Remuneration Committee

The responsibility of the committee regards matters related to remuneration to the CEO and other members of senior management, which pertains to the executives who, in addition to the CEO, comprise Group Management. A specification of salaries and other remuneration paid to the CEO, senior management and Board Members is presented in Note 8 Personnel Costs in the Annual Report. Other than what is specified in Note 8 there exists no contracts regarding benefits for board members or executive management after that their assignments or employment contracts has been terminated.

In 2007, the remuneration committee appointed by the Board consisted of Chairman Dan Olofsson and board member Göran Larsson.

Guidelines for Remuneration

The board of directors proposes that the annual general meeting 2008 resolves on the following principles for remuneration to the executive management. Executive management consists of the managing director and other persons in the company’s management team. The principles shall apply to employment agreements entered into following the general meeting’s resolution on the principles as well as in the event that changes are made in existing conditions following the general meeting’s resolution. Teleca AB shall offer a competitive total remuneration in order to recruit and retain an executive management with high competence. The remuneration to the executive management shall consist of fixed salary, possible variable salary, pension and other benefits.

The fixed salary shall take into account the individual’s areas of responsibility and experience. Reviews should be conducted every year. The variable salary shall be dependent on the individual’s completion of quantitative and qualitative targets. The variable salary shall not exceed 45 per cent of the fixed salary. Pension benefits shall be fee-based. The pensions shall be marketable in relation to the conditions for corresponding executives on the market. The employment agreement with the managing director may be terminated by the employee with a six months term of notice and by the company with a twelve months term of notice. For other persons in the executive management, a three to six months mutual term of notice applies.

The executive management may be awarded other customary benefits, such as company car and company healthcare etc. The board of directors may deviate from the above guidelines, should the board of directors in an individual case consider it motivated for special reasons.

Remuneration of the CEO

The CEO, Svendsen-Tune, received remuneration totaling SEK 5.0 million for 2007. Remuneration covers his fixed salary and bonus. According to the employment contract, the cost of his pension premium amounts to 30% of his basic salary, equivalent to SEK 1.4 million. In addition to his fixed salary, René Svendsen-Tune has a bonus agreement, which comes into operation from 2008 until up to the end of 2011. The size of the bonus is based on the company’s average B share price in June for the respective years in relation to the average share price in June of the preceding year. The average share price in the month of June for the respective years should amount to at least SEK 45 in order for the bonus to be paid out. The base for the calculation of the bonus is SEK 6.0 million, which means that the bonus yield should amount to that sum, if the average share price increased by 100%. The bonus can be paid out if the company becomes the object of a purchase offer of over SEK 45 per share. In this case the bonus is based on the remuneration that is offered for B shares. There is no bonus limit. For the extraordinary efforts performed during 2007 the Board has decided that the CEO will receive an extra bonus of SEK 1,0 Million. The period of notice on the part of the company is 12 months, and 6 months on the part of the CEO.

Remuneration to other Senior Executives

In 2007, Group Management consisted of 11 individuals in addition to the CEO. Since 1 July 2007, only ten of these are included here, as a result of the company’s restructuring process. In total, these 11 individuals received SEK 11.6 million in fixed salaries and SEK 1.0 million in bonuses. The value of other benefits amounted to SEK 0.2 million. Pension premiums for these executives are paid either as defined-benefit or defined-contribution pensions. Defined contribution pensions amount to a maximum of 15% of their annual salary.

Defined-benefit premiums are paid in accordance with the ITP occupational pension plan. Pension age is 65 years. A variable portion of salary may be paid to certain executives. The variable portion is based on individual targets linked to the particular executive’s area of responsibility and varies between 0% and 45%. Besides this one executive has a bonus agreement that mirrors the CEO’s bonus agreement but on a lower level. The period of notice for all executives is between 3 and 12 months on the part of the employee. On the part of the company it varies for each individual and is between 6 and 12 months. No termination payment or remuneration apart from salary, pension payments and other benefits are paid during the notice period.