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Prosafe SE
Remuneration Information • Mar 28, 2023
3718_10-k_2023-03-28_2a437507-0be8-4547-b51d-58117a1404d9.pdf
Remuneration Information
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DIRECTOR AND EXECUTIVE REMUNERATION REPORT
2022
1. INTRODUCTION
1.1 BACKGROUND
This remuneration report (the "Report") is prepared by the Board of Directors of Prosafe SE (the "company" or "Prosafe") in accordance with the Norwegian Public Limited Liability Companies Act (the "Companies Act") Section 6-16 b and associated regulations. The report contains information regarding remuneration to Board members and leading personnel of the company ("Executives") for the financial year of 2022 in line with the applicable requirements.
The company considers the Chief Executive Officer ("CEO") and the other members of the company's executive management team to be comprised by the term leading personnel under the Companies Act. These are the CEO, Chief Financial Officer ("CFO") and the Chief Operating Officer ("COO"). There are no employees who are members of the Board of Directors of the company and the company does not have a corporate assembly.
1.2 HIGHLIGHTS SUMMARY
In 2022, the DCEO&CFO, Stig H. Christiansen resigned and was replaced by Reese McNeel as the CFO in Prosafe's executive management team. The executive management team consists of Jesper Kragh Andresen, CEO, Reese McNeel, CFO and Ryan Duncan Stewart, COO. In 2022, the remuneration was consistent with the principles applied from previous years with the exception of the introduction of the long-term incentive program in the total remuneration package.
The total remuneration package for the executive management may consist of the following components:
-
- Gross annual salary
-
- Variable pay a) Short-term Incentive Program ('STIP') b) Long-term Incentive Program ('LTIP')
-
- Pension and insurance
-
- Other benefits
The variable pay of the executive management is performance related and linked to the operations and development of the company for the purpose of sustainable value creation for shareholders. It is aligned to the company's strategy, as set by the Board, and subject to the ethics and values of the company.
The variable pay consists of annual STIP and LTIP. The purpose of the STIP is to motivate for near term performance above expectations on relevant aspects of the company's business operations and development. The purpose of the LTIP is to ensure continuous focus on consistent value creation to align with shareholder interests.
The variable pay schemes shall be subject to reclaim provisions to enable the company to claim back variable pay amounts paid to an executive if it is identified that the performance assessment or the calculation of variable pay was based on incorrect information provided by the individual or if the executive has engaged in gross misconduct or exercised materially imprudent judgement that has caused, or could have caused, harm to the company. The Board may also reduce or eliminate STIP at its discretion.
a) Short-term Incentive Program – STIP
The company's STIP shall give executive management the possibility to earn variable pay upon meeting the targets set as part of the annual performance management process. The targets normally comprise financial, operational, commercial, and strategic elements which are key to driving the value of the company and shall be defined and used for the calculation of variable pay.
Approximately 70% of the total STIP is based on the achievement of targets and 30% is at the discretionary allocation of the Board of Directors.
Objectives in the performance management system are chosen to contribute to the sustainable development of the company and will typically include:
- Profitability and cash generation
- Key health and safety indicators
- Improvement of operational efficiency
- Emissions reduction initiatives
- Commercial outperformance
- Strategic initiatives
b) Long-term Incentive Program – LTIP
The LTIP is used to ensure long-term focus, consistent shareholder value creation and retention of executives.
Prosafe currently has a share option programme. To reduce the risk of an unrepresentative financial result, the dates of vesting, issuing and exercising of the options are spaced out over time.
The exercise of options in any given year is limited to such number as will represent a profit for the executive (market price less the subscription price at the date of exercise times the number of options exercised) of five times his/her fixed cash remuneration in such year.
1.3 OVERVIEW OF THE LAST FINANCIAL YEAR
During 2022, the company experienced high fleet activity, increased order backlog and improved financial results from its operations. This was driven by a strong oil price as well as increased maintenance activity by operators.
The Board's assessment is that the executive management have managed the company well through a year of increased activity and improved financial performance.
