Leroy Seafood : Remuneration Report

REMUNERATION REPORT

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Main developments in 2022

Financial summary 2022

The Group's vision is to be the leading and most profitable global supplier of sustainable, high-quality seafood by means of an efficient and sustainable value chain.

Recent years have been significantly impacted by restrictions related to the Covid-19 pandemic. As the restrictions were lifted in 2022, there was a significant increase in the demand for seafood from the HoReCa market (Hotels, restaurants and catering), while retailers were defending their increased markets shares. This dynamic gave a major increase in demand for seafood and the Group's products, while it also gave a lack in other areas such as goods, logistics and employees which contributed to a significant inflation also in costs.

The Group´s revenue was up 15%, from NOK 23.0 billion in 2021 to NOK 26.6

billion in 2022. The Group's return on capital employed and operating profit/loss before fair value adjustment of biomass are important metrics for return and earnings. Return on capital employed before fair value adjustment increased from 12.4% in 2021 to 14.5% in 2022. The operating profit before fair value adjustment was up from NOK 2,519 million in 2021 to NOK 3,195 million in 2022.

The operating profit from the Group's whitefish operations before biomass adjustment increased from NOK 340 million in 2021 to NOK 347 million in 2022. This development despite lower quotas, but supported by strong price development and operational improvements.

The growth in sea in the Group´s Farming segment was below expectations in the second half of 2022, leading to a reduction in the harvest volume of salmon and trout

from 187 thousand tonnes in 2021 to 171 thousand tonnes in 2022. There was a significant inflation in costs, increasing the cost per harvested kilo, but higher price realisation led to an operating profit before biomasse adjustment from NOK 1,768 million in 2021 to NOK 3,145 million in 2022.

2022 proved a very challenging year for the Group's VAPS&D segment. Higher prices led to an increase in revenue of 16% from NOK 22,0 billion in 2021 to NOK 25,5 billion in 2022. However, a significant price increase on input factors in production and logistics put pressure on profitability. The operating profit before biomasse adjustment fell from NOK 630 million in 2021 to NOK 156 million in 2022.

Development in remuneration of board members

At the Annual General Meeting in 2022, chairman Helge Singelstad abstained from participating in the election, and board member Arne Møgster was elected as chairman for a period of two years. Following the board is made up of six members, one of whom is the employee representative.

The Annual General Meeting in 2022 decided to increase the remuneration for the chairman from NOK 400,000 to NOK 500,000, and for board members from NOK 250,000 to NOK 300,000.

The Board of Directors has a subcommittee: the Audit Committee. Didrik Munch is the chair of the Audit Committee and Britt Kathrine Drivenes is a member. The volume of work for the Audit Committee has increased significantly in recent years, and the Annual General Meeting in 2022 made the decision to increase

remuneration of the Audit Committee's chairman to NOK

120,000 and to increase remuneration for the committee member to NOK 80,000. This compensation is in addition to the directors' remuneration.

Lerøy Seafood Group ASA has a Nomination Committee, with three members. The Annual General Meeting in 2022 made no changes in the remuneration of NOK 45,000 per member of the Nomination Committee.

Development in remuneration of Group management

The Group´s management has expanded in recent years. Until 2019, the management comprised three members: CEO, COO Farming and CFO. This was then increased to five members, including the COO VAPS&D and CHRO.

There were no changes in the Group´s management in 2022.

	2022	2021	2020	2019	2018
Revenue (NOKm)	26 646	23,073	19,960	20,427	19,838
Growth in revenue (%)	15 %	16 %	-2 %	3 %	7 %
EBITDA before fair value adj. of biomass (NOKm)	4 521	3,778	3,109	3,746	4,288
EBIT before fair value adj. of biomass (NOKm)	3 195	2,519	1,950	2,734	3,569
Pre-tax profit before fair value adj. of biomass (NOKm)	2 967	2,440	1,869	2,718	3,697
ROCE before fair value adjustment	14.5%	12.4%	10.5%	15.5%	22.3%
No. full-time equivalents	5092	4953	4293	4361	4589
Average salary based on full-time equivalents	583	544	566	542	472

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Remuneration report 2022

Remuneration report 2022

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Remuneration principles and framework

In May 2021, the Annual General Meeting adopted the Group's Guidelines for salaries and other remuneration of persons in senior positions. The Guidelines can be found on the Group's website at www. leroy.no and are described briefly below. The Guidelines steer remuneration of the Group´s management and the Board of Directors.

