Guidelines for remuneration to the senior executives
The 2020 Annual General Meeting adopt the following guidelines for remuneration to senior executives of SSM to be applicable no longer than until the 2024 Annual General Meeting.
The guidelines cover remuneration to the President & CEO of SSM and to members of the Group management.
The guidelines shall be applied to any remuneration agreed and to any changes of previously agreed remuneration after the adoption of the guidelines by the 2020 Annual General Meeting.
The guidelines do not cover remuneration determined by the Annual General Meeting, such as fees to board members or remuneration according to share-based incentive programs.
The decision-making process for determining, reviewing and implementing the guidelines
The Board of Directors has established a Remuneration Committee. The Remuneration Committee’s duties include preparing the Board of Directors’ resolutions on proposals for guidelines for remuneration to and other terms of employment for senior executives. The Board of Directors shall prepare proposals for new guidelines at least every fourth year and present the proposal for adoption by the Annual General Meeting.
The Remuneration Committee shall also follow up on and evaluate programs for variable remuneration to the Group management (both ongoing programs and those that ended during the year), the application of guidelines for remuneration to senior executives and applicable remuneration structures and levels in SSM.
In its annual evaluation, the Remuneration Committee or, if applicable, the Board of Directors, may adjust the targets and/or the remuneration for positive and negative extraordinary events, reorganizations and structural changes. The members of the Remuneration Committee are independent of the Company and the Group management. The CEO and other members of the Group management do not participate in the Board of Directors’ processing of and decisions on remuneration-related issues to the extent they are affected by such issues.
The salaries and terms of employment of all SSM employees were considered in the preparation of the Board of Directors’ proposal for these remuneration guidelines. Information on the employees’ total remuneration, components of remuneration and the increase and the rate of increase in remuneration over time has been considered in the Remuneration Committee and the Board of Directors’ decisions when evaluating the reasonability and limitations of the guidelines.
The guidelines’ promotion of the Company’s business strategy, long-term interests and sustainability
SSM develops and offers smart and affordable homes in residential buildings, both in the form of rental units and cooperative apartments. SSM is active in the Greater Stockholm area, where the need of affordable homes with varied forms of tenancy is considerable, chiefly in the Company’s target group, which is people between the ages of 20 and 44. SSM’s 2020–2024 business plan focuses on generating cash flow and strengthening the Company’s balance sheet. SSM’s sustainability initiatives are well integrated through the Company’s business strategy and incorporated through the Company’s Urban Score Index as well as through central codes such as the Code of Conduct and the Supplier Code. For additional information on SSM’s business strategy, long-term interests and sustainability initiatives, visit ssmlivinggroup.com
Successful implementation of SSM’s business strategy and safeguarding SSM’s long-term interests, including its sustainability, requires SSM to recruit and retain employees with the right skills. These guidelines make it possible to offer senior executives a competitive remuneration package.
Remuneration for senior executives is based on meeting of financial targets in the 2020–2024 business plan and on individual performance. A requirement for receiving remuneration is compliance with policies, guidelines and SSM’s Code of Conduct.
Remuneration included in these guidelines shall aim to promote the Company’s business strategy and long-term interests, including its sustainability.
Forms of remuneration, etc.
SSM shall offer market-level remuneration based on factors such as an employee’s expertise, experience and performance.
The remuneration shall be on market terms and comprise the following components:
- Fixed basic salary paid in cash;
- Short-term and long-term variable remuneration;
- Pension benefits; and
- Other benefits.
In addition, the Annual General Meeting may – independently of these guidelines – resolve on other forms of remuneration, such as share-based remuneration.
The fixed monthly salary shall be based on market terms and be fixed for a committed effort on a high professional level that ultimately aims to create added value for SSM’s customers, shareholders and employees. The fixed basic salary shall be attractive in the market and be based on the employee’s expertise, experience and performance. The salary is normally reviewed once a year. Senior executives do not receive a fee for serving on the boards of directors of the Group’s subsidiaries or associated companies.
In addition to the fixed basic salary, variable remuneration may be payable. Decisions on variable remuneration are made annually by the Board of Directors. Variable remuneration shall be linked to measurable criteria that are designed to promote the Company’s business strategy and long-term interests, including sustainability. At least two thirds of the variable remuneration to senior executives shall be based on the financial performance of the Group. No more than one-third of the variable remuneration to senior executives shall be based on operational targets. The fulfilment of criteria for the payment of short-term variable cash remuneration must be measurable in a period of one year and may amount to a total of six months’ salary (based on the fixed monthly salary) for the CEO and four months’ salary (based on the fixed monthly salary) for other members of the Group management during the measurement period. Variable remuneration is not pensionable unless required by peremptory provisions in a collective bargaining agreement. Variable remuneration may confer entitlement to holiday pay in accordance with peremptory legislation.
