Atlas Copco - Annual Report 1999

Remuneration and other fees for members of
the Board, the President and CEO, and other
members of the Group management
In 1999, the Chairman of the Board received SEK 1,000,000.
The Vice Chairman received SEK 350,000 on an annual basis
and of the Board members not employed by the Company,
each received board fees that amounted to SEK 275,000 on an
annual basis.
Board member Paul-Emmanuel Janssen also received fees
from Group companies of SEK 200,000 and board member Hari
Shankar Singhania received fees from Group companies in the
amount of SEK 27,000.
The President and Chief Executive Officer, Giulio Mazzalupi,
received a salary of SEK 5,387,884 plus a bonus of SEK 1,937,000.
In addition, he has a pension commitment from the Company
equal to 47 percent of base salary upon retirement, payable from
age 65.
Pension commitments for the Business Area Executives are
either defined contribution in nature or a mixture of defined
contribution and defined benefit. For commitments which are
defined contribution only, contributions in 1999 were in the range
16 to 22 percent of pensionable salary. For other commitments,
the pensions estimated to become payable upon retirement after
35 to 40 years of employment are in the range 35 to 70 percent of
pensionable salaries.
Regarding termination of the President and Chief Executive
Officer and the Business Area Executives, severance is not paid
if notice is given by the employee. If the Company terminates
the employment prior to retirement, the maximum Company
commitment is to pay two years’ final base salary. However, for
one of the Business Area Executives, the maximum Company
commitment is to pay final base salary plus continued health
benefits, both for 12 months.
Activities of the Board of Directors of
Atlas Copco AB during the year 1999
The Board of Directors of the Company had ten members, one
of which is the President and Chief Executive Officer, elected by
the Annual General Meeting and three members, with three personal
deputies, appointed by the unions.
During 1999, there were ten meetings, of which one was held
outside Sweden and two were per capsulam meetings. Each
meeting was governed by an approved agenda. The agenda also
covered the follow-up on major investments made. To ensure an
efficient process at each meeting, the Board members received a
package of written documentation prior to the meeting that
reflected a procedure intended to ensure that all matters raised
are supported by such sufficient and relevant information as is
required to form a basis for a decision. Members of the Group
management were regularly present at the Board meetings. In
between meetings, there were regular contacts between the
Chairman and the President. Each Board member received a
written update from the President on major events in those
months when there was no Board meeting.
To ensure that decisions on major matters would not be
unduly delayed, the Board appointed smaller committees
among its members to follow up and make proposals to the
Board regarding such matters. A remuneration committee was
appointed during the year.
The Company’s external auditors reported in person their
observations from the annual audit and presented their views
NOTES TO THE FINANCIAL STATEMENTS
on the internal control in the Group at the February meeting.
In April 1999, the Board adopted its Rules of Procedure and
Written Instructions.
Remuneration to auditors
Audit fees and consultancy fees to auditors, for advice or other
assistance than audit, were distributed as follows for 1999:
Group Parent
Company
KPMG
Audit fee 10 1
Other
Arthur Andersen
7 1
Audit fee 8 0
Other
Other audit firms
3 1
Audit fee 1 –
29 3
Audit fees excluding consultancy fees, for 1998 were estimated
at 15 for the Group and 1 for the Parent Company.
3
Cost of marketing, administration,
research, and development
Group
1999 1998
Marketing costs 3,907 3,865
Administrative costs 2,505 2,440
Research and development costs 943 945
7,355 7,250
4
Depreciation according to plan
Group Parent Company
1999 1998 1999 1998
Goodwill 486 415 – –
Patents etc. 9 13 – –
Buildings 109 109 – 1
Machinery and other
technical plant 520 453 – –
Equipment etc. 219 218 2 3
Rental equipment 1,273 668 – –
2,616 1,876 2 4
5
Other income and expenses from operations
Group Parent Company
1999 1998 1999 1998
Non-recurring items 83 – – –
Other operating income 191 367 118 73
Other operating expenses –47 –52 – –1
227 315 118 72
Non-recurring items include capital gain from divestment of
subsidiaries of 223 and restructuring costs mainly for consolidation
of the production structure in the Alliance Tools Division
of 140. Atlas Copco Internationaal BV, the Netherlands,
sold the European part of Atlas Copco Controls to a European
subsidiary of Danaher Corp., USA. Simultaneously, Atlas
Copco North America Inc. sold the US part of Atlas Copco
Controls to a US subsidiary of Danaher Corp. The divestment
ATLAS COPCO 1999 19