Pexip : 2022 Remuneration Report

Background

Under Section 6-16 b of the Public Limited Liability Companies Act, Pexip Holding ASA ("Pexip" or "The Company") is required to present an annual report that provides an overview of the remuneration to the Board of Directors and Senior Executives covered by the guidelines defined in Section 6-16 a. This report meets the requirements set out in the Regulations on guidelines for and reporting of remuneration of executive personnel, and it also meets the requirements of notes to the annual accounts in Section 7-31b and 7-32 of the Norwegian Accounting Act.

Purpose

The Company's Remuneration Policy adopted at the Annual General Meeting (AGM) in May 2021 and updated and approved at the AGM in April 2022 provides the framework for the remuneration of the Board of Directors (the Board) in 2022. This describes in more detail our corporate governance process in relation to the Remuneration Policy. The policy is available on Pexip.com, in the Corporate Governance section.

The Remuneration Policy has been introduced to comply with the regulatory framework. The Policy is a continuation of the previous remuneration principles to ensure that:

• • The policy is formulated in a clear and understandable way and contributes to the Company's business strategy, long-term interests, and economic viability.

• • The policy contains comprehensible, exhaustive, and complete criteria for receiving variable remuneration in the form of bonuses, remuneration, services, etc.

• • The remuneration policy explains how the pay and employment conditions of employees of the Company were considered when establishing the remuneration policy.

• • The remuneration report will be reported on an annual basis to comply with these guidelines.

• • The policy contains comprehensible, exhaustive, and complete criteria for receiving variable remuneration.

• • Remuneration is compared regularly to benchmarks of general industry companies and European Software as a service company.

Overall Company Performance 2022 was a year of change for Pexip. The Board appointed a new CEO at the start of 2022, and the Board and Management concluded that the existing growth targets were not attainable. Considering this, the Company has executed on a new strategy to return to profitability. As a result, Pexip reduced its cost base substantially throughout the year to deliver on its profitability targets of NOK 100-150 million for 2023 and with a NOK 40-60 million free cash flow.

Pexip's subscription base measured in Annual Recurring Revenue (ARR) was USD 99.6 million at the end of 2022, down from USD 106.4 million at the end of 2021. The decline was in mainly legacy areas, in addition to a large customer not renewing its contract.

The company delivered revenues of NOK 867 million, up 8% year-on-year. EBITDA including restructuring costs was negative NOK 245 million.

Key Developments in Board Remuneration

At the AGM on April 21, 2022, all existing board members were re-elected. In addition, two new board members were elected to represent interests of the shareholders in the best possible manner. The number of board members increased from five to seven members.

Pexip's nomination committee performs an annual review of remuneration to the Board. The base remuneration for the Chair of the Board and the Board members has been changed in the period and changes approved on the AGM on April 21, 2022. Based on the experience from the Board's work in 2021 and comparisons withother comparable listed Norwegian companies the Board remuneration was suggested a moderate increase in 2022.

The remuneration for the Audit Committee was decided at the AGM in April 2022. The remuneration of the Chair of the Board amounted to NOK 650,000 for his role as Chair of the Board and for serving on the Company's Audit Committee.

The remuneration for the Board and the Board Committees was approved by the AGM in April 2022.

Key Developments in Executive Management Remuneration

At the end of 2020, the Board sought external expert advice on benchmarking the remuneration of the Senior Executives in the Company, and to give advice on the design on a long-term compensation model both for Senior Executives and other employees. This exercise benchmarked the remuneration to relevant peers, laying the foundation for the adjustments made in January 2021. It also led to changes in the long-term incentive model considering that Pexip is a listed company and the industry it operates in, which are reflected in Pexip's Remuneration Policy. The new program was implemented in May 2022. For Senior Executives excluding the CEO, fixed remuneration increased 56% to NOK 11.84 million (NOK 7.57 million), while total variable remuneration increased 42% to NOK 5.7 million (NOK 4.0 million).

The Board appointed a new CEO at the start of 2022, and he took over as CEO on April 20, 2022. For 2022 his fixed remuneration was NOK 2.28 million, and his variable remuneration was NOK 1.19 million.

Feedback from shareholders

The AGM approved the remuneration guidelines for senior executives, as well as the remuneration to the Board without significant input or comments. The remuneration of the Board is based on the Remuneration Policy adopted by the AGM. The policy is available on Pexip.com, in the Corporate Governance section.

