Decided by AGM September 2019
In accordance with the guidelines prepared by the Board, the 2019 AGM adopted the following policies for remuneration and other terms of employment for company management (the President and other members of Executive Group management). The guidelines are unchanged since the AGM 2013. The guidelines state that:
Remuneration to company management is to be based on normal market terms, while also supporting the interests of shareholders. Remuneration primarily comprises fixed salary, variable salary, pension benefits and other benefits, such as a company car. Pension benefits are defined-contribution.
Fixed salary is established by accounting for the senior executive’s experience, responsibilities and performance and is based on market conditions. Variable remuneration is proportionate to the executive’s responsibilities and authority. It has a maximum limit and is based on the attainment of goals that promote the company’s long-term value-creation. Where applicable, variable salary is based on pre-determined and measurable criteria. The company’s costs for the variable salary portion for the President and other members of company management amount to not more than 50% of the fixed salary costs.
The notice period for terminating employment by the senior executive is a maximum of 12 months. If employment is terminated by the company, the total notice period and the time during which severance pay is received is a maximum of 24 months. Ordinary retirement age is 65. Pension terms are market-based and based on defined-contribution pension solutions. The pension premium is not more than 30% of the fixed and variable salary.
Board members with special expertise who perform services for the company beyond the scope of the Board assignment may receive a fee for such services payable at market rates. Decisions on such fees are addressed by the Board of Directors, without the participation of the relevant Board member in either the consideration or the decision.
Matters concerning remuneration to company management are addressed by the President. Remuneration to the President is resolved by the Board of Directors.
The Board of Directors shall be able to deviate from the guidelines for remuneration drawn up by the AGM, if there are special reasons for so doing in individual instances.
Remuneration of the Board
Fees are paid to the Board Chairman and other external members in accordance with the decision of the Annual General Meeting. Internal Board members are not paid a fee.
In 2019/2020, a fee of SEK 225,000 was paid to each of the Board members, and SEK 450,000 was paid to the Chairman of the Board. For Audit Committee work, SEK 50,000 was paid to external Board members and SEK 100,000 to the Chairman of the Audit Committee. No separate fees were paid for Remuneration Committee work. Other remuneration pertains to consultant services for assignments in which a Board member has specialist expertise.
Remuneration of the President and other senior executives
Remuneration of the President/CEO and other senior executives is based on market terms and comprises basic salary, variable salary, other benefits and pension. The fixed salary is determined taking into account experience, responsibility and performance. The variable salary is performance-based and capped at a percentage of the fixed annual salary, which is a maximum of 50%. “Other senior executives” refers to the nine individuals who, together with the President/CEO, comprised Group Management during the fiscal year.
Further information see Sectra’s Annual Report 2019/2020, Note 2 page 82.
Preparation and decision-making process
The Board fee was decided at the Annual General Meeting in accordance with the proposal of the Nomination Committee. Guidelines for remuneration of the President and other senior executives are determined at the Annual General Meeting. Remuneration to the President/CEO was prepared by the Remuneration Committee and decided by the Board of Directors. The President/CEO prepared and decided on the remuneration of other senior executives.
Terms of notice and severance pay
The company must give the President/CEO 18 months’ notice of termination. The President/CEO must give the company six months’ notice of resignation. The notice periods for other senior executives range from three to 12 months on the part of the company, and from three to six months on the part of the executives. There are no special agreements regarding severance pay.
The retirement age for the President and other senior executives is 65. Pension benefits for the President and other senior executives are paid within the framework of the pension plan that applies to all employees, which is a defined-contribution and vested pension.
Convertibles programs enable employees and external Board members to acquire shares in the company. For further information on outstanding share-based incentive programs, please see:
Evaluation and statements
The Board has authorized the Remuneration Committee to assume responsibility for matters pertaining to the company’s and the Group’s bonus system and remuneration policy. The main task of the Remuneration Committee is to prepare the Board’s decisions on matters pertaining to principles for remuneration and other terms of employment for the President and management and the guidelines for remuneration of senior executives that the AGM is legally obliged to establish.
The Remuneration Committee’s tasks also include:
- preparing supporting documentation on certain matters of principle or other important matters pertaining to remuneration, such as incentive programs and profit-sharing systems.
- monitoring and evaluating all programs for variable remuneration of company management.
- monitoring and evaluating the application of the guidelines for remuneration of senior executives established by the AGM, as well as the current remuneration structures and levels in the company.
Here you find the Board’s presentation of the remuneration committee’s evaluation and the statement of Auditor whether the guidelines for remuneration to senior executives adopted by the AGM of shareholders :