NOTES
MTG Annual Report 2005
NOTE 28
Salaries, other remuneration and social
security
expenses
(SEK million)
2005
2004
Group
Personnel expenses
Wages and salaries
864.5
737.5
Social security expenses
186.7 142.6
Pension costs - defi ned contribution plans
47.3 27.2
Pension costs - defi ned benefi t plans
2.2 1.4
Share-based payments
2.3
Social security expenes on share-based payments
10.0
Total
1,113.1
908.7
2005
2004
Board of Directors, presidents and vice presidents
Total excl SDI Media (1)
125.6 109.7
SDI Media
4.6
Total
125.6 114.3
of which, variable salary SDI Media excluded
35.2
46.2
(1) Includes SEK 3.5 (2.9) million Board fees approved by
the Annual General Meeting
Parent company
Board of Directors, presidents and vice presidents
31.1 21.1
o
f which, variable salary
15.5 10.0
Other employees
52.2 49.0
Total salaries and other remuneration
83.3 70.1
Social security expenses
23.1 24.9
of which, pension costs
7.0 5.5
of which, pension costs CEO
0.4 0.7
REMUNERATION TO SENIOR EXECUTIVES
Principles
A fee is paid to the Board of Directors in accordance with the ruling of the Annual
General Meeting.
The objectives with the Remuneration policy are to offer competitive remuneration
packages to attract, motivate and retain senior group and operational management,
within the context of the international peer group. The aim is to incentivize management
to deliver excellent operating results and also align senior executive remuneration
with the creation of value for shareholders. The remuneration should provide for an
appropriate balance between fi xed and variable, short and long term incentives. The
current senior executive remuneration programme therefore consists of a combination
of fi xed salary, variable salary and participation in option programmes, and is designed
to meet the objectives of the policy.
Remuneration to the CEO and other senior executives comprises a base salary, bonus and
other benefi ts. Other senior executives include vice presidents, business area presidents
and the CFO. The senior executives are found on pages 18 and 19.
The variable remuneration shall be based on the performance in relation to established
goals. The general contractual bonus system is based on an earnings period of one year,
and is normally 50% of the base salary and in all cases with a maximum. However in
some cases a super bonus above the 50% target has been granted based on exceptional
performance, and in two cases a loyalty bonus according to agreements from previous
years have been paid.
REMUNERATION AND OTHER BENEFITS DURING THE YEAR
Variable
Other
Base
Base
remun-
Other
Pension
remun-
(SEK thousand)
fee
salary
eration
benefi ts
costs
eration
Total
David Chance,
Chairman of
the
Board
1,000
536
1,536
Hans-Holger
Albrecht,
CEO
10,501 11,254
388
440
22,583
Other senior
executives
(8 persons)
21,905
23,399
1,166
1,841
48,311
Total
1,000
32,406
34,653 1,554 2,281
536
72,430
David Chance has, further to the Board fee in MTG, also received a Board fee of SEK
536 thousand as a Director of the Board in Viasat Broadcasting UK.
The CEO and the other members of the Company's senior executives are entitled to
customary pension commitments based on the national pension plan, entailing retirement
at the age of 65. Pension commitments are secured through premiums paid to insurance
companies.
Other benefi ts include company cars and, in one case, housing.
If the Company terminates the employment of the CEO or other senior executives,
salary will be paid during the period of notice, maximum 12 months. However, the CEO
has a three-year contract from the beginning of 2005 until 2007, and one of the senior
executives have a three-year contract with the beginning of 2006 until 2008.
DECISION PROCESS
The remuneration to the CEO was decided by the Board of Directors. Remuneration
to senior executives is proposed by the CEO and decided by the Board of Directors.
FINANCIAL INSTRUMENTS
The following personnel options were granted for the the two programmes issued. The
different programmes are described below.
Stock options
Number
Options granted to key personnel 2001
881,361
Options granted to key personnel 2002
38,084
Options granted to key personnel 2005
105,627
Options granted to senior executives 2001
424,359
Options granted to senior executives 2002
108,810
Options granted to senior executives 2005
194,373
Options granted to CEO 2001
108,810
Options granted to CEO 2005
99,999
Total options granted
1,961,423
Options cancelled
-865,040
Options outstanding
1,096,383
The calculated fair value of services received in return for share options granted for the
2005 programme were based on the following:
Share price when granted
244.50
Strike price
261.70
Expected volatility
30%
Time to maturity (years)
3
Expected dividends
Risk free interest rate
2.13%
In 2001, an extraordinary General Meeting decided to issue a maximum of 2,052,840
options to acquire shares in MTG. Senior executives and key employees were offered
approximately 80% of the options, to be called upon in three years time at the earliest and
no later than eight years from the time of issue. The remaining 20% of the options were
granted to the fully owned subsidiary MTG Holding AB. It is expected that the MTG
subsidiary would then sell the options and use the proceeds to cover the Company's social
security expenses and other expenses connected with the option program. The exercise
price of the options granted in 2001 is SEK 294.50 per share. which includes all
outstanding options from this program. The proprietor must be employed by the Group
when the option is exercised. The maximum number of options correspond to approximately
0.6% of the votes and approximately 2.4% of the share capital. In 2002, 146,894 options
were allotted, of which 119,691 to senior executives. Options under this program have not
been granted since August 2002. 865,040 options have been cancelled since the
proprietor is no longer employed by the Group.
In 2005, the Annual General Meeting decided to adopt an incentive program, where
employees were offered a combination of warrants and stock options, which entitle
them to Class B shares in MTG. Senior executives and key employees were offered to
purchase warrants on market terms. Senior executives and key employees were offered
the options, to be called upon in three years time at the earliest and no later than 5 (fi ve)
years from the time of issue. The exercise price of the options granted are SEK 261.70
per share. The proprietor must be employed by the Group when the option is exercised.
The stock options are not transferable. The maximum number of options correspond to
approximately 0.2% of the votes and approximately 0.6% of the share capital.
The two programs' current outstanding options corresponds to a 1.0% dilution of votes
and 3.1% of the share capital.
Options outstanding
2005
2004
Options outstanding at 1 January
870,480 1,093,541
Options and warrants issued during the year
399,999
Options cancelled during the year
-174,096 -223,061
Options outstanding at 31 December
1,096,383 870,480
