Principles for Remuneration
The following general principles for remuneration of senior executives were adopted by the 2022 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, evaluates and adapts 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 governing benefits for senior executives as well as a global Remuneration Policy covering all managers and senior salaried employees. In 2021, total remuneration of Group Management amounted to SEK 69,927,000 (43,747,000), excluding pension premiums, and SEK 80,682,000 (55,414,000), including pension premiums.
President
During 2021, 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 earning an annual variable salary. The annual variable salary has a fixed ceiling. Normally, this ceiling corresponds to a maximum of 65 percent of the fixed salary. For 2021, the company’s Board has decided on an exception as described in Remuneration Report 2021 on pages 66–67 of the 2021 Annual Report. In 2021, the annual variable salary was based on financial targets and specific sustainability targets. The annual variable salary does not constitute pensionable income and does not form the basis for the calculation of vacation pay. For 2021, an annual variable salary of SEK 8,956,000 (2,057,000) was paid to the President.
Pensionable age for the President is 65; however, both the company and the President have the right, without a special cause, to request an early retirement from the age of 60, with a mutual six-month notice of termination. Should the President enter into an early retirement, the employment agreement and the pension agreement will be null and void. The pension agreement is a defined-contribution scheme, and the premium comprises 45 percent of the fixed salary. Pension premiums were paid in 2021 as shown in the table to the right. For the President, a notice period of 24 months applies should termination of employment be initiated by the company. Should a termination of employment be initiated by the President, the notice period shall be six months.
Other senior executives
The principles for remuneration of other senior executives are based on a fixed and annual variable salary as well as certain benefits. Since 2022 the annual variable component has a fixed ceiling accounting for a maximum of 100 percent of the fixed annual salary. For 2021, the company’s Board has decided on an exception as described in Remuneration Report 2021 on pages 66–67 of the 2021 Annual Report. For 2021, the annual variable salary was based on profit before tax, operating cash flow, and specific sustainability targets.
For other senior executives, the entire pension plan was based on a defined-contribution model, whereby the pension premium varied between 10 and 40 percent of the fixed salary. For other Swedish senior executives, the maximum level of 35 percent in accordance with the policy was applied in 2021.
Certain senior executives have extended notice periods when a termination of employment is initiated by the company, normally 12, 18, or 24 months. Should a termination of employment be initiated by a senior executive, the notice period is six months. The President and other senior executives have also been entitled to 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 senior executives considered to have a significant influence on the Trelleborg Group’s earnings per share. These programs are rolling on three-years at the time. The Board determines annually whether to introduce new programs and, if so, the scope, objective and participants. The long-term incentive programs have been a cash-based supplement to the annual variable salaries, provided that the executives have not terminated their employment as per December 31 in the year when the program ends.
Purpose
The long-term incentive programs shall be designed to contribute to Trelleborg’s business strategy and long-term interests including its sustainability. The ultimate target is to increase the shareholder value by promoting, developing and retaining senior executives.
Target figures
The target value for the long-term incentive program is an annual improvement of 10 percent of the Trelleborg Group’s earnings per share. This target shall exclude the Group’s items affecting comparability and the impact of any share buyback programs. For the 2018–2020 programs, the basis for the target figure was set as the outcome of earnings per share for 2017. This principle has remained unchanged for the rolling three-year programs that commenced thereafter. All programs have an outcome limited to 33.3 percent of the maximum annual variable salary per year in the program.
Outcome and payment
The outcome of the programs are calculated annually, accumulated over the respective three-year period and potential payments are made in the first quarter of the year after the program expires. Therefore, a payment was made in the first quarter of 2021 for the program approved in 2018. For the program approved for 2019, payment will be made in the first quarter of 2022, for the program approved for 2020, payment will be made in the first quarter of 2023, and for the program approved for 2021, payment will be made in the first quarter of 2024. These payments do not constitute pensionable income and do not form the basis of calculation of vacation payment.
In 2021, SEK 27,432,000 (–) was expensed as the targets were partially achieved.
Other incentive programs
The Group has no other ongoing incentive programs such as convertible debentures, warrant programs, share incentive programs or similar at the present time.
Remuneration to the Group Management 2021
| SEK 000S | Fixed salary | Annual variable salary | Long Term Incentive program 1) | Other Benefits | Total | Pension | Total including pension | |
|---|---|---|---|---|---|---|---|---|
| President | 2021 | 11,917 | 8,956 | 4,614 | 221 | 25,708 | 5,181 | 30,899 |
| 2020 | 11,330 | 2,057 | - | 198 | 13,585 | 5,047 | 18,632 | |
| Group Management, others (6 persons) | 2021 | 24,401 | 13,233 | 5,461 | 1,124 | 44,219 | 5,574 | 49,793 |
| 2020 | 23,630 | 5,024 | - | 1,528 | 30,162 | 6,620 | 36,782 | |
| Total | 2021 | 36,318 | 22,189 | 10,075 | 1,345 | 69,927 | 10,755 | 80,682 |
| 2020 | 34,940 | 7,081 | - | 1,726 | 43,747 | 11,667 | 55,414 |
1) Expensed in 2021. Payment is made in the first quarter, 2022 to 2024, on condition that the individual is employed in the Group on December 31 of the preceding year
In November 2018, the principal owner – The Henry Dunker Donation Fund & Foundations – offered Trelleborg’s Group management 12,500 call options each, except the President and CEO who was offered 50,000 call options, in Trelleborg, with a term of five years. They purchased these call options at a price of SEK 9.86 per call option. Each call option entitles the holder to purchase one Series B share at a call price of SEK 175.83. The Black & Scholes method was used in the valuation of the call options. The principal owner’s intention in introducing the program was to encourage the Group management’s long-term commitment to the company. Trelleborg AB did not participate in the offer and will not have any expenses in connection with the offer.
Remuneration to the Board of Directors 2021
|
|
|
|
2021*
|
|---|---|---|---|
|
SEK 000s |
Board | Committee | Total |
| Hans Biörck | 1 900 | 385 | 2,285 |
| Gunilla Fransson | 650 | 250 | 900 |
| Monica Gimre | 650 | 150 | 800 |
| Johan Malmquist | 650 | 170 | 820 |
| Peter Nilsson | - | - | - |
| Anne Mette Olesen | 650 | 85 | 735 |
| Jan Ståhlberg | 650 | 235 | 885 |
| Jimmy Faltin | - | - | - |
| Lars Pettersson | - | - | - |
| Maria Eriksson | - | - | - |
| Magnus Olofsson | - | - | - |
*Remuneration paid to the Board of Directors for the period May 2021–April 2022. 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 2021 calendar year, remuneration was paid as per Note 10. No consulting fees were paid to the Board members. Remuneration is not paid to executive Board members. Remuneration excludes travel allowances.