Electrolux 2005 Annual Report Download - page 77

Notes
Electrolux Annual Report 2005 73
Divestment of Indian operation 2005
Fixed assets –132
Inventories –173
Receivables –74
Other current assets –23
Liquid funds –30
Loans 259
Other liabilities and provisions 190
Purchase price –599
Net borrowing in acquired/divested operation 229
Effect on Group cash and cash equivalents –370
In 2005, all activity in India was divested. During the year the divested
activity is included in Net sales with SEK 376m (553). Costs are
included with SEK 432m (706). The result before tax is included with
SEK –56m (–153). Tax is included with SEK 0m (0).
Note 27 Remuneration to the Board of Directors, the President and
other members of Group Management
Remuneration Committee
The working procedures of the Board of Directors stipulate that remu-
neration to Group Management is proposed by a Remuneration Com-
mittee. The Committee comprises the Chairman of the Board and two
additional Directors. During 2005, the Committee members were
Michael Treschow (Chairman), Aina Nilsson Ström and Karel
Vuursteen.
The Remuneration Committee establishes principles for remuner-
ation for the President and the other members of Group Manage-
ment, subject to subsequent approval by the Board of Directors. Pro-
posals submitted by the Remuneration Committee to the Board of
Directors include targets for variable compensation, the relationship
between fixed and variable salary, changes in fixed or variable salary,
criteria for assessment of variable salary, long-term incentives, pen-
sion terms and other benefits.
A minimum of two meetings is convened each year and additional
meetings are held when needed. Three meetings were held during 2005.
General principles for compensation within Electrolux
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 of employment.
The overall compensation package for higher-level management
comprises fixed salary, variable salary in the form of a short-term
incentive based on annual performance targets, long-term incentives,
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
thus represents a significant proportion of total compensation for
higher-level management. Total compensation is lower if targets are
not achieved.
In 2003, the Group introduced a uniform program for variable sal-
ary for management and other key positions. Variable salary is based
on a financial target for value creation as well as non-financial targets.
Each job level is linked to a target and a stretch level for variable sal-
ary, and the program is capped.
In 2004, Electrolux introduced a new performance-based long-
term incentive program that replaced the option program for less than
200 senior managers of the Group. The performance share program
is linked to targets for the Group’s value creation over a three-year
period.
The vesting and exercise rights of the option programs launched
up till 2003 will continue as scheduled.
Note 26 Acquired and divested operations
Compensation to the Board of Directors
The Annual General Meeting (AGM) determines the total compensa-
tion to the Board of Directors for a period of one year until the next
AGM. The Board allocates a portion of this compensation for commit-
tee work, and the rest is distributed exclusively to members who are
not employed by the Group. Compensation is paid quarterly. Com-
pensation paid in 2005 refers to 2/4 of the compensation authorized
by the AGM in 2004, and 2/4 of the compensation authorized by the
AGM in 2005. Total compensation paid in 2005 amounted to
SEK 4,012,000, of which SEK 3,500,000 referred to ordinary com-
pensation and SEK 512,000 to committee work. For distribution of
compensation by Board member, see table below.
Compensation to the Board members in ´000 SEK
Ordinary Compensation for Total
Board member compensation committee work compensation
Michael Treschow, Chairman 1,200 50 1,250
Peggy Bruzelius, Deputy Chairman 375 213 588
Barbara Milian Thoralfsson 350 75 425
Aina Nilsson Ström 350 50 400
Karel Vuursteen 350 50 400
Thomas Halvorsen (up to the AGM) 175 37 212
Caroline Sundewall (as of the AGM) 175 37 212
Tom Johnstone (as of the AGM) 175 — 175
Marcus Wallenberg (as of the AGM) 175 — 175
Luis R Hughes (as of the AGM) 175 — 175
Hans Stråberg — — —
Ulf Carlsson — — —
Annika Ögren — — —
Malin Björnberg — — —
Total 3,500 512 4,012