Remuneration to senior executives

Principles
The Board of Directors appoints a Remuneration Committee which is tasked with addressing matters related to 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 includes the President & CEO, members of the Executive Team and all managers who report directly to the President & CEO.

Sweco Group's objective is to offer a competitive and market-based level of remuneration that facilitates the recruitment and retention of senior executives. Compensation for senior executives is comprised of base salary, variable compensation, pension, other remuneration and share-based incentive schemes.

Base and variable salary
Compensation levels are based on factors such as work duties, qualifications, experience, position and performance. In addition, the breakdown between base salary and variable compensation is proportionate to the employee's position and work duties. Variable compensation is linked to predetermined, measurable criteria that are devised to comply with the company's long-term value creation. Variable compensation for the President & CEO and CFO may not exceed 75 per cent of base salary. For other Senior executives, variable compensation may not exceed 50 per cent of base salary. Due to acquisitions, exceptions to maximum per cent, may apply for a limited period, until integration with Sweco variable pay program is aligned. Variable compensation is determined based on results in relation to predetermined profitability targets. Targets for the President & CEO and other senior executives are set by the Board of Directors. 

Pensions
The terms and conditions for pensions for Sweco's President & CEO and senior executives are market-based relative to what generally applies to comparable senior executives in the market, and are normally based on defined contribution pension solutions.

Other benefits
Other benefits may be awarded, primarily in the form of company car and mobile phone.

Compensation and other benefits during 2017 (KSEK)

 

Base salary

Variable compensation

Share Savings Scheme

Other compensation

Pension costs

Total

President

6,648 

4,435

69

70

2,442

13,664

Other Senior Executives*

25,818

7,955

1,528

1,032

5,732

42,065

Total

32,466

12,390

1,597

1,102

8,174

55,729

* 11 people

Share-based incentive schemes
Senior executives of the Sweco Group may be offered to participate in various forms of incentive schemes on market-based terms. The rationale for share-based incentive schemes is to increase share ownership and diversify exposure to senior executives 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. Decisions on share-based incentive schemes are always resolved by the Annual General Meeting or Extraordinary General Meeting.

The costs for the 2018 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 2018 Share Savings Scheme, which is based on a SEK 260 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 188.60 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 151.40 and the value of each Performance Share has been calculated to SEK 59.20.

In total, this results in a maximum cost for the 2018 Share Savings Scheme of approximately SEK 10.5 million, excluding costs for social security contributions. The cost for social security contributions based on an annual appreciation of the Sweco share of 10 percent until the time of allocation is approximately SEK 8 million. These costs should be viewed in relation to Sweco’s costs for salaries and compensations, which during 2017 amounted to SEK 10,299 million including social security contributions. Administrative costs for the 2018 Share Savings Scheme are estimated to no more than SEK 1 million.

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