2. TOTAL REMUNERATION FOR DIRECTORS AND EXECUTIVES
2.1 INTRODUCTION
The tables in Section 2.2(a) and (b) below contain an overview of the total remuneration granted/awarded to the Board of Directors of Prosafe SE and executives for the current and previous financial year.
2.2(a) Remuneration of the Board of Directors
The remuneration of Board members is intended to reflect the respective members' responsibilities, expertise, time commitments and the complexities of the company's activities. In cases where Board members take on specific assignments for the company not part of their responsibilities as a Board member, the other Board members must be notified immediately and, if the assignment is of a substantial nature, this will explicitly be stated in the notes to the consolidated accounts. Details of the remuneration of individual Board members are available below and in the notes to the consolidated accounts. The Board members are not entitled to performance-related compensation and have not been granted share options.
Set out below are details of the fees paid to directors and shares in the Group held by Board of Directors for the reporting financial years 2022 and 2021.
| Name of Director and position | Year | Board Fees (USD 1,000) |
Audit Committee Fees (USD 1,000) |
Compensation Committee Fees (USD 1,000) |
Other Fees (USD 1,000) |
Total Remuneration (USD 1,000) |
No of shares owned |
|---|---|---|---|---|---|---|---|
| Glen Ole Rødland, Non-Executive Chairman | 2022 2021 |
110 110 |
4 10 |
NA NA |
1 2 |
115 122 |
100,000 0 |
| Alf C. Thorkildsen, Non-Executive Deputy Chairman | 2022 | 82 | NA | 10 | 2 | 94 | 0 |
| (Deputy Chairman from February 2022) | 2021 | 68 | NA | 10 | 0 | 78 | 0 |
| Birgit Aagaard-Svendsen, Non-Executive Director | 2022 | 68 | 20 | NA | 7 | 95 | 3 |
| 2021 | 68 | 20 | NA | 3 | 91 | 3 | |
| Nina Udnes Tronstad, Non-Executive Director | 2022 | 68 | NA | 15 | 2 | 85 | 6,000 |
| 2021 | 68 | NA | 15 | 1 | 84 | 0 | |
| Halvard Idland, Non-Executive Director (from May 2022) | 2022 | 44 | 6 | NA | 2 | 52 | 0 |
2.2(b) Remuneration of Executives for the reported financial year 2022 and 2021
| Name and position | Year | Fixed remuneration (USD 1,000) Base Salary |
Fixed remuneration (USD 1,000) Fringe benefits |
Variable remuneration (USD 1,000) One-year variable |
Variable remuneration (USD 1,000) Multi-year variable |
Extra ordinary items (USD 1,000) |
Pension expense (USD 1,000) |
Total Remuneration (USD 1,000) |
Proportion of fixed and variable remuneration |
|---|---|---|---|---|---|---|---|---|---|
| Jesper Kragh Andresen, CEO | 2022 | 357 | 19 | 95 | NA | NA | 43 | 514 | 82/18 |
| 2021 | 396 | 21 | 290 | NA | NA | 33 | 740 | 61/39 | |
| Stig H. Christiansen, DCEO & CFO | 2022 | 141 | 8 | 0 | NA | NA | 17 | 166 | 100/0 |
| (until May 2022) | 2021 | 376 | 21 | 284 | NA | NA | 31 | 712 | 60/40 |
| Reese McNeel, CFO (from August 2022) | 2022 | 131 | NA | 60 | NA | NA | 17 | 208 | 71/29 |
| Ryan Duncan Stewart, COO | 2022 | 342 | 2 | 95 | NA | NA | 34 | 473 | 80/20 |
| 2021 | 378 | 3 | 179 | NA | NA | 37 | 597 | 70/30 |
3. SHARE-BASED REMUNERATION
3.1 INTRODUCTION
The table in Section 3.2 contains an overview of the share options granted to the executives for 2022. No share options for executives were granted in 2021.
