Remuneration

Remuneration

Trelleborg details all aspects of remuneration – from guiding principles to breakdowns of remuneration to Group Management and the Board of Directors – in order to ensure a high degree of transparency for shareholders and other interested parties.

Principles for Remuneration

The following are the principles for remuneration of senior executives adopted by the Annual General Meeting:

  • Trelleborg will offer market-based terms of employment that enable the company to recruit, develop and retain senior executives.
  • The remuneration structure is to comprise fixed and variable salary, pension and other remuneration, which together form the individual’s total remuneration package.
  • Trelleborg continuously gathers and evaluates information on market-based remuneration levels for relevant industries and markets.
  • Principles for remuneration may vary depending on local conditions.
  • The remuneration structure will be based on such factors as position, expertise, experience and performance.

Senior executives comprise the President and other members of Group Management. The principles are supplemented by a policy for benefits for senior executives as well as a global Remuneration Policy covering all managers and senior salaried employees. In 2016, total remuneration of Group Management amounted to SEK 91,817,000 (81,714,000), excluding pension premiums, and SEK108,246,000 (104,255,000), including pension premiums.

President
During 2016, the President and CEO received a fixed salary and other remuneration as shown in the table overleaf. Pursuant to agreements, the President has the possibility of obtaining an annual variable salary. The annual variable salary has an established ceiling for full-year 2016, corresponding to a maximum of 65 percent of fixed salary. During 2016, the annual variable salary was based on the Trelleborg Group’s profit before tax and the Group’s operating cash flow, excluding both the effect of structural changes approved by the Board, the earnings effect from Vibracoustic and global growth. The President also had a minor share of the annual variable salary based on the result from Vibracoustic. The annual variable salary does not constitute pensionable income and does not form the basis of calculation of vacation pay. For 2016, an annual variable salary of SEK 6,058,000 (5,648,000) was payable to the President. 

Pensionable age for the President is 65; however, both the company and the President have the right, without special motivation, to request early retirement from the age of 60, with a mutual six-month notice of termination. If the President enters early retirement, the employment agreement and pension agreement are rendered invalid. The pension agreement is a defined-contribution scheme, and the premium comprises 40 percent of the fixed salary. Pension premiums were expensed in 2016 as shown in the table overleaf. For the President, a period of notice of 24 months applies when termination of employment is initiated by the company. The period of notice when termination of employment is initiated by the President is six months.

Other senior executives
The principles for remuneration of other senior executives are based on both a fixed and annual variable salary. The annual variable part has an established ceiling and accounts for a maximum of 40–65 percent of fixed annual salary. In 2016, one senior executive received a variable part that exceeded 65 percent. This was of a non-recurring nature and was approved by the Remuneration Committee. In 2016, the annual variable salary was based on the following factors: profit before tax, operating cash flow and global growth. In addition, a minor portion of the annual variable salary of a few senior executives was based on the result from Vibracoustic. For the business areas, other operating key figures also served as targets for annual variable salary. 

For other senior executives, the entire pension plan is a defined- ontribution scheme, whereby the pension premium can vary between 20 and 45 percent of the fixed salary. This applies to other senior executives in all countries other than Italy, where the premium level is slightly higher. Certain senior executives have extended notice of termination periods when initiated by the company, normally 12, 18 or 24 months. The period of notice from the senior executive is six months. The President and other senior executives have the possibility of having other benefits, primarily a company car and medical expenses insurance.

Long-term incentive program

Since 2005, the Board of Directors has annually resolved on a long-term incentive program for the President and for certain senior executives considered to exercise a significant influence on the Trelleborg Group’s earnings per share. These programs are ongoing, three-year programs. The Board determines annually whether to instigate new programs and, if so, the scope, objective and participants of such new programs. The incentive programs are a cash-based supplement to the annual variable salaries, provided that the executive has not terminated his employment as per December 31 in the year in which the program ends.

