Remuneration

Remuneration for Group Management

The objective of SKF's principles of remuneration for Group Management is to ensure that the SKF Group can attract and retain the best people in order to support the SKF Group's mission and business strategy. Remuneration for Group Management shall be based on market competitive conditions and at the same time support the shareholders' best interests.

The total remuneration package for a Group Management member consists primarily of the following components: fixed salary, variable salary, performance shares, pension benefits, conditions for notice of termination and severance pay, and other benefits such as a company car. The components shall create a well balanced remuneration reflecting individual performance and responsibility as well as the SKF Group's overall performance.

At the Annual General Meeting 2016 it was resolved to adopt the following principles of remuneration for Group Management in accordance with the Board's proposal.

Principles of remuneration for Group Management

Variable salary

The variable salary of a Group Management member runs according to a performance-based programme. The performance-based programme is primarily based on the short-term financial performance of the SKF Group established according to the SKF management model Total Value Added (TVA). TVA is a simplified economic value-added model. This model promotes greater operating profit, capital efficiency and profitable growth. The TVA profit is the operating profit, less the pre-tax cost of capital. The TVA result development for the SKF Group correlates well with the trend of the share price over a longer period of time.

The maximum variable salary according to the programme is capped at a certain percentage of the fixed annual salary. The percentage is linked to the position of the individual and varies between 40% and 70% for Group Management members. If the financial performance of the SKF Group is not in line with the requirements of the variable salary programme, no variable salary will be paid. The maximum variable salary will not exceed 70% of the accumulated annual fixed salary of Group Management members.

SKF's Performance Share Programmes

At the Annual General Meeting in 2008 the SKF Group introduced a long-term performance share programme for senior managers and key employees (SKF’s Performance Share Programme 2008). Since 2008 the Annual General Meeting has resolved each year upon a performance share programme. For further details click on the links at the bottom of this page.

  • SKF’s Performance Share Programme 2009: No allotment of shares has been or will be made due to non-fulfillment of the TVA target for the financial year 2009.
  • SKF’s Performance Share Programme 2010: Allotment of shares was made in the beginning of 2013. In total 259,231 SKF shares of series B were allotted pursuant to the terms of the programme, based on the degree of achievement of TVA during the three year period 2010 to 2012.
  • SKF’s Performance Share Programme 2011: Allotment of shares was made in the beginning of 2014. In total 171,094 SKF shares of series B were alloted pursuant to the terms of the programme, based on the degree of achievement of TVA during the three year period 2011 to 2013.
  • SKF’s Performance Share Programme 2012: No allotment of shares will be made due to non-fulfillment of the TVA target for the financial year 2012.
  • SKF’s Performance Share Programme 2013: No allotment of shares will be made due to non-fulfillment of the TVA target for the financial year 2013.
  • SKF's Performance Share Programme 2014: Allotment of shares may be made following the expiry of the three year calculation period, i.e. during 2017, if all the conditions of the programme are met.
  • SKF's Performance Share Programme 2015: Allotment of shares may be made following the expiry of the three year calculation period, i.e. during 2018, if all the conditions of the programme are met.
  • SKF's Performance Share Programme 2016: Allotment of shares may be made following the expiry of the three year calculation period, i.e. during 2019, if all the conditions of the programme are met.

Allotment to the Board of Directors 

The Chairman of the Board and the Board members are remunerated in accordance with the decision taken at the Annual General Meeting. At the Annual General Meeting held in 2016 it was decided that the Board be entitled to a fixed allotment and an allotment for committee work (for more information regarding this, see clause 13 of the minutes of the Annual General Meeting 2016). 

SKF logo