Remuneration

IAR Systems Group AB strives for a remuneration system for the Chief Executive Officer, senior executives and other employees that is market-based and competitive. Remuneration to the Executive Management shall consist of fixed salary, variable salary, a long-term incentive scheme, pension and other customary benefits.

Fixed salary

Fixed salary shall be market-based and individually differentiated on the basis of the individual's role, performance, results and responsibilities. As a rule, fixed salary is adjusted once a year. That portion of salary consisting of health and fitness, company car and lunch benefits, etc., is assigned a value in SEK and comprises part of fixed salary.

Variable salary

Variable salary shall be proportionate to the responsibilities and powers of the individual in question. Variable salary is based on the attainment of predetermined performance targets in the areas of profit, sales and "soft" individual goals. The amount of variable salary is based on the number of established targets that are met by the individual and on actual outcomes in relation to these targets. The maximum amount of variable salary may not exceed 50 percent of fixed salary for the Chief Executive Officer and Chief Financial Officer, and 30 per cent of fixed salary for the subsidiary presidents. The Board Chairman receives no variable salary. In addition, the Board shall be authorized to award variable salary on a discretionary basis to senior executives or subsidiary presidents in excess of that described above when deemed appropriate. Such remuneration may not exceed 50 percent of fixed salary.

Pension

The Chief Executive Officer and Chief Financial Officer are covered by a pension plan corresponding to the cost of the ITP plan, but with a retirement age of 60 years that makes the premium higher than that for a retirement age of 65 years. Other employees are covered by a pension plan corresponding to the cost of the ITP plan.

Other terms of employment

Employment contracts can be terminated with a notice period of between three and six months. Monthly salary is payable throughout the entire notice period. If employment is terminated by the company, the Chief Executive Officer and Chief Financial Officer are entitled to a 12-month notice period and termination benefits corresponding to a maximum of six monthly salaries. If employment is terminated by the Chief Executive Officer or Chief Financial Officer, the notice period is six months. Aside from the above, there are no agreements for additional termination benefits for senior executives.

Remuneration to the CEO and CFO

Remuneration to the CEO and CFO consists of basic fixed salary, variable salary, other benefits and pension. The maximum amount of variable salary for the CEO and CFO is 50 percent of basic salary. Pension and other benefits are paid as part of the total remuneration package. In the event of termination on the part of the company, the CEO and CFO are entitled to a notice period of 12 months with full salary and additional termination benefits equal to six monthly salaries

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