Volvo 2009 Annual Report Download - page 107

employment. Furthermore, age limit at date of notice of termination is
removed and with few exceptions, severance pay is entitled for a
period of 12 months.
Pensions
Members of the Group Executive Committee and certain other senior
executives are offered pensions that are competitive in the country in
which the person is or have been domiciled or in the country to which
the person is essentially connected.
Previous pension agreements for certain senior executives stipu-
lated that early retirement could be obtained from the age of 60.
Agreements for retirement at age 60 are no longer signed, and are
instead replaced by a defined-contribution plan without a definite time
for retirement. The premium constitutes 10% of the pensionable salary.
Earlier defined-benefit pension plans, which entitled the employee
to 50% of the pensionable salary after normal retirement age, have
also been replaced by a defined-contribution plan. The pension plan
includes employees born before 1979 and is a complement to the
collective agreement regarding occupational pension. The premium
constitutes of SEK 30,000 plus 20% of the pensionable salary over
30 income base amounts. The pensionable salary consists of the
annual salary and the average of the variable salary for the previous
five years. Pension premiums amounted to SEK 33,594,037 for other
senior executives in 2009.
Total costs for remuneration and
benefits to senior executives
Total costs for total remuneration and benefits to the members of the
Group Executive Committee (GEC) in 2009 is pertaining to the follow-
ing: fixed salary SEK 91 million (87); variable salary SEK 8 million (19);
other benefits including allotted shares in the share incentive program
SEK 14 million (49); employee stock options SEK 0 million (revenue of
6) and pensions SEK 45 million (61). Total costs for members of the
GEC include social fees on salaries and benefits, special pension tax
and additional costs for other benefits. The remuneration model of the
Volvo group is to a main part designed to follow changes in the profit-
ability of the group, why the remuneration to the members of the GEC
have declined significantly during 2009 compared to previous years.
Incentive programs
During 2009, Volvo had two types of incentive programs for certain
senior executives, one program exercised in 2009 and one program
approved at the Annual General Meeting 2009 with a proposed allot-
ment in 2010.
Share-based incentive program
In 2007, the Annual General Meeting approved a share-based incen-
tive program for certain senior executives within the Volvo Group. In
February 2008, allotment was made of a value corresponding to
2,443,333 shares and was based on the fulfillment on certain finan-
cial goals determined by the Board for the fiscal year 2007. The allot-
ment was made from Volvo´s treasury stock , with 1,333,333 and cash
payment corresponding to 1,110,000 shares. The share price at allot-
ment was SEK 90,00. The total cost for Volvo for the shared-based
incentive program 2007/2008 amounted to SEK 304 million whereof
SEK 249 million during 2007 and SEK 55 million during 2008 and
pertains to the costs for payments in shares and in cash.
In 2008, the Annual General Meeting approved a share-based
incentive program for certain senior executives within the Volvo Group.
Allotment of a value corresponding to 85,557 shares in the program
was executed in March 2009 and was based on the fulfillment of
certain financial goals determined by the Board for fiscal year 2008.
The allotment was made from Volvo’s treasury stock, with 45,022, and
cash payment corresponding to 40,535 shares. The share price at
allotment was SEK 36,20. The total costs for the share-based incen-
tive program 2008/2009 amounted to SEK 6 million, whereof SEK 5
million during 2008 and SEK 1 million in 2009, this covers compensa-
tions both in stock and in cash.
The Annual General Meeting in 2009 decided on a similar program
for allotment during 2010. The financial targets set as conditions for
allotment were not fulfilled and no allotment was therefore made.
The Board of directors decided to not propose an incentive pro-
gram regarding 2010 for the Annual General Meeting. The Board of
directors intend to propose a new and possibly revised program for
the Annual General Meeting in 2011.
Outcome of share-based
incentive program decided at the
Annual General Meeting, shares 2008120092
President and CEO 1,333 –
Other members of GEC 10 , 811 –
Other senior executives 73,441 –
Total 85,585 –
1 Out of a total of 85,585 shares, 45,022 have been alloted, a cash-settlement
corresponding to 40,535 shares has been paid at allotment date and 28
shares has matured since personnel included in the program has left the Volvo
Group.
2 No allotment has been made under the incentive program decided by the
Annual General Meeting 2009.
Employee stock options program
Allotment was made from May 2, 2006 to May 1, 2008, and thereby
the employee stock options program was closed in 2008.
Cost for the long-term incentive program
Costs in 2009 for the 2008/2009 share-based incentive program
amounted to SEK 1 million (5). The cost for Volvo for the incentive
program is for cash and cost for share-based payment including social
fees. As of December 31, 2009 debt for the share-based incentive
program amounted to SEK 0 millon (5). As the financial goals for the
incentive program was not met no allotment will occur for this pro-
gram.
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