Compensation and benefits for the
|
President |
Other Group
|
||
| SEK millions | 2022 | 2021 | 2022 | 2021 |
| Fixed salary 2) | 13.6 | 12.9 | 39.7 | 35.5 |
| Other benefits 3) | 0.4 | 0.4 | 2.3 | 2.1 |
| Short-term variable salary 4) | 4.9 | 0.0 | 12.3 | 0.0 |
| Long-term variable salary 4) | 2.1 | 1.0 | 8.3 | 6.0 |
| Total compensation | 21.0 | 14.3 | 62.6 | 43.7 |
| Social security | 6.6 | 4.5 | 9.9 | 9.0 |
| Pension expenses | 6.1 | 5.8 | 14.4 | 11.4 |
| Total | 33.8 | 24.6 | 86.9 | 64.0 |
1) Includes 11 (10) members of the Group Executive Committee for the full year.
2) Includes payment of SEK 0.3 (0.2) million to the President in respect of vacation compensation, as well as SEK 0.3 (0.3)
million cost-compensation related to company residence.
3) Relates primarily to housing, car and gasoline benefits. For 1 (1) member of the Group Executive Committee, benefits relating
to with international assignment are included.
4) The payments relate to compensation earned in the previous year. The compensation for 2022 is not known at the end of
the accounting year as comparisons are made to the competitors who have not yet reported their figures. Also, as the Board
of Directors can decide to reduce the compensation for special reasons, the compensation is reported in the year when the payment has taken place. Accrued variable salary components for 2022 for the entire Group Executive Committee amounted to SEK 41.0 (26.2) million.
Guidelines for remuneration of the Senior Executives are included in the Board of Directors’ report. The remuneration for the President is further discussed in the Remuneration report. Compensation to the President and other members of the Group Executive Committee consists of a fixed salary component, a short-term variable salary component, and a long-term variable salary component.
The short-term variable salary component for 2021 (paid in 2022) is related to: A) three Group objectives, 1) EBITDA margin compared to peer group (Arcelor Mittal, Nucor, Salzgitter, ThyssenKrupp, US Steel and Tata Steel Europe), 2) net operating working capital in relation to sales and 3) a sustainability objective measuring injury frequency, combined with B) divisional financial and operational objectives as well as C) one or more individual objectives.
For the president, the individual objectives account for 15% of the total short-term variable pay whereas the other 85% relate to SSAB Group objectives. For Executive Vice Presidents of Group functions, the Group objectives account for 100% and for divisional Executive Vice Presidents 40% and 60% for divisional objectives.
This short-term variable salary component is capped at 75% of fixed salary for the President and at 50% for others except for the divisional head of SSAB Americas, who receives variable compensation competitive in the local market: Meeting the targets result in variable pay of 60% of fixed salary whereas extremely good performance may amount to a maximum of 180% of fixed salary. In 2022, the outcomes of the short-term variable compensation in relation to fixed salary were on cash-basis as follows: 39.8% (0) for the President and on average 33.9% (0) for the other Group Executive Committee members.
A long-term incentive program covers a maximum of 150 key persons throughout the Group, including the company’s President and other senior executives. The purpose of the program is to promote the company’s ability to recruit and retain key contributors. The program applies for rolling three-year periods, is cash-based and linked to the total return on the SSAB share compared with a reference group comprising the company’s competitors (Arcelor Mittal, Nucor, Salzgitter, ThyssenKrupp and US Steel) and return on capital employed. For participants in the program 2019–2021 outside North America, the result is capped at between 15% and 25% of fixed salary. For participants in North America the cap is between 30% and 108%, and the program is also linked to SSAB Americas’ results and return on capital employed.
The estimated annual cost for the 2022 program is SEK 120 million including social fees in the event of maximum realization. Payments under the long-term incentive program take place in cash and on condition that the employment remains.
For the President and other Group Executive Committee members, the notice period is 12 months in the event of dismissal by the company. In addition, in such situation, severance compensation equals to 12 months’ salary for the President and 6 months’ salary for the other members. In the event of resignation by the President or another Group Executive Committee member, the termination period is 6 months and there is no entitlement to severance compensation. The President earns variable compensation during the termination period only by remaining in active service.
The President’s retirement age is 65. The pension is based on contributions and is covered by insurance, and in 2022 the cost amounted to 45% (49%) of fixed salary. Earned pension is inviolable but premium payments cease upon termination of employment. The minimum retirement age for the other members of the Group Executive Committee is 62 and the pensions are based on contributions, except for Olavi Huhtala who, since his employment in Rautaruukki, continues to be covered by the benefit-based pension scheme via Rautaruukin Eläkesäätiö with a possible retirement age of 60, as well as Charles Schmitt, whose pension scheme is in line with the US legislation and practice.