Remuneration, Management and Board of Directors
The 2019 AGM adopted guidelines for remuneration of senior executives that are based on a total remuneration package comprising a fixed salary, variable salary and other benefits, and a pension, see Note C2. Updated guidelines, adapted to the new legal provisions on remuneration to senior executives and changes in the Swedish Corporate Governance Code that took effect on January 1, 2020, have been proposed to the 2020 AGM, see chapter Other Group information.
Remuneration of the President and other senior executives
Remuneration of the President and other senior executives is presented in Note C2. Variable remuneration for the President, CFO and other senior executives was maximized to a total of 100% of the fixed salary for 2019. For two Business Unit Presidents, stationed in Latin America and the US, the maximum outcome is 110–130%.
Variable remuneration and strategic targets
Programs for variable remuneration are formulated to support the Group’s strategic targets. The short-term program is individually adapted and based mainly on cash flow, EBITA margin and organic sales growth. The long-term program is based on the Essity share’s long-term total shareholder return, whereby remuneration is linked to the performance of the company’s B share, measured as the TSR (Total Shareholder Return) index compared with the MSCI Household Products Index, Consumer Staples, which contains competitors’ shares over a three-year period, where the maximum outcome requires a 5% better outcome for the Essity share compared with the benchmark index during the multiannual period.
Payment of remuneration for achieving the long-term performance target is also associated with requirements for certain investments in the Essity share and multi-year ownership of the shares.
Remuneration of the Board
The total remuneration of the AGM-elected Board members amounted to SEK 9,010,000 in accordance with the AGM’s resolution. See Note C3 for further information.