Compensation guidelines  

Directors' fees

Directors’ fees and fees for committee work are set by the Annual General Meeting, based on the state’s ownership policy. The Annual General Meeting 2011 and the Extraordinary Shareholder's Meeting on 14 June 2011 decided upon the following fees, for the period until the end of the Annual General Meeting in 2012.

The Chairman of the Board receives a fee of SEK 580 000 and the Deputy Chairman receives a fee of SEK 370 000. The Directors elected at the Annual General Meeting receive a fee of SEK 280 000 per Director. No remuneration is received by Directors employed at the Government Offices.

For the work in the Board’s Audit Committee, the Remuneration Committee and the Safety and Risk Committee, the Chairman of the respective Committees receives a fee of SEK 60 000. The Directors of the respective Committees receive a fee of SEK
45 000. No remuneration is received by Directors employed at the Government Offices or at Vattenfall AB.

No remuneration is received by employee representatives.

For information on directors’ fees in 2010, see the table “Composition of the Board and meeting attendance”, and Note 50 to the consolidated accounts in the Annual Report.

Compensation of senior executives

The Annual General Meeting 2011 decided that, with respect to the matter of compensation and other terms of employment, Vattenfall AB shall apply the principles set by the government in its “Guidelines for terms of employment for senior executives of state-owned companies”, which were approved by the government on 20 April 2009 (N9008), with the following departure.

The government’s guidelines are available on this link. (New window)
According to the government’s guidelines, a company shall also apply the guidelines for its subsidiaries.

In application of the government’s guidelines, Vattenfall departs from these with respect to how they are applied for Vattenfall’s subsidiaries. Positions which in Vattenfall’s subsidiaries are to be regarded as senior are defined based on whether they have significant impact on the Group’s earnings, and not based on the definition in the Swedish Companies Act. By application of the International Position Evaluation (IPE) model, managers with positions from IPE 68 and higher are considered to be senior. All senior executives (as defined in the Swedish Companies Act) of all subsidiaries are however covered by the review.

Annual report 2010 (PDF 7 MB)
Reporting of variable compensation for senior executives
(PDF 17 kB)

At the 2011 AGM, the Board provided the following explanation for deviations from the guidelines

Vattenfall’s main reasons for the deviation are the difficulties and costs associated with renegotiating existing contracts for executives who, according to the government’s guidelines, should have been defined as senior. In the view of Vattenfall’s board, renegotiation of a large number of contracts with national variations would be very time-consuming, entail a significant risk of losing key competence, and involve unreasonable costs.

For commercial and legal reasons, the Vattenfall Group has more than 400 subsidiaries. A very large number of executives would thereby be considered to be senior in application of the government’s guidelines also for subsidiaries. Moreover, like other international groups, Vattenfall governs its operations based on a commercial focus (via the business areas) and not primarily according to the legal company structure.

Vattenfall’s board therefore proposed that the positions in the Vattenfall Group that can be regarded as being senior shall be defined on the basis of whether they have significant impact on the Group’s earnings, and not based on the definition in the Swedish Companies Act. Moreover, such a definition reflects the company’s operations and governance. In this context, size in the form of sales, number of employees and number of levels in the value chain, as well as demands on innovation, knowledge, strategic/visionary role and international responsibility of the executive are decisive.

The International Position Evaluation (IPE) model has been used as support for confirming in a systematic manner which positions can be considered to be senior. Vattenfall’s conclusion is that, in addition to the Executive Group Management,managers with positions from IPE 68 and higher shall be considered to be senior within the Group. Sixteen positions have thus been identified for 2011. Of these, ten individuals are members of the Executive Group Management and the other six individuals are executives employed by subsidiaries and who have an IPE position of 68 or higher.

The use of a generally recognised ranking model instead of the definition set forth in the Swedish Companies Act of a senior executive entails a deviation from the government’s guidelines, insomuch as with respect to Vattenfall AB’s subsidiaries.

Vattenfall has performed a special analysis to arrive at the aforementioned definition, as described in more detail in the corporate governance report. The matter has also been addressed by the Board’s Compensation Committee.

Taxable remuneration and benefits and pension costs for the CEO and members of the Executive Group Management, and compliance with the guidelines set by the 2010 Annual General Meeting for compensation of senior executives are described in more detail in the Annual Report, Note 50 to the consolidated accounts.