News & Views

New Swedish Rules on Remuneration and Incentive Programmes in Listed Companies

11 December 2020

Authors: Mattias Friberg, Ola Åhman, Christoffer Saidac, Sanna Böris, and Khaled Talayhan

The Swedish Corporate Governance Board (in Swedish: Kollegiet för svensk bolagsstyrning) has announced a new codification of rules relating to remuneration of executive management and incentive programmes in listed companies (the “Remuneration Rules”), applicable from 1 January 2021.

The Remuneration Rules codify, into a coherent regulatory framework, the Swedish Securities Council’s (in Swedish: Aktiemarknadsnämnden) statements on these matters and replace the relevant rules regarding remuneration included in the Swedish Corporate Governance Code (the “Code”) (in Swedish: Svensk kod för bolagsstyrning), with some updates. The Remuneration Rules complement the Code as well as the rules on guidelines for remuneration and the remuneration report as set forth in the Swedish Companies Act (in Swedish: Aktiebolagslagen) and form part of the Swedish self-regulatory system and define established Swedish good stock market practice in the relevant areas. Furthermore, the Swedish Securities Council has declared that, since the new Remuneration Rules address the same matters as the Council’s statement AMN 2002:01 and subsequent statements on incentive programmes, these statements shall, as from 1 January 2021, no longer be guiding in matters addressed by the Remuneration Rules.

The main updates included in the Remuneration Rules are:

  • Clarification of the definitions of executive management and incentive programmes
  • Clarification on which incentive programmes are to be resolved by the general meeting
  • The introduction of a new section relating to conflict of interests, i.e. a person taking part in an incentive programme may not themselves participate in the formation of the programme
  • Clarification regarding call options issued by a third party or shareholder to a member of the executive management or board of directors, and
  • Specification of the information to be included in the proposal to the general meeting regarding an incentive programme.

Although the Remuneration Rules entail a welcomed codification of the rules and to some extent clarifications, it does not address all matters that can arise in connection with the formation, decision, and implementation of incentive programmes and other remuneration arrangements which are present on the Swedish market. Much is still left to the companies themselves to interpret. Our Capital Markets and Corporate Advisory team is well informed of the aforementioned rules and developments and will gladly discuss any related questions.