Item 16THE COMPLETE PROPOSAL OF THE BOARD FOR THE ADOPTION OF GUIDELINES FOR EXECUTIVE COMPENSATION The Board and the Executive Compensation Committee decide on the structure, size and form of compensation to the executive management. The Board of Directors proposes that the meeting approves the following guidelines for remuneration and other terms of employment for the executive management of the group. The guiding principles will be valid for employment agreements entered into after the meeting and for any changes made to existing employment agreements thereafter. It is proposed that the Board is given the possibility to deviate from the below stated guide lines in individual cases where specific reasons or requirements exist. Guidelines
It is of fundamental importance to the group and its shareholders that the principles for compensation and other employment conditions for the executives of the group aims to, in the short and long term, attract, motivate and retain competent employees and managers. To obtain this goal, it is important to ensure fairness and internal equity, while maintaining market competitiveness of the structure, scope and level of executive compensation. Employment conditions for the executive management should comprise a balanced mix of fixed and flexible salary, annual incentives, long term incentives, pension and other benefits as well as notice and severance payments.
Total target cash compensation, i.e. fixed salary and variable incentives, should be competitive in the geographic market where the employee is resident. The level of total cash should be reviewed annually to ensure that it is in line with the median for similar positions in the relevant market. Compensation should be highly performance driven and therefore the target annual incentive should be a relatively high portion of the total target compensation. Compensation components
The group compensation system comprises different forms of compensation in order to create a well balanced remuneration which strengthens and underpins long and short term objective setting and attainment.
Fixed salary
The fixed salary shall be individual and based on the content and responsibility of the role as well as the individual’s competence and experience in relation to the role held. Annual incentive
Executive management has an annual incentive with annually measurement and payment. The annual incentive is structured as a variable component of the total cash remuneration package and is primarily related to the achievement of common group financial performance goals. The goals for the annual incentive are established annually by the Board so as to sustain the business strategy and objectives. Other measures, i.e. Key Performance Indicators, may be used to create focus on non-financial objectives of particular interest. The proportion of total remuneration accounted for by the annual bonus varies according to position and can account for between 20 and 35 percent of 2 (2) fixed salary based of fulfillment of all targets. If financial and other quantitatively measurable targets are exceeded, the bonus may amount to a maximum of 70 percent of fixed salary. The plan shall also contain a minimum performance level under which no bonus will be paid out. Pension
When establishing new pension agreement, those senior executives that are entitled to pension benefits should have defined contribution schemes. The pension able age for Swedish citizens is 65 years while other executives follow the rules of their respective countries of residence. The main guide line is that the size of pension contributions is based only on the fixed salary. Certain individual adjustments may occur based on market practice. Other benefits
Other benefits, such as company cars and health, medical and sickness related insurance schemes, should be of a more limited value compared to other items of the compensation package and in line with the market practice for the respective geographic market. Notice periods and severance agreements
The President and CEO have a notice period of 24 months. Other senior executives have a notice period of 12 months. Severance agreements will in principle not be signed. In a redundancy situation, the current practice in the geographic market where the executive is resident will apply. Statement regarding possible scenarios for 2008
The Group’s total cost for current Group Management can, at full achievement of performance goals, total approximately SEK 23.6 m, of which approximately SEK 5.9 m constitutes non-fixed annual bonus. Since bonus criteria differ for each position, the amounts paid can vary from person to person. In the event of financial and other measurable targets are exceeded, bonus payments of up to a maximum of approximately SEK 11.9 m can be made for the year. | 