NWG Annual Report 2019 - EN NWG Annual Report 2019 - EN | Page 62

NWG // FINANCIAL INFORMATION employees, 588 (604) work in production. The production within the New Wave Group is attributable to AHEAD (embroidery), Cutter & Buck (embroidery), Dahetra, Kosta Boda, Orrefors, Paris Glove, Seger, Termo and Toppoint. There is no specifically appointed remuneration committee for the mana- gement of salary levels, pension benefits, incentive matters, and other terms of employment for the CEO as these issues are addressed by the Board as a whole. The terms of employment for other members of Group Management are decided on by the CEO and Chairman of the Board. Shown below are New Wave Group’s guidelines for compensation to senior executives. The guidelines have been applied during 2019 and up to the annual general meeting 2020: # # Remuneration to the Group CEO and other members of Group mana- gement comprises fixed salaries at competitive market rates # # There shall be no special fee for Board work in Group companies for senior executives # # Variable remunerations such as bonuses may be paid when this is justified in order to be able to recruit and maintain key staff so as to stimulate improvements in sales and profits as well as the work involved in achieving specific key figures set by the Board. Variable remunerations shall be based on predetermined, measureable criteria such as performance of New Wave Group or return on equity compared to fixed targets. The variable remuneration shall not exceed 50 % of the fixed remu- neration. Total yearly cost for the performance-based remuneration cannot exceed SEK 10 million # # The Board shall in respect of each financial year consider whether a share or share price related incentive program which covers the year in question shall be proposed to the AGM or not. The AGM makes the final decision regarding such incentive programs 062 // ANNUAL REPORT # # Pension benefits shall be equi- valent to an ITP plan or, for senior executives outside Sweden, pension benefits which are standard in the relevant country # # A mutual notice period of no more than six months and no severance pay shall apply for all senior execu- tives The Board may deviate from the proposed guidelines above in individual cases if there are specific reasons to do so. No deviations have been made from the guidelines during the current year. For the AGM 2020, the Board has prepared a proposal for new guidelines for compensation to senior executives. These guidelines can be found on pages 124-125. Related party transactions Lease agreements exist with related companies. Associated companies to the CEO have purchased merchandise and received compensation for consultancy services performed. In addition, there are transactions with related parties at immaterial values. All transactions have been made on market terms. For further description, see note 18. Risks and risk management New Wave Group’s international opera- tions mean that it is continuously exposed to various financial risks. The financial risks are interest rate risks, currency and liquidity and credit risks. In order to minimize the effect these risks may have on earnings, the Group has a financial risk policy. The Group’s policy is to have short fixed-rate interest periods, which means that fluctuating short-term interest rates have a rapid impact on the Group’s net interest income. A significant portion of New Wave Group’s sales are made in foreign currency (77%). The Group is exposed to changes in exchange rates in the future flows of payments related to firm commitments and to loans and investments in foreign currencies, i.e. transaction exposure. The Group’s financial statements are also affected by translating the results and net assets of foreign subsidiaries into SEK, i.e. translation exposure. Due to the relatively capital-intensive nature of its activities and its expansive growth strategy, New Wave Group has a need to secure its funding. For a growth group like New Wave Group it is essential to ensure that sufficient liquidity is avai- lable to fund future expansion and that there is a high degree of flexibility when acquisition opportunities occur. It is also important that a sound balance between equity and financing through debt is kept, as New Wave Group’s goal is to achieve an equity ratio in excess of 30 %. The Group is exposed to credit risk from its operating activities, primarily accounts receivable, and from its financing activities which include deposits at banks and financial institutions, currency futures and other financial instruments. The Group’s total exposure to credit risk amounted, at year-end, to SEK 1,625.8 (1,485.2) million. For a more extensive description of the Group’s risk exposures and risk mana- gement see note 17. Environment New Wave Group has a responsibility to ensure that our business operations, and the business operations of our suppliers, respect the legal provisions of different countries, as well as basic human rights and working conditions. New Wave Group works systematically with regard to supplier auditing, monitoring, and dialogue in order to ensure that our business operations are conducted in the most responsible manner possible with regard to people and environment. New Wave Group understands how our business operations are so closely