Electrolux 2010 Annual Report Download - page 165

Change in number of options per program
Number of options 2009 Number of options 2010
Program January 1, 2009 Exercised Forfeited1) Expired1) December 31, 2009 Exercised2) Forfeited1) Expired1) December 31, 2010
2003 301,890 189,549 — — 112,341 112,331 — 10 —
1) Options expire when they are not exercised post vesting period, e.g., due to expiration at the end of the term of the options or earlier, because of termination of
employment after vesting. Forfeiture is when the employees fail to satisfy the vesting condition, e.g., termination of employment before vesting period. Forfeiture
is governed by the provisions of the option plan.
2) The weighted average share price for exercised options is SEK 181.76.
Options provided to Group Management
Number of options
Beginning of 2010 Expired Exercised End of 2010
President 30,000 — 30,000 —
Other members of Group Management 9,390 — 9,390 —
Total 39,390 —39,390 —
Share-based compensation
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 manag-
ers 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. All programs
are equity-settled.
2003 option programs
In 2003, a stock option plan for employee stock options was intro-
duced for less than 200 senior managers. The options could be
used to purchase Electrolux B-shares at an exercise price that
was 10% above the average closing price of the Electrolux
B-shares on the exchange Nasdaq OMX Stockholm during a lim-
ited period prior to allotment. The options were granted free of
consideration. The program expired on May 8, 2010.
Performance-share programs 2008, 2009 and 2010
The Annual General Meeting in 2010 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 inte-
gral 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 in Electrolux B-shares.
Under the 2010 program, the allocation is determined by two
main factors. First, the participant should invest in Electrolux
B-shares through a purchase in the open market. The personal
investment should be equal in value to 10% to 15% of the maxi-
mum program value. Each purchased share will be matched with
one share at the end of the program by the company. The second
factor is that allocation is determined by average annual growth in
earnings per share. If the minimum level is reached, the allocation
will amount to 25% of maximum number of shares. There is no
allocation if the minimum level is not reached. If the maximum is
reached, 100% of shares will be allocated. Should the average
annual growth 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.
Participants are permitted to sell the allocated shares to cover per-
sonal income tax arising from the share allocation. For the 2008
and 2009 programs, the remaining shares must be held for another
two years; for the 2010 program this additional requirement is not
applicable.
If a participant’s employment is terminated during the perfor-
mance 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.
All programs cover almost 160 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 pro-
grams comprise B-shares.
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