1. The basis for the company’s management remuneration policy
The Group Board of Schibsted ASA (“Schibsted”) views the employees as the Group’s most important resource and focuses on the Group offering competitive conditions in order to attract and retain skilled employees. The company’s human resource policy covers several factors, including the pay and pension conditions, working environment, various development programmes and more traditional employee benefits. The management remuneration policy is part of the company’s human resource policy.
2. Who is covered by the guidelines
The guidelines for determining management remuneration are decided on by the Group Board and apply to remuneration to senior executives. Schibsted’s Group CEO and Group management are directly covered by the guidelines. The guidelines are also normative for the remuneration of other senior managers and management groups in the Group’s core activities in Norway and abroad.
3. The period for which the declaration applies
The declaration applies for the coming financial year, cf section 6-16 a) (2) of the Norwegian Public Limited Companies Act. The Group Board will base its work on this declaration following discussions at the Annual General Meeting on 13 May 2011.
4. The main principles of the company’s management remuneration policy
The fixed salaries of the Group’s managers are perceived to be moderate. This also forms the basis of the Group Board’s assessment of various additional benefits as a natural part of the managers’ total remuneration.
The Group’s further growth and profitability depend on the employees’ efforts to ensure the continued development of the operations and improved profitability. To motivate managers to make efforts, variable pay and other incentive schemes are linked to factors that the managers themselves can influence. These schemes must appear reasonable in relation to the Group’s results and value creation for the shareholders that year.
4.1. Fixed salary
The fixed salary (gross annual salary before tax and the calculation of variable pay and other additional benefits) is to be an important part of the manager’s salary.
The increase in fixed salaries is expected to be moderate in 2011.
4.2. Directors’ fees
Employees do not receive directors’ fees for Board appointments they accept as part of their work for the Group. Employee representatives are not covered by this rule.
4.3. Benefits in kind and other special schemes
Senior executives will normally be given the benefits in kind that are normal in comparable positions, ie, telephone expenses, a laptop, free broadband connection and use, newspapers, a company car or car allowance and free parking. There are no special restrictions on the type of other benefits that can be agreed on.
The Group’s manager-loan scheme was wound up in 2006 and has not been offered to new managers since then. This scheme entitled the manager to a loan of NOK 400,000-800,000 in return for a charge on the borrower’s home of up to 100 per cent of the agreed market value. Schibsted ASA has established a guarantee for the entire loan portfolio, which is currently approximately NOK 5 million for the entire Group.
4.4. Variable pay and other incentive schemes
Guidelines have been established for the use of variable pay and other incentive schemes in the Group. The Group Board believes there is a need to be able to offer various incentive schemes in order to ensure long-term value creation and entrepreneurship. Such incentive schemes may consist of short-term incentives (normally annual) and long-term incentives (normally three-year).
4.4.1. Short-term incentives
Senior executives take part in an annual variable pay programme which is linked to the attainment of targets each year. Other Group employees may also take part in such schemes. The variable pay is limited to a maximum of six months’ salary for the Group CEO and varies between four to six months’ salary for other members of the Group management. For the top manager/editor in chief of larger units, the payment in one year is normally limited to four months’ salary. For other employees that take part in short-term incentive schemes, the limit is normally three months’ salary.
The variable pay is to be in two parts, one which is to be linked to financial criteria and another which is to be linked to strategic and operational criteria. These criteria form part of an overall assessment.
The payment of variable pay to senior executives for the 2010 financial year is shown in note  to the financial statements.
4.4.2. Long-term incentive schemes
The objective of having multi-year incentive schemes is to promote long-term value creation in the companies by contributing to key Group managers owning more of the Group so that the management and shareholders share the same interests.
Schibsted’s options programme was replaced by an annually revolving three-year performance-based share purchase programme (the ”LTI programme”) in 2010. The introduction of an LTI programme for a large group of managers means that we have common rules for the use of incentive schemes in much of the Group, both in and outside Norway. The LTI programme normally replaces other long-term incentive schemes in the subsidiaries once these programmes expire. The use of one LTI programme in a lot of the Group also leads to administrative savings and creates greater predictability and equal treatment in the Group.
The LTI programme provides settlement in Schibsted shares, mainly based on the performance and target attainment of the individual participant’s company during the period. The ownership of Schibsted shares promotes common goals and contributes to greater cooperation between the companies. The LTI programme covered up to 45 participants when it started in 2010 and it is proposed to expand it to cover up to 66 participants in 2011.
Main elements of the LTI programme:
The LTI programme is divided into three levels of participants. Level 1 is for the Group CEO, Level 2 is for members of the Group management, while Level 3 is for selected key personnel in the Group as well as the managers/management groups in important subsidiaries. For each level, the participants are given a defined “Basic Amount” that is calculated as a percentage of their fixed salary. The Group Board has stipulated guidelines for the percentage to be allocated to the various participant levels in order to ensure that managers are flexible and mobile while also taking into account individual pay differences and variations in the compensation schemes of companies in and outside Norway.
