The total remuneration to the GMT consists of fixed cash salary, variable cash remuneration, pension benefits, other benefits and terms related to termination of employment.
The guidelines for executive remuneration adopted by the Annual General Meeting on April 2, 2020, are available on the page Remuneration principles.
Remuneration and other benefits to Group Management Team
|TSEK||Fixed salary||Variable salary||Other benefits||Pension costs||Total||Defined benefit obligations|
|Other members of Group Management Team 2021||21,422||22,890||1,940||7,054||53,307||28,415|
|Other members of Group Management Team 2020||24,671||30,363||2,021||7,765||64,820||61,456|
Comments to the table:
- At the end of 2021, the Group Management Team consisted of seven persons including the President. The President and three other members of the Group Management Team were employed by the Parent Company and three members were employed by a subsidiary.
- At the end of 2020, 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 and four members were employed by a subsidiary.
- Variable salary refers to accruals charged to the consolidated income statement during the year for short term and long term incentive programs.
- Other benefits refers 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 2021 and 2020 no earnings-related compensation (tantiem) has been paid to the Group Management Team.
- During 2021 and 2020 no severance has been paid to the Group Management Team.
In 2021, the Group Management Team (“GMT”) participated in short and long term incentive programs (variable salary) described under the presentation of the remuneration and other benefits to Group Management Team.
Performance targets for the short-term incentive are determined in the beginning of each year. For 2021, the CEO and heads of corporate functions of the GMT had the same criteria, Group operating profit (weight 75 percent) and Net sales from product segments (weight 25 percent). The Division Presidents had partly the same Group criteria as the CEO and partly criteria linked to the division.
In the three year long incentive program that started in 2019 and ended in 2021, the performance criteria for the CEO and other members of group management were based on Group operating profit (weight 75 percent) and net sales from product segments (weight 25 percent). For the criterion Group operating profit the threshold for payout and target for maximum payout were 14,520 MSEK and 16,809 MSEK respectively and for the criterion net sales from product segments the corresponding numbers were 37,998 MSEK and 43,988 MSEK respectively. The Remuneration Committee established the total weighted performance outcome for the long term program to 100 percent.
In the long term program that started in 2021, the performance criteria for the CEO and other members of the Group Management team is the accumulated Group operating profit (weight 70 percent), the accumulated Group net sales from product segments (weight 20 percent) and reduction in greenhouse gas intensity (weight 10 procent) for the years 2021 to 2023. There will be no pay-out in relation to these criteria unless there is an improvement in relation to the comparable performance of the Group in 2020. 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.
In 2021, the eligible participants in the long term incentive program have committed to purchase Swedish Match shares for the total compensation received, net after tax, and to retain these shares for a period not less than two years.
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. Swedish GMT members that are born 1978 or earlier are covered by the Swedish standard retirement plan for white-collar employees (ITP2 plan) on salary up to 30 times the income base amount. In addition, for some of the members, the Company also pays a pension contribution amounting to a maximum of 35 percent of fixed salary above 30 times the income base amount. Swedish GMT members that are born after 1978 are covered by the ITP1 plan, and are not eligible to any additional pension contributions. Members of the GMT who are resident in the US, are covered by a defined benefit pension plan with a normal retirement age of 65.
Other employment conditions
Severance pay etc.
For the Group Management Team including the President, a mutual notice period of maximum 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.