StrongPoint ASA (STRO) Earnings Call Transcript & Summary

Good morning, and very welcome to StrongPoint's Ordinary General Meeting. I hope quite a lot of you also had the opportunity to follow our Q1 presentation a few minutes ago, where you could see and hear that we are off to a pretty good start also on this year. The agenda we have for this general meeting is pretty standard one. So I'm not going to spend time going through every item right now. If I didn't say it already, my name is Morthen Johannessen, Chairman of the Board, and I have also been asked to chair this meeting. After the meeting, our CFO, Hilde, will co-sign the protocol together with myself. So let's go straight into the different agenda items of today. First, I'm very happy to be able also myself to report an all-time high. In fact, the votes we have received in advance, 16 million plus, almost 36% of the issued shares, is the highest ever. And I take that as a good sign of a good interest for our company. So thanks a lot to all of you. We have not received any amendments or new proposals to the agenda. So we can view the agenda and the notice itself as approved. Item 3. New report for 2022. Before I comment on the numbers very, very briefly, I would just like to urge you all to spend some time reading our annual report. We use it for much more than reporting numbers. It's very educational. We spent quite a lot of time and resources on the annual report, trying to explain the company, to give you some insight and the journey that we are on towards the 2025 ambition that we have outlined. So spend some time, read it. I can strongly recommend it. Numbers last year came in very strong, 40% growth, top line of getting close to NOK 1.4 billion and an EBITDA of NOK 75.5 billion, up with almost NOK 22 million. Very strong results, a very strong performance, and I would like to use the opportunity to say thank you to Jacob and his executive team and not at least the entire StrongPoint organization. Behind those numbers is a lot of dedication, passion and hard work. So thanks a lot. I think we can view the accounts and the annual report also as approved in this meeting. Auditor, also, we have a good cooperation by the way with our auditor. And as always, they insist on getting paid for it. The amount this year is NOK 554,000 being approved. It was said and outlined by Hilde, our CFO, in the quarterly presentation that we have an ambition to pay a slightly increasing dividend every year. As you can see, since 2012, we have been doing exactly that, slightly increasing. And for this year, we have proposed a dividend of NOK 0.90 per share. No one have come with any counterproposal on that. So that has also then been approved by this meeting and the dividend will be paid to all shareholders over the next few weeks. The Board of Directors' report on corporate governance. It's not something that we're going to vote on this meeting, but I urge you all to take a look on our web page and the annual report also. The world is pretty complex nowadays, and we spend a lot of time on corporate governance and try to do our very best in applying with all rules and legislation obviously. We have a couple of, I would say, practical items where we have some variance versus the Norwegian code of practice for corporate governance. But that's only of practical reasons, and I will actually also get back to that finally in this meeting. So you can read all the details on our corporate governance policy and how we deal with that in our annual report and on our website, so please do so. Election of the Board of Directors. We are up for election every year, in fact, and we have this year one change. Klaus De Vibe, long-timer Board of Directors, is leaving the Board and is then being proposed -- replaced by Audun Nordtveit, which has accepted that, and Audun knows StrongPoint pretty well. He is working for our second biggest shareholder. I've been following the company for a long time. So he will be a very valuable asset to the Board. Same time, I would definitely like to use the opportunity also to say thank you to Klaus for his long service and massive contribution to the Board of Directors. The Nomination Committee then proposed Board with the following representation. Myself, continuing as Chairman; Peter Wirén, Board member; Ingeborg Molden Hegstad, Board member; and Cathrine Laksfoss, Board member; and then our newcomer, Audun Nordtveit. No amendments. So that's the Board that's been then elected and approved by this meeting and the shareholders. So thanks a lot for that. Also then from the Nomination Committee, proposal in terms of the remuneration, they propose something in the range of a 5% increase year-on-year. To the Chair person, up from NOK 580,000 to NOK 610,000; directors, from NOK 290,000 to NOK 305,000. We have a system where we use 20% of our gross remuneration to buy shares in the company. And I would just want to underline that we -- when we buy those shares, it's without a single percent discount. We buy them full price in the market. We also have some hard-working committees. We have had a system up to now where we have had allowance per meeting. And in a world where some meetings are face-to-face, some meetings are Teams, some other are telephone calls, it's a little bit kind of complex and drives cost, in fact, in terms of the admin part of it. So we have been then recommending to do like most other listed companies nowadays to have a fixed amount for committee work. And you can see the different committees that we have, the Audit Committee and the Remuneration Committee. And then, of course, we have also a Nomination Committee. No amendments. So that has also then been approved. Nomination Committee, Svein Jacobsen, which had been Chairman of StrongPoint for many years then moved on and took over also as Chairman of the Nomination Committee when he left the Board. Svein is now stepping down. And same time, Audun Nordtveit, then is joining the Board. So that means it's 2 new members then being nominated to the Nomination Committee. That is Hilde, our CFO, which is unfortunately leaving the company in a few weeks' time. She has accepted the position as a new Chair of the Nomination Committee. Johanne Solhaug will continue. And then Are Juklestad Berg, which is working for our biggest shareholder, Strømstangen, he will also then join the Nomination Committee. So that looks like a strong team going forward. That has been approved. Remuneration for the Nomination Committee. I can just repeat what I just said on the other committees. We are then also changing the system from meeting allowance to a fixed committee payment for also this committee, also being approved by this meeting and the shareholders. Then it's the remuneration report. You can read all the details here also on our website and in the annual report. I'm not going to spend time on that. I can just say that we have a system in place, which is meant to be, for senior executives, performance-based. So we have a base salary -- competitive base salary. We have short-term incentive bonus systems. And then we have a long-term incentive system in place also. So we are not proposing any changes to remuneration policy this year. So -- and that has then -- also then been approved by this meeting and the shareholders. As said, we have a long-term incentive system in place, and Peter Wirén will now take over, he is the Chair of the Remuneration Committee, and give you some more insight in terms of what we are proposing there. Peter?

