Note 27 Employees and remuneration
Employees and employee benefits
In 2013, the average number of employees was 60,754 (59,478), of whom 41,310 (41,053) were men and 19,444 (18,425) women.
A detailed specification of the average number of employees by country has been submitted to the Swedish Companies Registration Office and is available on request from AB Electrolux, Investor Relations and Financial Information. See also Electrolux website www.electrolux.com/employees-by-country.
Average number of employees, by geographical area
|
Group | |
---|---|---|
|
2012 | 2013 |
Europe | 21,615 | 21,602 |
North America | 9,152 | 9,922 |
Latin America | 17,493 | 18,241 |
Rest of world | 11,218 | 10,989 |
Total | 59,478 | 60,754 |
Salaries, other remuneration and employer contributions
|
2012 | 2013 | ||||
---|---|---|---|---|---|---|
|
Salaries and remuneration | Employer contributions | Total | Salaries and remuneration | Employer contributions | Total |
Parent Company | 857 | 490 | 1,347 | 976 | 485 | 1,461 |
whereof pension costs |
|
1841) | 1841) |
|
1701) | 1701) |
Subsidiaries | 12,928 | 2,782 | 15,710 | 12,545 | 2,627 | 15,172 |
whereof pension costs |
|
343 | 343 |
|
430 | 430 |
Total Group | 13,785 | 3,272 | 17,057 | 13,521 | 3,112 | 16,633 |
whereof pension costs |
|
527 | 527 |
|
600 | 600 |
Salaries and remuneration for Board members, senior managers and other employees
|
2012 | 2013 | ||||
---|---|---|---|---|---|---|
|
Board members and senior managers | Other employees |
Total | Board members and senior managers | Other employees |
Total |
Parent Company | 32 | 825 | 857 | 45 | 931 | 976 |
Other | 217 | 12,711 | 12,928 | 230 | 12,315 | 12,545 |
Total Group | 249 | 13,536 | 13,785 | 275 | 13,246 | 13,521 |
Of the Board members in the Group, 126 were men and 26 women, of whom 7 men and 3 women in the Parent Company. Senior managers in the Group consisted of 188 men and 53 women, of whom 9 men and 3 women in the Parent Company. The total pension cost for Board members and senior managers in the Group amounted to 42m (42) in 2013.
Compensation to the Board of Directors
The Annual General Meeting (AGM) determines the total compensation to the Board of Directors for a period of one year until the next AGM. The compensation is distributed between the Chairman, Deputy Chairman, other Board Members and remuneration for committee work. The Board decides the distribution of the committee fee between the committee members. Compensation is paid out in advance each quarter. Compensation paid in 2013 refers to one fourth of the compensation authorized by the AGM in 2012, and three fourths of the compensation authorized by the AGM in 2013. Total compensation paid in cash in 2013 amounted to SEK 6.3m, of which SEK 5.7m referred to ordinary compensation and SEK 0.6m to committee work.
Compensation to Board members 2013
´000 SEK | Ordinary compensation | Compensation for committee work |
Total compensation |
---|---|---|---|
Marcus Wallenberg, Chairman | 1,688 | 55 | 1,743 |
Ronnie Leten, Deputy Chairman | 587 | — | 587 |
Lorna Davis | 511 | 55 | 566 |
Hasse Johansson | 511 | 85 | 596 |
Keith McLoughlin, President | — | — | — |
Bert Nordberg (as from AGM 2013) | 386 | — | 386 |
Fredrik Persson | 511 | 85 | 596 |
Ulrica Saxon | 511 | — | 511 |
Torben Ballegaard Sørensen | 511 | 200 | 711 |
Barbara Milian Thoralfsson | 511 | 120 | 631 |
Ola Bertilsson | — | — | — |
Gunilla Brandt | — | — | — |
Ulf Carlsson | — | — | — |
Total compensation 2013 | 5,727 | 600 | 6,327 |
Revaluation of synthetic shares from previous assignment period | -2,600 | — | -2,600 |
Total compensation cost 2013 including revaluation of synthetic shares | 3,127 | 600 | 3,727 |
Synthetic shares
The AGM in 2008, 2009 and 2010 decided that a part of the fees to the Board of Directors should be payable in synthetic shares. A synthetic share is a right to receive in the future a payment corresponding to the stock-market value of a Class B share in Electrolux at the time of payment. In accordance with the fee structure laid down by the AGM, the Directors have for the 2008/2009, 2009/2010 and 2010/2011 terms of office been given the choice of receiving 25% or 50% of the fees for the Board assignment in synthetic shares. The remaining part of the fees to the Directors is paid in cash. Foreign Directors have been able to elect to receive 100% of the fee in cash. The synthetic shares entail a right to payment, in the fifth year after the AGM decision, of a cash amount per synthetic share corresponding to the price for a Class B share in Electrolux at the time of payment. Should a Director’s assignment end not later than four years after the time of allocation, cash settlement may instead take place during the year after the assignment came to an end. At the end of 2013, a total of 18,979 (34,002) synthetic shares were outstanding, having a total value of SEK 3.2m (5.8). The accrued value of the synthetic shares has been calculated as the number of synthetic shares times the volume weighted average price of a Class B share in Electrolux as of December 31, 2013. The revenue from revaluation of synthetic shares during 2013 was SEK 2.6m. Cash settlements in 2013 amounted to SEK 2.7m (0.5).
