Note 25 Salaries, other remuneration, and social and security expenses

Group (SEK million)               2009 2008
Personnel expenses                  
Wages and salaries               1,249 1,088
Social security expenses               231 212
Pension costs - defined contribution plans               74 51
Pension costs - defined benefit plans               12 10
Share-based payments               6 4
Social security expenses on share-based payments               14 -3
Total               1,586 1,362
                   
(SEK million)               2009 2008
Board of Directors, CEO and other senior executives ¹               176 156
of which, variable salary               37 46
1) Includes SEK 4.4 (4.4) million Board fees approved by the Annual General Meeting  
                   
Parent company (SEK million)               2009 2008
Board of Directors, CEO and other senior executives               43 46
of which, variable salary               11 20
Other employees               57 61
Total salaries and other remuneration               100 107
                   
Social security expenses               26 37
of which, pension costs               7 10
of which, pension costs CEO               1 2
                   
Total salaries in the parent company include remuneration to other senior executives (4 persons) of SEK 20 (20) million, of which variable salary is SEK 5 (6) million.
Remuneration to senior executives  
A fee is paid to the Board of Directors in accordance with the ruling of the Annual General Meeting. The remuneration to senior executives are paid in accordance with the guidelines approved of by the Annual General Meeting.  
The objectives of the Group's Remuneration policy are to offer competitive remuneration packages to attract, motivate and retain senior group and operational management, within the context of the international peer group consisting of Northern and Eastern European media companies. The aim is to incentivise management to deliver excellent operating results and also align senior executive remuneration with the creation of value for shareholders. The remuneration should provide for an appropriate balance between fixed and variable, short and long term incentives. The current senior executive remuneration programme therefore consists of a combination of fixed salary, variable salary and participation in incentive programmes, and is designed to meet the objectives of the policy.
Remuneration to the CEO and other senior executives comprises a base salary, bonus and other benefits. Other senior executives include business area managers, the Chief Operating Officer, the Chief Financial Officer, Chiefs of Staff and Head of Administration. The Executive Management is found here in this report. Martin Lewerth joined the Executive Management group in January 2010, and the related salary is therefore not included in the figures below.
The variable remuneration shall be based on the performance in relation to established goals. The general contractual bonus system is based on an earnings period of one year, and does normally not exceed 50% of the base salary. However, in some cases an extra bonus above the 50% target has been granted based on exceptional performance, and, in other cases, due to the cash bonus paid out in connection with the exercise of the share options from the 2005 programme and the forfeited 2006 warrants, in accordance with the decision of the Annual General Meeting.
The CEO and the other members of the Company's senior execeutives are entitled to customary pension commitments based on the national pension plan, entailing retirement at the age of 65. Pension commitments are secured through premiums paid to insurance companies.
Other benefits include company cars and, in one case, housing allowance.  
The maximum notice period in any Executive's contract is twelve months during which time salary payment will continue. The Company does not generally allow any additional contractual severance payments to be agreed although there can be occasional cases where this takes place. The Chief Executive Officer is entitled to receive a severance payment equivalent to one month's basic salary per year of service in the Group if he complies with certain conditions.
Remuneration and other benefits 2009  
(SEK thousand)     Base fee Base salary Variable remuneration Other benefits Pension costs Other remuneration Total
David Chance, Chairman of the Board     1,125         252 1,377
Asger Aamund     425           425
Mia Brunell Livfors     425           425
Simon Duffy     600           600
Alexander Izosimov     475           475
Michael Lynton     475           475
David Marcus     450           450
Cristina Stenbeck     400           400
Hans-Holger Albrecht, CEO     - 13,721 5,908 315 1,287 - 21,231
Executive managers (9 persons)     - 31,586 11,829 1,278 2,058 - 46,751
Total     4,375 45,307 17,737 1,593 3,345 252 72,609
During 2009, the Group has applied a salary freeze for all senior executives. The 2009 amounts disclosed for the executive managers relate to the full year, 2008 part of the year for one of the executive managers. The remaining differences in base salary between the years relate to foreign exchange rate differences only. The numbers include variable salary remuneration incurred to be paid after the year end for the Chief Executive Officer of SEK 3.3 (2.2) million. In addition, non-cash share based incentive programme costs calculated in accordance with IFRS 2 amounted to SEK 5.4 million for the CEO and SEK 10.1 million for other executive managers.
                   