Remuneration of the Board of Directors

Policy

The remuneration of the Board is based on the Remuneration Policy adopted by the AGM. The policy is available on Pexip.com, in the Corporate Governance section.

In 2022, the Board remuneration did not deviate from the Remuneration Policy.

Composition of Remuneration to the Board

The remuneration of the Board consists of the Base fee and the Board Committee fee.

Table 1 - Remuneration composition

Remuneration	Board of Directors
Directors' fee	Yes
Board committee fee	Yes
Variable remuneration	-
Pension	-
Expenses	-
Other benefits	-
Severance pay	-

Directors' fee

Base fee level for the period April 21, up to the annual general meeting in 2023 increased from NOK 500 000 to NOK 600 000 adopted at the annual general meeting in 2022.

Board committee fee:

Board committee fee level for the period April 21, up to the annual general meeting in 2023 increased from NOK 300 000 to NOK 350 000 adopted at the annual general meeting in 2022.

Social security tax

In 2022 social security taxes were paid based on rates set by the authorities and in line with the policy.

Table 2 - Board and committee fee levels 2022:

(Amounts in NOK 1,000).

Board	Audit Committee	Nomination Committee
(NOK)	(NOK)	(NOK)
Chair	600	125	50
Member	350	50	25

Table 3 below includes the total remuneration of each board member in 2022. The total remuneration for each board member supports the focus of the Board on corporate strategy and are contributing to the long-term interest of the Company.

Table 3 - Actual remuneration of the Board

Below is a specification of remuneration to the board of directors for year 2021 and 2022 (Amounts in NOK 1,000).

Name	Position	Fixed base	Fixed base	Fixed base fee 2022
fee 2021	fee 2022	paid in 20232)
Michel Sagen1)	Chair of the Board	500	544,2	150
Kjell Skappel	Vice chair of the Board	300	322,1	87,5
Per Haug Kogstad	Board member	300	322,1	87,5
Irene Kristiansen	Board member	300	322,1	87,5
Marianne Wergeland Jenssen	Board member	300	322,1	87,5
Asta Ellingsen Stenhagen	Board member	0	154,8	87,5
Phillip Austern	Board member	0	154,8	87,5

1) Chair of the board Michel Sagen was also a consultant for the company. Allowance related to work performed as a consultant amounted to NOK 655 thousand for the year 2022 (60% position from Jan to May and 20 % position from June to Sept). The consultant agreement ended in full on the 30th of Sept 2022. Allowance for the year 2021 was 1,257 thousand (80% position from Jan to Feb and 60 % position from March to Dec).

2) Remuneration for the period Oct to Dec 22 were paid in Jan 23.

Table 4 - Actual remuneration of the committees

Below is a specification of remuneration to the audit and nomination committee paid in year 2021 and 2022. Fixed base fee paid in 2021 relates to year 2020, and fixed base fee paid in 2022 relates to year 2021. The remuneration for year 2022 will be paid in 2023 and will be settled on the annual general meeting in April 2023.

(Amounts in NOK 1,000.)

Name	Position	Fixed base	Fixed base
fee 2021	fee 2022
Irene Kristiansen	Chair of the Audit committee	100	125
Kjell Skappel1)	Audit committee member	50	50
Michel Sagen	Audit committee member	50	50
Dag Kaada	Chair of the Nomination committee	40	50
Aril Resen	Nomination Committee member	20	25
Oddvar Fosse	Nomination Committee member	20	25

1) Kjell Skappel's position as an audit committee member ended following the AGM in April 2022. Marianne Wergeland Jenssen was selected to take over the position from year 2022.

Table 5 - Shareholdings by the board 2022

As of 31 December 2022, the board held shares in Pexip themselves or through companies controlled by them. The Board does not receive any share-based compensation.

Name	Position	At the end of year
Michel Sagen	Chair of the Board	1,563,064
Kjell Skappel	Vice-Chair of the Board	10,341,505
Per Haug Kogstad	Board member	4,059,775
Irene Kristiansen	Board member	150,000
Marianne Wergeland Jenssen	Board member	3,000
Asta Ellingsen Stenhagen	Board member	0
Phillip Austern	Board member	100,000