Note 9 Employees, personnel costs and remuneration to senior officers

Costs for remuneration to employees

Group, MSEK 2017 2016
Salaries and remuneration etc. 6,792  6,211
Pension costs, defined contribution plans 702  614
Social security 2,034  1,909
Total 9,528  8,734

Average number of employees

No. of employees 2017 Of which were men 2017 percent No. of employees 2016 Of which were men 2016 percent
Parent company
Sweden 136 46  128  49
Subsidaries
Sweden 12,022 88  11,403  89
Norway 1,692 92  1,508  92
Finland 724 84  670  86
Poland 4 50  3  67
Total in subsidaries 14,442 89  13,584  89
Group 14,578 88  13,712  89

Gender distribution in boards and other senior officers

  2017 2016
Percentage of women Percentage of women
Parent company
The Board of Directors 27  27
Other senior officers 0  33
Group 
Boards 1) 11  9
Other senior officers 2) 15  11

1) Refers to the Board of Directors in the parent company and boards in subsidiaries.
2) Other senior officers in the Group refers to the other senior officers in the parent company along with business area management.

Salaries and other remuneration as well as pension costs for leading senior officers

Group 2017, MSEK Board of Directors and senior officers (14 persons) 1)
Salaries and other remuneration 25
– of which variable remuneration etc.
Pension costs 25
– of which pension costs for variable remuneration 16

1) The group leading senior officers refers to executive management. During 2017 the group consisted of six persons, three of which were in the parent company. 

Group 2016, MSEK Board of Directors and senior officers (14 persons) 1)
Salaries and other remuneration  31
– of which variable remuneration etc.
Pension costs  20
– of which pension costs for variable remuneration  11

1) The group leading senior officers refers to executive management. During 2016 the group consisted of six persons, three of which were in the parent company. 

Salaries and other remuneration divided among leading senior officers and other employees as well as social security costs

Parent company 2017, MSEK Board of Directors and senior officers (11 persons) 1) Other employees Total
Salaries and other remuneration 17 93 110
– of which variable remuneration etc. 2 2
Social security costs 26 63 89
– of which pension costs 6 19 25
– of which pension costs for variable remuneration 10 3 13

1) The group leading senior officers refers to executive management. During 2017 the group consisted of six persons, three of which were in the parent company.

Parent company 2016, MSEK Board of Directors and senior officers (11 persons) 1) Other employees Total
Salaries and other remuneration  22 92 114
– of which variable remuneration etc.  1 1
Social security costs  20 57 77
– of which pension costs  5 20 25
– of which pension costs for variable remuneration 6 2 8

1) The group leading senior officers refers to executive management. During 2016 the group consisted of six persons, three of which were in the parent company.

Salaries and other remuneration for leading senior officers in 2017

Thousands, SEK Basic salary/Board remuneration Variable remuneration LTI-program 1) Other benefits Pension costs Total
Chairman of the Board, Göran Grosskopf 720 720
Vice Chairman of the Board, Mats Paulsson 330 330
Other members of the Board
Karl-Axel Granlund 360 360
Lars Sköld 420 420
Fredrik Paulsson 330 330
Kerstin Lindell 360 360
Nina Udnes Tronstad 300 300
Malin Persson 300 300
Board of Directors fees, remuneration from the parent company 3,120 3,120
CEO, Jesper Göransson 7,029 3,270 1,806 87 3,250 15,442
Other senior officers, remuneration from the parent company 7,087 3,270 1,754 164 3,153 15,428
Other senior officers, remuneration from subsidiaries 8,156 3,835 2,008 171 3,135 17,305
Total 25,392 10,375 5,568 422 9,538 51,295
Remuneration from the parent company 17,236 6,540 3,560 251 6,403 33,990
Remuneration from subsidiaries 8,156 3,835 2,008 171 3,135 17,305

1) Refers to reserved costs for the year and the amount depends on the AGM’s decision on 7 May 2018 regarding the size of dividends. For more information see Long-term incentive program (LTI program) here.

