20% - Assa Abloy

The Board’s proposed guidelines for the remuneration of
senior management in 2008
The Board of ASSA ABLOY proposes that the 2008 Annual
General Meeting adopts the following guidelines for the
remuneration of senior management. The basic principle
is that the remuneration and other employment conditions
of senior management should be in line with market
conditions and competitive, in order to ensure that the
ASSA ABLOY Group can attract and retain competent senior
management. The total remuneration of senior management
should consist of fixed salary, variable salary,
other benefits and pension.
In addition to the fixed salary, the Executive Team
should have the opportunity to receive variable salary,
which should be based on the outcome in relation to targets
for operating income, and in some cases for other key
financial figures, in their individual area of responsibility
(Group or division). Variable salary should be capped at a
maximum 75 percent of the fixed salary for the CEO and
other members of the Executive Team. Under the Board’s
proposal, the cost of variable salary for senior management
is calculated on the basis of current remuneration levels
and maximum outcome (i.e. assuming the fulfillment of all
the targets on which remuneration is based) and will
amount to a total of SEK 30 M, excluding social security
contributions. This calculation is made on the basis of the
current members of the Executive Team. The costs may
change if more people join the Executive Team.
ASSA ABLOY has no outstanding remuneration commitments
apart from current commitments to senior management
in accordance with the remuneration principles
described here, including previous commitments regarding
a long-term incentive agreement (see below).
Other benefits, such as company car, extra health insurance
or occupational healthcare, should be payable to the
extent this is considered to be in line with market conditions
for senior management in equivalent positions in the
labor market in which the executive is employed. All members
of the Executive Team should be covered by definedcontribution
pension plans, for which pension premiums
are allocated from the executive’s total remuneration and
paid by the company during the period of employment.
If the company gives notice of the termination of the
contract, the CEO is entitled to a maximum 24 months’ salary
and other employment benefits, while the other members
of the Executive Team are entitled to a maximum 18
months’ salary and other employment benefits. These
guidelines should cover the members of the Executive
Team during the period the guidelines apply. The guidelines
apply to contracts entered into following the resolution
of the Annual General Meeting, and where amendments
are made in existing contracts after this time. The
Board should have the right to deviate from these guidelines
if there are particular reasons for doing so in an individual
case.
Remuneration of the Executive Team in 2007
The remuneration of ASSA ABLOY’s senior management in
2007 was determined in accordance with the guidelines
Corporate governance report
49
drawn up and adopted by the Board and subsequently
approved by the 2007 Annual General Meeting. During
2007, the same remuneration guidelines were applied as
the Board’s proposal to the 2008 Annual General Meeting
described above, with the exception that the variable salary
was capped at a maximum 70 percent of the fixed salary.
Since the period before the 2007 Annual General
Meeting, ASSA ABLOY has reached a long-term incentive
(LTI) agreement with some members of the Executive
Team (excluding the CEO), which allows them to receive
variable salary based on improvements in earnings per
share (67 percent) and organic growth (33 percent). The
maximum amount of SEK 2 M per person is payable if
earnings per share increase by 12 percent compared with
the previous year and organic growth reaches 7 percent.
One-third of such variable salary is paid the following year,
while two-thirds is retained for one or two years and
grows at the same rate as the Group’s return on capital
employed. The residual two-thirds is paid only if, at the
end of the period, the executive has not left his job on his
own initiative or been dismissed for breach of contract.
During the year, changes occurred in the composition
of the Executive Team. After complying with his contractual
notice period of six months, Joe Grillo terminated his
employment as Executive Vice President and Head of Global
Technologies division. In this connection, he received
remuneration of SEK 1,300,000 relating to accrued benefits.
Denis Hébert, Executive Vice President and Head of
the HID Group business unit, and Tim Shea, Executive Vice
President and Head of the ASSA ABLOY Hospitality business
unit, were appointed new members of the Executive
Team. These business units make up Global Technologies
division, which is now headed by Johan Molin.
Remuneration and other benefits of
the Executive Team in 2007
SEK thousand
Fixed
salary
Variable
salary
Other
benefits
Pension
costs
Johan Molin 10,200 6,300 100 2,940
Other members of
the Executive Team
(10) 1 27,233 16,902 1,769 8,128
Total remuneration
and benefits 37,433 23,202 1,869 11,068
Total costs 2 45,133 27,842 2,055 13,282
1 During the year Joe Grillo left and Denis Hébert and Tim Shea joined the Executive
Team. The costs tabled above cover the parts of the year during which each
person belonged to the Executive Team.
2 Total costs include social fees on salaries and benefits, special pension tax and
additional costs for other benefits.
External audit
At the 2006 Annual General Meeting, Pricewaterhouse-
Coopers (PwC) were appointed as the company’s external
auditors for a four-year period up to the 2010 Annual General
Meeting, with authorized public accountant Peter
Nyllinge as the Auditor in Charge. PwC have been the
Group’s auditors since the Group was formed in 1994.
Peter Nyllinge, born in 1966, is responsible for auditing