StrongPoint ASA (STRO) Earnings Call Transcript & Summary

Good morning, and welcome to StrongPoint's Ordinary General Meeting. My name is Morthen Johannessen, and I'm the Chairman of the Board. Due to the pandemic, we also, this year, have to do a streamed version of our General Meeting. I closed the meeting last year by saying that I was hoping to see you all in a standard conference room, and I can also repeat this year that I still hope to see you all in an ordinary conference room next year. I will chair the meeting, and when we have finished, Hilde, our CFO, will cosign the protocol and the minutes of the meeting. We have a rather standard agenda for the meeting. So I suggest that we just dive into it. Record of attending shareholders and votes. Sky high, I think, is all-time high, with 17,707,705, a lot of 7 in that votes that we received, which is almost 40% of the issued shares. So thanks a lot for all of you for sending it in. We have not received any other suggestions for the agenda. So I think we can view the notice and the agenda as approved. The annual accounts and the annual report for 2020. I think you have all read probably the annual report, and you have definitely seen the numbers before. With a 20% top line growth and a significant jump shift in the EBITDA, I think we had a very good year in 2020. And I would like to use the opportunity to thank all people, all the colleagues in StrongPoint's organization under the leadership of Jacob and Hilde for, I think, an exceptional good year. It's a very tough, I mean, operating circumstances also for us, but I think the result speaks for itself. It was very, very good. So I think we should all be very proud of those results. In terms of the annual report, if you haven't read it, I would strongly recommend that you do so, not only good numbers but it's also a lot of very relevant information in the report we made for 2020. So please take a look and read it. So no amendments on the accounts. So I think we can also view that one being approved at this meeting. Then it's a standard item that we should report on the director's report on corporate governance. It's not something that we're going to vote on. But I would rather just spend some time while you read the few exceptions that we have in StrongPoint, exceptions versus the Norwegian code of practice for corporate governance. I can tell you that we, during 2020, had 12 Board meetings, which I would call formal Board meetings. And we had a lot of contact and discussions in between those 12 meetings also. Working very close with the management team. And I think we have found a format of our meetings, and the work where we have, I think, a nice blend between operational and strategic topics and aspects. So I'm personally very pleased and happy with the way it's working. I think we are trying to work along best practice as much as we can and really try, I mean, to have focus on the right things. It's a lot of stuff to be -- that you can dig into on our corporate governance also in the annual report. So I think you should also there take a look and read it. As Hilde said in the quarterly presentation a few minutes ago, the Board proposed for last year based on the results to pay a dividend of NOK 0.70 per share. That -- when it will be approved, in a second, that will then follow quite some years now with a track record of being able to pay dividend. And as we have communicated, it's also the Board's intention to try to do so in the years to come. So we can view them the proposal of the NOK 0.70 as being approved by the General Meeting. We have a nomination committee that decides in terms of the remuneration for Board members, and they have proposed an increase of approximately 3.5% for both, I mean, the Chairman and all the directors. So it's an increase for the Chairman from NOK 540,000 to NOK 560,000; directors, NOK 270,000 to NOK 280,000. Then we have put a system in place where we all use 20% of the gross remuneration to buy shares, not discounted shares, shares being bought in the market at market price that we do on a quarterly basis. And then also for the 2 committees that we have, we have an audit committee, and we have a compensation committee. Also here, the nomination committee proposed an increase of 3.5% for the work in those committees. So we have not received any amendments. So we can see also that proposal as being approved by the AGM. Auditor, EY, with a fee for all the work during the last year, NOK 440,000, also here being approved by this meeting. Then we have Agenda Point 8 on executive remuneration policy. I propose also here that you read it thoroughly in -- on our website. We have a system in place which I could describe as being very much performance based, base salary than performance bonus. And we have some share-based programs, and we have some long-term share-based programs in place. I think it's working very well. And we have not got any comments on it that we are -- so we are -- we can see also that one as being approved by the meeting. Last year, the Board was elected for 2 years. Nomination committee has done their work and have discussions with Board members and also with management and don't see any reason to change it this year. So all the Board members are also very motivated to continue their work. So that's the same Board that will do the work also in 2021. Myself as Chairman, Klaus de Vibe, Camilla Tepfers, Peter Wirén and Ingeborg Molden Hegstad will continue to work in StrongPoint's Board. Then also the nomination committee should have a fee for all the work they do and in line with what's also proposed for other committees. Also here is a proposal to increase by 3.5%. So you can see the numbers. I see that as being also approved by the meeting. Then we have our long-term incentive program that we put in place last year. And I will hand over to the Chairman of the Compensation Committee, Peter Wirén, that will take you through that agenda item. So Peter, please.

