Electrolux 2014 Annual Report Download - page 126

Synthetic shares
The AGM in ,  and  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 /, / and / terms of office been
given the choice of receiving % or % of the fees for the Board assign-
ment 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 %
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 , a total
of , (,) synthetic shares were outstanding, having a total value
of SEK .m (.). The accrued value of the synthetic shares has been cal-
culated as the number of synthetic shares times the volume weighted
average price of a Class B share in Electrolux as of December , .
The revenue from revaluation of synthetic shares during  was
SEK .m. Cash settlements in  amounted to SEK .m (.).
Remuneration Committee
For information on the Remuneration Committee, see the Corporate
governance report on page .
Remuneration guidelines for Group Management
The AGM in  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 rep-
resents 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 , Electrolux has long-term performance-share programs
for  to  senior managers of the Group. For further information,
see page .
Compensation and terms of employment for the President
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  has been set
at USD ,, (approximately SEK .m).
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 out-
come is at or above the maximum, pay out is capped at % of the
annualized base salary. If the performance outcome is between mini-
mum and maximum, the pay out shall be determined on a linear basis.
The President participates in the Group’s long-term performance pro-
grams. For further information on these programs, see page .
The notice period for the company is  months, and for the Presi-
dent  months. The President is entitled to  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 allow-
ances that are provided to expatriates within the Group under the policy.
Pensions for the President
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 . The President is entitled to a fixed defined annual
contribution of USD , (approximately SEK .m) that is paid
towards the employer’s pension plans ((k), excess (k) and Sup-
plemental Defined Contribution Plan).
The capital value of pension commitments for the President in ,
prior Presidents, and survivors is SEK m ().
Compensation and terms of employment for other members of
Group Management
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 . The average base-sal-
ary increase for members of Group Management in  was .% (.).
Variable salary in  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 % of annual salary, which
is also the cap. The US-based business area head has a maximum of
%.
Group staff heads receive variable salary that varies between a mini-
mum (no pay out) and a maximum of %, which is also the cap.
No payments for extraordinary arrangements were made in  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 perfor-
mance-share program introduced in . For further information on
these programs, see page .
Certain members of Group Management are entitled to  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 pro-
vided 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 Manage-
ment employed outside of Sweden, varying fringe benefits and condi-
tions may apply, depending upon the country of employment.
Pensions for other members of Group Management
The earliest retirement age is  for members of Group Man agement.
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 con-
tribution increases with age. The contribution is between  and % of
pensionable salary, between . and  income base amounts. Provided
that the member retains the position until age , the company will final-
ize outstanding premiums in the alternative ITP plan. The contribution to
the supplementary plan is % of pensionable salary above  income
base amounts.
One member is covered by a closed supplementary plan in which
contributions equal % of the pensionable salary. The member is also
entitled to individual additional contributions.
Electrolux provides disability benefits equal to % of pensionable
salary less disability benefits from other sources. Electrolux also pro-
vides survivor benefits equal to the highest of the accumulated capital
for retirement or  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 .% per year.
Group Management members employed  and later receive a
pension entitlement where the aggregated contribution is % of annual
base salary. The retirement age is  years.
For members of Group Management employed outside of Sweden,
varying pension terms and conditions apply, depending upon the coun-
try of employment.
Cont. Note 

 ELECTROLUX ANNUAL REPORT 
All amounts in SEKm unless otherwise stated