The main principle for executive pay at Lerøy is that the Group shall attract and retain talented managers without being wage leaders in the industry.The variable element of a salary shall not represent such a large share of the total salary as to may result in unfortunate incentives and short-termism at the cost of the Group's targets.

Lerøy's values - open, honest, responsible and creative - shall lay the foundations for the Group's daily operations, and also for the perpetual, strategic business development required to achieve its vision of being the leading and most profitable global supplier of sustainable, high-quality seafood. Being a leading player in a global industry and safeguarding the Group's long-term interests are closely linked to the company's ability to recruit, develop and retain senior executives. Lerøy's people are the Group´s most important resource. Lerøy shall be a recognised and attractive employer in the seafood industry, with the capacity to attract employees with the appropriate competencies. It is important that the

Group succeed in building a learning and dynamic organisation where employees are happy and develop, so that they work together to meet our customers' needs.

Lerøy has established a remuneration scheme intended to stimulate the achievement of goals and at the same time promote good risk management and help prevent conflicts of interest. The Group's long-term interests and financial capacity shall be safeguarded.

Remuneration of members of the Board of Directors.

The remuneration of the board members is proposed by the Group's Nomination Committee and adopted by the Annual General Meeting in accordance with section 6-10 of the Public Limited Liability Companies Act. The Board members do not have a scheme for allocation of options to purchase shares in the Group.

Remuneration of executive personnel

The Remuneration of the Group CEO is determined annually by the Chairman of the Board according to a mandate issued by the board. Remuneration of the individual members of the Group management is determined by the CEO in consultation with the Chairman of the Board. The Board of Directors is subsequently informed of the decision.

General schemes for payment of variable benefits, including bonus schemes, are established by the Board of Directors as part of its

budget work. The Group CEO allocates such incentive schemes and other benefits to the Group's senior executives within the boundaries established by the Board. The board does not have a remuneration committee.

Regarding the remuneration of senior executives, the company mainly focuses on fixed salary as an instrument, and uses variable remuneration other than bonuses to a limited degree. Executive pay shall be competitive, so that the company is able to attract and retain the most talented managers. The fixed remuneration of senior executives shall include:

Base salary:

The base salary is established based on the basis of the responsibilities, complexity, competencies and length of service for the position. The base salary is normally the main element of executive pay.

Bonus scheme:

In principle, bonuses are a form of profit sharing, where members of the management are remunerated for their contribution to the company's long-term earnings and development. The purpose of Lerøy's bonus scheme is to stimulate continuous development of Lerøy's value creation, growth and results, as defined in the company strategy.

Assessment of bonus payments is carried out every year based on a

comprehensive discretionary evaluation of five components: the executive's value creation, efforts, results, values, and attitudes and conduct, all in relation to the defined goals, tasks and available resources implied in the position.

At the end of the measurement period, a decision is made regarding the extent to which the criteria for a bonus payment have been met. This evaluation shall be based on an assessment of the criteria as described above and in the bonus schemes for senior executives.

Bonus payments to persons in senior positions may comprise up to one year's salary.

The company does not have any scheme for reclaiming variable remuneration. The Board of Directors has the right to make changes to or terminate the bonus scheme on a yearly basis.

