All amounts in SEKm unless otherwise stated
In 2015, the average number of employees was 58,265 (60,038), of which 38,105 (39,931) were men and 20,160 (20,107) women.
A detailed specification of the average number of employees by country has been submitted to the Swedish Companies Registration Office and is available upon request from AB Electrolux, Investor Relations. See also Electrolux website www.electroluxgroup.com.
| Group | ||
|---|---|---|
| 2014 | 2015 | |
| Europe | 20,768 | 20,548 |
| North America | 10,702 | 9,933 |
| Latin America | 18,478 | 18,325 |
| Rest of world | 10,090 | 9,459 |
| Total | 60,038 | 58,265 |
| 2014 | 2015 | |||||
|---|---|---|---|---|---|---|
| Salaries and remuneration |
Employer contributions |
Total | Salaries and remuneration |
Employer contributions |
Total | |
| Parent Company | 965 | 493 | 1,458 | 1,078 | 562 | 1,640 |
| whereof pension costs | 1791) | 1791) | 2131) | 2131) | ||
| Subsidiaries | 13,313 | 2,653 | 15,966 | 14,780 | 2,839 | 17,619 |
| whereof pension costs | 479 | 479 | 555 | 555 | ||
| Total Group | 14,278 | 3,146 | 17,424 | 15,858 | 3,401 | 19,259 |
| whereof pension costs | 658 | 658 | — | 768 | 768 | |
1) Includes SEK 3m (6), referring to the President’s predecessors according to local GAAP (the cost for the President during 2015 is included in his home country).
| 2014 | 2015 | |||||
|---|---|---|---|---|---|---|
| Board members and senior managers |
Other |
Total | Board members and senior managers |
Other |
Total | |
| Parent Company | 44 | 921 | 965 | 51 | 1,027 | 1,078 |
| Other | 207 | 13,106 | 13,313 | 244 | 14,536 | 14,780 |
| Total Group | 251 | 14,027 | 14,278 | 295 | 15,563 | 15,858 |
Of the Board members in the Group, 95 were men and 17 women, of whom 8 men and 4 women in the Parent Company. According to the definition of Senior managers in the Swedish Annual Accounts Act, the number of Senior managers in the Group consisted of 152 men and 64 women, of whom 3 men and 1 women in the Parent Company. The total pension cost for Board members and senior managers in the Group amounted to 33m (29).
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 2015 refers to one fourth of the compensation authorized by the AGM in 2014, and three fourths of the compensation authorized by the AGM in 2015. Total compensation paid in cash in 2015 amounted to SEK 6.5m, of which SEK 5.9m referred to ordinary compensation and SEK 0.6m to committee work.
| ´000 SEK | Ordinary compensation |
Compensation for committee work |
Total compensation |
|---|---|---|---|
| Ronnie Leten, Chairman | 1,950 | 60 | 2,010 |
| Torben Ballegaard Sørensen, Deputy Chairman | 636 | 233 | 869 |
| Lorna Davis | 548 | 60 | 608 |
| Petra Hedengran | 548 | 120 | 668 |
| Hasse Johansson | 548 | 93 | 641 |
| Keith McLoughlin, President | — | — | — |
| Bert Nordberg | 548 | — | 548 |
| Fredrik Persson | 548 | 93 | 641 |
| Ulrica Saxon | 548 | 548 | |
| Ola Bertilsson | — | — | — |
| Gunilla Brandt | — | — | — |
| Ulf Carlsson | — | — | — |
| Total compensation 2015 | 5,871 | 660 | 6,531 |
| Revaluation of synthetic shares from previous assignment period | -1,608 | — | -1,608 |
| Total compensation cost 2015 including revaluation of synthetic shares | 4,263 | 660 | 4,923 |
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 fees 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 2015, a total of 0 (7,008) synthetic shares were outstanding, having a total value of SEK 0m (1.6). 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, 2015. The revenue from revaluation of synthetic shares during 2015 was SEK 1.6m. Cash settlements in 2015 amounted to SEK 1.8m (2.2).
For information on the Remuneration Committee, see the Corporate Governance Report on page 145.
The AGM in 2015 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 in certain circumstances include non-financial targets. 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 senior managers of the Group. The maximum number of participants has varied during the years between 160 – 250. For further information, see page 129.
