Note 10 Employees, personnel costs and remuneration to senior officers

Comments on the tables

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

Pension costs refer to costs charged to the year. See note 30 for additional information about pensions. In 2019 the group senior officers consisted of eight persons, of which four officers were in the parent company. During January-October 2018 the group consisted of six persons, three of which were in the parent company. From November 2018 the group consisted of seven persons, four of which were in the parent company.

The Board of Directors

The 2019 AGM decided on a total remuneration to members of the Board of SEK 4,875 thousand (4,260), of which SEK 4,050 thousand (3,600) refers to Board work and SEK 825 thousand (660) refers to committee work. Compensation to the Chairman of the Board was SEK 900 thousand (800) and SEK 3,150 thousand (2,800) was divided among the other Board members. Compensation for work on the Remuneration Committee was SEK 225 thousand (180), SEK 225 thousand (180) for work on the Finance Committee and SEK 375 thousand (300) for work on the Audit Committee.

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 eight senior officers who are members of executive management. The principles for remuneration to senior officers were adopted by the 2019 AGM.

Remuneration to the CEO and other senior officers consists of basic pay, any short-term incentives, 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 short-term incentives. Short-term incentives may not exceed 60 percent of their basic pay and is primarily based on the Peab Group’s profitability and, from time to time, essential Group goals. Short-term incentives are decided upon for each financial year. Short-term incentives for the financial year 2019 were maximized at SEK 4,450 thousand (4,320) for the CEO and a total of SEK 11,586 thousand (9,442) for the other senior officers.

Short-term incentives are 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. For senior officers and the CEO the upper limit (including social security) is 40 percent of their annual basic pay. 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 2019 were maximized at SEK 2,966 thousand (including social security) for the CEO and a total of SEK 8,155 thousand (including social security) 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 2019 received a salary and other remuneration, including benefits, totaling SEK 8,130 thousand (7,763). In addition, he has received short-term incentives for 2019 of SEK 3,110 thousand (2,477) and a provision for the LTI program of SEK 1,754 thousand (1,389) 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 3,829 thousand (3,668).

The CEO has the right to retire from the age of 62. Annual pension contributions of 47 percent of basic pay 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 seven 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 21,634 thousand (17,282). In addition, Short-term incentives for 2019 amounted to SEK 8,099 thousand (5,412) and provisions for the LTI program amounted to SEK 4,411 thousand (3,014), 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 8,808 thousand (6,999) during the year.

The pension policy for senior officers means that pension contributions are based on a contribution ladder within, alternatively, ITP or defined contributions entailing that the total contribution amounts to 35-47 percent of fixed salaries. Certain senior officers have an agreement with Peab that their employment ends the month they turn 62 years old. The other senior officers have an agreement that their employment ends the month they turn 65 years old.

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 six-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 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 December 31, 2020. For senior officers and the CEO the upper limit (including social security) is 40 percent of their annual basic pay. For other positions the upper limit (including social security) is 15-35 percent of their annual basic pay, depending on their position. The result of the LTI program will be placed in a pension savings connected to the Peab share. In 2019 the cost of the LTI program amounted to SEK 63 million (94) including social security.

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 are 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 2019 Peab allocated SEK 60 million. This amount less payroll tax will be paid into the foundation in 2020. In 2018 Peab allocated SEK 80 million including payroll tax.

Senior officers and other employees with other Short-term incentives are not entitled to benefits from the profit-sharing foundation.