Höegh Autoliners

Remuneration report 2022

In accordance with the Norwegian Public Limited Liability Companies Act section 6-16 b, the Board of Directors of Höegh Autoliners ASA ("Höegh Autoliners " or the "Company") has prepared a report on the salary and other remuneration of the Corporate Executive Manage-ment, and the board fees and other compensation of the Board of Directors, awarded or due in 2022.

Introduction

The remuneration report provides an overview of remunera-tion of the Corporate Executive Management and the Board of Directors of the Company in 2022.

This is the first report prepared as the Company uplisted to the main market on the Oslo Stock Exchange in 2022. The 2023 remuneration policy will be voted for at the Annual General Meeting (AGM) to be held on 25 April 2023, pursuant to the Norwegian Public Limited Liability Companies Act section 6-16a and will be available onwww.hoeghautoliners.com/investors once approved.

The Annual General Meeting in 2022 approved the resolution for the Long Term Incentive Plan allocation for 2022 without comments. Minutes from Annual General meetings will be posted on our website.

The report is available on Höegh Autoliners' website for ten years from the time of publishing.

Highlights

2022 has been a strong year for Höegh Autoliners, both financially and operational. Total revenues for 2022 were USD 1 270 million, up 34% from 2021, mainly driven by the higher net freight rates in a tight capacity market.

EBITDA was USD 447 million and net profit after tax was USD 299 million. Following the refinancing of the mortgage debt in 2022, the Company has a strong balance sheet with net interest bearing debt of USD 379 million and a cash balance of USD 184 million. Cash flows from operating activities were USD 405 million. The Company has in 2022 distributed dividend to shareholders of total USD 35 million.

Total remuneration for the Board of Directors

Remuneration Principles for the Board

The Chair and other Board members receive remuneration as Board members and members of Board Committees. The remuneration is determined by the Annual General Meeting (AGM) on the basis of recommendation from the Nomination Committee. One of the Board members is employed by the Company with details outlined below. In the case of business travel on behalf of the board, the board mem-bers are entitled to travel compensation based on actual expenses.

The Chair has a standard employment contract with three months' notice period, but no other agreed compensation for termination or other changes. None of the other members of the Board have any agreements for compensation in the event of termination or changes in their positions as Board members. The remuneration of the Board members in 2022 has been according to the mandate from the AGM.

Compensation to the Board of Directors is not linked to the Com-pany's performance. The members of the board receive an annual fixed compensation and additional compensation for participation in any of the board committees. The Chair's salary is regulated by the increase in G/ basic amount which is increased in May of each year.

Board and Committee compensation paid

(USD in thousand)

Board of Directors

Audit Committee

Sustainability, Governance & Compensation Committee (SGC)

Total Board fees for 2022

2022

402

14 18

434

Below is the overview of the fixed compensation per position in NOK that was approved in the annual general meeting for the period between the annual general meetings in 2022 and 2023:

Sustainability, Governance &

Audit Committee

Compensation Committee

Chair

350 000

60 000

60 000

Member

350 000

40 000

40 000

Board of Directors

(NOK)

The total compensation to the Board of Directors for the period from 1 January 2022 to 31 December 2022 was USD 434 000 including sala-ry and proposed committee fees. This does not include the deputy member's remuneration which will be paid retrospectively after the annual general meeting in 2023 for the previous years' service, due to the nature of the role.

(USD in thousand)Leif O. Høegh - ChairMorten W. Høegh - Deputy ChairKasper Friis NilausKjersti AassJohanna HagelbergJan B. KjærvikMartine Vice Holter

TotalTotal compensationBase salary

190 40

130

Pension

17

40

40 40 42 42

434

130

17

* Leif O. Høegh and his immediate family indirectly owns 50% of Leif Höegh & Co AS.

Other benefitsBoard compensation

2

36 36

36

Committee compensation

4 4

4

36 36 36 36

2

Share ownership

45 758 920.5*

45 758 920.5**

4 4 6 6

252

32

** Morten W. Høegh and his immediate family are the principal beneficiaries of trusts which have an indirect ownership of 50% of Leif Höegh & Co AS.

-- - - -

Remuneration of the

current Executive team

Name

Position

(USD in thousand)

Andreas Enger

CEO

Benefits

The remuneration structure for the Executive team reflects the Com-pany's desire to offer a market-relevant total remuneration package with an appropriate balance between base salary and variable pay, which includes short and long-term incentive components. The remuneration of the Executive team includes a base salary, variable pay in the form of an annual cash bonus and a long-term incentive as well as other standard benefits.

The total target remuneration mix is as follows:

Target

0.37x

Long term incentives (value at award)

0.50x

Short term incentives (max pay-out)

1.00x

Base salary

Summary overview of compensation elements/terms

Peer group

The starting point for peer group selection is the Norwegian shipping industry. From there the individual Executive team member role is used to define the benchmarking. In selecting the appropriate peer companies, we consider role and incumbent specific factors such as scope, key drivers, skills and competences as well as Company factors such as size and complexity and location. The peer group benchmarking is updated each year by the Company's external benchmarking supplier.

