Remuneration to Group Management
The overall principles for remuneration to Group Management are that remuneration should be based on the position held, on individual and Group performance and on a competitive basis in the country of employment.
The overall remuneration package for Group Management comprises fixed salary, variable salary in the form of short-term incentives based on annual performance targets, long-term incentives and benefits such as pension and insurance benefits.
Husqvarna aims to offer competitive and performance based remuneration. Variable remuneration may constitute a significant proportion of total remuneration, but could also be zero if the target level “entry” is not achieved or capped if the maximum level “stretch” is attained. Variable salary to the President and Group Management is based on the Group’s value creation.
| Remuneration to Group Management 2010-2011 | ||||||||
|---|---|---|---|---|---|---|---|---|
| SEKt | Fixed salary | Variable salary | Pension costs | Long-term incentive | Other benefits | Severence pay | Total 2011 | Total 2010 |
| President and CEO | 3,239 | 541 | 1,096 | 268 | 23 | - | 5,167 | 15,757 |
| President and CEO, former | 3,865 | - | 1,989 | - | - | 16,607 | 22,461 | - |
| Group Management other | 26,449 | 1,418 | 4,671 | 2,216 | 473 | 15,886 | 51,113 | 59,992 |
| Total | 33,553 | 1,959 | 7,756 | 2,484 | 496 | 32,493 | 78,741 | 75,749 |
Terms of employment for the President
The remuneration to the President and Chief Executive Officer comprises fixed salary, variable salary based on annual targets, long term incentive programs and pension benefits. The remuneration is reviewed annually per January 1.
The annual fixed salary to the President is SEK 6,100,000 effective 1 December 2011 when Hans Linnarson was appointed President and CEO. Hans Linnarson has had the position as acting President and CEO since 7 June 2011. During the period as acting President, the fixed salary was SEK 468,750 per month. The variable salary for 2011 is based on an annual targets for value created within the Group (50 percent) and value created within the business unit the President also leads (50 percent). The variable salary is 50 percent of the fixed salary at target level and is capped at 100 percent at stretch level.
The President participates in the Group’s long-term incentive programs for 2009 (LTI 2009) and 2010 (LTI 2010). For information on these programs, see Note 22.
The notice period for termination is 12 months on the part of the Company and 6 months on the part of the President. The President is entitled to severance pay, corresponding to 12 monthly salaries with deduction for any other income, in the event of notice of termination from the employer. The President is entitled to fringe benefits such as housing, maximum monthly rent of SEK 15,000, and compensation for cost for travel between home and office in Stockholm.
Pension terms for the President
The retirement age for the President is 62. The President is covered by the collectively agreed ITP plan, the alternative rule of the plan, and the Husqvarna Executive Pension Plan. The Husqvarna Executive Pension Plan is a defined contribution plan. The employer contribution to the plan for the President is equivalent to 40 percent (35 percent during period as acting President) of the pensionable salary which also includes the contributions for the benefits of the ITP-plan, alternative ITP and any supplementary disability and survivor’s pension. The pensionable salary is calculated on the basis of current fixed salary plus last year’s variable salary paid.
Terms of employment for other members of Group Management.
As with the President, other members of Group Management receive a remuneration package comprised of fixed salary, variable salary based on annual targets, long-term incentive programs and pension and insurance benefits. Remuneration is revised annually per January 1.
The variable salary is based on value creation for the Group and/or for the relevant business unit. The variable salary is 40–50 percent of the fixed salary at target level and is capped at 80–100 percent at stretch level.
Members of Group Management participate in the Group’s long-term incentive programs which consist of the programs for 2009, 2010 and 2011 (LTI 2009, LTI 2010 and LTI 2011). For information on these programs, see Note 22.
The notice period for termination is 12 months on behalf of the Company and 6 months on the part of the employee and in the event of notice of termination from the employer, the member of Group Management is entitled to severance pay, corresponding to 12 monthly salaries with deduction for any other income. Those conditions for termination refer to the members of Group Management employed in Sweden. Shorter period of notice applies for those employed outside Sweden.
Pension terms for other members of Group Management
The members of Group Management employed in Sweden (four out of seven) are covered by the collectively agreed ITP plan, the alternative rule of the plan. These individuals are also covered by the Husqvarna Executive Pension Plan, which is a defined contribution plan. The employer contribution to the plan is equivalent to 35 percent of the pensionable salary which also includes contributions for the ITP plan, alternative ITP and any supplementary disability and survivor’s pension. The pensionable salary is calculated on the basis of current fixed salary plus last year’s variable salary paid. The pension age is 65 (age 62 applies for two individuals) for the members of Group Management who are employed in Sweden. In addition to the pension terms described above there is a commitment to pay a single premium, at retirement age to those two individuals with retirement age 62, for pension benefits corresponding to 22.68 monthly salaries in the event that the member of Group Management remains in service until the retirement age. The members of Group Management that are not employed in Sweden are covered by the Group’s company retirement plans in the respective country of employment (Germany and the U.S). Pension age is 65 or higher.
Terms of employment for the former President
The former President and CEO, Magnus Yngen, resigned from his position on August 29, 2011, but his employment remains until August 28, 2012 (notice period).
The remuneration to the former President comprises fixed salary, variable salary (until May 2011) and pension benefits.
The annual fixed salary to the former President is SEK 6,077,000, effective January 1, 2011. The variable salary for 2011 is based on an annual target for value created within the Group. The variable salary is 50 percent of the fixed salary at target level and is capped at 100 percent at stretch level.
The former President does no longer participate in the Group’s long-term incentive programs. The former President is entitled to severance pay etc. which amounts to about SEK 16.6m and comprises fixed salary and pension costs during period of notice as well as severance pay during a maximum of twelve months from the end of the of the notice period. This severance pay amounts to SEK 506,417 per month and shall be reduced by any income, which the former President has earned from other gainful and non-competing employment during the period severance pay is due.
Pension terms for the former President
The former President is covered by the collectively agreed ITP plan, the alternative rule of the plan, and the Husqvarna Executive Pension Plan. The Husqvarna Executive Pension Plan is a defined contribution plan. The employer contribution to the plan for the former President is equivalent to 40 percent of the pensionable salary which also includes the contributions for the benefits of the ITP-plan, alternative ITP and any supplementary disability and survivor’s pension. The pensionable salary is calculated on the basis of current fixed salary plus last year’s variable salary paid.