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, and with 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 these maximum percentage may apply for a limited period, pending integration and alignment with Sweco’s variable pay programme. 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
Terms and conditions for pensions for Sweco's President & CEO and senior executives are market-based relative to terms and conditions generally applicable to comparable senior executives in the market, and are normally based on defined contribution pension solutions.

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

Compensation and other benefits during 2017 (SEK thousand)

Share-based incentive schemes
Senior executives of the Sweco Group may be invited 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 among 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 IFRS 2 and will be amortised 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, allocation of Matching Shares and the maximum number of Performance Shares following the Retention Period, an estimated annual staff turnover of 5 per cent, investment in Savings Shares by each participant to the maximum amount permitted, and expected dividends during the period. The values of the Matching Shares and 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 specified by the Board of Directors, and the correlations between the respective total yields of these shares. Based on the above assumptions, the value of each Matching Share has been calculated at SEK 151.40 and the value of each Performance Share at SEK 59.20.

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

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