Other remuneration

• Pension schemes:
  Lerøy Seafood Group ASA has a defined-contribution pension scheme according to the Act relating to mandatory occupational pensions. The base for premium payments is capped at maximum 12G (G is the national insurance base amount) per year. Senior executives in the Group are members of the company's collective pension

	scheme up to the Group's	• Share purchase programmes:
	in-house retirement age, which is	Lerøy is entitled to assess a
	70, and do not have separate	share-savings programme for all
	agreements that include early	employees, where employees
	retirement or supplementary	have the right to subscribe to a
	pensions. The company may,	limited number of shares at a
	however, enter into such	discounted price.
	agreements in the future.
		In extraordinary circumstances
•	Severance pay:	when significant events require
	In principle, the company does not	senior executives to make
	make use of severance pay apart	extraordinary efforts, the board
	from salary during the period of	may decide to deviate from these
	notice for the number of months	guidelines. The Board is not
	stipulated in the provisions of the	entitled to deviate from the
	Working Environment Act.	guidelines in relation to
	Severance pay may, however, be a	remuneration of Board members.
	good alternative in some	If necessary, such deviations shall
	situations for all parties involved.	be proposed and presented to
	Severance pay can therefore be	the Annual General Meeting for a
	utilised in extraordinary	general vote. There were no such
	circumstances, albeit capped at	deviations in 2022.
	two annual salaries.
•	Other special remuneration:
	Senior executives may receive
	other special remuneration that
	is normal for comparable
	positions, such as free telephone,
	PC at home, free broadband,
	newspapers, company car/car
	scheme and parking.

• Options and other types of remuneration linked to shares or developments in the share price: The company does not currently give persons in senior positions options or other types of remuneration linked to shares in the company or developments in the share price.

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Remuneration report 2022

Remuneration report 2022

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Earned and received remuneration of Group management

Earned remuneration of Group management

Remuneration element to management in 2021

Please refer to the previous comments on the different elements included in the salaries paid to Group management. There will be deviations between when the remuneration is earned and when it is disbursed. The following table shows

when the remuneration was earned.

In light of Norway's holiday pay scheme, fixed salary is paid as 11/12 of the agreed salary. With the exception of the CEO, bonuses are included in the holiday pay base amount.

The bonuses for 2022 are also specified in the table. These figures show the provision for bonuses in the Group's financial statements for 2022. Final bonus payments may vary from these figures.

Payment	Purpose	Level	Disbursement criteria	Period
element
Fixed salary /	Attract, retain and	Attractive, but not wage	None, but fixed salary	Annual, but paid as 11/12
Base salary	develop talented	leaders in the industry	will normally be adjusted	of the amount, as the last
	managers		annually	month is paid as holiday
				pay
Bonus	Harmonising the Group's	Up to one year's salary	Evaluation of the	Annual
	interests with those of		executive's value creation,
	senior executives for		efforts, results, values,
	perpetual, strategic		and attitudes and
	business development		conduct, all in relation to
	required so that Lerøy can		the defined goals, tasks
	achieve its vision		and available resources
			implied in the position
Holiday pay	Part of the pay system in	Holiday pay normally	The holiday pay base	The annual payment is
	Norway.	amounts to 12% of the	amount accrues over	in June, as the employee
		holiday pay base amount.	one year, and payment	does not receive salary in
		The holiday pay base	is made in the holiday	July. (Fixed salary is paid
		amount includes fixed	month the following year.	in 11 of the 12 months of
		salary and bonuses,		the year)
		unless otherwise agreed.

Name and position	2022	2021	2020	2019	2018
Henning Beltestad (CEO)
Fixed salary	3 500 000	3 208 333	3 000 000	3 000 000	3 000 000
Deduction from salary for holiday	-331 439	-284 091	-284 091	-284 091	-284 091
Bonus incl. holiday pay	3 400 000	3 400 000	3 300 000	3 300 000	3 300 000
Holiday pay	380 100	350 909	325 909	325 909	325 909
Pension expense	159 191	151 239	149 501	144 285	139 070
Other benefits	8 964	11 000	11 000	11 000	16 000
Total earned this year	7 116 815	6 837 390	6 502 319	6 497 104	6 496 888
Siren Grønhaug (COHR)
Fixed salary	1 787 771	1 698 834	1 627 200	1 466 667
Deduction from salary for holiday	-165 720	-154 091	-151 515	-133 333
Bonus	1 200 000	1 120 000	1 000 000	1 000 000
Holiday pay	324 472	305 369	295 994	160 000
Pension expense	160 537	151 239	150 501	117 285

Pension	The Group focuses on a
	long-term perspective,
	and it must be
	attractive to remain
	an employee with the
	Group throughout the
	employee's career.

