Note 5 Employee costs

2019 2018
Group, SEK M Board and CEO1 Other Total Board and CEO1 Other Total
2019 2018
Koncernen, Mkr Styrelse och VD1) Övriga Totalt Styrelse och VD1) Övriga Totalt
Salaries and remuneration Löner & ersättningar  89 2,606 2,695 87 2,327 2,414
Social security expenses Sociala kostnader  15  524  539 17 481 498
Pension expenses2) Pensionskostnader2)  5  145  150 7 161 168
Total Summa  109 3,275 3,384 111 2,969 3,080
1) Pertains to remuneration of Board and CEO of subsidiaries in the Group.
2) Pension expenses attributable to other personnel include an SEK 40 M adjustment of the pension liability for 2018.

Average number of employees

2019 2018
Number Men Women Total Men Women Total
2019 2018
Antal Män Kvinnor Totalt Män Kvinnor Totalt
Australia Australien 150 67 217 137 62 199
Belgium Belgien 53 21 74 52 24 76
Brazil Brasilien 12 5 17 6 1 7
Denmark Danmark 17 13 30 21 15 36
Dominican Republic Dominikanska Republiken 175 443 618 161 463 624
France Frankrike 364 126 490 326 111 437
United Arab Emirates Förenade Arabemiraten 10 2 12 10 1 11
Netherlands Nederländerna 104 60 164 96 62 158
Hong Kong Hongkong 13 9 22 12 10 22
India Indien 139 28 167 131 23 154
Ireland Irland 20 3 23 24 3 27
Italy Italien 85 38 123 91 46 137
Japan Japan 12 5 17 8 5 13
Canada Kanada 257 139 396 250 127 377
China Kina 104 129 233 228 167 395
Norway Norge 9 8 17 8 8 16
New Zealand Nya Zeeland 25 7 32 27 10 37
Poland Polen 289 472 761 284 446 730
Switzerland Schweiz 42 11 53 37 13 50
Singapore Singapore 30 12 42 33 11 44
Spain Spanien 18 9 27 17 8 25
UK Storbritannien 689 293 982 728 287 1,015
Sweden Sverige 96 89 185 89 74 163
South Africa Sydafrika 57 33 90 52 34 86
South Korea Sydkorea 2 2 2 2
Czech Republic Tjeckien 7 7 14 10 4 14
Germany Tyskland 305 90 395 294 84 378
USA USA 628 213 841 609 176 785
Austria Österrike 88 19 107 84 21 105
Total Summa 3,800 2,351 6,151 3,827 2,296 6,123

Distribution of senior executives at the closing date, %

Gender distribution in all companies in the Group

2019 2018
2019 2018
Women: Kvinnor:

Board members in the Parent Company

Styrelseledamöter i moderbolaget 29% 33%

Board members in all companies in the Group

Styrelseledamöter i samtliga koncernbolag 12% 12%

Other members of the company’s management, incl. CEO

Andra personer i företagets ledning inkl. VD 26% 26%
Men: Män:

Board members in the Parent Company

Styrelseledamöter i moderbolaget 71% 67%

Board members in all companies in the Group

Styrelseledamöter i samtliga koncernbolag 88% 88%
Other members of the company’s management, incl. CEO Andra personer i företagets ledning inkl. VD 74% 74%

Remuneration and other benefits for senior executives in 2019, SEK 000s

Board fee1 Basic pay Variable
remuneration, short term
Other
benefits
Pension expenses Total
Styrelsearvode1) Grundlön Rörlig ersättning, kortsiktig Övriga
förmåner
Pensions­kostnad Summa
Johan Malmquist, Chairman of the Board Johan Malmquist, styrelsens ordförande 1,508 1,508
Carl Bennet, Board member Carl Bennet, styrelseledamot  684  684
Eva Elmstedt, Board member Eva Elmstedt, styrelseledamot  713  713
Ulf Grunander, Board member Ulf Grunander, styrelseledamot  836  836
Carola Lemne, Board member Carola Lemne, styrelseledamot  713  713
Dan Frohm, Board member Dan Frohm, styrelseledamot  713  713
CEO Verkställande direktör 7,803  650  142 2,295 10,890
Other senior executives, employed in Arjo AB Övriga ledande befattningshavare, anställda i Arjo AB 8,787 1,245  418 2,216 12,666
Other senior executives, employed in other Group companies Övriga ledande befattningshavare, anställda i andra koncernbolag 12,694 3,040 1,069 1,660 18,463
Total Totalt 5,167 29,284 4,935 1,629 6,171 47,186

1)Also includes fees for work on Board Committees.

