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Annual Report 2015 Report by the Board of Directors Notes Proposed distribution of earnings Auditor’s report Eleven-year review Quarterly information


Electrolux corporate culture

Electrolux corporate culture in combination with a strong set of values form the core of the Group’s operations.

Leadership at Electrolux in all markets is distinguished by Passion for Innovation, Customer Obsession and Drive for Results. Respect, diversity, integrity, ethics, safety and the environment are at the core of all employee actions when they interact with customers and colleagues around the globe.

Wherever Electrolux operates in the world, the company applies the same high standards and principles of conduct.

Electrolux has a global Ethics Program, encompassing both ethics training and a whistle-blowing system – the Electrolux Ethics Helpline. Through the Ethics Helpline, employees can report suspected misconduct in local languages. Reports may be submitted anonymously if legally permitted. The majority of the reports during 2015 related to discrimination and harassment.

Electrolux has a number of tools for employees and management including leadership development programs at all levels of management such as the Talent Management program, the Connecting for Performance program, Teamship workshops, the internal Open Labor Market, and the web-based Employee Engagement Survey.

Code of Conduct 

The Group has a Code of Conduct that defines high employment standards for all Electrolux employees in all countries and business areas. It incorporates issues such as child and forced labor, health and safety, workers’ rights and environmental compliance. Key policies in this context include the ­Electrolux Code of Ethics, the Electrolux Workplace Code of Conduct, the Electrolux Policy on Corruption and Bribery and Environmental Policy. In 2014, Electrolux Workplace Code of Conduct was updated to align with the UN Guiding Principles on Business and Human Rights. Educational activities throughout the organization have taken place in 2015.

Number of employees

The average number of employees decreased in 2015 to 58,265 (60,038), of whom 2,027 (2,054) were in Sweden. At year-end, the total number of employees decreased to 55,245 (59,481).

Salaries and remuneration in 2015 amounted to SEK 15,858m (14,278), of which SEK 1,293m (1,199) refers to Sweden.

Average number of employees
Net sales per employee
  11 12 13 14 15
Average number of employees 52916 59478 60754 60038 58265
Net sales per employee 1.92 1.85 1.8 1.87 2.12

The average number of employees declined to 58,265 (60,038) in 2015.

Proposal for remuneration guidelines for Group Management

The Board of Directors will propose the following guidelines for remuneration and other terms of employment for the President and CEO and other members of Group Management of ­Electrolux to the Annual General Meeting (AGM) 2016. Group Management currently comprises twelve ­executives. The proposed guidelines for 2016 correspond in all material respects to the guidelines approved by the AGM in 2015.

The principles shall be applied for employment agreements entered into after the AGM 2016 and for changes made to existing employment agreements thereafter.

Remuneration for the President and CEO is resolved upon by the AB Electrolux Board of Directors, based on the recommendation of the Remuneration Committee. Remuneration for other members of Group Management is resolved upon by the Remuneration Committee and reported to the Board of Directors.

For a detailed description on remuneration to Group Management and related costs, see Note 27.

Electrolux shall strive to offer total remuneration that is fair and competitive in relation to the country or region of employment of each Group Management member. The remune­ration terms shall emphasize ‘pay for performance’, and vary with the performance of the individual and the Group. The total remuneration for Group Management may comprise the components set forth hereafter.

Fixed compensation

The Annual Base Salary (ABS) shall be competitive relative to the relevant country market and reflect the scope of the job responsibilities. Salary levels shall be reviewed periodically (usually annually) to ensure continued competitiveness and to recognize individual performance.

Variable compensation

Following the ‘pay for performance’ principle, variable compensation shall represent a significant portion of the total compensation opportunity for Group Management. Variable compensation shall always be measured against pre-defined targets and have a maximum above which no payout shall be made.

Variable compensations shall principally relate to financial performance targets.

Non-financial targets may also be used in order to strengthen the focus on delivering on the Group’s strategic plans. The targets shall be specific, clear, measurable and time bound and be determined by the Board of Directors. 

Short Term Incentive (STI) 

Group Management members shall participate in an STI plan under which they may receive variable compensation. The objectives in the STI plan shall mainly be financial. These shall be set based on annual financial performance of the Group and, for the sector area heads, of the sector area for which the Group Management member is responsible. 

The maximum STI entitlements shall be dependent on job position and may amount up to a maximum of 100% of ABS. Reflecting current market conditions, the STI entitlement for Group Management members in the USA may amount up to a maximum of 150% of ABS if the maximum performance level is reached.

STI payments for 2016 are estimated1) to range between no payout at minimum level and SEK 67m (excluding social costs) at maximum level.

Long Term Incentive (LTI)

Each year, the Board of Directors will evaluate whether or not a long-term incentive program shall be proposed to the General Meeting. Long-term incentive programs shall always be designed with the aim to further enhance the common interest of participating employees and Electrolux shareholders of a good long-term development for Electrolux.

For a detailed description of all programs and related costs, see Note 27.

Proposal for performance-based long-term share program 2016

The Board of Directors will propose a performance-based long-term share program for 2016 to the AGM 2016. The proposed program will be connected to performance targets for the Group established by the Board for (i) earnings per share, (ii) return on net assets and (iii) organic sales growth, for the 2016 financial year. The proposed program will include up to 250 senior managers and key employees. Allocation of performance-based shares, if any, will take place in 2019. Details of the program will be included in the notice to the AGM 2016.

The costs for the LTI program proposed for 2016 are estimated1) to SEK 319m (including social costs) at maximum level.

Extraordinary arrangements

Other variable compensation may be approved in extraordinary circumstances, under the conditions that such extraordinary arrangement shall, in addition to the target requirements set out above, be made for recruitment or retention purposes, are agreed on an individual basis, shall never exceed three (3) times the ABS and shall be earned and/or paid out in installments over a minimum period of two (2) years.

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.

Pension and benefits

Old age pension, disability benefits and medical benefits shall be designed to reflect home-country practices and requirements. When possible, pension plans shall be based on defined contribution. In individual cases, depending on tax and/or social security legislation to which the individual is subject, other schemes and mechanisms for pension benefits may be approved.

Other benefits may be provided on individual level or to the entire Group Management. These benefits shall not constitute a material portion of total remuneration.

Notice of termination and severance pay

The notice period shall be twelve months if the Group takes the initiative and six months if the Group Management member takes the initiative.

In individual cases, severance pay may be approved in addition to the notice periods. Severance pay may only be payable upon the Group’s termination of the employment arrangement or where a Group Management member gives notice as the result of an important change in the working situation, because of which he or she can no longer perform to standard. This may be the case in e.g. the event of a substantial change in ownership of Electrolux in combination with a change in reporting line and/or job scope. 

Severance pay may provide as a benefit to the individual the continuation of the ABS for a period of up to twelve months following termination of the employment agreement; no other benefits shall be included. These payments shall be reduced with the equivalent value of any income that the individual earns during that period of up to twelve months from other sources, whether from employment or independent activities.

Deviations from the guidelines

The Board of Directors shall be entitled to deviate from these guidelines if special reasons for doing so exist in any individual case.

1) Estimation is made on the assumption that Group Management is unchanged.