Remuneration schemes in the Volvo Group are designed to attract and retain qualified managers and at the same time promote sustainable growth and value creation. At the Annual General Meeting, shareholders decide on a policy on remuneration to senior executives.
Financial year 2011
The Annual General Meeting decides on principles for remuneration and other employment terms for members of Group management. The Annual General Meeting also decides on the remuneration to be paid to the members of the Board of Directors.
The remuneration principles adopted by the Annual General Meeting held on April 6, 2011, can be summarized as follows: remuneration and other employment terms for the Group management shall be competitive to ensure that the Volvo Group can attract and retain skilled executives. The fixed salary shall be competitive and shall reflect the individual’s area of responsibility and performance.
The Remuneration Committee, which is a committee within the Board of Directors, prepares and the Board of Directors decides on terms of employment and remuneration for the CEO and remuneration principles for other members of Group management. Furthermore, the Remuneration Committee shall approve proposals for the remuneration of other members of Group management in accordance with the principles established by the Board of Directors.
Group management and a number of other senior executives receive variable remuneration in addition to fixed salaries. Variable remuneration is in most cases based on the fulfilment of certain improvement targets or financial targets.
Before each Annual General Meeting, the Board of Directors evaluates whether a share or share-price related incentive program should be proposed to the Annual General Meeting. The Annual General Meeting decides upon such programs.
Share-based incentive program
In 2011, The Annual General Meeting adopted the Board of Directors’ motion concerning a long-term share-based incentive program, comprising the years 2011–2013, for a maximum of 300 senior executives in the Volvo Group. In order to participate, the executives must invest a proportion of their salary in Volvo shares and retain these shares and continue to be employed by the Volvo Group for at least three years after the investment has been made.