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Incentive structures among publicly listed Swedish companies

Below follows market reference on publicly listed Swedish Large Cap companies, with characteristics concerning program types, performance criteria, eligibility and dilution of shareholders’ equity. 

Sweden - large cap

KPI:s

Close to two thirds of Swedish Large Cap incentive programs focus on performance shares, commonly with performance metrics such as TSR, EBIT(DA) and EPS, with also ESG commonly used, but with a smaller weight.

Key employees

Majority of all programs include Key Employees outside of Executive Management, who usually receive smaller, but still meaningful, allocations in the program.

Dilution

Dilution is averaging 0.33%, often with smaller dilution in PRSU programs, and larger in Warrant/Call option programs.

Program Types

Untitled presentation (9)

Program length

Untitled presentation (11)

Key activities - LTI design & implementation

Feasibility

Review of alternatives, limitations, and desired goals of the plan. Getting a go/no-go for further plan design

Design

Designing the plan structure and plan parameters. Cost estimates of the plan.

Legal & Tax

Creating all the necessary legal documents. Tax and Legal topics and restrictions in global companies.

Communication

Creating awareness and excitement for the plan and making sure the plan employees understand the plan details.

Administration

Setting up payroll, HR and Treasury processes. On-going administration for the plan to run smoothly.

Reward payment

Participants are rewarded at the end of each plan period for their continuous commitment and active ownership.

Untitled presentation (5)

Remco agenda

Q4

  • STI & LTI | Evaluation and design (plan design, participation, KPI:s)
  • STI |Preparation of KPI outcomePreparation of target setting for coming cycle.
  • Annual Report | Remuneration input
  • Payroll Audit | Prepare budget for coming year approval management salary adjustments.
  • Salary Benchmark (CEO & Management) | Prepare and review data and system

Q1

  • LTI | Decide on the principles, shareholder anchoring and AGM proposal
  • LTI | Preparation on exercise of previous program
  • STI | Decide on the principles and Board proposal
  • Previous program: KPI evaluation and pay-out
  • LTI | Board decision on the program proposal

Q2

  • Pay-roll Audit | Preparation
  • AGM Notice | LTI proposal and remuneration guidelines
  • AGM | Chairman’s presentation of LTI proposal and remuneration guidelines, decision
  • LTI & STI | Implementation and communication to participants
  • LTI | Exercise.

Q3

  • Salary Data | Benchmark for revision
  • LTI | Prepare LTI for coming years
  • Succession Planning | Data for revision, rolling updates, reconciliation with the Board
  • Role Grading | Process for establishment of role grading and revision.
  • Remuneration Guidelines | Review of remuneration guidelines for upcoming year
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