To ensure that senior executives and other employees can be recruited and retained, H&M aims to offer employees market rates of pay.

See below proposed guidelines for remuneration to senior executives that were adopted by the Annual General Meeting on May 8, 2008. The proposed guidelines are the same as the guidelines that was decided by the AGM 2007, see Annual General Meeting, Documents from the AGM 2007

Guidelines for remuneration to senior executives 2008

H&M does not have a remuneration committee because the Board of Directors is deemed to have this responsibility. The Board negotiates annually the Managing Director’s salary according to established guidelines. The employment terms for other members of the executive management team are determined by the Managing Director and the Chairman of the Board. With the exception of the Managing Director, no severance pay is paid out by H&M.

H&M’s principles for the remuneration of senior executives are as follows:

• Remuneration should be based on factors such as work assignments, competence, position, experience and performance.
• Senior executives receive competitive remuneration at market rates. H&M is present in more than 20 countries and remuneration may differ from place to place.
• The main portion of the remuneration consists of the fixed salary. For information about the variable portion, see the section on the bonus system below.

Variable remuneration

The Managing Director, country managers and certain senior executives are included in a bonus system. The size of the bonus per person is based on 0.1 percent of the increase in dividend approved by the Annual General Meeting and the fulfilment of targets in their respective areas of responsibility. The maximum bonus per person and year has been set at SEK 0.3 million net after tax. In the case of the Managing Director the bonus is 0.3 percent of the dividend increase, up to a maximum of SEK 0.9 million net after tax. The bonus paid must be invested entirely in shares in the company, which must be held for at least five years.

In certain cases other members of the executive management team as well as country managers may receive further one-off payments, up to a maximum of 30 percent of regular salary, at the discretion of the Board or Managing Director.