Base salary

The base salary is the annual fixed pay which recognises market value and reflects the nature of the role in terms of scale, complexity and responsibility as well as the individual's experience, contribution, and sustained performance level. The base salary is reviewed by the CEO and the Board at least once a year.

Variable pay

The variable pay components are designed to drive an owner like decision making and to incentivise the delivery on the Company's strategic ambitions. The variable pay includes a short-term cash bonus plan and a long-term incentive plan. Both the short-term and long-term incentives are awarded annually.

Benefits are aligned to what the Company provides to the general workforce in Norway. Benefits include insurance coverage, defined contribution pension, flexi days, annual health checks, mobile phone, newspaper subscription, car parking, long service awards and other benefits according to the relevant benefit policies.

Contractual main terms

The Executive team members have leading contracts based on the standard conditions for Executives working under Norwegian em-ployment law, except for the Chief Strategy & Analytics Officer who has a UK contract as she works remotely from the UK.

The Executive team member can resign from the Company by giving 6 months' notice. In the event of termination by the Company, there is no severance payment included in the contract, except for the CEO who is entitled to severance pay equal to six months base salary as per the date of termination. Treatment of the short-term incentive bonus and the long term incentive plan awards in case of termination follows the leaver provision described under Short-term and Long-term incentive agreements. The Executive team members also have a non-competition clause, which restricts the individual to directly or indirectly participate in any competitive business for up to 12 months.

Compensation for the current Executive team in 2022

In 2022, the aggregate compensation to the Executive team was USD 3 318 thousand, compared to USD 3 413 thousand in 2021. In 2022, The CEO received Board fees as the Chair of Posten until May 2022 and the CS&AO received Board fees for being a member of the Höegh Eiendom Board. No other Executive team members received compensation from any other Company.

The base salary development for the Executive team in 2022 was in line with the salary development of regular employees in the relevant markets. The 2022 salary review spend for employees in Höegh Auto-liners was 4.2% and for the Executive team 5.2%. All salary increases for the Executive team and employees were effective from 1 January 2022. The slightly higher average increase for the Executive team was due to both Orstadius and Stubberud salaries being lifted beyond the salary increase budget in 2022, due to market rate adjustments based on the external benchmarking to align closer to the market median.

The Long-Term Incentive Plan (LTIP) that was introduced in Novem-ber 2021 is not included in the 2022 total compensation overview as the value of the bonus award will only be known after the 3-year vesting period. The first annual award vests in 2024.

In accordance with the Norwegian Public Limited Liability Companies Act, the Accounting Act, and the Norwegian Government's guidelines for executive compensation, and in line with the Norwegian Code of Practice, all aspects of compensation for the CEO and the Executive team are presented on the next page:

Per Øivind RosmoLise Duetoft

- since 11 October 2021

Sebjørn DahlOskar OrstadiusLaura Exner

- since 1 January 2021

Espen Stubberud

Total

CFOCS&AOCOOCSOCHR&COCT&CO

Currency exchange NOK to USD: 2022: 9.63

Fixed compensation

Total compensation

Base salaryBenefits/ Other remuneration

Pension

Bonus (STI)

Total compensation

% Fixed vs Variable

582

2

9

223

816

73% / 27%

301

2

107

141

551

74% / 26%

297

-

21

37

355

90% / 10%

302

2

108

141

553

75% / 25%

251

2

24

120

397

70% / 30%

165

2

9

78

254

69% / 31%

253

2

17

120

392

69% / 31%

2 151

12

295

860

3 318

The CS&AO is UK based and paid therefore in GBP. Currency exchange GBP to USD: 2022: 1.24

Short-term incentive

The Short-Term Incentive (STI) rewards the achievement of annual Company goals guided by the long-term business strategy. STI is en-tirely driven by business performance in the specific financial year.

The maximum bonus pay-out is up to 50% of the annual base salary. The CEO and Chair set the annual goals and measures for the CEO at the start of the financial year which are cascaded and shared by the Executive team. Metrics are selected to reflect the specific business goals for the financial year and include a combination of financial metrics, operating performance and other non-financial metrics. These goals are reviewed and approved by the Board. Following the end of the financial year, the Chair and the CEO review the performance of the CEO based on the agreed metrics and weightings per goal.

0 MONTHS

Performance concerns or long term absence

1- 3 MONTHS

Partial goal achievementFinancial measures and targets cannot be updated, however operational goals can be adjusted throughout the year to adapt to changing market conditions.

The overall evaluation for the CEO then guides the Executive team's overall STI bonus budget. The CEO has the mandate to make individual adjustments to individual bonuses using the baseline as guidance - i.e., if there has been significant and differentiated contri-bution and impact, a higher bonus can be awarded, and the opposite if there has been a significantly lower contribution and impact.

The bonus payment guidance would be based on the following criteria:

4 MONTHS

Full individual goal achievement

5- 6 MONTHS

Full individual goal achievement plus extraor-dinary achievements and/ or substantial shareholder value creation

Attachments

Disclaimer

Hoegh Autoliners ASA published this content on 31 March 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 31 March 2023 05:53:10 UTC.