 2023 to 31 December 2023 (plus (i) any dividends paid during such period and (ii) the theoretical value of any subscription rights allotted to shareholders in any rights issue, including the rights issue resolved on by the board of directors on 17 December 2020). If the TSR is less than 8 per cent per annum (the “Threshold TSR”) no Share Rights shall vest. If the TSR is equal to the Threshold TSR (i.e., 8 per cent per annum), 25 per cent of the Share Rights shall vest. If the TSR is equivalent to 35 per cent per annum or more (the “Maximum TSR”), 100 per cent of the Share Rights shall vest. If the TSR is between the Threshold TSR and the Maximum TSR, the Share Rights shall vest in a linear proportion.

LTIP 2019

The 2019 long-term incentive program, approved by the 2019 Annual General meeting, comprised both a performance share plan and warrants.
The targets for the performance share plan 2019 were not met so there are no outcome on the performance share plan.

The warrant plan is directed towards the CEO , senior executives and key personnel. The warrants issued entitle to a maximum of 434,667
Class B shares. Each warrant entitles the holder to, during a period from 15 June 2022 to 15 June 2023, subscribe to one new Class B
share at 115 percent of the average volume-weighted share price during the period 9 May 2019 and 22 May 2019. MTG subsidized the participants’
purchase of warrants by granting the participants a cash compensation corresponding to between 25-75 per cent (depending on the participant’s
category), net after taxes, of the warrants purchased by the participant. Such subsidy will be paid out at the time of purchase of the warrants.
If the participant leaves MTG during the three year vesting period for the subsidy, MTG may under certain circumstances reclaim the subsidy,
in whole or in part in proportion to the term of the vesting period. The participants’ maximum profit are capped at 4.0 times the share price of
SEK 117.24, the average volume-weighted share price during the five last trading days in March 2019.