Long-term incentive program 2021 (LTIP 2021)

Eltel AB's Annual General Meeting 2021 adopted a long-term incentive program (LTIP 2021) for senior executives and other key individuals in order to encourage a personal long-term ownership in the company, and in order to increase and strengthen the potential for recruiting, retaining and motivating such senior executives and key individuals.

Participants will, after a qualifying period and assuming an investment of their own in Eltel Shares, be given the opportunity to, without consideration, receive allotments of Eltel Shares (defined below) and call options issued by the company. The number of allotted Eltel Shares and call options will depend on the number of Eltel Shares that they have purchased themselves and on the fulfilment of certain performance requirements. Eltel Shares are ordinary shares in the company (“Eltel Shares”). The term of LTIP 2021 is more than three years.

Basic features of LTIP 2021

The LTIP 2021 will be directed towards senior executives and other key individuals in the company. The participants are based in Sweden and other countries where the Eltel Group is active. Participation in the LTIP 2021 assumes that the participant acquires and locks Eltel Shares into LTIP 2021 (“Savings Shares”). Savings Shares shall be newly acquired Eltel Shares.

For each acquired Savings Share, the participant shall be entitled to, after a certain qualification period (defined below), provided continued employment and dependent on the fulfilment of certain performance requirements for the financial years 2021-2023, receive allotment of Eltel Shares (”Performance Shares”) and call options issued by the company (“Performance Options”).

The performance requirements are linked to the company's Compound Annual Growth Rate of Revenue (“CAGR of Revenue”), Average Earnings Margin Before Interest, Taxes and Amortization (“Average EBITA Margin”) and Total Shareholder Return (“TSR”). The participant shall not pay any consideration for the allotted Performance Shares and Performance Options. Performance Shares are Eltel Shares and Performance Options are call options issued by the company.

The exercise price when the participant exercises the Performance Option shall correspond to 120 percent of the volume-weighted average price according to Nasdaq Stockholm’s official price list for the Eltel Share during the first ten trading days that directly follows the Annual General Meeting 2021 (the “Purchase Price”). Customary recalculation of the Purchase Price as well as of the number of Eltel Shares that each Performance Option corresponds to may occur if the share capital or the number of shares in the company changes due to bonus issue, split or reverse split, redemption of shares, certain new issues and other similar corporate events, and if certain other measures are taken.

Participation in LTIP 2021

LTIP 2021 is directed towards not more than twelve senior executives and other key individuals, divided into three categories of participants:

Category

Maximum number of Savings Shares per person

Maximum number of Performance Shares per Savings share

Maximum number of Performance Options per Savings share

A) CEO,
maximum 1 person

11,500

8.0x

8.0x

B) Group Management Team,
maximum 7 persons

3,700

8.0x

8.0x

C) Other key individuals,
maximum 4 persons
2,800 8.0x 8.0x

To be eligible to participate in LTIP 2021, the participant must invest in Savings Shares for an amount corresponding to approximately five (5)% of the participant’s fixed base salary for the current year, however, not exceeding the number of Savings Shares that the participant can tie up within the scope of LTIP 2021 according to the above.

Allotment of Performance Shares and Performance Options

Allotment of Performance Shares and Performance Options within LTIP 2021 will be made during a limited period of time following the latter of the date of (i) the presentation of the first quarterly report for the first quarter of 2024, and (ii) the first record date for dividends decided by the Annual General Meeting 2024. The period up to this date is referred to as the qualification period (vesting period).

In order for the participant to be entitled to receive allotment of Performance Shares and Performance Options, it is assumed that the participant remains an employee of the Eltel Group during the full qualification period up until allotment, that the participant, during this period, has kept all Savings Shares, and that the CAGR of Revenue, Average EBITA Margin and TSR performance requirements are fulfilled.

The participant can receive allotment of a maximum of eight (8) Performance Shares and eight (8) Performance Options per Savings Share. Regarding the maximum number of Performance Shares and Performance Options that can be allotted per Savings Share, the following shall apply. Twenty (20)% of the Performance Shares and twenty (20) percent of the Performance Options shall be linked to the fulfilment of the performance requirement regarding CAGR of Revenue, thirty (30)% of the Performance Shares and thirty (30)% of the Performance Options shall be linked to the fulfilment of the performance requirement regarding Average EBITA Margin, and fifty (50) percent of the Performance Shares and fifty (50)% of the Performance Options shall be linked to the fulfilment of the performance requirement regarding TSR. No allotment of Performance Shares or Performance Options linked to a certain performance requirement will take place below the minimum level for such performance requirement. Full allotment of Performance Shares and Performance Options linked to a certain performance requirement will take place at or above the maximum level of such a performance requirement. The number of Performance Shares and Performance Options that can be allotted increases linearly between the minimum and maximum level for each performance requirement.

No allotment of Performance Shares or Performance Options shall take place unless the outcome of the performance requirement regarding TSR exceeds zero (0)%.