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

                   
Group (SEK million)               2008 2007
Personnel expenses                  
Wages and salaries               1,088 1,000
Social security expenses               212 193
Pension costs - defined contribution plans               51 55
Pension costs - defined benefit plans               10 7
Share-based payments               4 11
Social security expenses on share-based payments               -3 13
Total               1,362 1,278
                   
(SEK million)               2008 2007
Board of Directors, CEO and other senior executives ¹               156 140
of which, variable salary               46 44
                   
1) Includes SEK 4.4 (3.8) million Board fees approved by the Annual General Meeting  
                   
Parent company (SEK million)               2008 2007
Board of Directors, CEO and other senior executives               46 39
of which, variable salary               20 17
Other employees               61 44
Total salaries and other remuneration               107 83
                   
Social security expenses               37 33
of which, pension costs               10 7
of which, pension costs CEO               2 1
                   
Total salaries in the parent company include remuneration to other senior executives (4 persons) of SEK 20 (19) million, of which variable salary is SEK 6 (8) 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 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. 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, Chief Operating Officer and the Chief Financial Officer. The Executive Management are found on pages 10-13.
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 is normally 50% of the base salary and in all cases with a maximum. 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, in accordance with the decision of the Annual General Meeting.
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
Other senior executives (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
                   
Variable salary remuneration incurred to be paid the year after for the Chief Executive Officer is SEK 2.2 (1.1) million. In addition, non-cash share based incentive program costs calculated in accordance with IFRS 2 amounted to SEK 2.2 million for the CEO and SEK 4.2 million for Other senior executives.
                   
Remuneration and other benefits 2007  
(SEK thousand)     Base fee Base salary Variable remuneration Other benefits Pension costs Other remuneration Total
David Chance, Chairman of the Board     1,025 - - - - 328 1,353
Asger Aamund     450           450
Mia Brunell Livfors     375           375
Nick Humby     500           500
Lars-Johan Jarnheimer     350           350
David Marcus     425           425
Cristina Stenbeck     350           350
Pelle Törnberg     350           350
Hans-Holger Albrecht, CEO     - 16,122 8,570 105 1,081 - 25,878
Other senior executives (11 persons)     - 28,335 15,538 1,744 2,202 - 47,819
Total     3,825 44,457 24,108 1,849 3,283 328 77,850
                   
In addition, non-cash share based incentive program costs calculated in accordance with IFRS 2 amounted to SEK 3.1 million for the Chief Executive Officer and SEK 6.7 million for Other senior executives.
                   
          2005/2009 2006/2010 2007/2011 2008/2011
          Stock options Warrants and stock options Warrants and stock options Retention and performance
Financial instruments 2008         Number Number Number Shares Options
CEO         - 99,300 44,996 27,200 51,000
Senior executives (9 persons)         6,440 58,546 174,384 67,750 124,950
Total         6,440 157,846 219,380 94,950 175,950
                   
David Chance has, further to the board fee in MTG, also received a board fee of SEK 252 (328) thousand as a Director of the Board in Viasat Broadcasting UK.
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 includes 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 payment equivalent to one month's basic salary per year of service in the Group if he complies with certain conditions.
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.
                   
2008 Long-term incentive programme (LTIP)                  
The 2008 program 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 program. 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, and return on capital employed and organic growth. 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. The program is estimated to comprise 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 have 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 MTG 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 2006 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 2005 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 2001 programme (expired in 2007)                  
In 2001, an Extraordinary General Meeting decided to issue a maximum of 2,052,840 options to acquire shares in MTG. Senior executives and key employees were offered to participate, The exercise price of the options was SEK 294.50 per share, which in 2006 was recalculated to SEK 273.90, due to the distribution of shares in Metro International S.A. to the shareholders. A number of options were exercised during 2007 and 2006. The 2001 programme expired in 2007, and the remaining options ceased to be valid in 2007.
Dilution                  
If all options granted to senior executives and key employees as at 31 December 2008 were exercised, the issued share capital of the Company would increase by 1,049,807 Class B shares, and be equivalent to a dilution of 1.6% of the issued capital and 0.5% of the related voting rights at the end of 2008. In 2008, 335,835 options from the 2005 programme were exercised.
Distribution of issued warrants, stock options and retention and performance rights and options:
Warrants and Stock options granted           CEO Senior executives Key personnel Total
Stock option programme 2001           108,810 533,169 919,445 1,561,424
Options exercised 2007 and 2006           -108,810 -359,073 -217,620 -685,503
Options forfeited           - -174,096 -701,825 -875,921
Options 2001 programme outstanding as per 31 December 2008 and 2007           0 0 0 0
                   