So thank you, Morthen, and good morning. My name is Peter Wirén. I'm the Chairman of the Compensation Committee at StrongPoint. I would like to start with a short recap. At the Extraordinary General Meeting in October 2020, it was decided to adopt a long-term incentive program as part of the total remuneration for executive management and key personnel. And 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. And the option plan is a performance-based remuneration scheme, reflecting the underlying long-term value creation of the company. And the Board considers this to be an important element in the efforts to reach the communicated 2025 strategic milestones and ambitions. And 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 limits for the allocation of share options is determined by the Board within the Board mandates approved by the General Meeting. And the option scheme will be granted with a strike price equal to the market price at grant. And the options will vest over 3 years with 25% vesting after 1 year, 25% after 2 years and the remaining 50% after 3 years. And the split investing underpins the retention ambition of the program. Any nonexercised options expire 5 years after grant. So the Board of Directors recommends to the General Meeting that the long-term incentive program continues for 2023. And the number of options granted under the LTIP '23 will not exceed 3% of the total current outstanding shares of the company. The total number of options shall never exceed 10% of outstanding shares. As of today, the number of options equals 5.2% of the outstanding shares. The authorization suggested is, however, limited to 1 year only. And the Annual General Meeting is requested to authorize the Board to settle the options, either by issuing new shares or by acquiring own shares in the market. So in short, that's the proposal. Thank you, and over to you, Morthen.

Thank you very much, Peter, and this program was also then sent out and communicated as part of the invitation and the agenda for the AGM. And we have received over 90% support for their proposal. So that has been approved. 90%, that's kind of almost, I would say, massive support to this program also. Then we have only 2 items left on the agenda. It's 2 items that we basically have every year. And that's the first one is an authorization for the Board to increase their share capital. It's not used very often, but it's good to have in terms of having some flexibility to be able to act fast if needed. Can be used, for example, if we are working on some M&A activities. We have got 88%, almost 89%, support on that one. So that has been then approved this year also. It replaces the authorization from last year, by the way. Same with the last one on the agenda, authorization for the Board to acquire its own shares. It's always good to have a holding of own shares that can be used in M&A situations and it can also be used for incentive programs like we have for senior executives and other key persons in the organization. We don't use it if we don't need to do it, but keeping a holding at a level that we are comfortable with, I think, is our objective as a Board on that one also. Got more than 88% support on that one. So that has also been approved by this meeting. That, in fact, concludes this year's annual general meeting for StrongPoint. I would like to thank you all for participating by sending in your votes in advance and I wish you a wonderful day. Thanks a lot.