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 2015 has been set at USD 1,553,240 (approximately SEK 11.9m).
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 based share programs. For further information on these programs, see page 129.
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.
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 6.7m) 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 2015, prior Presidents, and survivors is SEK 323m (313).
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 2015 was 4.5% (3.9).
Variable salary in 2015 is based on financial targets on business area and Group level. Variable salary for business area heads varies between a minimum (no pay-out) and a maximum of 100% of annual salary, which is also the cap. Group Management members in the USA have a maximum of 150% of annual base salary.
Group Management members that are Group staff heads receive variable salary that varies between a minimum (no pay out) and a maximum of 80%, which is also the cap.
Costs for extraordinary arrangements during 2015 amounts to approximately SEK 8.8m. Costs for extraordinary arrangements which have not yet been paid out are currently estimated to approximately SEK 9.5m.
The members of Group Management participate in the Group’s long-term performance based share programs. For further information on these programs, see page 129.
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.
For members of Group Management employed outside of Sweden, varying fringe benefits, such as car, and conditions may apply, depending upon the country of employment.
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.
| 2014 | 2015 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| ’000 SEK unless otherwise stated | Annual |
Variable |
Total |
Long- |
Other |
Annual |
Variable |
Total |
Long- |
Other |
| President and CEO | 10,174 | 2,022 | 12,196 | 655 | 7,489 | 11,862 | 8,847 | 20,709 | 11,604 | 13,1985) |
| Other members of Group Management4) | 48,696 | 13,430 | 62,126 | 2,391 | 7,038 | 51,257 | 27,788 | 79,045 | 41,194 | 36,7746) |
| Total | 58,870 | 15,452 | 74,322 | 3,046 | 14,527 | 63,119 | 36,635 | 99,754 | 52,798 | 49,972 |
1) The annual fixed salary includes vacation salary, paid vacation days and travel allowance.
2) The actual variable salary paid in a year refers to the previous year’s performance.
3) Includes conditional variable compensation, allowances and other benefits as housing and company car.
4) Other members of Group Management comprised of 11 people in 2014 and in first quarter of 2015, and 10 the three last quarters of 2015.
5) Includes costs for extraordinary arrangements. In addition higher STI and LTI payments in 2015 has resulted in additional Swedish gross up of tax, as well as gross up of Swedish tax on employee US social security contributions.
6) Includes severance pay and costs for extraordinary arrangements.
| 2014 | 2015 | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| ’000 SEK unless otherwise stated | Annual |
Variable |
Long- |
Other |
Total |
Social |
Annual |
Variable |
Long- |
Other |
Total |
Social |
| President and CEO | 10,174 | 7,038 | 6,607 | 7,489 | 5,512 | 3,917 | 11,862 | 4,804 | 6,192 | 13,6673) | 6,724 | 8,207 |
| Other members of Group Management | 48,696 | 27,059 | 21,322 | 7,038 | 22,814 | 12,234 | 51,257 | 18,739 | 18,418 | 46,9144) | 21,702 | 24,725 |
| Total | 58,870 | 34,097 | 27,929 | 14,527 | 28,326 | 16,151 | 63,119 | 23,543 | 24,610 | 60,581 | 28,426 | 32,932 |
1) Cost for share-based incentive programs are accounted for according to IFRS 2, Share-based payments. If the expected cost of the program is reduced, the previous recorded cost is reversed and an income is recorded in the income statement. The cost includes social contribution cost for the program.
2) Includes conditional variable compensation, allowances and other benefits as housing and company car.
3) Includes costs for extraordinary arrangements. In addition higher STI and LTI payments in 2015 has resulted in additional Swedish gross up of tax, as well as gross up of Swedish tax on employee US social security contributions. There are some additional Swedish and US social security charges to be paid in 2016.
4) Includes severance pay and costs for extraordinary arrangements.
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.
For Electrolux, the share-based compensation programs are classified as equity-settled transactions, and the cost of the granted instrument’s fair value at grant date is recognized over the vesting period which is 2.7 years. At each balance-sheet date, the Group revises the estimates to the number of shares that are expected to vest. Electrolux recognizes the impact of the revision to original estimates, if any, in the income statement, with a corresponding adjustment to equity.
