Electrolux achieved excellent results in 2009, in a difficult and uncertain market. Total shareholder return exceeded 150%. Operating income improved substantially. Launches of new products in several markets improved the product mix.
Performance targets set by the Board at the beginning of the year focused on operating margin, net working capital and cash flow and were exceeded by the company overall and by virtually all business units.
The structure of Electrolux total remuneration places high emphasis on ‘pay for performance’ with short-term variable remuneration payouts historically correlating closely with achieved performance. In 2009, the targets relating to variable remuneration were exceeded.
In spite of the strong results of 2009, the 2007-2009 long-term incentive plan which is based on 3 year earnings per share (EPS) growth will not pay out, owing to the poor results achieved in a very difficult environment during 2008.
Looking forward, our remuneration strategy remains focused on principles that both align with shareholder interests and engage a talented and multinational senior management group. Key within our ‘pay for performance’ framework is to establish competitive total remuneration within our various relevant markets – normally the country or region where our executives are employed.
During 2009, we reviewed elements of our total remuneration with particular attention on our long-term element. In the process, we have engaged with key shareholders to exchange ideas and discuss proposals.
The result of our review is contained in the recommendation to the AGM for 2010 on the Long Term Incentive program. We propose no change to the total remuneration structure comprising fixed salary, a short-term variable component, a long-term share-related incentive plan, and pension.
We intend to introduce a mandatory personal investment feature to the long-term plan along with a matching element to enhance long-term equity ownership of executives and further align with shareholder interests.
Salaries for the President and CEO and all members of Group Management were frozen during 2009 and we expect to see only modest adjustments during 2010. As normal, targets for both short-term and long-term plans have been set at the start of this year.
For the short-term, these are focused on financial goals including operating margin, and net operating working capital, while the long-term continues to be based on average EPS growth over the upcoming three-year period. Targets are, as usual, challenging but consistent with the overall strategic objectives of the Group.
We are confident that our overall approach to, and management of, total remuneration aligns well with our business goals, and long-term shareholder interests and will engage and motivate our talented and committed executive team in a very challenging market.
|
||||||
|---|---|---|---|---|---|---|
|
|
|||
|---|---|---|---|
|
