In accordance with the Swedish Companies Act, the Annual General Meeting shall each year, as proposed by the Board of Directors, take decisions regarding guidelines for remuneration of senior executives. The guidelines are to include the President and other members of company management.
Guidelines for remuneration
The company's auditor is, no later than three weeks before the Annual General Meeting, to submit a written opinion on compliance with the guidelines that have applied since the previous Annual General Meeting.
The 2017 Annual General Meeting adopted the following guidelines for remuneration and other employment conditions for senior executives:
Remuneration of senior executives will be a fixed amount, variable remuneration, additional benefits and pension. The total remuneration is to correspond to market practice and be competitive in the senior executive's field of profession and linked to the manager's responsibility and authority.
Variable remuneration is to be limited and linked to the fixed remuneration, based on earnings results in relation to annual and long-term established targets. In the event of termination of employment, the notice period should normally be up to two years if termination is initiated by the company, and up to one year, when initiated by the senior executive. There will be no severance pay.
Pension benefits should, wherever possible, only include defined premium pension benefits and entitle the executive to receive a pension from the age of 65.
Variable remuneration is not pensionable income.
The Board of Directors has the right to depart from the established guidelines if there is an individual case with special grounds. The guidelines do not take precedence over compulsory conditions in accordance with labor legislation or collective agreements. Furthermore, they are not applicable to existing contracts.
Variable remuneration of the President is maximized to a total of 100% of the fixed salary. For Business Area Presidents and Central Staff Managers, variable remuneration is maximized to a total of 80% of the fixed salary.
The program for variable remuneration is divided into a short and long-term portion.
The short-term portion ("Short-term Incentive" or STI) for the President may amount to a maximum of 50% of fixed salary and for Business Area Presidents and Central Staff Managers a maximum of 40% of fixed salary. The STI goals set for Business Area Presidents are mainly based on operating cash flow, cost control, operating profit and production targets for each business area. The goal for the President and other managers reporting directly to him is based primarily on the Group's operating profit, operating cash flow and capital employed relative to sales.
The long-term portion ("Long-Term Incentive" or LTI) may amount to a maximum of 50% of the fixed salary for the President and a maximum of 40% for other senior executives. The senior executive is to 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 the purchase of shares in the relevant LTI program. 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' and consumer companies' share performance (TSR) over a three-year period.