In addition, the Group provides for employer contributions expected to be paid in connection with the share-based compensation programs. The costs are charged to the income statement over the vesting period. The provision is periodically revalued based on the fair value of the instruments at each closing date.
The Annual General Meeting in 2015 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 program drives executive shareholding and the participants are more aligned with the long-term strategy of the company.
The allocation of shares in the 2013, 2014 and 2015 programs 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.
For the 2013, 2014 and 2015 programs allocation is linear from minimum to maximum. 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.
If a participant’s employment is terminated during the three-year program period, the participant will be excluded from the program and will not receive any shares or other benefits under the program. However, in certain circumstances, including for example a participant’s death, disability, retirement or the divestiture of the participant’s employing company, a participant could be entitled to reduced benefits under the program.
Each of the 2013, 2014 and 2015 program covers 200 to 220 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 2015 performance-share program over a three-year period is estimated at SEK 156m, including costs for employer contributions. If the maximum level is attained, the cost is estimated at a maximum of SEK 310m. The distribution of shares under this program will result in an estimated maximum increase of 0.57% in the number of outstanding shares.
For 2015, LTI programs resulted in a cost of SEK 94m (including a cost of SEK 20m in employer contribution) compared to a cost of SEK 106m in 2014 (including a cost of SEK 36m in employer contribution). The total provision for employer contribution in the balance sheet amounted to SEK 46m (76).
Electrolux has on the basis of authorizations by the Annual General Meetings acquired own shares as a hedge for the company’s share related incentive programs. The Annual General Meeting in 2012 resolved that the company shall be entitled to transfer B shares to participants in the 2012 program and the Annual General Meeting in 2015 resolved that the company shall be entitled to transfer B shares in the company for the purpose of covering costs, including social security charges, that may arise as a result of the 2013 program.
The 2012 performance-share program met the maximum performance and, therefore, delivered matching shares and all allocated performance shares according to the terms and conditions of the 2012 share program during 2015.
| Maximum number of B shares1) | Maximum value, SEK2) 3) | |||||
|---|---|---|---|---|---|---|
| 2013 | 2014 | 2015 | 2013 | 2014 | 2015 | |
| President | 48,948 | 54,981 | 52,404 | 7,811,000 | 7,745,000 | 11,547,000 |
| Other members of Group Management | 19,325 | 22,411 | 19,545 | 3,084,000 | 3,157,000 | 4,307,000 |
| Other senior managers, cat. C | 11,642 | 13,545 | 9,637 | 1,858,000 | 1,908,000 | 2,124,000 |
| Other senior managers, cat. B | 6,359 | 7,309 | 5,206 | 1,015,000 | 1,029,000 | 1,147,000 |
| Other senior managers, cat. A | 3,460 | 3,792 | 2,788 | 552,000 | 534,000 | 614,000 |
1) Each value is converted into a number of shares. The number of shares is based on a share price of SEK 159.57 for 2013 and SEK 140.86 for 2014, and SEK 220,36 for 2015 calculated as the average closing price of the Electrolux Class B share on the Nasdaq Stockholm during a period of ten trading days before the day participants were invited to participate in the program, adjusted for net present value of dividends for the period until shares are allocated. The recalculated weighted average fair value of shares at grant for all the programs is SEK 171.85 per share.
2) Total maximum value for all participants at grant is SEK 227m for the 2013 performance-share program, SEK 228m for the 2014 program and SEK 285m for the 2015 program.
3) The share allocation from the 2013 program will be at 30% of maximum. For the 2014 program, share allocation will be at 70.9% of maximum. The share allocation for the 2015 program will be at 21%.
| Financial objectives | Allocation of shares | |||||
|---|---|---|---|---|---|---|
| Minimum | Maximum | Actual | Outcome, % | Weight, % | Allocation, % | |
| Earnings per share, SEK | 10.8 | 12.3 | 10.7 | 01) | 25 | 0 |
| Return on net assets, % | 18.8 | 20.9 | 19.3 | 241) | 50 | 12 |
| Organic sales growth, % | 1.5 | 3.5 | 2.2 | 34 | 25 | 9 |
| Total allocation | 21 | |||||
1) Including adjustments for costs related to the terminated acqusition of GE Appliances.