So good morning. My name is Peter Wirén. I'm the Chairman of the Compensation Committee at StrongPoint. At the extraordinary General Meeting in October last year, it was decided to adopt a long-term incentive program as part of the total remuneration for executive management and key personnel. The option program is designed to align and incentivize management performance with shareholder value creation and to attract and retain high-caliber executive management and key personnel. The Board considers this to be an important element in the efforts to reach the communicated 2025 strategic milestones and ambitions. The participants will be eligible to participate in the company's incentive program called LTIP 2021. And the share options allocated under the LTIP will be allocated to the participants based on company and individual performance and at the Board's discretion. The Board will take into consideration the company's goals and strategies as well as targeted performance for executive management when granting the options. The option plan is a performance-based remuneration scheme, reflecting the underlying long-term value creation of the company. The limits for the allocation of share options to the participants is determined by the Board within the Board mandates approved by the Annual General Meeting. The option scheme will be granted with a strike price equal to the market price at grants, and the strike price is calculated as the average market price per share over the last 5 days before a grant. So it's a volume weighted average price. The options will vest over 3 years, with 25% vesting after 1 year, 25% after 2 years and the remaining 50% after 3 years. The split investing underpins the retention ambition of the program, and any nonexercised options expires 5 years after grant. The Board of Directors recommends to the Annual General Meeting that the long-term incentive program launched and approved in the extraordinary General Meeting in 2020 continues for 2021. The number of options granted under the LTIP 2021 will not exceed 3% of the total current outstanding shares of the company. The LTIP will continue with yearly allocations or share options, each that between 1% and 3% of the total outstanding shares of the company, and the total number of options shall never exceed 10% of outstanding shares. The authorization suggested is, however, limited to 1 year only. So the Annual General Meeting is requested to authorize the Board to settle the options, either by issuing new shares or by acquiring shares in the market. So Morthen, that's the proposal. Thank you. Over to you.

Thank you, Peter. I think you've done a very good job in describing it because we got almost 94% support for the program. So it's definitely been approved by this AGM. So thanks a lot. Then it's a couple of more items on the agenda that we normally have and cover. First one is authorization for the Board to increase the share capital. It's very practical to have, if we are in situations where we need to act quickly, for example, in M&A situations and stuff like that. So no amendments being received, so it's been approved also by the meeting this year. Next one, authorization for the Board to acquire own shares. Also very practical and good to have and can be used in terms of optimizing our balance sheet, for example, but can also, which is, I think, is very relevant for us now with the share-based programs we have in place also to have a holding own shares that can be used for those programs. So I think that's the intention going forward. No other amendments being received, so we see that as being approved by this general assembly. Final one on the agenda is also kind of nitty-gritty small detailed one. We have in place election for the Board for a period of 2 years at a time. Both we, the Board and the nomination committee finds is more practical to have 1 year at a time. So we changed it back to 1 year for those elections. I think everyone that -- has sent in their votes supporting that one. So that has now also been approved by this General Meeting. So thanks a lot. That, in fact, concludes this year's general assembly for StrongPoint. I would thank all of you again for sending in your votes in advance. And I'm sincerely hoping that next year we can meet in the conference room somewhere in the Oslo area. So thanks a lot and stay safe. Thanks.