SCA’s variable remuneration programmes involve executives at the Group and business group level and include both a profit-related and a share-related component.
The programme is maximized and for 2007 can give a maximum variable remuneration to the CEO, executive vice president and business group presidents amounting to 75% of the fixed salary (65% for other senior executives) while the programme for 2008 can provide a total variable remuneration to the CEO, executive vice president and business group presidents of 85% (75% for other senior executives) of fixed salary.
The profit-related component is based on an earning period of one year. The outcome of this component, which for the CEO, executive vice president and business group presidents for 2007 could provide a maximum of 50% (40% for other senior executives) of fixed salary, is dependent on whether or not the set targets are achieved. For 2007 the target for the CEO, the executive vice president and the heads of corporate staff units was measured with respect to profit before tax, while the target for the business group presidents was based on cash flow. For 2008 target measurement for all senior executives will be to a certain portion (30%) measured against earnings per share while the remainder will be measured against profit before tax (CEO, executive vice president, and heads of corporate staffs) and business group specific targets respectively (business group presidents). Any result is paid in cash after the close of each earning year. Targets for the CEO are set annually by the Board. The targets for other executives are determined by the CEO.
The share-related component is based on an earning period of one year. The result depends on how the value (known as the effective return) of SCA’s Class B shares progresses over a three-year period in relation to the value trend among SCA’s competitors in Sweden and abroad. The result requires that the effective return for SCA Class B shares exceeds the average effective return among a comparative group. For 2007 the maximum result could amount to 25% of fixed salary while for 2008 it can amount to 35%, provided the senior executive invests at least half the result (after tax) in SCA shares, otherwise at 25%.
For the CEO, who took up his position on 1 November, the programme has provided a total remuneration corresponding to 66% of fixed salary, which will be paid in 2008.
For the executive vice president, business group presidents and heads of corporate staffs the programmes provided a total remuneration corresponding to 66% of fixed salary (executive vice president) and an average remuneration corresponding to 59% of fixed salary (business group presidents) as well as an average remuneration corresponding to 58% of fixed salary (heads of corporate staffs), which remuneration will also be paid in 2008.