Alligo () : BoD remuneration report 2023

Remuneration report 2023

On behalf of the Board of Directors, Alligo AB (publ) presents the remuneration report for the financial year 2023. The report describes how the remuneration guidelines adopted at the Annual General Meeting in May 2022 have been applied in the company.

Introduction

This report describes how guidelines for remuneration for senior management of Alligo AB, adopted by the Annual General Meeting, were applied during 2023. The guidelines are described on pages 69- 71 of Alligo's Annual Report for 2023. The report has been prepared in accordance with the Swedish Companies Act and the Rules on Remuneration of the Board and Executive Management and on Incentive Programmes (the "Remuneration Rules") issued by the Stock Market Self-Regulation Committee.

The report contains information on total remuneration, including fixed and variable remuneration to Alligo's President & CEO as well as to the Executive Vice President (EVP) for the periods in which such a position has been appointed. The report also contains a summary of the company's share-based incentive programs.

In 2023, there have been no deviations from the enforcement of the remuneration guidelines approved by the General Meeting, however there is a deviation for the current CEO deriving from the time as CEO of Swedol AB (Remuneration report 2021). No compensation has been reclaimed. The auditor's statement on the company's compliance with the guidelines is available on the company's website.

Remuneration to the Board of Directors is not included in the remuneration report since such remuneration is decided annually by the Annual General Meeting. Remuneration to the Board of Directors is presented in note 5 on pages 99-100 of the 2023 Annual Report.

Further information on remuneration to senior executives in accordance with Chapter 5, Sections 40- 44 of the Annual Accounts Act can be found in note 5 on pages 99-100 of the Annual Report for 2023. Information on the work of the Remuneration Committee during 2023 can be found in the Corporate Governance Report on page 77 of the Annual Report for 2023.

Guidelines for remuneration to Alligo's senior management

Alligo has a clear strategy to achieve profitable growth and create shareholder value. A prerequisite for the successful implementation of the company's business strategy and protection of its long-term interests, including its sustainability, is that the company is able to recruit and retain qualified personnel. Hence, it is necessary that the company offers competitive remuneration.

The remuneration guidelines enable the company to offer senior management a competitive total remuneration. For further information about the company's strategy, refer to Alligo's website.

SID 1 (5)

The terms of remuneration are to emphasize "performance-based rewards" and vary depending on individual performance and the Group's results. The total remuneration package for Group management is to reflect market conditions and may comprise the following components: fixed salary, variable salary, pension benefits and other benefits.

Remuneration 2023 in brief

The table below summarises the various forms of remuneration as set out in the guidelines.

			Outcome 2023, SEK
	Purpose and link to strategy	Construction in brief	thousand
Fixed salary	The successful	The fixed salary shall be competitive and reflect	Company
	implementation of the	the requirements placed on the role in terms of	management
	company's business strategy	qualifications, responsibility, complexity and the	CEO: 5,719
	and the protection of the	manner in which it contributes to achieving the
	company's long-term	business targets. The fixed salary shall also reflect
	interests, including its	the performance of the senior executive and thus
	sustainability, requires the	be individual and differentiated.
	company to be able to
	recruit and retain qualified
	personnel.

Variable	The objectives of the variable
remuneration	remuneration link the
	remuneration of senior
	management to the
	company's performance,
	promoting the
	implementation of the
	company's business strategy,
	long-term value creation and
	competitiveness.

The variable remuneration shall be linked to one	Company
or more predetermined and measurable criteria	management
set by the Board of Directors, which may be	CEO: 2,148
financial, such as the growth of the Group's
and/or the individual area of responsibility's
results, profitability and cash flow, or non-
financial, such as customer satisfaction, quality,
environment, health and safety. Any variable
remuneration may consist of an annual cash
salary, up to a maximum of 50 per cent of the
fixed annual salary.

Other	Provide competitive benefits.	Other benefits, including, inter alia, company car,	Company
benefits		travel concessions, extra healthcare insurance	management
		and occupational health services, shall be in line	CEO: 8
		with market conditions and only constitute a
		limited share of total remuneration. Premiums
		and other costs pursuant to such benefits shall
		amount to not more than 10 percent of the fixed
		annual salary in total.
Pension	Offer long-term security and	The President & CEO and other senior executives	Company
	competitive pensions.	are covered by a defined-contribution pension,	management
		whose size depends on the outcome of the	CEO: 1,548
		pension insurance policies taken out. Premiums
		for the defined-contribution pension must not
		exceed 40 per cent of the fixed annual salary.

Total remuneration to CEO in 2023 (SEK thousand)

Name of senior		Variable	Other			Total	Percentage	Percentage
executive (position)	Fixed salary	remuneration	benefits	Pension		remuneration	fixed1	variable2
Clein Johansson	5,719	2,148	8	1,548		9,423		77%	23%
Ullenvik (CEO)

1. Percentage refers to fixed remuneration and pension divided by total remuneration.
2. Percentage refers to variable remuneration divided by total remuneration.

SID 2 (5)

One-time bonus

The Annual General Meeting held on 11 May 2022 resolved, based on a proposal from the Board of Directors, that Group management has the possibility to receive a one-time cash bonus in addition to any fixed and variable salary that may be received in accordance with the remuneration guidelines. The purpose of the bonus was to facilitate integration within the Group between Swedol and Tools. The bonus would correspond to a maximum of one (1) annual salary (based on fixed salary) and be measured against the specific EBITA targets for 2022/2023 and other parameters determined by the Board of Directors.

The one-time bonus for the CEO Clein Johansson Ullenvik for 2023, amounted to 31.6 per cent of the fixed salary, corresponding to SEK 1,630,560.

