Annual Report 2011

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NOTES TO THE FINANCIAL STATEMENTS OF THE GROUP continued – NOTE 34 Salaries and other remuneration for the Board members and Executive Management1 TUSD Parent Company in Sweden Board members Ian H. Lundin Magnus Unger Lukas H. Lundin William A. Rand Asbjørn Larsen Dambisa F. Moyo Kristin Færøvik Total Board members Subsidiaries abroad Executive Management C. Ashley Heppenstall Alexandre Schneiter Chris Bruijnzeels Geoffrey Turbott Total Executive Management 1 2 3 Fixed Board remuneration/ fixed salary and other benefits2 Short-term variable salary 3 2008 Unit Bonus Plan (third tranche) Remuneration for Committee work 2 Board remuneration for special assignments 4 Pension Total 2011 Total 2010 123 62 62 62 62 62 31 464 – – – – – – – – – – – – – – – – – 31 8 31 15 15 8 108 180 15 – – – – – 195 – – – – – – – – 303 108 70 93 77 77 39 767 345 97 70 83 69 69 – 733 975 579 473 513 2,540 685 469 379 419 1,952 298 238 149 149 834 – – – – – – – – – – 91 59 47 51 248 2,049 1,345 1,048 1,132 5,574 1,888 1,247 929 948 5,012 4 Salaries and other remuneration have been expensed during the reporting period. Other benefits include school fees and health insurance. In December 2011, the Compensation Committee awarded a bonus for 2011 of one month’s salary to Executive Management (included in the bonus expense for 2011). In January 2012 the Compensation Committee reassessed the bonus payments made for 2011 considering the employees’ contributions to the results of the Group and the achievement of personal targets and awarded additional bonuses payable in January 2012. The same reassessment was made in January 2011 for 2010 and the amounts are included in the cost of 2011. Other remuneration paid during 2011 relates to fees paid for special assignments undertaken by Board members on behalf of the Group. The payment of such fees was in accordance with fees approved by the 2011 AGM. Board members There are no severance pay agreements in place for any non-executive directors and such directors are not eligible to participate in any of the Group’s incentive programmes. Executive Management The pension contribution is 10% of the qualifying income for pension purposes, 40% of which is funded by the employee. Qualifying income is defined as annual basic salary. The normal retirement age for the CEO is 65 years. The Executive Management has no outstanding incentive warrants. The third and last tranche under the 2008 Unit Bonus Plan was paid in 2011. A mutual termination period of between one month and six months applies between the Company and Executive Management, depending on the duration of the employment with the Company, where the maximum applies as of the tenth year of employment. In addition, severance terms are incorporated into the employment contracts for Executives that give rise to compensation, equal to two years’ basic salary, in the event of termination of employment due to a change of control of the Company. Please see page 50–51 of the Corporate Governance report for further information on the Company’s principles of remuneration and the Policy on Remuneration for the Executive Management for 2011. NOTE 35 – LONG-TERM INCENTIVE PLANS The Company maintains the long-term incentive plans (LTIP) described below. Unit Bonus Plan In 2008, Lundin Petroleum implemented a LTIP scheme consisting of a Unit Bonus Plan which provides for an annual grant of units that will lead to a cash payment at vesting. The LTIP has a three year duration whereby the initial grant of units vested equally in three tranches: one third after one year; one third after two years; and the final third after three years. The cash payment is conditional upon the holder of the units remaining an employee of the Group at the time of payment. The share price for determining the cash payment at the end of each vesting period will be the five trading day average closing Lundin Petroleum share price prior to and following the actual vesting date. In 2009, 2010 and 2011, LTIPs that follow the same principles as the 2008 LTIP have been implemented for employees other than Executive Management. The following table shows the number of units issued under the LTIPs, the amount outstanding as at 31 December 2011 and the year in which the units will vest. Unit Bonus Plan 2009 2010 2011 Total units 670,400 723,950 425,850 Outstanding 31 Dec 2011 219,984 470,169 418,400 Year of vesting 2010 232,437 – – 2011 219,980 236,299 – 2012 219,984 235,085 139,467 2013 – 235,084 139,467 2014 – – 139,466 The total number of units vesting do not necessarily equal the units awarded due to the recalculation following distributions by Lundin Petroleum offsetting units that have lapsed following employees leaving the Group. 94 Lundin Petroleum ANNUAL REPORT 2011

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