G4 Personnel information and remuneration of management

Average number of employees

Wages, salaries other remuneration and social costs

A total of SEK 59 million (62) of the Group’s pension costs relates to Boards and presidents. The Group’s pension liability to these persons amounted to SEK 76 million (105).

Wages, salaries and other remuneration by market area

Gender distribution in senior management

Remuneration of the board of directors and senior executives

The Board

Fees to the Chairman and other external Board members are paid in accordance with the resolution at the Annual General Meeting. No Board fees are paid to the President and the employee representatives.

In accordance with the resolution of the 2020 Annual General Meeting, the total fee to the external Board members elected at the Meeting amounts to in total SEK 6,690,000 on an annual basis. Of this amount SEK 2,550,000 is payable to the Chairman of the Board (Johan Molin) and SEK 690,000 to each of the other external Board members (Jennifer Allerton, Claes Boustedt, Marika Fredriksson, Johan Karlström, Helena Stjernholm and Kai Wärn).

In addition to these amounts, the Annual General Meeting resolved that a fee for committee work should be paid to Board members elected by the Meeting, in an amount totaling SEK 640,000 to the members of the Audit Committee (Claes Boustedt SEK 300,000, Helena Stjernholm SEK 170,000 and Johan Molin SEK 170,000) and in an amount totaling SEK 375,000 to the members of the Remuneration Committee (Johan Molin SEK 145,000, Johan Karlström 115,000 and Helena Stjernholm SEK 115,000).

No remuneration was paid to the members of the Acquisitions and Divestitures Committee. The long-term asset manager and largest shareholder of Sandvik shares, Industrivärden, granted in 2019 the Chairman of the Board one million call options over Sandvik shares with a five-year term and an exercise price of SEK 177. The options were purchased by the Chairman of the Board at market price.

President and other senior executives

Guidelines for remuneration

For information on the current guidelines for remuneration of senior executives, adopted by the 2020 Annual General Meeting, please refer to the Directors’ report.

President and CEO

Sandvik’s President and CEO, Stefan Widing, was paid an annual fixed salary of SEK 11,159,393 and received the fringe-benefit value of a car provided by the company. In addition, an annual variable cash-based salary of maximum 75 percent of the fixed salary is payable. The variable salary for 2020 amounted to SEK 1,787,501.

Stefan Widing is entitled to retire at age 65. A pension premium of 37.5 percent of his annual fixed salary is reserved annually.

In the event of termination of employment by the company, Stefan Widing has a notice period of 12 months and 12 months’ severance pay.

Other senior executives

Other members of the Group Executive Management are covered by a Swedish pension plan (ITP1 or ITP2) and for one member a Swiss pension plan. The retirement age is minimum 62.

For members that are covered by the ITP plan 1 (defined contribution) a supplement of 5 percent of the salary portions in excess of 7.5 income base amounts may apply.

For members that are covered by the ITP Plan 2 (defined benefit), a supplementary defined-contribution plan applies under which the company each year contributes 25–33 percent (depending on age and employment start in GEM) of fixed salary portions in excess of 20 price base amounts. One member is covered by a Swiss pension plan under which 21 percent of fixed salary is contributed and whereof 75 percent is paid by the company and 25 percent by the employee.

Severance pay is paid in the event that the company terminates employment. The severance pay equals 6–12 months’ fixed salary in addition to the notice period, which is 6–12 months. Any other income from employment may be deducted from the severance pay.

Long-term incentive programs (LTI)

Share-based incentive program 2017–2020

The 2017–2020 Annual General Meetings approved the Board’s proposal to adopt a performance share program for each year for maximum 350 senior executives and key individuals in the Sandvik Group, divided into four categories. For all participants, a personal investment is required in each separate program and the programs encompass at grant a maximum total of 4,853,793 shares.

All program participants have invested in Sandvik shares (“investment shares”) up to an amount corresponding to 10 percent of their fixed annual pre-tax salary at the time of the investment.

Matching shares

In LTI 2017, each acquired investment share entitles participants to be allotted one Sandvik share (“matching share”) after a period of three years, free of charge.

Performing shares

In LTI 2017–2020, provided certain performance targets are met, Sandvik shares (“performances shares”) may be allotted. The maximum number of performance shares that may be allotted for each acquired investment share depends on the category to which the participant belongs.

The number of performance shares that will finally be allotted to the participant for each acquired investment share is dependent on the development of the Sandvik Group adjusted Earnings Per Share (“EPS”) during the financial year that the investment shares were acquired, compared to adjusted EPS for the previous financial year.

In January 2017–2020, respectively, the Board of Directors established the levels regarding adjusted EPS for the performance year in question that had to be attained for allotment of a certain number of performance shares.

Performance outcome 2017–2020

LTI 2017: Matching shares were allotted during 2020. Performance shares were also allotted since the performance targets set by the Board of Directors were met. Adjusted EPS for the financial year 2017 amounted to SEK 7.99.

LTI 2018: Performance shares will be allotted since the performance targets set by the Board of Directors were met. The adjusted EPS for the financial year 2018 amounted to SEK 10.58.

LTI 2019: Performance shares will partly be allotted since the performance targets set by the Board of Directors were partly met. The adjusted EPS for the financial year 2019 amounted to SEK 11.20.

LTI 2020: No performance shares will be allotted since the performance targets set by the Board of Directors were not met. Adjusted EPS for the financial year 2020 amounted to SEK 8.74. This means that there will be no allotment of shares under LTI 2020.

The number of allotted shares (matching shares under the 2017 LTI program and performance shares under the 2017 – 2020 LTI programs) for the President and other members of the Group Executive Management on Dec 31, 2020 corresponds to the number of outstanding performance shares and matching shares at year-end.

The allotments of performance shares in LTI 2018 and LTI 2019 programs requires continuous employment and that all investment shares are held during a period of three years from the acquisition of the investment shares.

Costs for the programs

The following IFRS 2 provisions were established during the year:

For LTI 2020 no IFRS 2 provisions were made during 2020 since the performance targets set by the Board of Directors were not met,

For LTI 2019 SEK 10.4 million (excluding social costs), of which SEK 1.4 million for the other senior executives.

For LTI 2018 SEK 28.2 million (excluding social costs), of which SEK 4.8 million for the other senior executives.

The President did not participate in LTI 2019 or LTI 2018, thus there are no provisions established during the year.

The employee matching shares and performance shares are expensed as an employee expense (excluding social costs) over the vesting period and are recognized directly against equity. The amount recognized is continuously revised throughout the vesting period of each program. Social costs are expensed during the vesting period of each program based on the change in value of the employee matching shares and performance shares.

Preparation and decision-making process

The Board’s Remuneration Committee prepares issues relating to the Group Executive Management’s remuneration. The Committee met two times during the year. Issues dealt with included the distribution between fixed and variable salary, the magnitude of any pay increases and the long-term variable incentive program.

The Board discussed the Remuneration Committee’s proposals and made a decision, using the Committee’s proposal as a basis. Based on the Remuneration Committee’s proposals, the Board decided on the remuneration of the President for 2020. The President decided on remuneration to other senior executives after consultation with the Remuneration Committee. The Remuneration Committee performed its task supported by expertise on remuneration levels and structures. For information on the composition of the Committee, refer to the Corporate Governance Report.