A long-term salary program should be measurable during a three-year period and must not exceed 50 percent of the total fixed basic salary in the year when the program started.
Additional variable remuneration may be payable during extraordinary circumstances, provided such extraordinary arrangements are only agreed on the individual level in order to recruit or retain senior executives or as compensation for extraordinary efforts in addition to a person’s regular work duties. Such remuneration may not exceed an amount corresponding to 50 percent of the fixed annual salary and may not be paid more than once per annum per individual. Decisions to pay such remuneration shall be made by the Board of Directors after preparation by the Remuneration Committee.
The distribution between fixed and variable remuneration shall be in proportion to the employee’s position and duties. Total remuneration shall be on a market level, be competitive and reflect the employee’s area of responsibility and the complexity of the position.
However, variable remuneration shall not be payable if the Company has made a loss before tax, regardless of whether any applicable individual operational targets for the senior executive were met.
Variable short-term remuneration shall be in the form of cash remuneration.
Long-term remuneration in the form of shares and/or share-related instruments in SSM shall be distributed through the participation in long-term incentive programs adopted at a general meeting. Such programs shall be based on performance, require continued employment in the Group and require an investment by the participants themselves. The vesting period of the program (alternatively, the time from the date of the agreement until the time when a share may be acquired) shall not be less than three years. The goal of the incentive program shall be to achieve an aligned interest between the participating employee and the company’s shareholders, as well as to create long-term value for the shareholders.
The Board of Directors shall evaluate annually whether a long-term share related incentive program shall be proposed to the Annual General Meeting.
SSM applies a retirement age of 68 years to all senior executives. Variable remuneration shall not be pensionable. However, variable cash remuneration is pensionable to the extent this is required by peremptory provisions in a collective bargaining agreement that applies to the senior executive. The CEO’s pension shall be premium based and be based on the fixed basic salary according to generally accepted principles. The CEO is entitled to pension provisions corresponding to 30 percent of the pensionable salary (which corresponds to the fixed monthly salary multiplied by a factor of 12.2). Other senior executives receive pension provisions in accordance with the applicable collective bargaining agreement between the Swedish Construction Federation (Sveriges Byggindustrier) and Ledarna (Sweden’s organization for managers), the Swedish Association of Graduate Engineers (Sveriges ingenjörer) and Unionen (a Swedish white-collar trade union).
Termination of employment
If an employment agreement is terminated by the Company, a notice period of no more than twelve (12) months shall apply. The total of the fixed basic salary during the notice period may not exceed an amount corresponding to the fixed cash salary for twelve (12) months for the CEO and six (6) months for the other senior executives. If the employment is terminated by a senior executive, the notice period may not exceed six (6) months and shall not confer a right to severance pay. If it is agreed between the Company and the senior executive to terminate the employment, the wording above means that severance pay may be payable and/or that a higher amount of severance pay may be payable than if the employment is terminated by the senior executive. Severance pay shall not be pensionable nor confer a right to holiday pay.
In addition, remuneration may be payable for a non-compete undertaking. Such an undertaking shall constitute compensation for loss of income and shall only be payable during the period when the senior executive is not entitled to severance pay. The monthly remuneration shall amount to no more than ninety (90) percent of the average monthly salary for the three (3) months prior to the end of the employment. Remuneration shall be payable for the duration of the non-compete undertaking, which shall not last for more than six (6) months after the employment ended.
Other benefits may comprise life insurance, health insurance and car insurance. Premiums and other costs for such benefits may not exceed five percent in total for the CEO and ten percent of the fixed average cash salary for the other senior executives.
In exceptional cases, this may mean that the Group management is temporarily supplemented by an extraordinary member engaged on a consultancy basis. If this is the case, such a member shall only receive the agreed consultancy fee. The consultancy fee may at most correspond to the CEO’s fixed basic salary for the same period, adjusted upwards with an amount corresponding to social security contributions.
Description of significant amendments to the guidelines and how shareholders’ viewpoints have been considered
At the Annual General Meeting 2019, Principles for the remuneration to and other terms of employment for Senior Executives were adopted for the time until the end of the next Annual General Meeting. In brief, these guidelines meant that, in addition to the fixed basic salary, variable remuneration shall be payable that is linked to SSM’s profit after tax. The guidelines proposed at the Annual General Meeting 2020 do not entail any material differences compared with the Company’s existing remuneration principles.
Information on determined remuneration that is not yet due for payment
Short-term variable remuneration is expensed during the financial year and is payable after the annual accounts have been adopted at the Annual General Meeting.