3.2 SHARE OPTIONS GRANTED OR OFFERED TO EXECUTIVES FOR THE REPORTED FINANCIAL YEAR
| Information regarding the reported financial year | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Opening balance |
During the year |
During the year |
Closing balance |
Closing balance |
|||||||
| The main conditions of share option plans | Share | Share | Share | ||||||||
| Name and position |
Specification of plan |
Award date |
Vesting date |
End of retention period |
Exercise period |
Exercise price of share |
options held at the beginning of the year |
Share options awarded |
Share options vested |
options awarded and unvested |
options subject to a retention period |
| Jesper Kragh Andresen CEO |
Option to purchase 150,000 shares in 3 tranches of 50,000 each |
11 May 2022 |
9 Feb 2024 9 Feb 2025 9 Feb 2026 |
9 Feb 2027 |
Options can be exercised after the vesting date |
NOK 83.0 |
– | 150,000 | – | 150,000 | – |
| Ryan Duncan Stewart COO |
Option to purchase 100,000 shares in 3 tranches of 33,333 each (Last tranche 33,334) |
11 May 2022 |
9 Feb 2024 9 Feb 2025 9 Feb 2026 |
9 Feb 2027 |
for each tranche and must be exercised one year |
NOK 83.0 |
– | 100,000 | – | 100,000 | – |
| Reese McNeel CFO |
Option to purchase 100,000 shares in 3 tranches of 33,333 each (Last tranche 33,334) |
19 Aug 2022 |
18 Aug 2024 18 Aug 2025 18 Aug 2026 |
18 Aug 2027 |
after the last vesting date tranche |
NOK 237.5* |
– | 100,000 | – | 100,000 | – |
* On 28 March 2023, the Board decided to amend the strike price of the 100,000 options for Reese McNeel to the market price of NOK 146.50. The new strike price corresponds to the volume-weighted average price (VWAP) of a share between the opening and closing of trading for the 10 trading days between 10 March and 23 March 2023.
4. ANY USE OF THE RIGHT TO RECLAIM VARIABLE REMUNERATION
This provision has not been applied in the years 2022 and 2021.
5. INFORMATION ON HOW THE REMUNERATION COMPLIES WITH THE REMUNERATION POLICY
With respect to the application of the performance criteria, information is provided in the table below.
| Name and position | Desciption of the criteria related to the remuneration component |
Relative weighting of the performance criteria |
Measured performance |
Actual award/ remuneration outcome |
|---|---|---|---|---|
| Jesper Kragh Andresen, CEO | Meeting Operational KPIs | 11% | 0% of max | 0 |
| Commercial Targets | 28% | 28% of max | 25,000 | |
| Improve Financing | 8% | 0% of max | 0 | |
| LT strategic projects | 31% | 0% of max | 0 | |
| Discretionary | 22% | 100% of max | 70,000 | |
| Ryan Duncan Stewart, COO | Meeting Operational KPIs | 24% | 0% of max | 0 |
| Commercial Targets | 44% | 25% of max | 25,000 | |
| Discretionary | 32% | 100% of max | 70,000 | |
| Reese McNeel, CFO | Meeting Operational KPIs | 12% | 0% of max | 0 |
| Improve Financing | 29% | 0% of max | 0 | |
| LT strategic projects | 25% | 0% of max | 0 | |
| Commercial Targets | 5% | 0% of max | 0 | |
| Discretionary | 29% | 100% of max | 60,000 |
6. DEROGATIONS AND DEVIATIONS FROM THE REMUNERATION POLICY AND FROM THE PROCEDURE FOR ITS IMPLEMENTATION
For the year 2022, there were no deviations from the remuneration policy.
7. COMPARATIVE INFORMATION ON THE CHANGE OF REMUNERATION AND COMPANY PERFORMANCE
The table below contains information on the annual change of remuneration of each individual director and executive, of the performance of the company and average remuneration on a full-time equivalent basis of employees of the company other than executives over the five most recent financial years.