Remuneration and other benefits for senior executives in 2018, SEK 000s

Board fee1 Basic pay Variable
remuneration, short term
Variable
remuneration, long term
Other
benefits
Pension expenses Total
Styrelsearvode1) Grundlön Rörlig ersättning, kortsiktig Rörlig ersättning, långsiktig Övriga
förmåner
Pensions­kostnad Summa
Johan Malmquist, Chairman of the Board Johan Malmquist, styrelsens ordförande 1,275 1,275
Carl Bennet, Board member Carl Bennet, styrelseledamot 667 667
Eva Elmstedt, Board member Eva Elmstedt, styrelseledamot 695 695
Ulf Grunander, Board member Ulf Grunander, styrelseledamot 815 815
Carola Lemne, Board member Carola Lemne, styrelseledamot 695 695
CEO Verkställande direktör 7,472 3,466 420 135 2,242 13,735
Other senior executives, employed in Arjo AB Övriga ledande befattningshavare, anställda i Arjo AB 8,580 2,661 465 378 2,452 14,536
Other senior executives, employed in other Group companies Övriga ledande befattningshavare, anställda i andra koncernbolag 12,356 4,783 672 621 1,858 20,290
Total Totalt 4,147 28,408 10,910 1,557 1,134 6,552 52,708
1)Also includes fees for work on Board Committees.

Comments on the table

  • Remuneration to CEO Joacim Lindoff and other member of the Management Team refers to the period January 1–December 31 for both 2019 and 2018.
  • Short-term variable remuneration refers to the 2019 fiscal year’s expensed bonus, which was paid in 2020. No provision for the long-term incentive program was made in 2019.
  • Other benefits refer to company car and health insurance.
  • Other senior executives pertains to remuneration to members of the Arjo Management Team, other than the CEO (9 individuals)

Remuneration of senior executives

Principles

The 2019 AGM established guidelines for remuneration to senior executives, primarily entailing the following: Remuneration and other employment terms and conditions for senior executives is to be market-based and competitive in every market where Arjo is active so as to attract, motivate and retain skilled and competent employees. The Annual General Meeting decides on remuneration to the Chairman of the Board and Board members. Employee representatives do not receive Board remuneration. Remuneration to the CEO and other senior executives comprises basic pay, variable remuneration, other benefits as well as pensions. Other senior executives comprise the individuals, who together with the CEO, comprise the Arjo Management Team. For the Management Team’s structure, see here. The allocation between basic pay and variable remuneration should be proportionate to the executive’s responsibility and authority. The CEO’s variable remuneration is a maximum of 60% of basic pay.

Variable remuneration

Variable remuneration is limited to a maximum amount and linked to predetermined and measurable criteria, designed with the aim of promoting the company’s long-term value creation. No variable remuneration will be paid if profit before tax is negative. The CEO’s bonus for 2019 was based on financial targets set by the Board. The performance-based annual bonus for the CEO is not to exceed 60% of fixed annual salary. For other senior executives, bonuses for 2019 were based on a combination of financial targets and individual goals. The performance-based annual bonus for other senior executives is not to exceed 50-70% of fixed annual salary (depending on function and geographic placement).

Pensions

The CEO is entitled to a pension from the age of 65. The pension is premium based and amounts to 30% of basic pay. The age of retirement for other senior executives is also 65. These pension agreements are premium based. Pension agreements have been signed in accordance with local legislation in the country where the executive resides.

Severance pay

The period of notice for the CEO is a minimum of six months. If termination of employment is initiated by the company then severance pay of 12 months’ pay will be awarded. Severance pay is not offset against any other income. Upon termination of employment of any other senior executives, they have the right to severance pay of a minimum of six months and a maximum of 12 months.

Drafting and decision-making process

During the year, the Remuneration Committee gave the Board its recommendations concerning policies for the remuneration to senior executives. The recommendations included the proportion between fixed and variable remuneration, the size of possible pay increases and proposed criteria for assessment of bonus outcomes. The Board discussed the Remuneration Committee’s proposals and decided in line with the Remuneration Committee’s recommendations. Remuneration of the CEO for the 2019 fiscal year was decided by the Board taking into account the Remuneration Committee’s recommendations. Remuneration of other senior executives was decided by the CEO in consultation with the Chairman of the Board. During 2019, the Remuneration Committee was convened on three occasions. In addition to the aforementioned variable remuneration, adopted share or share-related incentive programs may be included. The aim is that such a program will help to attract and retain highly skilled managers, while it makes the Management Team of Arjo AB shareholders of the company, which is considered to be an important and strong signal for other shareholders.

Long-term incentive program

In 2018, the Board decided to introduce a long-term incentive program. The program is cash-based and encompasses 55–60 senior executives. The incentive program is an addition to annual variable salary.

Purpose

The incentive program is targeted and has a long-term content. The aim of the program is to strengthen commitment and reward the senior executives who can exercise the greatest influence over Arjo’s earnings.

Targets

The program extends for three years and remuneration may total a maximum of twelve monthly salaries during a three-year period. The calculation of outcome excludes the Group’s exceptional items and impact of any acquisitions and divestments.

Outcome and payment

The outcome of the program is calculated every year and accumulated over a three-year period. Any outcome will be paid in 2021 provided that the senior executive remains employed at the company on the payment date.

Synthetic share options

Arjo’s Board and the Management Team have been individually invited to sign an agreement for synthetic share options with Carl Bennet AB. The costs for this will not be charged to Arjo’s income statement.