Electrolux 2006 Annual Report Download - page 47

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How does Electrolux recruit, train and develop
talent in Asia?
There is a lot of competition for talent in our region but
Electrolux is in a very strong position to attract top people
both externally and internally due to the strength of its
brand and its positive reputation as an employer.
We use the Open Labor Market, the Group’s internal
posting and recruitment tool, to attract internal talent to
our region. We offer a variety of training courses at all
levels to ensure high quality in manufacturing, expertise
in a variety of business skills and a clear understanding of
the Electrolux Code of Conduct.
Seeking talent in new markets
Attracting and developing the best talent is essential
to business success, particularly in the fast-growing
markets of Asia. Manusrudee Suwannarat has overall
responsibility for recruitment and training in Thailand
and East Asia.
Manusrudee Suwannarat
Remuneration to
Senior Management
“Offering competitive salaries to senior management is a pre-
requisite for attracting personnel and stimulating them to make
the strong commitment that is required in the tough international
competition that Electrolux faces. The Group also aims at offering
competitive total remuneration, based on performance.
Advice from independent consultants
In order to determine appropriate total remuneration in connection
with recruiting someone for a specifi c position and retaining him/
her, Electrolux requests advice from external consultants. They
evaluate the leading management positions and compare remu-
neration with other Swedish and European companies, including
Electrolux leading competitors.
More than fi xed salary
Remuneration to management in Electrolux consists of a fi xed sal-
ary, a variable salary based on annual targets, a long-term share-
related salary, and pension benefi ts. Remuneration other than fi xed
salary has symbolic importance. If the company does not perform
well, the shareholders are not the only ones affected. And since
many others in the company have performance-based salaries, it
would be inappropriate for senior management to receive only a
fi x e d salary.
Important variable component
The variable salary is based on clearly defi ned targets for each
member of senior management. The Board devotes a good deal of
time to defi n ing these targets, since they are an important part of
The text below is part of Board Chairman Michael Treschow’s speech at the Electrolux AGM in
2006, where he discussed the company’s approach to remuneration for senior management.
the work of running the company. The targets include fi nancial goals
for value creation as well as non-fi nancial goals. Variable salary is
paid only if the targets are reached, and maximum as well as mini-
mum levels are defi ned for each position. The maximum level may
not be exceeded.
Performance share program
In addition to fi xed and variable remuneration, there is a long-
term share-related component. For a large listed company like
Electrolux, with tens of thousands of shareholders, it is important
that in their daily activities the President and senior management
are moving in the same direction as the owners, who do not par-
ticipate in daily operations. The Electrolux incentive program is
linked to the long-term value creation within the Group, is maxi-
mized at a defi ned level, and covers about 160 persons.
Over time, the fi xed component corresponds to about half of total
remuneration, and the variable and share-based components each
correspond to about 25 percent.
Pension benefi ts
Pension benefi ts are based on allocations during the period in which
the individual is employed by the company. This premium-based
system enables the Group to have continuous control of costs.”
Value creation is the Group’s primary fi n ancial performance indicator for measuring and
evaluating fi n ancial performance, for more information, see page 107.
For the Board’s proposal on remuneration guidelines to the Annual General Meeting 2007,
see page 67. For additional information on remuneration guidelines and processes for senior
management, see Note 22 on page 92 and Note 27 on page 101.
43