Remuneration and other benefits 2008  
(SEK thousand)     Base fee Base salary Variable remuneration Other benefits Pension costs Other remuneration Total
David Chance, Chairman of the Board     1,125         252 1,377
Asger Aamund     450           450
Mia Brunell Livfors     425           425
Simon Duffy     600           600
Alexander Izosimov     475           475
David Marcus     500           500
Cristina Stenbeck     400           400
Pelle Törnberg     400           400
Hans-Holger Albrecht, CEO     - 14,107 7,303 108 1,950 - 23,468
Executive managers (9 persons)     - 29,503 13,468 935 2,389 - 46,295
Total     4,375 43,610 20,771 1,043 4,339 252 74,389
                   
The amounts disclosed for the executive managers relate to the full year with one exception where the information relates to part of the year. The numbers include variable salary remuneration incurred to be paid the year after of SEK 2.2 (1.1) million for the Chief Executive Officer. In addition, non-cash share based incentive programme costs calculated in accordance with IFRS 2 amounted to SEK 2.2 million for the CEO and SEK 4.2 million for other executive managers.
                   
      2005/2009 2006/2010 2007/2011 2008/2011 2009/2012
      Stock options Warrants and stock options Warrants and stock options Retention and performance Retention and performance
Financial instruments 2009     Number Number Number Shares Options Shares Shares
CEO     - 99,300 44,996 27,200 51,000 7,000 49,000
Executives executives (9 persons)     - 58,546 174,384 67,750 124,950 17,000 92,000
Total     - 157,846 219,380 94,950 175,950 24,000 141,000
                   