Remuneration Committee
For information on the Remuneration Committee, see the Corporate governance report on page 148.
Remuneration guidelines for Group Management
The AGM in 2013 approved the proposed remuneration guidelines. These guidelines are described below.
The overall principles for compensation within Electrolux are tied strongly to the position held, individual as well as team performance, and competitive compensation in the country or region of employment.
The overall compensation package for higher-level management comprises fixed salary, variable salary based on short-term and long-term performance targets, and benefits such as pensions and insurance.
Electrolux strives to offer fair and competitive total compensation with an emphasis on “pay for performance”. Variable compensation represents a significant proportion of total compensation for higher-level management. Total compensation is lower if targets are not achieved.
The Group has a uniform program for variable salary for management and other key positions. Variable salary is based on financial targets and may include non-financial targets for certain positions. Each job level is linked to a minimum and a maximum level for variable salary, and the program is capped.
Since 2004, Electrolux has long-term performance-share programs for 160 to 225 senior managers of the Group. For further information, see page 137.
Compensation and terms of employment for the President
The compensation package for the President comprises fixed salary, variable salary based on annual targets, a long-term performance-share program and other benefits such as pensions and insurance.
For the President, the annualized base salary for 2013 has been set at USD 1,450,000 (approximately SEK 9.9m).
The variable salary is based on annual financial targets for the Group. Each year, a performance range is determined with a minimum and a maximum. If the performance outcome for the year is below or equal to the minimum level, no pay out will be made. If the performance outcome is at or above the maximum, pay out is capped at 100% of the annualized base salary. If the performance outcome is between minimum and maximum, the pay out shall be determined on a linear basis.
The President participates in the Group’s long-term performance programs. For further information on these programs, see page 137.
The notice period for the company is 12 months, and for the President 6 months. The President is entitled to 12 months severance pay based on base salary. Severance pay is applicable if the employment is terminated by the company. It is also applicable if the employment is terminated by the President provided serious breach of contract on the company’s behalf or if there has been a major change in ownership structure in combination with changes in management and changed individual accountability.
The President is employed on a US employment contract and has been assigned to Sweden. A specific support package is provided to him under the Group’s International Assignment Policy that includes amongst others relocation support, tax filing support, as well as various allowances that are provided to expatriates within the Group under the policy.
Pensions for the President
The President is covered by the pension plans in place with his US employer for old age, disability and death benefits. The retirement age for the President is 65. The President is entitled to a fixed defined annual contribution of USD 800,000 (approximately SEK 5.2m) that is paid towards the employer’s pension plans (401(k), excess 401(k) and Supplemental Defined Contribution Plan).
The capital value of pension commitments for the President in 2013, prior Presidents, and survivors is SEK 279m (258).
Compensation and terms of employment for other members of Group Management
Like the President, other members of Group Management receive a compensation package that comprises fixed salary, variable salary based on annual targets, long-term performance-share programs and other benefits such as pensions and insurance.
Base salary is revised annually per January 1. The average base-salary increase for members of Group Management in 2013 was 2.2% (2.6).
Variable salary in 2013 is based on financial targets on sector and Group level. Variable salary for sector heads varies between a minimum (no pay out) and a maximum of 100% of annual salary, which is also the cap. The US-based Sector head has a maximum of 150%.
Group staff heads receive variable salary that varies between a minimum (no pay out) and a maximum of 80%, which is also the cap.
No payments for retention agreements were made in 2013 and there are no extraordinary arrangements outstanding for retention purposes. Three individual members of Group Management were entitled to additional compensation arrangements. Such compensation has been paid in installments over two and three years, respectively, ending in 2013. These payments amounted to SEK 6.0m in 2013.
