Electrolux 2003 Annual Report Download - page 83

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Legal Affairs
Cecilia Vieweg
Professional Products
Consumer Durables
Communications and
Branding
Lars Göran Johansson
Group strategy and key processes
Hans Stråberg, Bengt Andersson
and Johan Bygge
President and CEO
Hans Stråberg
Controlling, Accounting,
Taxes, Auditing
Fredrik Rystedt
Treasury
Nina Linander
Human Resources and
Organizational Development
Lilian Fossum
White Goods
Europe
Wolfgang König
White Goods
North America
Keith R.
McLoughlin
White Goods
outside
Europe and
North America
Johan Bygge
Floor Care
Products
and Small
Appliances
Magnus Yngen
Outdoor
Products
Bengt Andersson
Outdoor
Products
Bengt Andersson
Indoor
Products
Detlef Münchow
Electrolux Annual Report 2003 81
Corporate Governance
the Board’s activities, the composition of the Board, directors’
fees and possible requirements for special expertise on the Board.
The names of the nominees are given in the written notice of the
Annual General Meeting.
Management and Company structure
Electrolux operations are organized into seven business sectors,
including a total of 27 product lines. There are five supporting
Group staff units.
Group Management
In addition to the President and CEO, Group Management includes
the six sector heads and the five Group staff heads. Group Man-
agement meets each month to review the previous month’s
results, update forecasts and plans, and discuss strategic issues.
Business sectors
The sector heads have complete responsibility for the results and
balance sheets of their respective sectors. The overall management
of the sectors is the responsibility of sector boards, which meet
every quarter. The President and CEO is the chairman of all sector
boards. Apart from the President and CEO, the sector board meet-
ings are attended by the management of the respective sectors, as
well as the Head of Group staff Controlling, Accounting, Taxes,
Auditing. The sector boards are responsible for monitoring on-going
operations, establishing strategies, determining sector budgets, and
making decisions on major investments.
The product line managers are responsible for the profitability
and long-term development of their product lines.
Six Group processes
In order to ensure a systematic approach to improving operational
efficiency and secure the manner in which business is performed,
the Group has defined six core processes within strategically impor-
tant areas. These processes are common for the entire Group and
comprise purchasing, people, branding, product creation, demand
flow, and business support.
The President and CEO and two members of Group Manage-
ment form a special working group with the task of addressing
strategic issues and increasing cooperation between the sectors
within the framework of the above-mentioned processes.
Remuneration to the Board
and Group Management
Compensation for the Chairman and Board members is paid in
accordance with the resolution adopted by the Annual General
Meeting.
Compensation to the President and CEO and Group Manage-
ment is proposed by the Remuneration Committee and comprises
fixed salary, variable salary, benefits and long-term incentives. The
general principles of compensation at Electrolux are closely observed
with strong regard for the position held, competitive compensation
in the country of location, and individual performance.
Variable salary is paid depending on performance. Variable
salary for the President and CEO and sector heads is determined
by improved value created during the year, the primary financial
performance indicator for the Group. Group staff heads receive
variable salary based on improved value created for the Group
and performance objectives within their respective functions.
For more information on this concept, see below.
In terms of long-term incentive programs, Electrolux has imple-
mented several employee stock option programs, which are
designed to align management incentives with shareholder interests.
For more information on compensations during 2003, see Note 28 on page 63.
Value creation
The Group uses a model for value creation to measure profitability
by business area, sector, product line and region. The model links
operating income and asset efficiency with the cost of the capital
employed in operations. Value created is also the basis for incentive
systems for managers and employees in the Group. The Group
has covered its cost of capital every year since 1998.
Value created is measured as operating income, excluding items
affecting comparability, less the weighted average cost of capital
(WACC) on average net assets, excluding items affecting compa-
rability.
For details on the value creation concept, see page 77.