The Board of Directors’ report of the Remuneration Committee’s evaluation of remunerations to senior executives
The Board of Directors of Sandvik AB has established a Remuneration Committee which, since the Annual General Meeting 2010, consists of Anders Nyrén, Chairman of the Board as well as the Remuneration Committee, Georg Ehrnrooth and Egil Myklebust. The Remuneration Committee's tasks include monitoring and evaluating programmes for variable remuneration for senior executives, the application of Sandvik's principles for the remuneration of senior executives, and current remuneration structures and remuneration levels in the company. The Board of Directors hereby presents the following report of the results of the Remuneration Committee's evaluation, in accordance with rule 10.3 of the Swedish Corporate Governance Code.
The Remuneration Committee believes that the company's principles for the remuneration of senior executives adopted by the Annual General Meeting 2010 have fulfilled their purposes and worked well. The Board has at one occasion utilized its right to deviate from the principles, namely in connection with the settlement of severance pay for former CEO Lars Pettersson. Moreover, the Committee considers the company's remuneration structures and remuneration levels to be balanced and on market terms.
The Committee however believes that the relationship between the interests of the executive management and the shareholders should be further strengthened. As a result of the Remuneration Committee's evaluation of Sandvik's performance-based programme for long-term variable cash salary (LVL), introduced in 2006, the Board proposes that the Annual General Meeting 2011 adopt a share-related long term incentive programme for senior executives and key employees. The proposed programme is expected to enhance the ability to retain and recruit qualified employees to the Sandvik Group as well as to strengthen Sandvik's focus and objective to meet the company's long-term business goals. The programme is also intended to increase the proportion of remuneration linked to Sandvik's performance and to promote private shareholding in Sandvik.
Sandvik Aktiebolag (publ)
The Board of Directors