8 - Employees and personnel costs

Total remuneration is included in profit or loss under the heading "Personnel costs".

Remuneration to senior executives

Remuneration to the Board approved by the 2009 AGM

The AGM on 5 May 2009 approved remuneration totalling SEK 1,450,000 for the work of the board in 2009. The Chairman received SEK 400,000 and members of the board not employed in the Group received SEK 175,000 each.

In addition, it was resolved to pay fees for committee work of SEK 35,000 to each committee member who is not employed in the Group, and that a fee of SEK 75,000 be paid to the Chair of the Audit Committee and a fee of SEK 50,000 to be paid to the Chair of the Remuneration Committee. The total remuneration payable to the board is thus SEK 1,715,000, of which SEK 1,450,000 is for the ordinary work of the board and SEK 265,000 for committee work.

Remuneration to the Board in 2009

Remuneration to the board is payable quarterly. This means that the remuneration to the board was at the rate determined by the AGM in 2008 for the first two quarters and at the rate determined by the AGM in 2009 for the remaining two quarters of the year.

During 2009 a total of SEK 1,715,000 (2008: SEK 1,570,000) was recognised as an expense for remuneration to the board in the parent company accounts. In addition, the employee representatives on the board and the board member employed by the ÅF Group received a total of SEK 50,000 (SEK 50,000).

No agreements have been signed concerning future pensions or severance pay for the Chairman or other members of the board.

President/CEO

Annual variable remuneration is based on the Group’s results, as well as a number of preset targets, and may amount to a maximum of 75 percent of fixed basic salary. The fixed basic salary of the President/CEO for 2009 was SEK 3,294,000 (2008: 3,294,000). The President/CEO also has the use of a company car.

The period of notice for the President/CEO of the parent company is two years from the company’s side. From the President/CEO’s side, a period of 6 months’ notice applies. The retirement age for the President/CEO is 60. The President/CEO’s retirement benefit plan is defined-contribution, and an annual provision equivalent to 35 percent of the year’s basic salary is made for this. Full salary continues to be payable during the period of notice. An obligation to work during the period of notice may apply for a maximum of one year.

ÅF Group senior management, excluding the President/CEO

The ÅF Group senior management team consists of nine (seven) individuals excluding the President/CEO. During the first three months of the year, the senior management team consisted of nine (2008: seven) individuals excluding the President/CEO.

Annual variable remuneration may amount to a maximum of 60 percent of fixed basic salary. Members of the ÅF Group senior management team have the use of company cars. For members of the senior management team, the period of notice from the company’s side is normally 12 months. Full salary continues to be payable during the period of notice. From the individual’s side, a period of 6 months’ notice applies.

One of the members of the ÅF Group’s senior management team has retirement benefit conditions in line with the ITP occupational pension plan. Others have defined-contribution retirement benefits, towards which an amount equivalent to 27.5 to 30 percent of basic salary is allocated annually.

Determination of remuneration

The level of remuneration paid to the President/CEO for financial year 2009 was set by the Board of Directors following a proposal drafted by the board’s Remuneration Committee. Remuneration paid to other senior executives was set by the President/CEO in consultation with the Remuneration Committee.

Annual variable remuneration

Within ÅF’s divisions, there are different systems of variable remuneration for co-workers. Remuneration may either be based on the division’s performance or linked directly to individual performance.

To demonstrate clearly the crucial importance of the efforts of co-workers to the Group’s results in both the long and the short term, a Group bonus has been introduced. The model is based on part of profit that is generated at Group level being shared out in the form of bonus payments that are the same for co-workers in all parts of the Group.

Non-current variable remuneration

Incentive programme 2007–2009

At the beginning of 2007, the ÅF Board approved the establishment of a three-year reward system for some 30 key management personnel. The programme ran from 2007–2009 and aimed to retain the services of key individuals at ÅF. Payments were contingent on the profit trend for the company outperforming that of a number of competing firms, and on ÅF’s share price reaching preset targets. Individuals participating in the three-year reward system are not entitled to take part in the 2008 and 2009 performance-related share savings programme at the same time. The cost of the programme during 2009 was SEK 4.5 million. The total provision at the end of 2009 was SEK 20.7 million, which is equivalent to the final outcome.

Performance-related Share Savings Programme 2008 and 2009

A performance-related share savings programme was introduced for key members of staff in 2008. The Annual General Meeting of ÅF AB on 5 May 2009 voted to initiate a further performance-related share savings programme for 2009. The aim of both programmes is to encourage continued loyalty and excellent performance, and also to make the ÅF Group even more attractive as an employer. To participate in the programme, employees must invest their own money. Senior managers, including the ÅF Group’s senior management team, have been selected and allocated four, five or six shares (matching shares) for every share they buy under the programme.

In the 2009 share savings programme, 102 business area managers, section managers and certain specialists may be given the right to performance-matching of up to four shares for every share they buy. Seven members of the senior management team may be given the right to performance matching of up to five shares for every share they buy, and the President may be given the right to performance matching of up to six shares for every share bought. In the 2008 share savings programme, 94 business area managers, section managers and certain specialists may be given the right to performance-matching of up to four shares for every share they buy. Five members of the senior management team may be given the right to performance matching of up to five shares for every share they buy, and the President may be given the right to performance matching of up to six shares for every share bought. Employees who participate in the Performance-related Share Programmes for 2008 and 2009 may save an amount equivalent to a maximum of 5 percent of their fixed salary.

The total number of matching shares which may be issued under the Performance-related Share Programme for 2009 is approximately 99,000, based on the share price quoted at the end of the application period. The total number of matching shares which may be issued under the Performance-related Share Programme for 2008 is approximately 87,000, based on the share price quoted at the end of the application period.

Performance matching requires that certain set targets are achieved. The terms for performance matching are based on the company’s operating margin before extraordinary items in relation to a basket of comparable companies, as well as to the company’s growth in earnings per share over a three-year period. In addition, performance matching requires that the key individual in question has been employed throughout the entire three-year period, with effect from the date that the relevant programme commenced.

Before the number of performance shares for matching is finally determined, the Board of Directors will consider whether performance matching is reasonable with regard to the company’s financial performance and position, and the situation on the stock market and in general. Should the board conclude that full matching is not appropriate, it may reduce the number of performance shares to a number it deems appropriate.

The performance targets may not be revised after the end of the three-year period. If the minimum performance has not been achieved, no performance matching shares will be issued.

In the financial statements for 2009, an expense of SEK 2.4 million (2008: SEK 1.6 million) has been charged against profits for the performance-based share savings programme. The expense is arrived at by periodising a straight-line estimated expense over three years. The maximum potential dilution of earnings per share under the two programmes together is equivalent to 1.1 percent.