Incentive programme 2005, warrants           33,333 64,791 35,209 133,333
Incentive programme 2005, stock options           66,666 129,582 70,418 266,666
Incentive programme 2006, warrants           33,100 45,523 30,500 109,123
Incentive programme 2006, stock options           66,200 91,046 61,000 218,246
Incentive programme 2007, warrants           6,428 28,626 15,935 50,989
Incentive programme 2007, stock options           38,568 171,756 95,610 305,934
LTIP 2008, retention shares           1,700 5,275 4,463 11,438
LTIP 2008, performance shares           25,500 62,475 40,163 128,138
LTIP 2008, performance options           51,000 124,950 80,325 256,275
Total granted           322,495 724,024 433,623 1,480,142
                   
Options exercised           -99,999 -136,209 -99,627 -335,835
Options forfeited           - -87,500 -7,000 -94,500
Total outstanding as per 31 December 2008           222,496 500,315 326,996 1,049,807

 

          2008   2007
          No of options Weighted exercise price   No of options Weighted exercise price
Options outstanding at 1 January         1,078,291 351.64   750,384 310.17
Warrants issued during the year         - -   50,989 432.50
Retention shares and options issued during the year         395,851 322.47   305,934 432.50
Options exercised during the year         -335,835 237.19   -29,016 273.90
Options forfeited during the year         -88,500 386.96   - -
Total outstanding at 31 December         1,049,807 374.28   1,078,291 351.64
                   
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 415.06 (397.50) for stock options exercised during the period .
Outstanding options as per 31 December 2008 have an exercise price between SEK 235.80 and SEK 498.10, and the weighted average price is SEK 374.28 (351.64). The weighted average remaining contractual life is 1.95 (1.4) year.
The calculated 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.
  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%  
                   
Terms and conditions Options outstanding 31 Dec 2008 Acquisition price (SEK) Share per option   Theoretical fair value Exercise price recalculated (SEK)   Exercise date
Incentive programme 2005, warrants   42.89 1   - 239.30 15 May 2008 - 10 October 2009
Incentive programme 2005, stock options 44,832 - 2   49.52 235.80 15 May 2008 - 10 October 2009
Incentive programme 2006, warrants 109,123 61.90 1   - 417.70 15 May 2009 - 10 October 2010
Incentive programme 2006, stock options 172,646 - 2   54.82 413.30 15 May 2009 - 10 October 2010
Incentive programme 2007, warrants 50,989 94.37 1   - 432.50 15 May 2010 - 10 October 2011
Incentive programme 2007, stock options 276,366 - 6   104.38 432.50 15 May 2010 - 10 October 2011
LTIP 2008, retention shares 11,438 - 1   415.10 Free of charge After 27 April 2011
LTIP 2008, performance shares 128,138 - 1   415.10 Free of charge After 27 April 2011
LTIP 2008, performance options 256,275 - 1   57.00 498.10 After 27 April 2011
                   
Employee expenses, Group (SEK million)               2008 2007
Share options granted in 2001/2002               - -1
Share options granted in 2005               -14 11
Share options granted in 2006               1 7
Share options granted in 2007               7 8
Retention rights and options granted in 2008               7 -
Total expense recognised as employee costs               1 25
                   
Employee expenses, Parent company (SEK million)               2008 2007
Share options granted in 2001/2002               - -
Share options granted in 2005               -18 8
Share options granted in 2006               -6 2
Share options granted in 2007               2 2
Retention rights and options granted in 2008               5 -
Total expense recognised as employee costs               -16 12
                   
Options outstanding, Parent company               2008 2007
Warrants issued 2005               - 78,083
Stock options issued 2005               44,832 156,166
Warrants issued 2006               53,823 66,246
Stock options issued 2006               104,646 132,492
Warrants issued 2007               18,121 19,335
Stock options issued 2007               108,726 116,010
Retention shares issued 2008               4,500 -
Performance shares issued 2008               46,500 -
Performance options issued 2008               93,000 -
Total               474,148 568,332
                   
Terms, prices and basis of calculation are the same as for the Group.
                   

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