Europris

Remuneration Information • Mar 30, 2022

Europris remuneration report 2021

Content

1. Introduction
2. Total remuneration
3. Share-based remuneration
4. Comparative information

1. Introduction

Highlights summary

The financial year 2021 was very strong for Europris. Sales grew by 7.9 per cent and EBIT increased by 29.8 per cent, on top of the previous record year in 2020. The Covid-19 pandemic, with closed borders for much of 2020 and 2021, has affected group sales and profits positively. In recent years, the group has upgraded several important product categories, significantly expanded its customer base and strengthened its online presence with the acquisitions of Lekekassen and Lunehjem. Customers have never been happier, according to the annual market and customer survey (Mediacom brand tracker 2021) covering important parameters such as price perception, deals, product quality, shopping experience and service. For more information on 2021 developments, please see the annual report on the company's investor website (link: Europris ASA - Financials - Annual Reports).

* Adjusted EBIT for 2016-19. IFRS-16 was implemented from 2019.

Remuneration guidelines

The company's remuneration policy was adopted by the AGM on 5 May 2021 (link: Guidelines for remuneration of senior executives). The board has prepared this report in accordance with section 6- 16b of the Norwegian Public Limited Companies Act. No changes have been made to the remuneration policy and current guidelines apply until new ones are adopted by the AGM, which must take place at least every four years – in other words, by the AGM in 2025 at the latest. No deviations have occurred from the principles applicable in the remuneration policy. Included in this report are members of the board and senior executives defined as the CEO and CFO, which provides a representative overview of the development for all senior executives. For more details on the total remuneration to all senior executives, please see note 7 in the annual report for 2021.

The guidelines are designed to ensure that the company is able to recruit, develop and retain senior executives with relevant competence and expertise. Remuneration should be motivational and in line with market practice. It comprises a fixed and a variable amount, with variable remuneration consisting of a short-term bonus (variable annually) and a long-term bonus (variable over multiple years). The long-term bonus strengthens alignment between the interests of shareholders and senior executives, since future pay-outs will be adjusted in line with the development of the share price. Variable remuneration is not included in the basis for calculating holiday pay and pension. The maximum pay-out of total variable remuneration in any one year is 12 months of gross pay.

Remuneration for the board of directors is not part of the remuneration policy, but is determined by the AGM. This remuneration consists of fixed and pre-determined amounts, as approved annually by the AGM.

In accordance with the remuneration guidelines, the board may annually approve a restricted share programme for directors and senior executives. This programme has been implemented to strengthen an aligned ownership culture between shareholders, the board and senior executives at limited cost to the company.

Information on shareholder voting

Not applicable, since this is the first remuneration report produced by the company.

Changes to the CEO and CFO positions

Espen Eldal became acting CEO on 27 March 2020 and was appointed CEO on 29 April 2020. Eldal was previously CFO for the company and acted as both CEO and CFO until Stina C Byre started work as the CFO on 18 January 2021.

Exercise of the right to reclaim

When a senior executive resigns, they no longer have a right to receive any previously awarded variable remuneration that has not already been paid. Nor will any new awards of variable remuneration take place.

2. Total remuneration

Directors

Remuneration of directors is determined annually by the AGM and consists of fixed amounts. In addition, directors are reimbursed for any expenses incurred on the company's behalf, such as costs related to travel. Included as remuneration of directors are fees paid during the financial year.

Figures in NOK 1,000			Remuneration
Name of director, positions	Year	Annual fee	committee	Audit Committee	Total fee	Comment
Tom Vidar Rygh, chair of the board, chair remuneration	2021	556	34	48	638
committee, member audit committee	2020	540	33	47	620
Bente Sollid Storehaug, director, member remuneration	2021	283	23		306
committee	2020	275	23		298
		283			283	Member audit com.
Claus Juel-Jensen, director, member audit committee	2020	275			275	from July 2021
Hege Bømark, director, chair audit committee	2021	283		74	357
	2020	275		72	347
		283	23		306
Tone Fintland, director, member remuneration committee	2020	275	23		298
Karl Svensson, director	2021	283			283
	2020	275			275
Pål Wibe, director	2021	283			283	Served since 2020

Table 2: Remuneration of directors

CEO and CFO

Remuneration to the CEO and CFO consists of fixed and variable remuneration. In addition, any expenses incurred on the company's behalf is reimbursed.

