Other Group information
The Group’s Parent Company, Svenska Cellulosa Aktiebolaget SCA (publ), owns most of the forest land and other real estate relating to forestry operations, and grants felling rights for standing timber to the subsidiary SCA Skog AB. The Parent Company is otherwise a holding company with the main task of owning and managing shares in a number of business group companies and performing Group-wide management and administrative functions. In 2015, the Parent Company recognized operating income of SEK 430m (414) and profit before appropriations and tax of SEK 10,098m (4,116). The Parent Company’s divestments in shares and participations in companies outside SCA amounted to SEK 7m (0). Investments in property and non-current assets totaled SEK 157m (544) during the year. Cash and cash equivalents at year-end amounted to SEK 0m (0).
Research and development
Research and development (R&D) costs during the year amounted to SEK 1,093m (1,050), corresponding to 0.9% of consolidated net sales. R&D is coordinated and conducted from a global perspective. Product development is carried out in close cooperation with the local units, as well as through direct collaboration with customers. A slightly more long-term approach is adopted when it comes to R&D in the fields of materials and technology.
Holdings of treasury shares
SCA implemented a directed cash issue of a total of 1,800,000 shares in 2001. These shares were subsequently acquired by SCA to be used for transfer to senior executives and key individuals under the employee stock option program. The program ended in 2009. Following the share split in 2007 and transfer of the shares under the concluded program, the company holds a total of 2,767,605 treasury shares. The Board was not authorized to repurchase shares in 2015.
Distribution of shares
During the year, 18,608,314 Class A shares were converted into Class B shares. The proportion of Class A shares was 9.6% at year-end.
The Board of Directors proposes an increase in the dividend by 9.5% to SEK 5.75 (5.25) per share. The dividend is expected to total approximately SEK 4,038m (3,687). Accordingly, dividend growth over the most recent five-year period amounted to 7.5%. The Board’s assessment is that the proposed dividend will provide the Group with the scope to fulfill its obligations and make the required investments. The record date for entitlement to receive dividends is proposed as April 18, 2016.
Environmental impact in Sweden
In 2015, SCA conducted 13 operations for which a permit is required in Sweden. Operations for which permits are required accounted for 16% of consolidated net sales. Five permits relate to the manufacture of pulp and paper. These operations impact the environment through emissions to air and water, solid waste and noise. Seven permits relate to the production of solid-wood and value-added wood products, and biofuel. These operations affect the environment through emissions to air and water, and noise. One permit relates to the manufacture of fuel pellets. This operation affects the environment through emissions to air and water, as well as noise.
Guidelines for remuneration of senior executives
The Board of Directors has decided to propose to the 2016 Annual General Meeting the following guidelines for determining salaries and other remuneration for senior executives to apply for the period following the Annual General Meeting.
“Remuneration of the CEO and other senior executives will be a fixed amount, possible variable remuneration, additional benefits and pension. Other senior executives include the Executive Vice President, Business Unit Managers and equivalent, and Central Staff Managers. The total remuneration is to correspond to market practice and be competitive in the senior executive’s field of profession. Fixed and variable remuneration are to be linked to the manager’s responsibility and authority.
For the CEO, as well as for other senior executives, the variable remuneration is to be limited and linked to the fixed remuneration. The variable remuneration is to be based on the outcome of predetermined objectives and, as far as possible, be linked to the increase of value of the SCA share, from which the shareholders benefit. Programs for variable remuneration should be formulated so that the Board of Directors, if exceptional financial circumstances prevail, has the possibility to limit, or refrain from, payment of variable remuneration if such an action is considered reasonable and in compliance with the company’s responsibility to shareholders, employees and other stakeholders.
In the event of termination of employment, the notice period should normally be two years if termination is initiated by the company, and one year, when initiated by the senior executive. Severance pay should not exist.
Previously agreed pension benefits in the company are either defined benefit or defined contribution plans, or a combination of both, and can entitle the senior executive to pension from the age of 60, at the earliest. To earn full defined benefit pension benefits, the period of employment must be long-term, at present 20 years. When resigning before the age providing entitlement to pension, the senior executive will receive a paid-up pension policy from the age of 60. Pension benefits in new employment contracts should, wherever possible, only include defined premium pension benefits and entitle the executive to receive a pension from the age of 65. Variable remuneration is not pensionable income. Matters of remuneration of the senior management are to be dealt with by the Remuneration Committee and, as regards the President, be resolved by the Board of Directors.”
This proposal entails that the guidelines remain essentially unchanged compared with 2015, with the addition that pension benefits in new employment contracts should, wherever possible, only include defined premium pension benefits and entitle the executive to receive a pension from the age of 65. For information concerning the company’s application of previously agreed guidelines and information on the company’s calculated expenses for remuneration of senior executives, see Note C3.