One third of the Basic Amount (the ”Share Purchase Amount”) is to be awarded when the programme starts in the form of Schibsted shares and this has a lock-in period until the programme expires (3 years). If a level 1 or 2 participant leaves the company during the lock-in period, shares that were bought for the Share Purchase Amount are to be handed back. No corresponding restriction applies to level 3 participants.
The remainder, i.e. 2/3 of the Basic Amount (the ”Performance Amount”) is linked to three-year performance criteria - profit targets. At the end of the three-year period, participants receive settlement in Schibsted shares based on target achievement, and the number of shares is calculated based on the average share price during the three-year term of the programme. The maximum settlement after three years will depend on the target achievement during the period. If the minimum target is not achieved during the three-year period, only the Share Purchase Amount will be paid at the end of the three-year programme.
Guidelines apply to the adjustment of the profit targets during the measurement period. The final outcome of the LTI programme is determined by the Group Board.
The Group Board determines the allocation to the CEO. Other allocations are determined by the CEO within the programme’s frameworks and in compliance with the Board’s allocation guidelines. The CEO’s allocations are reported to the Board. Allocations under the programme take place subject to the approval of the Annual General Meeting that year and thus normally by the end of the first half of the individual start-up year.
There is not normally any partial accrual if a participant leaves the company during the accrual period. An exception applies to the Share Purchase Amount for level 3 participants and in general if a participant leaves the company due to illness, death, early retirement, normal retirement or other special reasons. In such cases, the right to partial accrual is granted.
Level 1 and 2 participants will not be able to sell their shares in the market until further defined requirements as to the minimum ownership of Schibsted shares are met. The minimum ownership requirements vary depending on the allocation level. The minimum ownership requirements do not apply to level 3 participants.
The final cost of the LTI programme in an individual year depends, among other things, on the number of participants, the individual participant’s salary on the allocation date, share price developments and the target achievement during the three-year period. The cost of the LTI programme in 2011, with 66 participants, is estimated to be around NOK 39.6 million if the expected target achievement takes place, excluding employers’ contributions. If the maximum outcome is achieved, the cost is estimated to be around NOK 65.4 million (excluding employers’ contributions). If the targets achieved are under the minimum requirement, the programme costs will only relate to the Share Purchase Amount and equal around NOK 16 million (excluding employers’ contributions).
5. Pension schemes
The Group Board regularly assesses the Group’s pension solutions to ensure that these are reasonable and well balanced. The pension solutions are assessed in light of the overall compensation offered to Schibsted Group managers in the form of fixed salary, additional benefits, annual bonuses, participation in the LTI programme and other benefits. The overall compensation is to be competitive with that offered to managers in comparable jobs and functions in other companies with which the Schibsted Group wishes to compare itself.
The Group CEO and other senior executives in Norway are, like other employees, members of the Group’s company pension schemes, see note 26 to Schibsted’s consolidated financial statements.
The Group CEO and other senior executives in the Group have individual pension contracts which mainly entitle them to an early retirement pension from the age of 62 years (early retirement pension) and thereafter a lifelong retirement pension as well as a disability pension, child pension and spouse/cohabitant pension. The full retirement/disability pension normally equals 66 per cent of the fixed salary. The pension costs linked to senior executives in Schibsted ASA are stated in notes  and  to the financial statements.
The Group’s senior executives who are based in Sweden mainly have defined contribution pension insurances which ensure them benefits in line with those of Norwegian senior executives as from the age of 62 years. Guidelines have been established to determine contribution rates based on age and salary. The Group Board is of the opinion that the current schemes for senior executives based in Sweden are adapted to the market and these schemes will be continued without any major changes.
The pension level and solution for senior executives outside Norway and Sweden are to be viewed in connection with the individual manager’s overall salary and employment conditions and are intended to be comparable to the overall solution for managers in Norway and Sweden. Local rules linked to pension legislation, social security rights, tax, etc, are taken into account when shaping the individual pension contracts.
6. Termination payment schemes
The Group CEO is entitled to a termination payment equal to 18 months’ salary in addition to the six-month period of notice. The other Group management and senior executives are normally entitled to termination payments equal to 6-18 months’ salary, depending on their job level. A prohibition against competition and scaling down provisions normally apply during the termination payment period.
7. The effects on the company and shareholders of agreements entered into or amended in 2010
The Board believes that the guidelines for share-based remuneration promote value creation in the company/Group and that the effects on the company and shareholders are positive.
Oslo, 31 March 2011
Schibsted ASA's Board of Directors