The Board of Directors appoints a Remuneration Committee which is tasked with addressing matters related to remuneration principles, employment terms, pension benefits and bonus systems for senior executives, as well as monitoring and evaluating these principles as well as remuneration structures. The Remuneration Committee also deals with general employment terms and remunerative matters affecting all employees in the company. Senior executives include the President & CEO, members of the Executive Team and all managers who report directly to the President & CEO.
The Sweco Group’s aim is to offer a competitive and market-based level of remuneration to recruit and retain its senior executives. Remuneration to senior executives comprises basic salary, variable compensation consisting of short-term variable remuneration and long-term variable remuneration (Sweco Share Saving Scheme), pension and other benefits.
Base and variable salary
Remuneration is to be based on factors such as work duties, qualifications, experience, position and performance. In addition, the break-down between base salary and short-term variable remuneration shall be proportionate to the employee’s position and work description. Sweco’s short-term incentive remuneration shall be linked to predetermined, measurable criteria that are devised to comply with the company’s long-term value creation. Short-term variable remuneration for the President & CEO and the CFO may not exceed 75 per cent of base salary. For other senior executives, the short-term variable remuneration may not exceed 50 per cent of base salary. Due to acquisitions, exceptions to maximum percent may apply for a limited period, until integration with Sweco’s short-term incentive programme is aligned. Short-term variable remuneration shall be determined based on results in relation to predetermined profitability targets. Targets for the President & CEO and other senior executives shall be determined by the Board of Directors.
The terms and conditions for pensions for Sweco’s President & CEO and senior executives shall be market-based relative to what generally applies to comparable senior executives in the market, and shall normally be based on defined contribution pension schemes.
Other benefits may be awarded, primarily in the form of company vehicles and mobile phone benefits.
Long-term Variable Remuneration – Share-based incentive schemes
Sweco senior executives may be offered various forms of long-term incentive schemes, based on market terms. The rationale for share-based incentive schemes is to increase and or diversify senior executives’ share ownership and/or exposure and to more closely align the interests of the company’s decision makers and shareholders. A long-term, personal shareholder commitment among key personnel is expected to stimulate greater interest in the company’s operations and earnings trend and to increase motivation and solidarity with the company.
Resolutions on share-based incentive schemes shall always be made by the Annual General Meeting or at an Extraordinary General Meeting.
Costs for the 2019 Share Savings Scheme The costs for the 2019 Share Savings Scheme are based on the IFRS 2 reporting standard and will be amortized over three years. The Board of Directors has made a preliminary cost calculation for the 2019 Share Savings Scheme, which is based on a SEK 261.10 price per share at final allocation, that Matching Shares and the maximum number of Performance Shares are allocated following the Retention Period, an estimated annual staff turnover of 5 percent, that each participant invests in Savings Shares to the maximum permitted amount and expected dividends during the period. The value of the Matching Shares and the Performance Shares have been calculated based on a share price of SEK 194.10 per share at the implementation of the scheme, an estimate of the future volatility of the company’s share and the shares of the group of benchmark companies as decided by the Board of Directors, as well as the correlations between the respective total yields of these shares. Based on the above assumptions, the value of each Matching Share has been calculated to SEK 113.20 and the value of each Performance Share has been calculated to SEK 57.50. In total, this results in a maximum cost for the 2019 Share Savings Scheme of approximately SEK 9.3 million, excluding costs for social security contributions. The cost for social security contributions based on an annual expected appreciation of the Sweco share of 5 percent until the time of allocation is approximately SEK 10.1 million. These costs should be viewed in relation to Sweco’s costs for salaries and compensations, which during 2018 amounted to SEK 11,468 million including social security contributions. Administrative costs for the 2019 Share Savings Scheme are estimated to no more than SEK 1 million.