The members of Group Management participate in the Group’s long-term performance programs. These programs comprise the performance-share program introduced in 2004. For further information on these programs, see page 137.
Certain members of Group Management are entitled to 12 months’ severance pay based on base salary. Severance pay is applicable if the employment is terminated by the company. It is also applicable if the employment is terminated by the Group Management member provided serious breach of contract on the company’s behalf or if there has been a major change in ownership structure in combination with changes in management and changed individual accountability.
The Swedish members of Group Management are not eligible for fringe benefits such as company cars. For members of Group Management employed outside of Sweden, varying fringe benefits and conditions may apply, depending upon the country of employment.
Pensions for other members of Group Management
The earliest retirement age is 60 for members of Group Management.
Members of Group Management employed in Sweden are covered by the Alternative ITP plan, as well as a supplementary plan.
The Alternative ITP plan is a defined contribution plan where the contribution increases with age. The contribution is between 20 and 35% of pensionable salary, between 7.5 and 30 income base amounts. Provided that the member retains the position until age 60, the company will finalize outstanding premiums in the alternative ITP plan. The contribution to the supplementary plan is 35% of pensionable salary above 20 income base amounts.
One member is covered by a closed supplementary plan in which contributions equal 35% of the pensionable salary. The member is also entitled to individual additional contributions.
Electrolux provides disability benefits equal to 70% of pensionable salary less disability benefits from other sources. Electrolux also provides survivor benefits equal to the highest of the accumulated capital for retirement or 250 income base amounts.
The pensionable salary is calculated as the current fixed salary including vacation pay plus the average variable salary for the last three years. Accrued capital is subject to a real rate of return of 3.5% per year.
Group Management members employed 2012 and later receive a pension entitlement where the aggregated contribution is 35% of annual base salary. The retirement age is 65 years.
For members of Group Management employed outside of Sweden, varying pension terms and conditions apply, depending upon the country of employment.
Compensation paid to Group Management
|
2012 | 2013 | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
’000 SEK unless otherwise stated | Annual fixed salary1) | Variable salary paid 20122) | Total salary |
Long-term PSP (value of shares awarded) | Other remuneration3) | Annual fixed salary1) | Variable salary paid 20132) | Total salary |
Long-term PSP (value of shares awarded) | Other remuneration3) |
President and CEO | 9,875 | 1,738 | 11,613 | 2,824 | 1,814 | 9,875 | 7,276 | 17,151 | 249 | 2,727 |
Other members of Group Management4) | 48,640 | 10,136 | 58,776 | 15,530 | 9,540 | 50,230 | 34,859 | 85,089 | 1,375 | 8,811 |
Total | 58,515 | 11,874 | 70,389 | 18,354 | 11,354 | 60,105 | 42,135 | 102,240 | 1,624 | 11,538 |
Compensation cost incurred for Group Management
|
2012 | 2013 | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
’000 SEK unless otherwise stated | Annual fixed salary | Variable salary incurred 2012 but paid 2013 | Long- term PSP (cost)1) |
Other remuneration2) | Total pension contribution | Social contribution | Annual fixed salary | Variable salary incurred 2013 but paid 2014 | Long- term PSP (cost)1) |
Other remuneration2) | Total pension contribution | Social contribution |
President and CEO | 9,875 | 8,299 | 1,293 | 1,814 | 5,387 | 1,811 | 9,875 | 2,063 | 4,077 | 2,727 | 5,219 | 2,842 |
Other members of Group Management | 48,640 | 36,179 | 5,060 | 9,540 | 22,704 | 14,609 | 50,230 | 13,823 | 15,439 | 14,720 | 26,282 | 18,598 |
Total | 58,515 | 44,478 | 6,353 | 11,354 | 28,091 | 16,420 | 60,105 | 15,886 | 19,516 | 17,447 | 31,501 | 21,440 |
Share-based compensation
Over the years, Electrolux has implemented several long-term incentive programs (LTI) for senior managers. These programs are intended to attract, motivate, and retain the participating managers by providing long-term incentives through benefits linked to the company’s share price. They have been designed to align management incentives with shareholder interests. All programs are equity-settled.
Performance-share programs 2011, 2012 and 2013
The Annual General Meeting in 2013 approved an annual long-term incentive program. The program is in line with the Group’s principles for remuneration based on performance, and is an integral part of the total compensation for Group Management and other senior managers. Electrolux shareholders benefit from this program since it facilitates recruitment and retention of competent executives and aligns management interest with shareholder interest as the participants invest and receive awards delivered in Electrolux Class B shares.