Share-based incentive programmes

The 2022 Annual General Meeting resolved on a new call option programme. The aim of the programmes was to offer benefits in the form of long-term incentives linked to the company's share price in order to attract, motivate and retain senior management. The programmes were designed to align the incentives to the participants with the shareholders' interests.

Call option programme 2022/2025

The Annual General Meeting 2022 resolved on a call option programme comprising of a maximum of 185,000 options corresponding to approximately 0.36 per cent of the total number of shares and approximately 0.33 per cent of the total number of votes in the company. The programme is directed to key personnel in senior positions and provides the opportunity to acquire call options at market price for Class B shares repurchased by Alligo. After two years, a subsidy shall be paid corresponding to the premium paid for each call option (before tax), provided that the option holder's employment with the group is not terminated and that the call options are not divested before that time. The subsidy is amortised as an accrued expense until the employment condition is fulfilled. The subsidy is also subject to social security contributions. Each call option entitles its holder to acquire one (1) repurchased Class B share in the company on three occasions: 1) during the period starting 2 June 2025 up to and including 16 June 2025, 2) during the period starting 18 August 2025 up to and including 1 September 2025, and 3) during the period starting 3 November 2025 up to and including 17 November 2025. The exercise price has been calculated at SEK 129.30 based on 120 per cent of the volume-weighted average of the price paid during the period 12 May to 25 May 2022. If the market price at the time the call option is exercised exceeds SEK 194.00, the exercise price shall be increased on a krona for krona basis by the amount exceeding SEK 194.00. The option premium has been calculated at SEK 7.82 and performed by an independent third party according to the recognised Black & Scholes model.

185,000 call options have been granted and acquired by key management personnel on market terms. Of these, 80,000 were acquired by the group's CEO and CFO and 105,000 by other key employees. The option premium paid amounts to a total of SEK 1.4 million.

A summary of the 2022/2025 call option programme for senior management is shown in the following table.

SID 3 (5)

		Number of				Exercise	Number of
Name of senior		call options	Purchase		Time of	price,	call options
executive (position)	Allocation	allocated	price, SEK	Exercise period3	exercise	SEK	at year-end
Clein Johansson	June 2022	50,000	7.82	2025-06-02--16,	-	129.30	50,000
Ullenvik (CEO)				2025-08-18-
				09-01 resp.
				2025-11-03--17

Application of performance criteria for variable remuneration

The performance criteria for the President & CEO's variable remuneration have been determined to deliver on the company's strategy and profitability performance and to encourage behaviour that is in accordance with the long-term interests of the company. The non-financial performance criteria also contribute to sustainability adaptations and the company's values. In the selection of performance criteria for variable remuneration to the President & CEO, both the strategic and long-term objectives and the short-term business priorities for the 2023 financial year have been taken into account.

Name of senior executive			Maximum	Achievement	Remuneration
(position)	Description of criteria	Weighing	outcome	of targets	outcome
	EBITA	80%	SEK 2,064,000	25%	SEK 517,505
Clein Johansson Ullenvik (CEO)	EBITA/WC	20%	SEK 516,000	0%	-
	EBITA, one-time bonus	-	SEK 5,160,000	31.6%	SEK 1,630,560

Comparative information on changes in remuneration and Group performance

Comparative information on the total remuneration and variable remuneration (in italics) of the company's CEO and the development of the Group's results as well as the average remuneration of the company's employees is presented on the following page.

3 Refers to the exercise period under the offer in June 2022.

SID 4 (5)

Remuneration in SEK thousand (change in %) per financial year4

							2020 (9 months)	2019/2020
Name of senior	2023		2022	2021	1 Apr 2020-	1 Apr 2019-
executive (position)		1 Jan-31 Dec	1 Jan-31 Dec	1 Jan-31 Dec	31 Dec 2020	31 Mar 2020
Clein Johansson		9,423 (1%)			9,346 (601%)	1,334
Ullenvik (CEO)				-	-
	2,148 (11%)			1,935 (450%)	352
As of 1 Nov, 2021
Ulf Lilius (CEO)		-			-	6,826 (6%)	6,422 (-5%)	6,753 (2%)
1 Jan-31 Oct 2021				1,850 (23%)	1,500 (148%)	604 (-20%)
Niklas Enmark (EVP)		-			-	3,705 (2%)	3,649 (-16%)	4,338 (3%)
1 Jan-31 Oct 2021						848 (13%)	750 (1%)	746 (-11%)
Variable remuneration is indicated in italics

Group result

			Financial year
SEK million	2023	2022	2021	2020 (9 months)	2019/2020
	1 Jan-31 Dec	1 Jan-31 Dec	1 Jan-31 Dec	1 Apr 2020-	1 Apr 2019-
				31 Dec 2020	31 Mar 2020
Operating profit	748	669	427	226	303
Operating profit,
change compared to	11.8%	56.7%	88.9%	-25.4%	0.3%
previous financial year

Average compensation to employees converted to full-time equivalents5

					Financial year
						2020 (9 months)	2019/2020
SEK thousand		2023		2022	2021	1 Apr 2020-	1 Apr 2019-
		1 Jan-31 Dec		1 Jan-31 Dec	1 Jan-31 Dec	31 Dec 2020	31 Mar 2020
Remuneration to		600		627	595	423	606
Group employees
Change		-4.3%		5.4%	40.7%	-30.2%	-1.0%

This document is in all respect a translation of the Swedish original. In the event of any differences between this translation and the Swedish original, the latter shall prevail.

1. Remuneration includes fixed remuneration, variable remuneration, other benefits and pension.
2. Group employees excluding CEO, EVP and Group Management. Remuneration is based on fixed salary and other benefits, including pension.

SID 5 (5)