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Variable remuneration of the CEO, Executive Vice President and Business Unit Presidents and equivalents is maximized to a total of 100% of the fixed salary. For two Business Unit Presidents, stationed the Americas, the maximum outcome is 110–130%, while the corresponding limit for other senior executives is 90%.
The program for variable remuneration is divided into a short and long-term portion.
The short-term portion (“Short-term Incentive”, or STI) for the CEO, Executive Vice President and Business Unit Presidents and equivalents may amount to a maximum of 50% of fixed salary. For the Business Unit Presidents, stationed in the Americas, the maximum outcome is 60–80% of the fixed salary, while the corresponding limit for other senior executives is 40%. The STI goals set for the Business Unit Presidents are mainly based on operating cash flow, cost control, operating margin and organic sales growth for each business unit. The goal for the CEO and others reporting directly to him is based primarily on the Group’s profit before tax, operating cash flow and organic sales growth. Furthermore, for certain senior executives, a non-financial goal also applies accounting for 10–30% of the variable remuneration.
The long-term portion (“Long-Term Incentive”, or LTI) may amount to a maximum of 50% of the fixed salary. The senior executive is to invest half of the variable LTI compensation, after tax withholdings, in Essity shares. The shares may then not be sold before the end of the third year after the purchase of shares in the relevant LTI program. The established LTI goal is based on the performance of the company’s B share, measured as the TSR (Total Shareholder Return) index, compared with a weighted index of competitors’ and consumer companies’ shares performance (TSR) over a three-year period.
For the CEO, Executive Vice President and Central Staff Managers, STI resulted in 28 to 36% of fixed salary for 2017. STI resulted in variable remuneration corresponding to 17 to 46% of fixed salary for the Business Unit Presidents. The LTI target was achieved for 2015–2017, resulting in a maximum outcome for the CEO and other senior executives.
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