‘No bonuses at state-owned companies’

The Swedish government has said it wants to end bonuses and variable compensation for executives at state-owned companies and has urged company boards to renegotiate contracts to bring about the change.

'No bonuses at state-owned companies'

Excessive management pay-outs have sparked public outrage on both sides of the Atlantic in recent months, with the bonus schemes cast in stark contrast to widespread job cuts and plunging equity markets due to the financial crisis.

In Sweden, the criticism has come to focus on payments made to executives at both state-run and private pension funds. Both world number two truck maker Volvo and bank SEB have withdrawn proposed management pay schemes.

“There must be no question that the management of state-owned companies work with the good of the Swedish people in the front of their minds,” Finance Minister Anders Borg and other representatives of the four-party coalition government said in an article in the Dagens Nyheter (DN) newspaper.

“We are closing the door to all possibilities for variable remuneration and bonus. All the top managers at state-owned companies will only have fixed wages under the new guidelines.”

According to the government’s own review, high-ranking executives at 12 of Sweden’s 53 state-owned companies have variable compensation as part of their pay packages.

“Nothing excessive has been found, but it doesn’t matter because everyone believes that it is. So we’re taking a step back and getting rid of it. It’s just as well to get a clean slate so that citizens can feel that things are proper and clean in a state-owned company,” said Enterprise Minister Maud Olofsson at a press conference on Tuesday.

All except for one of the 12 state-owned companies with variable compensation cap it at four-times an executive’s fixed monthly salary, but in practice most have a ceiling of two-times fixed monthly salaries.

The only exception is Swedish Export Credit Corporation (Svensk Exportkredit – SEK), where an old agreement from the previous Social Democratic government is still in place.

The agreement hasn’t been renegotiated by SEK’s board despite new guidelines on compensation at state-owned companies issued in July 2008 by the current centre-right government.

“Accountability will be demanded where it hasn’t happend,” write Olofsson and Borg, along with Financial Markets Minister Mats Odell, and chair of the Riksdag’s industry committee Karin Pilsäter, in DN.

They write that the culture of bonuses has contributed to imbalances which have led to a crisis in the global economy and forced governments to use taxpayer money to give temporary support to the financial sector in order to prevent a collapse of the payments system.

Sweden is currently working with other countries to come up with new rules for a compensation system for high-ranking executives in the financial industry.

The discussion of how to reform bonus systems will also spread to other areas of private industry, as the leaders of large companies will also be invited to present their views on appropriate levels of compensation for executives and company directors.

The government said it would also invite other major corporate stakeholders to discuss “reasonable remuneration levels” at Swedish companies.

The Swedish government owns stakes in companies such as the Nordic region’s biggest bank Nordea, telecommunications operator TeliaSonera and airline SAS.

A spokesperson for Olofsson said that the government would also try to influence remuneration policy at companies in which it owns stakes.

“Representatives of the state on the boards of these companies will push the government’s line,” spokesman Frank Nilsson said.


WATCH: Can this viral Swedish fika hit create world peace?

Two Swedes behind a viral anthem which may just become the simultaneously most annoying and awesome Swedish global hit of the year have told The Local they are overwhelmed by the reactions.

WATCH: Can this viral Swedish fika hit create world peace?
Oskar Kongshöj and Gustaf Mardelius. Photo: Screenshot from the video by Go Royal Productions

Is Swedish fika the key to world peace? That's what Oskar Kongshöj and Gustaf Mardelius – the duo behind Go Royal Productions – suggest in this tongue-in-cheek take on a serious topic.

“Every day we see war and brutality, criminality,” starts the song, calling on world leaders such as Donald Trump, Vladimir Putin, Angela Merkel and Tsai Ing Wen to sit down and… enjoy a fika.

With lines such as “replace your gun with a cinnamon bun”, “stop building walls eat chocolate balls” and “no time for war if you take a påtår” (påtår = a Swedish word which means having a second cup of coffee) it has quickly gained a fan base racking up millions of views on social media.

For those of you who have never heard of Swedish fika, it is the practice of having a cup of coffee and something sweet, either in your spare time or as a short break during office hours. The concept has gained world fame in recent years and has more or less joined the club of over-hyped Scandinavian cliches (lagom and hygge, we're looking at you). But we recommend watching the video below anyway.

READ ALSO: Here's what happened when this Swede introduced fika at her London office

“The idea behind the song is to highlight a serious and important issue and mix it with a bit of comedy and music. Things that are strange and unfamiliar often seem scary, but we as humans have to get better at overcoming our fears which are often based only on ignorance or uncertainty,” Kongshöj told The Local.

The video was first published earlier this year, but really went viral this week after it was shared by social media content platform 9GAG.

“We are completely overwhelmed by the reactions! We knew that many are fond of fika, but would not have dreamed of this lovely response. Apparently we are not alone in thinking that the world would look much better if everyone just sat down and talked to each other,” said Kongshöj.

“Gustaf and I also have a soft spot for funny and sometimes somewhat bad rhymes, which meant that the song ended up including a lot of that,” he admitted.

Here's the Spotify version: