In 2014, the average number of employees was 60,038 (60,754), of whom 39,931 (41,310) were men and 20,107 (19,444) 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.electroluxgroup.com.
| Group | ||
|---|---|---|
| 2013 | 2014 | |
| Europe | 21,602 | 20,768 |
| North America | 9,922 | 10,702 |
| Latin America | 18,241 | 18,478 |
| Rest of world | 10,989 | 10,090 |
| Total | 60,754 | 60,038 |
| 2013 | 2014 | |||||
|---|---|---|---|---|---|---|
| Salaries and remuneration | Employer contributions | Total | Salaries and remuneration | Employer contributions | Total | |
| Parent Company | 976 | 485 | 1,461 | 965 | 493 | 1,458 |
| whereof pension costs | 1701) | 1701) | 1791) | 1791) | ||
| Subsidiaries | 12,545 | 2,627 | 15,172 | 13,313 | 2,653 | 15,966 |
| whereof pension costs | 430 | 430 | 479 | 479 | ||
| Total Group | 13,521 | 3,112 | 16,633 | 14,278 | 3,146 | 17,424 |
| whereof pension costs | 600 | 600 | 658 | 658 | ||
1) Includes SEK 6m (9), referring to the President’s predecessors according to local GAAP (the cost for the current President is included in his home country).
| 2013 | 2014 | |||||
|---|---|---|---|---|---|---|
| Board members and senior managers | Other employees |
Total | Board members and senior managers | Other employees |
Total | |
| Parent Company | 45 | 931 | 976 | 44 | 921 | 965 |
| Other | 230 | 12,315 | 12,545 | 207 | 13,106 | 13,313 |
| Total Group | 275 | 13,246 | 13,521 | 251 | 14,027 | 14,278 |
Of the Board members in the Group, 82 were men and 16 women, of whom 6 men and 3 women in the Parent Company. Senior managers in the Group consisted of 181 men and 68 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 29m (42) in 2014.
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 2014 refers to one fourth of the compensation authorized by the AGM in 2013, and three fourths of the compensation authorized by the AGM in 2014. Total compensation paid in cash in 2014 amounted to SEK 6.3m, of which SEK 5.7m referred to ordinary compensation and SEK 0.6m to committee work.
| ´000 SEK | Ordinary compensation | Compensation for committee work | Total compensation |
|---|---|---|---|
| Marcus Wallenberg, Chairman (until AGM 2014) | 425 | 18 | 443 |
| Ronnie Leten, Chairman (from AGM 2014) | 1,497 | 40 | 1,537 |
| Torben Ballegaard Sørensen, Deputy Chairman | 597 | 200 | 797 |
| Lorna Davis | 534 | 58 | 592 |
| Petra Hedengran (from AGM 2014) | 405 | 80 | 485 |
| Hasse Johansson | 534 | 88 | 622 |
| Keith McLoughlin, President | — | — | — |
| Bert Nordberg | 534 | — | 534 |
| Fredrik Persson | 534 | 88 | 622 |
| Ulrica Saxon | 534 | — | 534 |
| Barbara Milian Thoralfsson (until AGM 2014) | 129 | 40 | 169 |
| Ola Bertilsson | — | — | — |
| Gunilla Brandt | — | — | — |
| Ulf Carlsson | — | — | — |
| Total compensation 2014 | 5,723 | 612 | 6,335 |
| Revaluation of synthetic shares from previous assignment period | –1,589 | — | –1,589 |
| Total compensation cost 2014 including revaluation of synthetic shares | 4,134 | 612 | 4,746 |
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 2014, a total of 7,008 (18,979) synthetic shares were outstanding, having a total value of SEK 1.6m (3.2). 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, 2014. The revenue from revaluation of synthetic shares during 2014 was SEK 1.6m. Cash settlements in 2014 amounted to SEK 2.2m (2.7).
For information on the Remuneration Committee, see the Corporate governance report on page 136.
The AGM in 2014 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 125.
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 2014 has been set at USD 1,493,500 (approximately SEK 10.2m).
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 125.
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 5.5m) 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 2014, prior Presidents, and survivors is SEK 313m (279).
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 2014 was 3.9% (2.2).
Variable salary in 2014 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. The US-based business area 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 extraordinary arrangements were made in 2014 and there are no such payments outstanding per year end.
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 125.
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.