David Chance has, further to the board fee in MTG, also received a board fee of SEK 252 (252) thousand as a Director of the Board in Viasat Broadcasting UK.
Decision process  
The remuneration to the Chief Executive Officer was decided by the Board of Directors. Remuneration to executive management is proposed by the Chief Executive Officer and decided by the Board of Directors.
Sharebased payments  
The Annual General Meetings, with the beginning in 2005, have established stock-based incentive programmes for senior executives and key personnel.
2009 Long-term incentive programme (LTIP)          
The 2009 programme is performance based and directed towards 50 senior executives and other key employees. Individual investments in MTG shares are required to participate. These shares can be shares already held or shares purchased on the market in connection with the notification to participate in the programme. The shares must be held during the three year vesting period. Thereafter, the participants are granted retention rights and performance rights depending on the fulfillment of certain stipulated goals. The goals relate to shareholder return, normalised return on capital employed and shareholder return to be equal to a peer group. The rights to retention shares and performance shares were granted by the company free of charge at the beginning of June 2009, and may be exercised the day following the release of the interim report for Q1 2012. Dividends paid on underlying shares during the vesting period will increase the number of retention and performance shares in order to treat the shareholders and the participants equally. The programme is calculated to comprise 43,225 retention shares, and 217,900 performance shares.
2008 Long-term incentive programme (LTIP)          
The 2008 programme is performance based and directed towards 50 senior executives and other key employees. Individual investments in MTG shares are required to participate. These shares can be shares already held or shares purchased on the market in connection with the notification to participate in the programme. The shares must be held during the three year vesting period. Thereafter, the participants are granted retention shares and performance shares and options depending on the fulfilment of certain stipulated goals. The goals relate to shareholder return, return on capital employed, organic growth and shareholder return compared to a peer group. The rights to retention and performance shares were granted by the company free of charge at the end of May 2008, and may be exercised after the release of the interim report for Q1 2011 until 30 days before the planned release of the Q2 report in 2011. The retention rights and the performance shares will be adjusted for dividends. The programme comprises 12,500 retention shares, 131,000 performance shares and 262,000 performance options.
2005-2007 programmes – conditions in general          
The 2005-2007 incentive programmes have comprised a combination of warrants and stock options, which entitle senior executives to a combined maximum of 399,994 MTG Class B shares under the 2007 programme and 399,999 MTG Class B shares under the 2006 and 2005 programme. The participants had the opportunity to buy warrants at the prevailing market price, and, for each warrant purchased, a maximum of six stock options under the 2007 programme and two stock options under the 2006 and 2005 programmes are issued, each carrying the right to purchase one Class B share. The exercise price for both the 2005 and 2006 programmes was set at 115% and for the 2007 programme at 110% of the average share price of the Class B share over the ten days following the Annual General Meeting.
To encourage participation in the incentive programme, the AGMs also approved the payment of a cash bonus three years after the acquisition of the warrants by the participant. The cash bonus will be paid if the stock options and the Class B shares acquired by exercising the warrants are still held by the participant, and if the participant is still employed by the Group, after three years. The bonus may amount to a maximum of the difference between the total price paid by the participant and 2% of the total value of the underlying Class B shares at the time of acquisition of the warrants and stock options.
The 2007 option programme  
The 2007 programme was directed towards a group of 41 senior executives. The exercise price for the allotted options was set at SEK 432.50 per MTG Class B share. The stock options may be exercised on, or after, 15 May 2010 provided that the holder is still employed by the Group. The exercise period is 15 May 2010 - 15 May 2012.
The 2006 option programme            
The 2006 programme was directed towards a group of 25 senior executives. The exercise price for the allotted options was set at SEK 450.30 per MTG Class B share. The stock options may be exercised on, or after, 15 May 2009 provided that the holder is still employed by the Group. Following the distribution of the majority of MTG’s shareholding in Metro International S.A. to MTG shareholders in July 2006, the exercise price for the warrants was recalculated as SEK 417.70 and the exercise price for the stock options as SEK 413.30. The exercise period is 15 May 2009 - 15 May 2011.
The 2005 option programme            
The 2005 programme was directed towards a group of 20 senior executives. The exercise price for the allotted options was set at SEK 261.70 per MTG Class B share. The stock options may be exercised on, or after, 15 May 2008 provided that the holder is still employed by the Group. Following the distribution of the majority of MTG’s shareholding in Metro International S.A. to MTG shareholders in July 2006, the exercise price for the warrants was recalculated as SEK 239.30 and the exercise price for the stock options as SEK 235.80. The exercise period is 15 May 2008 - 15 May 2010.
Cost effects of the incentive programmes        
The programmes are equity-settled programmes. The initial fair value at grant date of the stock option programmes, are expensed during the vesting period. The cost for the programmes are recognised in equity and as an operating expense. The cost is based on the fair value of the MTG Class B share at grant date and the number of shares expected to vest. The cost recognised in 2009 for the programmes amounts to SEK 19 million excluding social charges.
The fair value of services received in return for share options granted were calculated based on the Black & Scholes method. The expected volatility is based on historical values. Further, it has been assumed that 10% of the personnel will leave during the period. As for the performance programmes, the probability that the goals are met has been taken into consideration by applying adjustment factors to the different goals, when calculating the costs.
At the end of 2009, exercisable stock options granted in 2005 and 2006, entitling the holders to acquire 203,238 MTG Class B shares had not yet been utilised.
Dilution                  
If all options granted to senior executives and key employees as at 31 December 2009 were exercised, the issued share capital of the Company would increase by 1,130,159 Class B shares, and be equivalent to a dilution of 1.7% of the issued capital and 0.8% of the related voting rights at the end of 2009. In 2009, 6,440 options from the 2005 programme were exercised.
Distribution of issued warrants, stock options and retention and performance rights and options:
Warrants, options and rights outstanding           CEO Senior executives Key personnel Total
Incentive programmes 2005-2007           111,196 227,278 160,919 499,393
LTIP 2008           78,200 192,700 122,501 393,401
LTIP 2009           56,000 109,000 72,365 237,365
Total outstanding as per 31 December 2009           245,396 528,978 355,785 1,130,159
    2009   2008
  No of options Weighted exercise price   No of options Weighted exercise price
Options outstanding at 1 January 1,049,807 374.28   1,078,291 351.64
Warrants issued during the year - -   - -
Retention shares and options issued during the year 239,490 -   395,851 322.47
Options exercised during the year -6,440 235.80   -335,835 237.19
Options forfeited during the year -152,698 413.12   -88,500 386.96
Total outstanding at 31 December 1,130,159 293.89   1,049,807 374.28
           
