Annual Report 2011 - Skanska

Note37Remuneration to senior executives and Board membersThe Senior Executive Team includes the President and CEO and all eight ExecutiveVice Presidents. The Team consisted of a total of nine persons at the end of 2011.The term “senior executives” refers to the members of the Senior Executive Team.Preparation and decision-making processesPrinciples for remuneration to senior executives are established annually by theAnnual Shareholders’ Meeting. The salary and other benefits of the President andCEO are established by the Board of Directors of Skanska AB, following recommendationsfrom the Board’s Compensation Committee. The Committee sets salaries,variable remuneration and other benefits of the other members of the Senior ExecutiveTeam. The President and CEO regularly informs the Compensation Committee aboutthe salaries, variable remuneration and other benefits of the heads of Group staffunits and business units. During 2011, the Compensation Committee consisted ofSverker Martin-Löf, Chairman of the Board; Stuart Graham, Vice Chairman of theBoard; and Lars Pettersson, Board member. The Compensation Committee metseven times during the year. The Annual Shareholders’ Meeting approves the totalamount of directors’ fees and remuneration for committee work for members of theBoard, following a recommendation from the Nomination Committee.Remuneration to senior executivesPrinciples for remunerationThe Annual Shareholders’ Meeting in 2011 approved the following guidelines forsalary and other remuneration to senior executives:Remuneration to the senior executives in Skanska AB shall consist of fixed salary,variable remuneration, if any, other customary benefits and pension. The senior executivesinclude the CEO and the other members of the Senior Executive Team. Thecombined remuneration for each executive must be market-related and competitivein the labor market in which the executive is placed, and distinguished performanceshould be reflected in the total remuneration.Fixed salary and variable remuneration shall be related to the senior executive’sresponsibility and authority. The variable remuneration shall be payable in cashand/or shares and it shall be capped and related to the fixed salary. Distribution ofshares shall have a vesting period of three years and be part of a long-term incentiveprogram. The variable remuneration must be based on results in relation to establishedtargets and be designed to increase the community of interest between theexecutive and the shareholders of the company. The terms for variable remunerationshould be structured so that the Board, if exceptional economic conditions prevail,has the possibility to limit or refrain from paying variable remuneration if such a paymentis considered unreasonable and incompatible with the company’s responsibilityin general to the shareholders, employees and other stakeholders.To the extent that a Board member performs work for the company, besides theBoard membership, consultant fee and other remuneration may be granted for suchwork.In the event of employment termination, the normal period of notice is sixmonths, combined with severance pay corresponding to a maximum of 18 monthsof fixed salary or, alternatively, a period of notice of maximum 24 months.Pension benefits should be either defined-benefit or defined-contributionschemes, or a combination of these, and should entitle the executive to the right toreceive a pension from the age of 65. However, a pension at age of earliest 60 yearsmay be granted in individual cases. For defined benefit plans years of service requiredfor fully earned benefits shall normally correspond to the years of service required forgeneral pension plans in the same jurisdiction. Variable salary shall not be includedin pensionable salary except when it follows from rules under a general pension plan(like the Swedish ITP plan).The Board of Directors may under special circumstances deviate from theseprinciples in individual cases.Matters related to remuneration to the CEO are prepared by the CompensationCommittee and decided by the Board of Directors. Matters related to remunerationto other senior executives are decided by the Compensation Committee.158 Notes, including accounting and valuation principles Skanska Annual Report 2011