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.
| 2013 | 2014 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| ’000 SEK unless otherwise stated | Annual fixed salary1) | Variable salary paid 20132) | Total salary |
Longterm PSP (value of shares awarded) | Other remuneration3) | Annual fixed salary1) | Variable salary paid 20142) | Total salary | Longterm PSP (value of shares awarded) | Other remuneration3) |
| President and CEO | 9,875 | 7,276 | 17,151 | 249 | 2,727 | 10,174 | 2,022 | 12,196 | 655 | 7,4895) |
| Other members of Group Management4) | 50,230 | 34,859 | 85,089 | 1,375 | 8,811 | 48,696 | 13,430 | 62,126 | 2,391 | 7,038 |
| Total | 60,105 | 42,135 | 102,240 | 1,624 | 11,538 | 58,870 | 15,452 | 74,322 | 3,046 | 14,527 |
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 12 people in 2013 and 11 people in 2014.
5) Expert tax relief for the CEO expired at the end of 2013 resulting in additional tax and social security costs for Electrolux.
| 2013 | 2014 | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| ’000 SEK unless otherwise stated | Annual fixed salary | Variable salary incurred 2013 but paid 2014 | Longterm PSP (cost)1) |
Other remuneration2) | Total pension contribution | Social contribution | Annual fixed salary | Variable salary incurred 2014 but paid 2015 | Longterm PSP (cost)1) |
Other remuneration2) | Total pension contribution | Social contribution |
| President and CEO | 9,875 | 2,063 | 4,077 | 2,727 | 5,219 | 2,842 | 10,174 | 7,038 | 6,607 | 7,489 | 5,512 | 3,9173) |
| Other members of Group Management | 50,230 | 13,823 | 15,439 | 14,720 | 26,282 | 18,598 | 48,696 | 27,059 | 21,322 | 7,038 | 22,814 | 12,234 |
| Total | 60,105 | 15,886 | 19,516 | 17,447 | 31,501 | 21,440 | 58,870 | 34,097 | 27,929 | 14,527 | 28,326 | 16,151 |
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) Expert tax relief for the CEO expired at the end of 2013 resulting in additional tax and social security costs for Electrolux.
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 2014 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 and 2014 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. The 2012 program has 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 2012 program. For the 2013 and 2014 programs 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 performanceshare 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.
Each program covers 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 2014 performance-share program over a three-year period is estimated at SEK 127m, including costs for employer contributions. If the maximum level is attained, the cost is estimated at a maximum of SEK 253m. The distribution of shares under this program will result in an estimated maximum increase of 0.65% in the number of outstanding shares.
For 2014, LTI programs resulted in a cost of SEK 106m (including a cost of SEK 36m in employer contribution) compared to a cost of SEK 73m in 2013 (including a cost of SEK 16m in employer contribution). The total provision for employer contribution in the balance sheet amounted to SEK 76m (29).
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.
The 2011 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 2011.
| Maximum number of B-shares1) | Maximum value, SEK2) 3) | |||||
|---|---|---|---|---|---|---|
| 2012 | 2013 | 2014 | 2012 | 2013 | 2014 | |
| President | 38,614 | 48,948 | 54,981 | 5,000,000 | 7,811,000 | 7,745,000 |
| Other members of Group Management | 13,901 | 19,325 | 22,411 | 1,800,000 | 3,084,000 | 3,157,000 |
| Other senior managers, cat. C | 10,426 | 11,642 | 13,545 | 1,350,000 | 1,858,000 | 1,908,000 |
| Other senior managers, cat. B | 6,951 | 6,359 | 7,309 | 900,000 | 1,015,000 | 1,029,000 |
| Other senior managers, cat. A | 5,213 | 3,460 | 3,792 | 675,000 | 552,000 | 534,000 |
1) Each value is converted into a number of shares. The number of shares is based on a share price of SEK 129.49 for 2012, SEK 159.57 for 2013 and SEK 140.86 for 2014, 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 143.13 per share.
2) Total maximum value for all participants at grant is SEK 166m for the performance-share program 2012, SEK 227m for the 2013 program and SEK 228m for the 2014 program.
3) The 2012 program meet the maximum level. The share allocation from the 2013 program will be at 30% of maximum. The share allocation from the 2014 program will be at 70.9% of maximum.
| Financial objectives | Allocation of shares | |||||
|---|---|---|---|---|---|---|
| Minimum | Maximum | Actual | Outcome, % | Weight, % | Allocation, % | |
| Earnings per share, SEK1) | 8.4 | 11.6 | 11.3 | 90.6 | 25 | 22.7 |
| Return on net assets, %1) | 13.3 | 17.3 | 17.1 | 95.3 | 50 | 47.6 |
| Organic sales growth, % | 1.0 | 5.0 | 1.1 | 2.5 | 25 | 0.6 |
| Total allocation | 70.9 | |||||
1) Excluding items affecting comparability.