The weighted exercise price for the 2005-2007 option programmes were recalculated for the redemption of the shares in Metro International S.A..
The weighted share price at exercise day was SEK 334.22 (415.06) for stock options exercised during the period.
Outstanding options as per 31 December 2009 have an exercise price between SEK 235.80 and SEK 498.10, and the weighted average price is SEK 293.89 (374.28). The weighted average remaining contractual life is 1.5 (1.95) year.

 

          2008 2007   2006   2005
Share option programmes at grant   Options Warrants Stock options   Warrants Stock options   Stock options
Expected volatility %         28% 27% 27%   30% 27%   27%
Expected life of options (years)         3 3 3   3 3   3
Expected dividends         - - -   - -   -
Risk free interest rate %         4.32% 4.19% 4.05%   3.31% 4.10%   4.09%
The 2009 programme comprise share rights only.

 

Specification of LTIP programmes No. of allocated options and other rights No. of people Exercise price Theoretical value at allocation Exercise period Outstanding options as per 1 January Forfeited during the year Exercised during the year   Outstanding options as per 31 December
Grant 2005                    
2009 399,999 20 235.80 49.52 2008-2010 44,832   6,440   38,392
2008 399,999 20 235.80 49.52 2008-2010 396,999 16,332 335,835   44,832
                     
Grant 2006                    
2009 327,369 25 413.30 54.82 2009-2011 281,769 116,923     164,846
2008 327,369 25 413.30 54.82 2009-2011 324,369 42,600     281,769
                     
Grant 2007                    
2009 356,923 41 432.50 104.38 2010-2012 327,355 31,200     296,155
2008 356,923 41 432.50 104.38 2010-2012 356,923 29,568     327,355
                     
Grant 2008                    
2009 395,851 50 498.10 57.00 2,011 395,851 2,450     393,401
2008 395,851 50 498.10 57.00 2,011         395,851
                     
Grant 2009                    
2009 239,490 50 Free of charge 65.60 2,012   2,125     237,365
                     
Total grant                    
2009 1,719,632         1,049,807 152,698 6,440   1,130,159
2008 1,480,142         1,078,291 88,500 335,835   1,049,807
The 2005 and 2006 programmes were exercisable at the balance sheet date.

 

Employee expenses, Group (SEK million)   2009 2008
Share options granted in 2005   -1 -14
Share options granted in 2006   -5 1
Share options granted in 2007   8 7
Retention rights and options granted in 2008   11 7
Retention rights and options granted in 2009   5 -
Total expense recognised as employee costs   18 1
       
       
Employee expenses, Parent company (SEK million)   2009 2008
Share options granted in 2005   -1 -18
Share options granted in 2006   -2 -6
Share options granted in 2007   2 2
Retention rights and options granted in 2008   2 5
Retention rights and options granted in 2009   2 -
Total expense recognised as employee costs   3 -16
       
Options outstanding, Parent company   2009 2008
Stock options issued 2005   38,392 44,832
Warrants issued 2006   - 53,823
Stock options issued 2006   30,646 104,646
Warrants issued 2007   18,121 18,121
Stock options issued 2007   77,610 108,726
Retention shares issued 2008   4,500 4,500
Performance shares issued 2008   46,500 46,500
Performance options issued 2008   93,000 93,000
Retention shares issued 2009   14,475 -
Performance shares issued 2009   66,900 -
Total   390,144 474,148
       
Terms, prices and basis of calculation are the same as for the Group.      

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