STOCKHOLM, Sweden, April 14, 2005 (PRIMEZONE) -- Skandia's board has revised the compensation policy covering all employees of the Skandia group.
Skandia's overall remuneration philosophy is based on attracting and retaining individuals who contribute to Skandia's long-term growth in value.
The baseline is to make Skandia's total compensation package attractive and competitive in the local market in the countries in which Skandia works.
On the whole, Skandia's compensation levels should normally be at the median level in the local market.
Skandia has a performance-based view of compensation: performance beyond the expected levels should be rewarded.
Based on this policy, Skandia is introducing a new short- and long-term variable salary component for senior executives as well as a profit-sharing system for most of the company's employees in Sweden.
Variable salary component for Skandia's managers The Board has decided to introduce a short- and long-term variable salary component for senior executives within the group, divisions and subsidiaries as well as key employees in the group functions. Currently the long-term salary component does not apply for Swedish members of the executive management, or managers in the group staffs or the Swedish operations.
The basic salary components in the compensation package are: - base salary - pension - an annual variable salary component - a long-term variable salary component
The short-term salary component is pegged in essential respects to financial targets set by the Board for the respective units.
The long-term salary component is pegged to result targets for the group.
Both the short-term and long-term programmes have clearly defined caps. The cap for employees in Sweden, who are currently only included in the short-term programme, is 30% of the respective employees' base salary.
In the current year a total of some 60 individuals residing outside Sweden are covered by the long-term variable salary component. The total maximum outcome for the long-term variable salary component including social security charges may not exceed 15% of the shareholder dividend proposed by the Board for the year in question. The proposed dividend for the current year is SEK 358 million.
Payment of the long-term salary component to employees will take place after three years if the employee remains in service.
Both the annual variable salary component and the long-term variable salary component will be verified by the auditors.
Skandianen reintroduced for Skandia's employees in Sweden Through 2000 Skandia had a profit-sharing foundation, called Skandianen. In 2001 Skandianen was replaced by Skandia's global stock option programme. As the option programme has been concluded, there is currently no profit-sharing system in use for the majority of Skandia's employees in Sweden who do not have some form of performance-based variable salary component.
The aim of reintroducting the Skandianen profit-sharing system from mid-year 2005 is based on the conviction that a profit-sharing system that includes the majority of Skandia's employees in Sweden will sharpen the company's focus on value-creating measures.
The decision applies for employees of Skandia Insurance Company Ltd, its subsidiaries and group functions.
Skandia Liv will make its own decision regarding any profit-sharing system.
The profit-sharing system is related to the result of the Swedish operations, and for a full-time employee on a yearly basis can entail a maximum payment of 62.5% of the Price Base Amount, i.e., currently approximately SEK 25,000. A maximum of 50% of the allocation to the profit-sharing foundation may be invested in Skandia shares and will be locked for three years before payment is made to the employee. The maximum cost of the profit-sharing programme is currently just under SEK 50 million on a yearly basis.
For this programme, too, Skandia's auditors will examine and verify that the set targets have been achieved.
Participants in the variable salary programmes will not participate in Skandianen.
In Sweden approximately 1,500 employees will be included in Skandianen.
CEO's compensation
The Board has set CEO Hans-Erik Andersson's salary for 2005 at SEK 6 million, without any variable component. This is the same salary as he received in 2004.
Skandia's Chairman, Bernt Magnusson, comments: "The Board's decision should be seen in the light of the strong reaction from shareholders and customers to the variable compensation systems that were created during the stock market 'bubble'. The programme now proposed is reasonable and entails no risk for the type of excess that previously occurred at Skandia. No share-related programmes have been proposed for the time being."
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