Salaries and other remuneration for leading senior officers in 2016

Thousands, SEK Basic salary/Board remuneration Variable remuneration LTI-program Other benefits Pension costs Total
Chairman of the Board, Göran Grosskopf  650  650
Vice Chairman of the Board, Mats Paulsson  3,030  3,030
Other members of the Board
Karl-Axel Granlund  295  295
Lars Sköld  265  265
Fredrik Paulsson  265  265
Kerstin Lindell  265  265
Nina Udnes Tronstad  235  235
Malin Persson  235  235
Board of Directors fees, remuneration from the parent company  5,240          5,240
CEO, Jesper Göransson  5,730  1,936  1,045  85  2,486  11,282
Other senior officers, remuneration from the parent company  10,741 1)  1,914  1,135  167  2,488  16,445
Other senior officers, remuneration from subsidiaries  8,825  2,934  1,762  172  3,936  17,629
Total  30,536  6,784  3,942  424  8,910  50,596
Remuneration from the parent company  21,711  3,850  2,180  252  4,974  32,967
Remuneration from subsidiaries  8,825  2,934  1,762  172  3,936  17,629

1) Includes provisions for termination salaries.

Comments on the tables

From time to time the CEO and other senior officers may be offered variable remuneration. Other benefits refer to company cars.

Pension costs refer to costs charged to the year. See note 31 for additional information about pensions. In 2017 the group senior officers consisted of six persons (six), of which three officers (three) were in the parent company.

The Board of Directors

The 2017 AGM decided on a total remuneration to members of the Board of SEK 3,120 thousand (5,240), of which SEK 2,700 thousand (4,970) refers to Board work and SEK 420 thousand (270) refers to committee work. Compensation to the Chairman of the Board was SEK 600 thousand (560) and SEK 2,100 thousand (4,410) was divided among the other Board members. Compensation for work on the Remuneration Committee was SEK 90 thousand (90), SEK 90 thousand (90) for work on the Finance Committee and SEK 240 thousand (90) for work on the Audit Committee. During the year the total amount of fees paid was SEK 3,120 thousand (5,240). In 2016 a special compensation of SEK 2,765 thousand was paid to the Vice Chairman of the Board for his availability to the Group in matters concerning customers and the market. No special compensation was paid out in 2017.

Remuneration is not paid to members of the Board who are permanent employees of the Group. There are no agreements for future pension/leaving remuneration or other benefits either for the Chairman of the Board of Directors or for other members of the Board.

Principles for remuneration to senior officers

The group senior officers is comprised of six senior officers who are members of executive management. The principles for remuneration to senior officers were adopted by the 2017 AGM.

Remuneration to the CEO and other senior officers consists of a fixed salary, any variable remuneration, extra health insurance and those benefits otherwise enjoyed by other Peab employees as well as pension. All pension obligations are defined contribution pensions. The total remuneration paid to each senior officer is based on market terms and the responsibilities and qualifications of the senior officer.

From time to time, senior officers may be offered variable remuneration. Such variable remuneration may not exceed 60 percent of their regular salary and is primarily based on Peab Group’s pre-tax profit. Variable remuneration is decided for each financial year. Variable remuneration for the financial year 2017 was maximized at SEK 3,960 thousand (3,240) for the CEO and a total of SEK 8,604 thousand (8,114) for the other senior officers.

Variable remuneration is settled the year after being earned and may either be paid out as salary or placed as pension in financial instruments connected to the Peab share. If it is paid out as a one-off defined pension contribution adjustments are made so as to neutralize the total cost for Peab.

From time to time, senior officers may be offered to participate in a LTI program. This variable remuneration is based on the operative operating margin for the Group and the dividend level. For senior officers and the CEO the upper limit (including social security) is 40 percent of their fixed annual salary. The result of the LTI program is placed in a pension savings in a financial instrument connected to the Peab share. Provisions for the LTI program for 2017 were maximized at SEK 2,640 thousand (including social security) for the CEO and a total of SEK 5,736 thousand for the other senior officers.

The period of notice from Peab is, at the most, 24 months and the period of notice from Senior officers is, at the most, 6 months.  If severance pay is paid the total remuneration for salary during the period of notice and severance pay may not exceed 24 months wages.

