Securitas AB Annual Report 2005

Notes and comments to the consolidated fi nancial statements
CONT. NOTE 5 FINANCIAL RISK MANAGEMENT
Revaluation of fi nancial instruments 2005
MSEK 2005
Recognized in the statement of income
Financial income 36.2
Finacial expenses –
Deferred tax –10.1
Impact on net income for the year 26.1
Recognized via Other reserves in equity
Changes in hedging reserve before tax 15.6
Deferred tax –4.4
Changes in hedging reserve after tax 11.2
Total revaluation before tax 51.8
Total revaluation after tax/impact on equity above 37.3
NOTE 6 TRANSACTIONS WITH RELATED PARTIES
Joint ventures
The Securitas Group includes only one company, Securitas Direct S.A. (Switzerland),
in which its share of the voting rights is 50 percent. Due to the negligible impact
of this company on the Group’s earnings and fi nancial position, it is not reported
separately in the consolidated statement of income or balance sheet. The company
is included under Other in the Group’s segment reporting from December 2005.
Comparatives have been adjusted. Total sales amounted to MSEK 43 (42), operating
income before amortization to MSEK 6 (5), operating fi xed assets to MSEK 9
(8), accounts receivable to MSEK 5 (6), other assets to MSEK 6 (5), other liabilities
to MSEK 7 (6), goodwill to MSEK 9 (9) and acquisition related intangible
fi xed assets to MSEK 1 (1).
Other
Information on the remuneration to the Board of Directors and Senior Management
is provided in Note 7. Information on total payroll expenses for the Board of
Directors and the Presidents of the Group is provided in Note 11.
For information on the Parent Company’s transactions with affi liated parties,
refer to Note 39 and Note 42.
NOTE 7 REMUNERATION TO THE BOARD OF DIRECTORS
AND SENIOR MANAGEMENT
General
Principles
The Chairman of the Board and the Directors receive fees in accordance with the
decision of the Annual General Meeting. Separate fees are paid for committee
work. Neither the President and CEO nor the employee representatives receive
directors’ fees.
The compensation paid to the President and CEO and other members of Group
Management consist of a base salary, variable compensation and pension.
The variable compensation varies between zero and the maximum amount as
follows. For the President and CEO the variable compensation is maximized at
100 percent of his base salary. For the other members of Group Management, the
bonus is maximized at 60–100 percent of their base salaries. The variable compensation
is based on performance relative to earnings improvement (and in certain
cases other key ratios) for the individual responsibility level (Group or Division).
The total cost of fi xed and variable compensation is decided each year to an
amount that includes all compensation costs for the Company, including social
security costs. The total cost concept allows the President and CEO and other
members of Group Management to allocate part of their fi xed and variable compensation
to other benefi ts, for example pension benefi ts.
The total compensation in some cases further includes long-term incentive
programs.
Planning and decision making process
The Board’s remuneration committee deals with all the above issues regarding the
President and CEO and other members of Group Management as well as other
management levels if the committee so decides. The committee presents its proposals
to the Board of Directors, which takes all decisions.
The members of the remuneration committee are Melker Schörling (chairman) and
Berthold Lindqvist. The committee held three meetings during 2005.
Remuneration during the year
Group Management remuneration related to 2005:
MSEK
Base
salary
Other
benefi ts
Variable
compensation
Longterm
incentive 2 Pension
Total
remuneration
Chairman of
the Board1 1.0 – – – – 1.0
Other Directors1 3.3 – – – – 3.3
President and CEO
Other members of
Group Management
11.5 0 6.4 – – 17.9
(6 persons) 30.6 2.1 14.4 13.9 5.0 66.0
Total 46.4 2.1 20.8 13.9 5.0 88.2
Above information refers to full year remuneration for the Group Management. Other benefi ts include
customary expatriate benefi ts. The Board of Directors and the President and CEO have no
pension benefi ts.
1 Including remuneration for committee work.
2 Refer to the cost for 2005, please fi nd further reference below under section incentive programs.
Board of Directors
For the 2005 fi nancial year, the Chairman Melker Schörling received a director’s
and committee work fee of MSEK 1.0. The other Directors received an aggregate
director’s and committee work fee of MSEK 3.25. The Board of Directors is not
entitled to any other compensation except for travel and lodging expenses.
President and Chief Executive Offi cer
During the 2005 fi nancial year, Thomas Berglund received a salary equivalent to
MSEK 11.5. A variable compensation of MSEK 6.4 for 2005 performance will be
paid out 2006.
The President and CEO has no pension benefi ts from the Company and the
Company pays no pension insurance for the President and CEO. The retirement
age for the President and CEO is 65 years. If the employment is terminated by the
Company, the President and CEO is entitled to compensation equivalent to 24
months salary as from the date of termination.
Other members of Group Management
The other members of Group Management are; Håkan Winberg (Executive Vice
President and CFO), Santiago Galaz, Tore K. Nilsen, Dick Seger, Clas Thelin and
Juan Vallejo (Divisional Presidents). During the fi nancial year 2005 their aggregated
fi xed salaries amounted to MSEK 30.6 and other salary benefi ts to MSEK 2.1. The
aggregate variable compensation for 2005 performance amounted to MSEK 14.4,
and will be paid out in 2006.
These six members of the Group Management have individual pension plans.
The retirement age for these members of Group Management is 65 years.
Under the total cost concept, as described under Principles above, each member
can allocate part of his remuneration to a defi ned contribution pension premium.
One member has a defi ned benefi t plan (Swedish ITP plan) but can also allocate
part of their remuneration to a defi ned contribution premium.
The ITP plan guarantees a lifetime pension from age 65. The pension amount is
88 SECURITAS 2005