Securitas AB Annual Report 2005

a certain percentage of the fi nal salary depending on age however maximised to a
salary of MSEK 1.2 per employee. This pension benefi t is funded through annual
premiums paid by the Company during the term of employment.
All members have defi ned contribution pension plans for which pension premiums
are allocated from the member’s total remuneration and paid by the Company during
the term of employment. These premiums can vary but are limited to amounts
deductible for tax purposes by the Company.
During 2005 the pension costs for the Group Management amounted to MSEK 5.0.
No pension benefi ts are conditioned by future employment.
The long-term bonus program for Juan Vallejo from 1998 has been replaced by
a pension scheme with Securitas AB. The pension is a defi ned contribution scheme
paid by one single premium of MSEK 41.0. The pension scheme value has,
according to agreed terms, been linked to the average stock price of 406,706 Securitas
B-shares between 1 July and 31 December 2005. Securitas AB has paid the
one single premium in January 2006 and has received the corresponding amount
from an insurance company. Securitas AB will not incur any further expenses for
this pension scheme. The future proceeds from the pension scheme capital will
increase the pension liability with a corresponding amount. The pension liability
is accounted for as a long-term liability and the receivable on the insurance company
is accounted for as a long-term receivable.
If the employment is terminated by the Company these members of Group
Management are entitled to compensation equivalent to 12 months salary as from
the date of termination and in relevant cases the portion of the variable and the
long-term bonus programs. The Executive Vice President and CFO has a possibility
to a compensation equivalent to 24 months salary.
Incentive programs
Long-term incentive
In 1998 the Board of Directors established a long-term incentive program based on
the market performance of the Securitas share for the Group Management members.
In 1999 this program was discontinued and the balance was transferred to a singlepremium
insurance policy whereafter Securitas has not incurred any further expenses
in this respect. Following the replacement of the long-term bonus program
for Juan Vallejo in 2005, to a pension scheme, the long-term incentive program
with a single premium insurance is fully terminated. Please refer to further details
above under section remuneration.
There is currently no long term incentive program in place for the President
and CEO.
For fi ve other members of the Group Management long-term incentive plans
exist in which the maximum compensation is limited to two to three year’s base
salary. The compensation is based on the earnings development and other key
ratios in the divisions for which the members are responsible. The long-term bonus
plans includes fi nancial years 2004 to 2006 and 2005 to 2007. Any payment will
be received in 2007 or 2008 respectively. The 2005 provision for long-term bonus
plans amounted MSEK 13.9. The accumulated provision for these plans amounts
to MSEK 15.2 as per December 31, 2005. The provisions are the total cost for
Securitas and include social security costs.
Convertible debenture loans
Securitas AB introduced in 2002 a global incentive program with a duration of fi ve
years, which was offered to almost all employees of the Securitas Group. In 2005
all members of the Group Management have accepted an offer to all members of
the program, approved by the AGM on 7 April 2005, to sell their investment in
Securitas Employee Convertible 2002 Holding S.A. prematurely for market value.
Group Management’s holdings through acquisitions on the stock market or
through acquisitions through convertible debenture loans are detailed in the table
below.
Group Management’s holdings of
Securitas B-shares and shares in the incentive program 1
B-shares Incentive program 2
2005 2004 2005 2004
Thomas Berglund3 500,000 501,608 – 126,756
Håkan Winberg 745,000 525,000 – 126,756
Santiago Galaz4 175,000 175,000 – 126,756
Tore K. Nilsen 153,811 20,013 – 126,756
Dick Seger 89,224 26 – 126,756
Clas Thelin 139,198 50,000 – –
Juan Vallejo 148,000 103,000 – 126,756
1 Information refers to shareholdings as of 31 December 2005 and February 2005.
2 Referred in 2004 to the corresponding number of Series B-shares after full conversion of the
convertible debenture loan 2002/2007 Series 1–4 based on holdings of shares in Securitas
Employee Convertible 2002 Holding S.A. All members of the Group Management have accepted
an offer to sell their investment prematurely for market value.
3 In 2004 Thomas Berglund acquired 500,000 B-shares on the stock market and has made a
commitment not to dispose of these shares earlier than 18 months after termination of employment
and in any case not before June 30, 2007.
4 A Securitas U.S. subsidiary has guaranteed a bank loan of MSEK 7.0 for the benefi t of Santiago
Galaz to fi nance part of his investment in Securitas B-shares. The guarantee was given in
accordance with U.S. law.
Notes and comments to the consolidated fi nancial statements
NOTE 8 SEGMENT REPORTING
The Group’s operations are divided into fi ve divisions that provide the operational
structure for internal controls, follow-ups and reporting. For both internal and external
reporting, each division represent a primary segment. The split of Security
Services into Security Services USA and Security Services Europe refl ects both
the internal operational structure as well as the differences between the risks and
rates of return within the two segments. The secondary segments consist of the
three main geographical areas in which the Group is active: Nordic region, Europe
excluding Nordic region and USA. In addition to this the operations outside these
regions are included in Rest of world. Security Services USA offers specialized
services for permanent guarding and mobile services, special events, consulting
and investigation. Operations are developed for small, medium and large regional
customers, as well as nationwide and global customers. The organization is divided
into 13 regions, 100 areas and 650 branch offi ces. Security Services Europe offers
complete security solutions for both large and small customers. The business
is divided into Permanent guarding, Transport aviation security, Mobile services
and Alarm monitoring. The division operates in 19 countries with 145 areas
and 895 local branches. Securitas Systems works with the integration of security
systems and offers complete security solutions for customers with high security
demands within market segments such as banking, industry and retail. Services are
based on modern technology and concepts include access control, CCTV, intrusion
and fi re systems. The division operates in 12 countries in Europe and in the USA.
Direct offers high security for homes and small businesses. It is a comprehensive
service with 24-hour monitoring and intervention. The alarm product includes installation,
secure transmission and advanced verifi cation, and is designed for ease
of use. The division currently operates in nine European countries. Cash Handling
Services offers secure and effi cient cash distribution, processing and recycling solutions
for fi nancial institutions, retailers and other commercial enterprises through
an international network of 440 branch offi ces in ten European countries and in the
USA. Other comprises the general administrative expenses and other expenses that
arise at the consolidated level and relate to the Group as a whole. The geographical
split represents various levels of market development in terms of wages, employee
turnover, product mix, market growth and profi tability. The total sales for the geographical
split of sales are given by the location of the sales. The location of the
sales in all material aspects corresponds to the location of the customers.
All segments follow the accounting principles presented in Note 1. The segment
reporting follows the format of the Securitas’ fi nancial model since this is the
basis for fi nancial planning and reporting from Branch offi ce level up to the Board
of Directors. Acquisitions are for all material purchases broken down by division
and presented in the Financial overview under the heading Acquisitions and divestitures.
Comparatives for 2004 have been adjusted to refl ect the transfer of Canada
and Mexico from Security Services Europe to Security Services USA, the transfer
of operations within the third-party alarm monitoring from Securitas Systems and
Direct to Security Services Europe as well as the transfer of Direct Switzerland
to Other.
SECURITAS 2005 89