The allocation of shares in the 2013 program is determined by the position level and the outcome of three financial objectives; (1) annual growth in earnings per share, (2) return on net assets and (3) organic sales growth. The 2011 and 2012 programs have one financial objective; average annual growth in earnings per share.
If the minimum level of the objectives is reached, the allocation will amount to 17% for the 2011 and 2012 programs. For the 2013 program allocation is linear from minimum to maximum, i.e., no threshold amount when meeting the minimum level. There is no allocation if the minimum level is not reached. If the maximum is reached, 100% of shares will be allocated. Should the achievement of the objectives be below the maximum but above the minimum, a proportionate allocation will be made. The shares will be allocated after the three-year period free of charge. No personal investment is required for participation in the performance-share program as from 2013.
Participants are permitted to sell the allocated shares to cover personal income tax arising from the share allocation. If a participant’s employment is terminated during the vesting period, the right to receive shares will be forfeited in full. In the event of death, divestiture or leave of absence for more than six months, this will result in a reduced award for the affected participant.
All programs cover 180 to 225 senior managers and key employees in about 20 countries. Participants in the program comprise five groups, i.e., the President, other members of Group Management, and three groups of other senior managers. All programs comprise Class B shares.
If performance is between minimum and maximum, the total cost for the 2013 performance-share program over a three-year period is estimated at SEK 128m, including costs for employer contributions. If the maximum level is attained, the cost is estimated at a maximum of SEK 254m. The distribution of shares under this program will result in an estimated maximum increase of 0.7% in the number of outstanding shares.
For 2013, LTI programs resulted in a cost of SEK 73m (including a cost of SEK 16m in employer contribution) compared to a cost of SEK 32m in 2012 (including a cost of SEK 7m in employer contribution). The total provision for employer contribution in the balance sheet amounted to SEK 29m (11).
Repurchased shares for LTI programs
The company uses repurchased Electrolux Class B shares to meet the company’s obligations under the share programs. The shares will be distributed to share-program participants if performance targets are met. Electrolux intends to sell additional shares on the market in connection with the distribution of shares under the program in order to cover the payment of employer contributions.
Delivery of shares for the 2010 program
The 2010 performance-share program did not meet the minimum performance level to deliver performance shares. Only matching shares were delivered to participants according to Terms and Conditions Share Program 2010.
Number of potential shares per category and year
|
Maximum number of B-shares1) | Maximum value, SEK2) 3) | ||||
---|---|---|---|---|---|---|
|
2011 | 2012 | 2013 | 2011 | 2012 | 2013 |
President | 34,825 | 38,614 | 48,948 | 5,000,000 | 5,000,000 | 7,811,000 |
Other members of Group Management | 12,537 | 13,901 | 19,325 | 1,800,000 | 1,800,000 | 3,084,000 |
Other senior managers, cat. C | 9,403 | 10,426 | 11,642 | 1,350,000 | 1,350,000 | 1,858,000 |
Other senior managers, cat. B | 6,269 | 6,951 | 6,359 | 900,000 | 900,000 | 1,015,000 |
Other senior managers, cat. A | 4,702 | 5,213 | 3,460 | 675,000 | 675,000 | 552,000 |
Performance-share program 2013
|
Financial objectives | Allocation of shares | ||||
---|---|---|---|---|---|---|
|
Minimum | Maximum | Actual | Outcome, % | Weight, % | Allocation, % |
Earnings per share, SEK1) | 11.7 | 14.2 | 9.81 | 0 | 40 | 0 |
Return on net assets, %1) | 16.0 | 22.0 | 14.0 | 0 | 30 | 0 |
Organic sales growth, % | 1.0 | 4.0 | 4.5 | 100 | 30 | 30 |
Total allocation |
|
|
|
|
|
30 |
CEO Statement
In 2013 we continued to deliver above our growth target and delivered 4.5% in organic sales growth.
CEO Statement
I'm convinced that raising product efficiency for the growing middle class is where long-term shareholder value creation lies.
Our products
Electrolux is the only appliance manufacturer in the industry to offer complete solutions for both consumers and professionals. The focus is on innovative and energy-efficient products in the premium segments.
Sustainability
Achieving the Group's vision of sustainability leadership is crucial to realizing the business strategy. The objective is to develop smarter, more accessible, resource-efficient solutions that meet people's needs and improve their lives. Read the comprehensive sustainability performance review.
Awards & recognition
Financial Reporting
Net sales for the Electrolux Group in 2013 amounted to SEK 109,151m, as against SEK 109,994m in the previous year. The organic sales growth was 4.5%, while currencies had an impact of -5.3%.