Taking notes with Trelleborg pen
Purpose
The incentive programs are directional and have long-term content. The aim is to increase value for the Group’s shareholders by promoting and retaining the commitment of senior executives to the Group’s development.

Target figures
The target value for the incentive programs is an annual improvement of 10 percent in the Trelleborg Group’s earnings per share. This target excludes the Group’s items affecting comparability and the impact of any share buyback programs. For the 2014-2016 program, the basis for the target figure was set as the outcome of earnings per share for 2013 and this principle has remained unchanged for the rolling three-year programs that commenced thereafter. For 2016, the effect of Vibracoustic has been excluded. All programs have an outcome that is limited to 33.3 percent of the maximum annual variable salary.

Outcome and payment
The outcomes of the programs are calculated annually and accumulated over the three-year period and potential payments are made in the first quarter of the year after the program expires. A payment was made in the first quarter of 2016 for the program approved in 2013. For the program approved for 2014, payment will be made in the first quarter of 2017, for the program approved for 2015, payment will be made in the first quarter of 2018, and for the program approved for 2016, payment will be made in the first quarter of 2019. The payments do not constitute pensionable income and do not form the basis of calculation of vacation pay. In 2016, the Group’s earnings were charged with SEK 45,423,000 (46,479,000) and additional payroll overheads of SEK 9,988,000 (10,675,000).

Other incentive programs
The Group has no ongoing convertible debenture or warrant programs at the present time.

Remuneration to the Group Management 2016

 SEK 000s   Fixed salary Annual variable salary Long Term Incentive program 1) Other Benefits Total  Pension Total including pension
 President 
 2016 9,6782) 6,058  6,7933) 180  22,709  3,9593) 26,668 
 
 2015  9,772  5,648  5,609  171  21,200  3,841  25,041
Group Management, other (10  persons) 
 2016 33,814  16,855  17,128  1,311  69,108  12,470  81,578 
   2015 33,083  11,844  14,218  1,369  60,514  18,700  79,214 
 Total  2016 43,492  22,913  23,921  1,491  91,817  16,429  108,246 
 Total  2015 42,855  17,492  19,827  1,540  81,714  22,541  104,255 

1) Expensed 2016. Payment to be made in first quarter 2017 to 2019 on condition that the executive has not terminated his/her employment in the Group as of December 31 in the previous year.
2) Of this amount, fixed salary represented SEK 9,703,000, with the remainder mainly consisting of a change in vacation pay liability.
3) The sum expensed for the President in 2016 includes an accounting effect due to the allocation of amounts to certain periods. However, the maximum amount is within the specified framework..

Total remuneration 

In 2014, total remuneration of Group Management amounted to sek 76,898,000 (75,203,000), excluding pension premiums, and sek 97,629,000 (91,811,000), including pension premiums. 

Remuneration to the Board of Directors


   2016*      2015*  

TSEK

Board  Committee  Total  Board Committee  Total 
Sören Mellstig   1,425  230 1,655   1,300  100  1,400 
Hans Biörck  520 175  695   475  200  675
Jan Carlson  520 170  690   475  50  525
Gunilla Fransson  520  520   -  - -
Johan Malmquist  520  60  580   -  -  -
Peter Nilsson  -  -  -  -
Anne Mette Olesen 520  60  580   475  -  475
Susanne Pahlén Åklundh
520  520   -  -  -
Bo Risberg 520  170  690   475  150  625
Göran Andersson  -  -  -  -  -  -
Peter Larsson  -  -  -  -  -  -
Mikael Nilsson  -  -  -  -  -  -
Ingemar Thörn  -  -  -  -  -  -

*Remuneration paid to the Board of Directors for the period May 2016-April 2017. The fees paid to the members of the Board of Directors elected by the Annual General Meeting are approved by the Annual General Meeting based on the proposals of the Nomination Committee. For the 2016 calendar year, remuneration was paid as per Note 4. No consulting fees were paid to Board members. Remuneration is not paid to executive Board members. Remuneration excludes travel allowances.