The CEO

The CEO of Peab AB, Jesper Göransson, has in 2017 received wages and other remuneration, including benefits, totaling SEK 7,116 thousand (5,815). In addition, he has received variable remuneration for 2017 of SEK 3,270 thousand (1,936) and a provision for the LTI program of SEK 1,806 thousand (1,045) has been made, which was placed in a pension savings in a financial instrument connected to the Peab share. Pension contributions for the year were SEK 3,250 thousand (2,486).

The CEO has the right to retire from the age of 62. Annual pension contributions of 47 percent of basic salary are paid to meet this pledge. These are defined contribution pensions.

Notice on the part of Peab is twelve months with a reduction for any salary from a new employer combined with a severance pay of twelve months salary. Notice on the part of the CEO is six months combined with severance pay consisting of six months salary.

Other senior officers

The term other senior officers refers to the five other persons in addition to the CEO that make up Peab’s executive management. Salary and other remuneration including benefits for other senior officers amounted to SEK 15,578 thousand (19,905). The comparison year included provisions for termination salaries as well. In addition, variable remuneration for 2017 amounted to SEK 7,105 thousand (4,848) and provisions for the LTI program amounted to SEK 3,762 thousand (2,897) including social security, which will be placed in pension savings in a financial instrument connected to the Peab share.

Pension contributions paid for other senior officers amounted to SEK 6,288 thousand (6,424) during the year.

A new pension policy was established in 2017 for senior officers. This means that there are two parallel principles for senior officers in executive management. The older principle gives senior officers the right to retire from the age of 62 and annual pension contributions of 47 percent of basic salary are paid for this obligation. In the newer principle employment ends the month an officer turns 65 and annual pension contributions of 35 percent of basic salary are paid for this obligation. All pensions are defined contribution plans.

Notice on the part of Peab is twelve months with a reduction for any salary from a new employer combined with severance pay consisting of twelve months salary. Notice on the part of the other senior officers is six months combined with severance pay consisting of six months salary.

Long-term incentive program (LTI program)

From time to time, senior officers may be offered to participate in a LTI program. A LTI program was launched for 2015 – 2017 with annual provisions based on meeting the operating margin goal for the Group. The provisions’ size is related to the total dividends disbursed to shareholders for the year. The program was open to approximately 500 of the Group’s key employees. In order for an employee to receive their share of the result of the LTI program the employee had to have been working consistently for Peab from 2015 to 31 December 2017. For senior officers and the CEO the upper limit (including social security) was 40 percent of their fixed annual salary. For other positions the upper limit (including social security) was 15-35 percent of their fixed annual salary, depending on their position. The result of the LTI program is either placed in a pension savings connected to the Peab share or alternatively paid out to the employee as salary in 2018. In 2017 the cost of the LTI program amounted to SEK 83,5 million (66) including social security.

A new LTI program was launched for 2018 – 2020 and will be annually reconciled with operating margin goals for the Group. The program is open to approximately 500 of the Group’s key employees. In order for an employee to receive their share of the result of the LTI program the employee has to still be working for Peab on 31 December 2020. For senior officers and the CEO the upper limit (including social security) is 40 percent of their fixed annual salary. For other positions the upper limit (including social security) is 15-35 percent of their fixed annual salary, depending on their position. The result of the LTI program will be placed in a pension savings connected to the Peab share.

Profit-sharing foundation

In 2007, Peab founded a profit-sharing foundation. The object of the profit-sharing foundation is to create greater participation through employee co-ownership and to better employees’ financial situation after retirement. Individual annual shares in profits is related to the employee’s profit-sharing entitling work hours. Upon retirement employees can withdraw their share in the foundation. Under the foundation’s investment policy, its assets must be mainly invested in shares in Peab. In 2017 Peab allocated SEK 73 million. This amount less payroll tax will be paid into the foundation in 2018. In 2016 Peab allocated SEK 52 million including payroll tax. Senior officers are not entitled to benefits from the profit-sharing foundation.