The total remuneration paid to GMT consists of fixed salary, variable components in the form of annual short term variable remuneration and long-term variable remuneration, pension, other benefits and terms related to termination of employment.
The Boards proposal to the Annual General Meeting for principles of remuneration to management, as well as the Boards evaluation of certain remuneration related issues pursuant to section 10.3 of the Swedish Corporate Governance Code, are available on the page Remuneration principles.
Remuneration and other benefits to Group Management Team
|Total||Defined benefit obligations|
|Other members of Group Management Team 2018||22,606||30,871||1,976||7,606||63,059||38,772|
|Other members of Group Management Team 2017||19,726||20,305||2,336||6,574||48,941||32,849|
Comments to the table:
- At the end of 2018, the Group Management Team consisted of eight persons including the President. The President and three other members of the Group Management Team were employed by the Parent Company, three members were employed by a subsidiary and one member was partly employed by the Parent Company and partly by a US subsidiary.
- At the end of 2017, the Group Management Team consisted of nine persons including the President. The President and five other members of the Group Management Team were employed by the Parent Company and three member were employed by a subsidiary.
- Variable salary pertains to accruals charged to the consolidated income statement during the year for short term and long term incentive programs.
- Other benefits pertain to company cars, medical insurance, dental plan, life insurance, club membership and other benefits.
- Reported pension costs correspond to service costs for defined benefit pension plans and fees relating to defined contribution pension plans (excluding payroll taxes).
- During 2018 and 2017 no earnings-related compensation (tantiem) has been paid to the Group Management Team.
- During 2018 and 2017 no severance has been paid to the Group Management Team.
In 2018, the Group Management Team (“GMT”) participated in short and long term incentive programs (variable salary) described under the presentation of the principles for remuneration and other terms of employment above.
The performance criterion for the CEO, the heads of corporate functions and the majority of the operating unit Presidents, in the short term incentive program for 2018 was Group operating profit from product segments. One member of the Group Management had partly the same criterion as the CEO and partly incentive criteria linked to the operating unit.
The performance criteria for the CEO and other members of the GMT for the long term program that started in 2016, for which the performance period ended in 2018, was based on the accumulated Group operating profit from product segments. The threshold and target for maximum payout were 11,071 MSEK and 12,454 MSEK respectively for the total performance period. The Compensation Committee established the total performance outcome for the long term program to 100.0 percent.
In the long term program that started in 2018, the performance criteria for the CEO and other members of the Group Management team is the accumulated Group operating profit from product segments (weight 75%) and the accumulated Group Net Sales excluding SMD Logistics (weight 25%) for the years 2018 to 2020. There will be no pay-out in relation to this criteria unless there is an improvement in relation to the comparable performance of the Group in 2017. The costs for the long term program are expensed during the fiscal year when the compensation is earned based on an estimated outcome. At year end, a final estimate of the year’s cost is calculated based on the actual outcome. Adjustments of previously reported costs for the long term programs are also reported when the estimated outcome is updated for each program during the performance period. As the long term program extends over three years the final result will be established at the end of the three year performance period.
In addition to the programs noted above, GMT members residing in the US also participated in a three-year local program. This local program extends over three years, with a new program starting every second year. Accordingly, this program can generate an outcome every second year. The maximum outcome of this plan corresponds to a fixed annual salary every second year.
The President’s retirement age is 62 and he is covered by the Swedish standard retirement plan for white-collar employees (ITP plan) on salary up to 30 times the income base amount. The President’s ITP plan shall be fully funded at age 62. In addition, the Company pays a pension premium amounting to 40 percent of fixed salary above 30 times the income base amount to a defined contribution pension plan.
Other members of Group Management Team
For members of Group Management Team who are residents in Sweden, the retirement age is 62 or 65. All Swedish members are covered by the Swedish standard retirement plan for white-collar employees (ITP plan) on salary up to 30 times the income base amount. In addition, for some of the members, the Company also pays a pension premium amounting to a maximum of 35 percent of fixed salary above 30 times the income base amount. Two members of Group Management Team, who are resident abroad, are covered by a defined benefit pension plan with a normal retirement age of 65. Annual variable salary is capped at 50 percent of the fixed salary in the calculation of retirement benefits.
Other employment conditions
Severance pay etc.
For the Group Management Team including the President, a mutual period of notice of six months applies and a maximum severance payment of 18 months’ fixed salary is payable if the Company terminates the employment contract.
The President and three other members of the Group Management Team are entitled to terminate their employment with the right to receive severance pay in accordance with the above terms if a major organizational change should occur that significantly restricts their position.