Volvo board pulls back proposal for higher bonuses

STOCKHOLM: The board of directors of Swedish truck maker Volvo AB on Wednesday withdrew a proposal to raise bonus limits for the company's top executives, giving in to a large public outcry and criticism from the Swedish Prime Minister.

The board last week proposed to raise the limit for the top executives' bonuses, despite the fact the company reported a loss of 1.4 billion kronor ($120 million) in the fourth quarter and has been forced to cut nearly 16,000 jobs in the wake of the global financial crisis.

The suggestion triggered harsh criticism from Swedish media, as well as from labor unions, shareholders and Prime Minister Fredrik Reinfeldt who called it ``provocative'' and ``offensive.''

Speaking in a televised interview on Sunday Reinfeldt said the proposal supported the government's decision to reject a call from Volvo for financial support following the financial crisis.

The board's proposal included a raise of the limit for performance-based salaries for 250 top executives to 60 per cent of the fixed salary from the current 50 per cent. It also included an increase to the number of shares in the executives' incentive programs.

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