Table 3: Remuneration of the CEO and CFO

			1			2	3	4	5		6
Figures in NOK 1,000				Fringe	One-year	Multi-year	Extra	Pension	Total
Name, position	Year	Base salary	Fees	benefits	variable	variable	ordinary	expense	remuner	fixed	variable	Comment
	2021	3 727	0	0	1 335	2 962	0	129	8 154	47 %	53 %	CFO until 26.03.20, acting CEO as of
Espen Eldal, CEO	2020	3 018	0	9	1 247	2 625	0	124	7 023	45 %	55 %	27.03.20 and CEO as of 29.04.20
Stina Charlene Byre, CFO	2021	1 548	0	135	416	900	0	123	3 123	58 %	42 %	Began 18.01.21
	2020	na	na	na	na	na	na	na	na	na	na

Base salary

Base salary consists of fixed basic salary, including holiday pay, paid during the financial year.

Fees

No fees have been paid during the financial year.

Fringe benefits

Fixed car allowance paid during the financial year is included in fringe benefits.

Extraordinary items

No extraordinary items have been paid during the financial year.

Pension expense

The company has established an occupational pension scheme in accordance with the Norwegian Occupational Pensions Act. In addition comes an individual pension scheme based on the annual base salary. All pension paid during the financial year is included as pension expense.

One-year variable

The short-term bonus has a maximum ceiling of 4.5 months of gross pay for the CEO and three months of gross pay for the CFO. Seventy-five per cent of the performance criteria are common and based on the development of EBIT. Fifty per cent of this part of the bonus is awarded if the budget is met, with a linear increase to 100 per cent if the budget is exceeded by five per cent. The remaining twenty-five per cent of the short-term bonus is based on performance with respect to individual goals. The CEO and CFO had two individual goals in the bonus agreement for 2021.

The short-term bonus will be paid in full after the AGM has approved the annual accounts and the annual report for the relevant financial year.

The short-term bonus included as remuneration is the amount awarded for the financial year.

Table 4: Performance related to short-term bonus

		Relative weighting of the	Award for performance	Total award outcome for
Short-term bonus for CEO and CFO, 2021		performance criteria	criteria	performance criteria
	Common criteria: EBIT	75.0%	100.0%	75.0%
Espen Eldal, CEO	Individual criteria	25.0%	70.0%	17.5%
	Total	100.0%		92.5%
	Common criteria: EBIT	75.0%	100.0%	75.0%
Stina Charlene Byre,	Individual criteria	25.0%	70.0%	17.5%
CFO	Total	100.0%		92.5%

Multi-year variable

The long-term bonus was introduced for the 2019 financial year, and did not exist prior to this. The only criterion for the long-term bonus is EBIT development for the company. The bonus will be awarded if EBIT for the relevant financial year exceeds the previous year's EBIT after adjustment for the consumer price index, with a linear increase to 100 per cent when EBIT reaches 105 per cent of the budgeted figure.

This part of the bonus scheme has a ceiling of up to nine months of gross pay for the CEO and up to six months for the CFO. The long-term bonus is awarded after the AGM has approved the annual accounts and the annual report for the relevant financial year. Twenty-five per cent is paid 12 months after the award, then 25 per cent at 24 months afterwards and 50 per cent at 36 months afterwards. Payment is made at the same time as short-term bonus is paid.

Actual payments are adjusted in accordance with the development of the share price, measured as the volume-weighted average share price during the week after the AGM, adjusted for dividend paid. From 2019 to 2020, the change in the share price (based on the principle described above) was an increase of 52.1 per cent.

The first award of long-term bonus was for the financial year 2019, from which the first pay-out fell due in 2021. Long-term bonus included as remuneration for the financial year is based on two elements: i) the amount awarded for the financial year and ii) any adjustments to previously awarded bonus owing to changes in the share price (as described above) affecting the amount to be paid in the financial year.

Long-term bonus for CEO and CFO, 2021		NOK 1,000
Espen Eldal, CEO	Awarded long-term bonus for 2021 (payable 2023, 2024 and 2025)	2 888
	Adjusted pay-out in 2021 on previous awards from changes in share price	74
	Total	2 962
	Awarded long-term bonus for 2021 (payable 2023, 2024 and 2025)	900
Stina Charlene Byre, CFO	Adjusted pay-out in 2021 on previous awards from changes in share price	n/a
	Total	900

Table 5: Performance related to long-term bonus

3. Share-based remuneration

Directors and senior executives may participate in a restricted share programme for an investment amount limited to NOK 500,000. This programme is subject to annual approval by the board. Shares acquired through this programme are subject to a two-year lock-up period. Each restricted share will be issued at a purchase price corresponding to the volume-weighted average price of the company's shares on the Oslo Stock Exchange during the 10 trading days before the award, adjusted for the reduction in value from the two-year transfer restriction. The reduced value applicable to the programme run in 2021 was 19 per cent.

The number of restricted shares to be issued or sold was calculated by dividing the relevant amount invested by the calculated purchase price, rounded down to the nearest whole share. Share purchases are borne by the participants, and the company does not provide credit or financing.

The programme was run for the first time in 2021 and completed on 16 September 2021. The market price for the shares, i.e., the volume weighted average for the 10 trading days before the allocation

date (2-15 September 2021), was NOK 61.51. The purchase price, adjusted for the reduced value from the restrictions, was NOK 49.82.

Table 6: Investment in company shares

Share program 2021	Investment	Market value of	Number of
Name, position	amount	shares	shares acquired	Comment
Tom Vidar Rygh, chair	500 000	617 234	10 035
Karl Svensson, director	500 000	617 234	10 035
Hege Bømark, director	405 000	499 999	8 129
Tone Fintland, director	400 000	493 787	8 028
Claus Juel-Jensen, director	130 000	160 475	2 609
Espen Eldal, CEO	500 000	617 234	10 035	Acquired through Knipen AS
Stina Charlene Byre, CFO	500 000	617 234	10 035

In addition to the programme described above, the company ran a share programme for all employees in 2021. Employees were offered to purchase shares for a market value of up to NOK 30,000 at 25 per cent discount. The CEO and CFO participated in this programme; both purchased shares for a market value of NOK 30,000 at a cost of NOK 22,500.

4. Comparative information

A significant improvement in EBIT was achieved by the group during 2020 and 2021. The share price also developed strongly in these two years, which is reflected in the variable remuneration. Longterm variable remuneration was introduced for the financial year 2019.

Table 7: Comparative table over remuneration and company financial performance
--------------------------------------------------------------------------------	--

	2017 vs	2018 vs	2019 vs	2020 vs	2021 vs
Annual change in remuneration, per cent	2016	2017	2018	2019	2020	Comment
Directors
Tom Vidar Rygh	0.0%	5.6%	0.0%	2.9%	3.0%	Began 2015
Bente Sollid Storehaug	0.0%	14.6%	0.0%	3.8%	2.9%	Began 2015
Hege Bømark	0.0%	6.3%	0.0%	3.6%	2.9%	Began 2015
Claus Juel-Jensen	n/a	n/a	0.0%	3.8%	2.9%	Began 2017
Tone Fintland	n/a	n/a	0.0%	3.8%	2.9%	Began 2017
Karl Svensson	n/a	n/a	n/a	n/a	2.9%	Began 2019
Pål Wibe	n/a	n/a	n/a	n/a	n/a	Began 2020
CEO and CFO
Espen Eldal,					16.0%	CFO until 26.03.20, acting CEO as of
Executive CEO	-8.3%	6.8%	34.2%	132.1%		27.03.20 and CEO as of 29.04.20
Stina Charlene Byre,					n/a	Began 18.01.21
Executive CFO	n/a	n/a	n/a	n/a
Pål Wibe,
Executive CEO	-13.1%	9.0%	7.4%	n/a	n/a	Ceased 01.04.20
Company performance
EBIT*	-5.7%	3.1%	7.3%	88.7%	29.8%	Basis for short and long term bonus
Share price development	n/a	n/a	n/a	n/a	52.1%	Basis for adjustment for long-term
						bonus, applicable as of 2021
Full-time equivalent employee (FTE)
Average remuneration FTE**	2.3%	0.3%	7.0%	4.8%	1.9%