Defined-contribution pension scheme whereby the Group pays contributions to the employee's personal pension account. The Group pays pension contributions up to 12G (G is the national insurance base amount in Norway; 1G in 2022 is NOK 111,477).

Fixed salary and bonus, but the Group does not pay contributions for compensation exceeding 12G. A 2% deduction

is made from the employee's fixed salary up to 12G.

Other benefits	8964	30 000	22 000	10 000
Total earned this year	3 316 024	3 151 351	2 944 179	2 620 619

Other benefits	Compensation for	Based on actual
	minor expenses related	documented expenses
	to work. Typically
	Internet connection,
	mobile telephone and
	newspapers

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Remuneration report 2022

Remuneration report 2022

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Name and position	2022	2021	2020	2019	2018
Sjur S. Malm (CFO)
Fixed salary	2 517 999	2 437 800	2 400 000	2 341 667	2 300 000
Deduction from salary for holiday	-233 409	-227 273	-227 273	-217 803	-217 803
Bonus	2 200 000	2 053 571	1 785 714	1 964 285	1 785 714
Holiday pay	512 375	479 549	496 442	471 149	464 150
Pension expense	159 223	152 239	153 501	147 285	141 070
Other benefits	8 964	21 000	10 000	10 000	12 000
Total earned this year	5 165 151	4 916 886	4 618 384	4 733 462	4 485 131
Ivar Wulff (COO VAPS&D)
Fixed salary	1 992 088	1 900 250	1 830 600	1 650 000
Deduction from salary for holiday	-184 659	-173 352	-170 455	-150 000
Bonus	1 200 000	1 120 000	1 000 000	1 000 000
Holiday pay	346 661	327 228	317 993	180 000
Pension expense	158 883	149 239	147 501	114 285
Other benefits	8 964	30 000	24 000	14 000
Total earned this year	3 521 886	3 353 365	3 149 639	2 808 285
Bjarne Reinert (COO Farming)
Fixed salary	2 043 166	2 000 000
Deduction from salary for holiday	-189 394	-189 394
Bonus	1 200 000	1 120 000
Holiday pay	352 208	242 317
Pension expense	158 997	150 239
Other benefits	8 964	11 000
Total earned this year	3 573 941	3 334 162

Name and position	2022	2021	2020	2019	2018
Stig Nilsen (COO Farming)
Fixed salary			2 400 000	2 400 000	2 400 000
Deduction from salary for holiday			-319 580	-181 119	-273 427
Bonus			1 517 857	1 517 857	1 700 000
Holiday pay			534 353	534 353	304 100
Pension expense			146 501	142 285	137 070
Other benefits			136 000	135 000	110 000
Total earned this year			4 415 130	4 548 376	4 377 744
Webjørn Barstad (COO Wildcatch)
Fixed salary			2 300 000	2 300 000	2 200 000
Deduction from salary for holiday			-217 803	-217 803	-208 333
Bonus				2 000 000	1 500 000
Holiday pay			466 863	425 863	371 000
Pension expense			107 000	97 000	97 000
Other benefits			11 000	12 000	20 000
Total earned this year			2 667 060	4 617 060	3 979 667

Bjarne Reinert			63%									37%
Ivar Wulff			62%									38%
Sjur S. Malm			53%									47%
Siren Grønhaug			60%									40%
Henning Beltestad			52%									48%
0	10	20	30	40	50		60		70	80	90	100
					Fixed salary				Variable salary

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Remuneration report 2022

Remuneration report 2022

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