| 2018 vs 2017 | 2019 vs 2018 | 2020 vs 2019 | 2021 vs 2020 | 2022 vs 2021 | ||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Annual change | USD 1,000 |
% | USD 1,000 |
% | USD 1,000 |
% | USD 1,000 |
% | USD 1,000 |
% |
| Director's and Executive's remuneration | ||||||||||
| Glen Ole Rødland | +7 | -6% | ||||||||
| Non-Executive Chairman | +5% | -16 | -11% | -8 | -6% | +2 | +2% | -7 | ||
| Alf C. Thorkildsen | ||||||||||
| Non-Executive Director (from May 2020) | NA1 | NA1 | NA1 | NA1 | +51 | N.M2 | +27 | N.M2 | +16 | +21% |
| and Deputy Chairman from (May 2021) | ||||||||||
| Birgit Aagaard-Svendsen | -6% | -8% | -2 | +4% | ||||||
| Non-Executive Director (from May 2017) | +29 | N.M2 | -6 | -8 | -2% | +4 | ||||
| Nina Udnes Tronstad | +1% | |||||||||
| Non-Executive Director (from May 2019) | NA1 | NA1 | +57 | N.M2 | +26 | N.M2 | +1 | +1% | +1 | |
| Halvard Idland | N.M2 | |||||||||
| Non-Executive Director (from May 2022) | NA1 | NA1 | NA1 | NA1 | NA1 | NA1 | NA1 | NA1 | +52 | |
| Jesper Kragh Andresen | 0% | +255 | +53% | -226 | ||||||
| CEO | +390 | +76% | -418 | -46% | -2 | -31% |
| 2018 vs 2017 2019 vs 2018 |
2020 vs 2019 | 2021 vs 2020 | 2022 vs 2021 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Annual change | USD 1,000 |
% | USD 1,000 |
% | USD 1,000 |
% | USD 1,000 |
% | USD 1,000 |
% |
| Director's and Executive's remuneration | ||||||||||
| Reese McNeel | ||||||||||
| CFO (from August 2022) | NA1 | NA1 | NA1 | NA1 | NA1 | NA1 | NA1 | NA1 | +208 | N.M2 |
| Ryan Duncan Stewart | -85 | -15% | +131 | +28% | -124 | -21% | ||||
| COO from August 2020 (CCO prior to that) | +188 | +50% | -11 | -2% | ||||||
| Stig H. Christiansen | -29 | -6% | +246 | +53% | -546 | N.M2 | ||||
| DCEO & CFO (left in May 2022) | +298 | +62% | -280 | -36% | ||||||
| Jens O. Berge | NA1 | NA1 | NA1 | |||||||
| Ex COO. End 2017 -April 2019 | +809 | N.M2 | -703 | N.M2 | NA1 | NA1 | NA1 | |||
| Company's performance (USD mil) | ||||||||||
| EBITDA | +44 | +36% | -70 | -42% | -107 | -110% | +34 | +362% | +37 | +147% |
| Profit / (loss) | +533 | +82% | -285 | -249% | -550 | -138% | +1,878 | +198% | -926 | -100% |
| Backlog | -53 | -15% | -133 | -46% | +8 | +5% | -10 | -6% | +198 | +130% |
1 N.A. denotes Not Applicable. No data is available as the individual director/executive is not in service for the period.
2 N.M. denotes Not Meaningful. The % change is not meaningful as the individual director/executive was not in service throughout the period resulting in incomparable data with the prior period.
Average remuneration on a full-time equivalent basis of onshore employees*
| Onshore full-time employees of the company | 2018 | 2019 | 2020 | 2021 | 2022 |
|---|---|---|---|---|---|
| Employees of the Group | \$95,193 | \$95,193 | \$90,551 | \$91,030 | \$98,991 |
* Focus on onshore employees, as offshore employees may be engaged short term depending on nature of contract.
8. INFORMATION ON SHAREHOLDER VOTE
Pursuant to the Companies Act Section 6-16 b (3), this report shall explain the outcome of the general meeting's advisory vote regarding the report on salary and other remuneration to leading personnel for the previous year. However, as the Remuneration Policy was first approved by the general meeting on 11 May 2022 and no report was prepared for 2020, this requirement is not required.
28 March 2023
The Board of Directors of Prosafe SE (original signed)
Glen Ole Rødland Alf C. Thorkildsen Non-executive Chairman Non-executive Deputy Chairman
Birgit Aagaard-Svendsen Nina Udnes Tronstad Non-executive Director Non-executive Director
Halvard Idland Jesper K. Andresen Non-executive Director Chief Executive Officer
www.prosafe.com
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