Skanska Annual Report 2003

Note 35 continued2001 yielded no outcome and the same was true of the 2002 program. This rollingone year incentive program ended with the year 2002.While awaiting a new long-term incentive program, in 2003 a temporary incentiveprogram was introduced for a number of executives including the President.When there is an outcome, the program may provide an outcome equivalentto a maximum of 10 percent of the participant’s annual salary. Any outcome isconditional upon achieving certain financial earnings targets. An equivalent oneyeartemporary incentive program also applies to 2004. The estimated maximumannual cost to the Group amounts to about SEK 35 M.F1. Employee stock options, 2000 – 2005In 2000, the Board of Skanska AB decided to allot a total of 1,596,000 “syntheticoptions” to 13 individuals in the Group Management of Skanska. Stuart Graham,now President and CEO, received 120,000 options. At present, 1,236,000 optionsremain in this program, divided among 10 individuals.The exercise price amounts to SEK 94.40, equivalent to 125 percent of the averageclosing price paid for a Skanska Series B share during the period February 28, 2000– March 3, 2000. The options may be exercised during the period March 3, 2003– March 31, 2005.F2. Employee stock options, 2001 – 2006In 2001, the Board of Skanska AB decided to allot a total of 2,040,000 options to21 individuals in Skanska’s Group Management. In February 2002, the Board ofSkanska AB approved an additional allotment of options. After the above decisions,and after adjustments due to employee attrition, the 2001 – 2006 employee stockoption program covers 28 individuals, and the number of options totals 2,304,000.Stuart Graham, now CEO, received 80,000 options.The exercise price amounts to SEK 128, equivalent to 125 percent of the averageclosing price paid for a Skanska Series B share during the period June 14–20, 2001.The options may be exercised during the period March 1, 2004–March 31, 2006.F3. Terms of employee stock optionsFor the above-mentioned employee stock option programs, the following areamong the conditions that apply. The option programs encompass synthetic optionsand settlement will take place in cash. The options were provided free of cost andmay only be exercised on the condition that the holder is still employed by Skanskaon the exercise date or has retired with a pension. The holder may not transferthe right to exercise the options. Skanska has hedged the obligations that theCompany may incur as a consequence of a market price upturn. Since the marketprice of a Skanska share on December 31, 2003 stood far below the exercise price,no provision was reported in the balance sheet, and no personnel expense in theincome statement either.The principles for reporting of employee stock options in the financial statementscan be found under “Accounting and valuation principles.”G. Local incentive programsSalaries and other remuneration are adopted with reference to prevailing conditionsin the rest of the construction industry and customary practices in each local market.Skanska applies a remuneration model for the affected executives and managersthat consists of a fixed annual salary plus a flexible salary element which is based onfinancial targets achieved.Average number of employeesOf whom Of whom Of whom Of whom2003 men women 2002 men womenParent CompanySweden 56 30 26 56 31 25SubsidiariesSweden 14,180 12,442 1,738 14,958 13,253 1,705Norway 4,599 4,228 371 4,820 4,437 383Denmark 1,816 1,636 180 2,271 2,089 182Finland 3,590 3,208 382 3,383 3,025 358United Kingdom 4,029 3,552 477 4,209 3,709 500Poland 4,060 3,296 764 6,243 5,275 968Czech Republic 6,444 5,446 998 6,526 5,556 970United States 10,332 9,182 1,150 9,462 8,339 1,123Argentina 2,758 2,705 53 2,157 2,106 51India 2,830 2,803 27 2,250 2,228 22Other countries 14,975 14,214 761 16,363 15,632 731Total 69,669 62,742 6,927 72,698 65,680 7,018Men and women on Boards of Directors and among senior executives on balance sheet dateOf whom Of whom Of whom Of whom2003 men, % women, % 2002 men, % women, %Number of Board members 328 95% 5% 364 95% 5%Number of Presidents andother senior executives 206 93% 7% 233 93% 7%Of whom Of whom Of whom Of whomParent Company 2003 men, % women, % 2002 men, % women, %Number of Board members 15 87% 13% 14 93% 7%President and othersenior executives 6 100% 0% 7 100% 0%82 Notes, including accounting and valuation principles – Skanska Annual Report 2003