Variable remuneration of the CEO, Executive Vice President and Business Group Presidents and equivalents is maximised to a total of 85% of the fixed salary. For one Business Group President, stationed in the US, the maximum outcome is 95%, while the corresponding limit for other senior executives is 75%.
The programme for variable remuneration is divided into a short and long-term portion.
"The short-term portion (Short-term Incentive, or STI) for the CEO, Executive Vice President and business area presidents and comparable executives may amount to a maximum of 50% of the fixed salary."
The short-term portion (Short-term Incentive, or STI) for the CEO, Executive Vice President and Business Group Presidents and equivalents may amount to a maximum of 50% of fixed salary. For one Business Group President, stationed in the US, the maximum outcome is 60%, while the corresponding limit for other senior executives is 40%. The STI goals set for the Business Group Presidents are mainly based on operating cash flow, cost control, operating profit and growth for each business group, while the goal for the CEO and others reporting directly to him is based primarily on the Group’s profit before tax and cash flow before dividends. Furthermore, a non-financial goal also applies accounting for 10 to 20% of the variable remuneration.
The long-term portion (Long-Term Incentive, or LTI) may amount to a maximum of 35% of the fixed salary, providing that the executive invests half of the net outcome in the company’s share, and a maximum of 25% if such investment is not made. The established LTI goal is based on the performance of the company’s B share, measured as the TSR (Total Shareholder Return) index, compared with a weighted index of competitors’ shares performance (TSR) over a three-year period. The structure of the LTI was approved by the Board in 2003.
The outcome on variable remuneration is shown in note 6 of the Annual Report.
For 2011, the Company will apply the guidelines in a largely unchanged manner with regard to variable remuneration. However, the LTI will be capped at 50% of the fixed salary. In return, the senior executive must invest half of the variable LTI compensation, after tax withholdings, in SCA shares. The shares may then not be sold before the end of the third calendar year after entry into the relevant LTI programme.