Saab 2010 Annual Report Download - page 45

Other terms
All executives in Group Management, including the President, may
terminate their employment with six months’ notice. If the employ-
ment ends at Saab’s initiative, the notice period is also six months,
aer which severance is paid for one year. One additional annual
salary may be payable if no new employment has been obtained in
the rst  months.
For employment agreements entered into aer  January , if
employment terminates at Saab’s initiative the maximum severance pay
is  months, in addition to the six-month notice period.
In both cases, termination pay and severance pay will be deducted
against income from other employment during the corresponding time.
Saab had no other incentive programs during  for the Group
Managment other than those described above.
THE BOARD OF DIRECTORS’ PROPOSAL FOR GUIDELINES
FOR REMUNERATION OF SENIOR EXECUTIVES TO APPLY AS
OF THE NEXT ANNUAL GENERAL MEETING
Background and reasons
e Remuneration Committee has evaluated the application of the
guidelines for remuneration for senior executives of Saab that were
resolved at the Annual General Meeting in  and the current
remuneration structures and remuneration levels in the company.
e Remuneration Committee has thereby analyzed and evaluated
the eectiveness and relevance of the short-term variable remunera-
tion (Short Term Incentive, “STI”) for senior executives. Saab’s oper-
ations are mainly characterized by technically advanced products
and systems. ey are marketed, further developed, produced and
maintained during long periods of time, in some cases three to four
decades, and generally entail substantial investments and long-term
customer relations all over the world. e Remuneration Commit-
tee’s evaluation shows that short-term quantitative and qualitative
targets in Saab’s operations are dicult to evaluate and measure.
Long-term projects can only to a very limited degree be aected by
an individual in the short term. e Remuneration Committee
considers that it is important that senior executives have a long-term
view and a long-term commitment in the company’s operations and
prots, and that therefore a long-term incentive (“LTI”) is especially
well suited to Saab and its shareholders.
e evaluation of the Long-Term Performance Share Plan has
shown that the level of enrollment has decreased in the most recent
programs. e conclusion of the evaluation is that the Performance
Share Plan should be amended in order to achieve its purpose and
have a positive eect on business and thus counterbalance the costs
of the program.
As a result of the evaluation of the total compensation package
for senior executives, the Remuneration Committee proposes to dis-
continue with the STI and replace them with revised long-term
incentive programs together with an adjusted xed salary.
e suggested revision of the long-term incentive programs in
principal means that the number of shares that can be earned in the
Performance Share Plan is reduced by one share and is replaced with
one matching share without performance requirement. e savings
amount allowed in the Performance Share Plan is maximized to . per
cent of the gross salary. However, of the . per cent, only an amount of
maximum  per cent of the gross salary can be the basis for allocation
of matching shares. Technically this revision is accomplished by partici-
pants in the Performance Share Plan also enrolling in the Share Match-
ing Plan that is open to all employees. e total savings amount how-
ever can never exceed . per cent of the gross salary.
e Remuneration Committee further proposes that the xed
salary for senior executives is adjusted in such a way that the adjust-
ment will constitute reasonable compensation for the future loss of
remuneration from the STI considering the historical outcome of
such remuneration.
Proposal for guidelines
In light of the above background and reasons, the Board of Directors
therefore proposes that the guidelines for remuneration of senior
executives are changed.
In respect of pensions, other benets and miscellaneous terms,
the guidelines are unchanged from  except for minor linguistic
adjustments.
e new guidelines are proposed to have the following wording
regarding xed and variable remuneration, remuneration to mem-
bers of the Board of Directors and Long-Term Incentive Programs
. e guidelines are proposed to apply from the Annual General
Meeting . In terms of xed salary, the guidelines shall apply from
 January .
Fixed remuneration
Cash remuneration shall consist of xed salary. e xed salary shall
be reviewed annually as per  January for all members of the Group
Management. e xed salary shall be at market terms and based on
factors such as position, competence, experience and performance.
Variable remuneration
It is important that senior executives have a long-term view and a
long-term commitment in the company’s operations and prots.
erefore a long-term incentives are especially well suited to Saab
and its shareholders.
e President and CEO and senior executives are entitled to
participate in the long-term incentive programs as resolved by the
Annual General Meeting.
In extraordinary cases, agreements of a one-time nature for vari-
able cash remuneration may be made provided that such agreements
are made solely on an individual base for recruitment or retention
purposes only, or as compensation for extraordinary eorts beyond
the individual’s ordinary assignment. Such remuneration shall never
exceed the amount of the xed annual salary and shall not be paid
more than once a year per individual. Resolutions on such cash
remuneration shall be made by the Board based on a proposal from
the Remuneration Committee.
Variable cash remuneration shall not be paid in other cases.
42 SAAB ANNUAL REPORT 2010
ADMINISTRATION REPORT