* Adjusted EBIT for 2016-19. IFRS-16 was implemented from 2019.

** Pay expenses and pension expenses, divided by average number of FTEs during the respective financial years.

BDO AS Munkedamsveien 45 Postboks 1704 Vika 0121 Oslo

To the General Meeting of Europris ASA

Independent auditor's assurance report on report on salary and other remuneration to directors

Adverse opinion

We have performed an assurance engagement to obtain reasonable assurance that Europris ASA's report on salary and other remuneration to directors (the remuneration report) for the financial year ended 31 December 2021 has been prepared in accordance with section 6-16 b of the Norwegian Public Limited Liability Companies Act and the accompanying regulation.

In our opinion, because of the significance of the matter described in the "Basis for adverse opinion" paragraph, the remuneration report has not been prepared, in accordance with section 6-16 b of the Norwegian Public Limited Liability Companies Act and the accompanying regulation.

Basis for adverse opinion

The board of directors have included members of the board and senior executives defined as the CEO and CFO in the remuneration report. In our opinion, significantly more executives meet the definition of senior executives, and thus, should have been included in the remuneration report. The company's remuneration guidelines define eight senior executives.

Board of directors' responsibilities

The board of directors is responsible for the preparation of the remuneration report and that it contains the information required in section 6-16 b of the Norwegian Public Limited Liability Companies Act and the accompanying regulation and for such internal control as the board of directors determines is necessary for the preparation of a remuneration report that is free from material misstatements, whether due to fraud or error.

Our independence and quality control

We are independent of the company as required by laws and regulations and the International Ethics Standards Board for Accountants' Code of International Ethics for Professional Accountants (including International Independence Standards) (IESBA Code), and we have fulfilled our other ethical responsibilities in accordance with these requirements. Our firm applies International Standard on Quality Control 1 (ISQC 1) and accordingly maintains a comprehensive system of quality control including documented policies and procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements.

Independent auditor's assurance report on salary and other remuneration to directors Europris ASA - 2021 page 1 of 2

Auditor's responsibilities

Our responsibility is to express an opinion on whether the remuneration report contains the information required in section 6-16 b of the Norwegian Public Limited Liability Companies Act and the accompanying regulation and that the information in the remuneration report is free from material misstatements. We conducted our work in accordance with the International Standard for Assurance Engagements (ISAE) 3000 - "Assurance engagements other than audits or reviews of historical financial information".

We obtained an understanding of the remuneration policy approved by the general meeting. Our procedures included obtaining an understanding of the internal control relevant to the preparation of the remuneration report in order to design procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company's internal control. Further we performed procedures to ensure completeness and accuracy of the information provided in the remuneration report, including whether it contains the information required by the law and accompanying regulation. We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Bdo AS

Roger Telle-Hansen State Authorised Public Accountant (This document is signed electronically)

Independent auditor's assurance report on report on salary and other remuneration to directors Europris ASA - 2021 page 2 of 2

BDO AS, a Norwegian liability company, is a member of BD intentional Limited by guarantee, and forms part of the international BDO
network of independent member fims. The Reg

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