Proposal by the Board for 2011
For 2011, the Board proposes that compensation to the President and other members of the Company’s management shall comprise a fixed salary, possible variable salary components, other benefits, such as company car, as well as pension. “Other members of the Company’s management” means members of the Group Executive Committee, currently eight persons in addition to the President. The total compensation package shall be on market terms and competitive in the employment market in which the executive works. Fixed salary and variable salary components shall be related to the executive’s responsibilities and authority. The variable salary components shall be based on results as compared with defined and measurable targets and shall be subject to a ceiling in relation to the fixed salary. Variable salary shall not be included in the basis for computation of pension, except in those cases where so provided in the rules of a general pension plan (e.g. the Swedish ITP plan). For senior executives outside Sweden, all or parts of the variable salary may be included in the basis for pension computation due to legislation or local market practice.
Programs for variable salary should be structured such that, in the event of exceptional circumstances, the Board has the possibility to limit or withhold payment of variable salary where such a measure is deemed reasonable and compatible with the Company’s responsibilities to shareholders, employees and other stakeholders.
Consulting fees on market terms may be payable to the extent a director performs work on behalf of the Company, in addition to the duties serving on the Board.
Senior executives in Sweden must give six months’ notice of termination of employment. In the event of termination by the Company, the total termination period and the period during which severance compensation is payable shall not exceed 24 months. Pension benefits are determined either as benefit-based or contribution-based, or a combination thereof, with individual retirement ages, however under no circumstances below the age of 60. Benefit-based pension benefits are conditional on the benefit being earned during a predetermined period of employment. In the event the employment terminates prior to retirement age, the executive shall receive a paid-up policy regarding earned pension. Termination periods and severance compensation for senior executives outside Sweden may vary due to legislation or local market practice.
The Board of Directors shall be entitled to deviate from the guidelines where special reasons exist in an individual case.
Variable salary 2010
For the President and the other members of the Group Executive Committee, the variable salary component 2010 is linked to the Group’s EBITDA margin relative to a number of comparable steel companies and to a target for cash flow established by the Board, combined with one or more individual targets.
Temporary incentive program
In connection with the acquisition of IPSCO, the Board made the assessment that, in light of the size of the acquisition and the major financial strain resulting from the acquisition, it was of the utmost importance to achieve a rapid integration of the business, that identified synergies quickly could be realized, that earnings continued to develop positively during the integration of the merged SSAB/IPSCO, and that senior executives remained with the Company during this critical period. Therefore, the Board of Directors decided on a temporary incentive program for a number of key persons stationed in Sweden who were engaged in the integration of the American operations, which includes the Swedish members of the Group Executive Committee, including the President. This temporary incentive program consisted of variable compensation and applied as a supplement to the already existing variable salary component. For the Swedish members of the Group Executive Committee, the incentive program applied during a maximum of two years commencing July 2007 and was capped at 100 percent of each member’s fixed annual salary. The amount payable depended entirely on the degree to which a number of established targets were achieved as regards the integration of the American operations into SSAB’s operations. The targets comprised the Group’s EBITDA margin compared with a number of comparable steel companies, a cash flow target established by the Board, and realized synergies. The first year’s outcome was paid in cash in 2008. Payment of the second year’s outcome was, for the time being, stopped in accordance with the resolution adopted at the 2009 Annual General Meeting which authorized the Board to limit or withhold payment of variable compensation in the event of exceptional economic circumstances. However, the cost affected 2009. During 2010 the Board decided to pay two thirds of the maximum outcome.
For more detailed information regarding compensation, see Note 2.