Volvo drops bid to boost executive pay

Sweden’s Volvo Group bowed to criticism and said it was scrapping a proposal to raise executive bonuses on Wednesday, the same day that its truck making subsidiary announced it was stopping production at one of its plants because of dropping demand.

“The board of AB Volvo has today decided to withdraw the proposal to the annual general meeting to raise the ceiling for the performance-based variable salary from 50 percent to 60 percent of the fixed salary for the 250 most senior executives in the Volvo Group,” Volvo said in a statement.

“The board also withdraws its proposal to increase the number of shares in the long-term incentive program for these senior executives,” it added.

The proposal announced last month sparked angry reactions within Volvo, in political circles and among the public given the dire market conditions, the company’s large fourth quarter losses and the job cuts it has announced.

“We have noted that the proposal presented created debate, internally as well as externally … As a result, the board does not want to present a proposal that adversely affects cooperation within the group in these exceptional times,” Volvo chairman Finn Johnsson said in the statement.

Volvo posted a net loss of 1.35 billion kronor ($151 million) in the fourth quarter of 2008, and has announced more than 5,000 job cuts in recent months.

The Swedish company had said when it presented the plan that a study showed its executive management received lower pay than in comparable companies.

Proof of the tough times facing Volvo was reinforced on Wednesday when Volvo Trucks spokesman Stefan Karlsson told AFP that production at the Tuve plant in Gothenburg “will be stopped several days here and there every month, totaling about a week a month.”

“Time will tell how long we will need to do this, depending on when demand starts to pick up again,” he said, adding: “There are no signs of an upswing yet.”

Employees, who will receive full pay, will either be entitled to days off, professional training or maintenance projects, he said.

The Tuve factory was Volvo Trucks’ second-biggest assembly plant in 2008, rolling out 25,300 trucks. In 2007, it produced 24,000 trucks.


US and Japan fuel surge for Volvo trucks

Sweden's Volvo, the world's second-largest maker of trucks, said Friday it saw a spike in profits in the third quarter, boosted by thriving sales in the US and Japanese markets.

US and Japan fuel surge for Volvo trucks
Ed Carbaugh prepares to install parts on a truck engine on an assembly line at Volvo Trucks' powertrain manufacturing facility in Hagerstown, Maryland, March 2014. Photo: Patrick Semansky/AP

Net profit increased eight percent to 1.5 billion kronor ($206 million), while sales rose 3.6 percent to 67.2 billion kronor, above expectations by analysts who had forecast 63.8 billion kronor.

"The market development in the third quarter followed the overall direction from the second quarter with good momentum in North America and Japan," chief executive Olof Persson said in a statement.

At the same, there was "continued slow development in the emerging markets in South America and Asia," he said.

In Europe, the company had seen increased uncertainty in many markets based on the political and economic situation, which has led to the positive momentum from the first half of the year leveling off, the company said.

One year ago, the then struggling Volvo Group announced the elimination of 2,000 jobs of managers and consultants.

For 2015, the company predicted the market for heavy-duty trucks would be at the same level as in 2014 in Europe, Japan and China, while higher in North America and India.