Note 3 – Employees, personnel costs and executive remuneration

In this note, amounts are given in SEK thousands unless otherwise stated.

Average number of employees 2017 of whom men 2016 of whom men
Parent Company
Sweden 8 50% 9 56%
Total in the Parent Company 8 50% 9 56%
Subsidiaries
Sweden 329 91% 338 88%
Finland 272 91% 282 91%
Estonia 21 68% 23 62%
Latvia 11 70% 10 78%
Lithuania 10 70% 10 70%
Poland 27 86% 26 78%
Czech Republic 20 64% 29 51%
Slovakia 2 50% 12 8%
Total for subsidiaries 692 88% 730 85%
Group total 700 88% 739 84%

Specification of gender distribution in Group management

Salaries, other remuneration and social security expenses

Group 2017 2016
Salaries and remunerations 298,257 304,664
Pension expense, defined-contribution plans 34,421 36,080
Social security contributions 69,612 67,440
402,290 408,184
Parent Company  2017 2016
Salaries and remunerations  Social security expenses Salaries and remunerations Social security expenses
Parent Company 10,734 6,168 11,179 6,343
(of which, pension expenses)1) (2,254) (2,146)

1) Of the Parent Company’s pension expenses, 1,420 (1,075) KSEK refers to senior executives. There are no outstanding pension commitments.

Salaries and other remunerations distributed between the Parent Company and its subsidiaries and
between senior executives and other employees 1)

1) Salaries and other remuneration include base salary and supplementary vacation pay.
2) Senior executives include Board members, members of Group Management and company presidents.

Defined benefit plans

Pension obligations for retirement pensions and family pensions for white-collar employees in Sweden are secured through an insurance policy provided by Alecta. According to a statement (UFR 10) from the Swedish Financial Reporting Board, this is a multiple-employer defined benefit plan. The Company has not had access to information that would permit recognition of its proportional share of the plan’s commitments, plan assets and costs that meant that the plan could not be recognized as a defined-benefit plan. The ITP 2 pension plan secured through insurance provided by Alecta is accordingly recognized as a defined contribution plan. The premium for the defined-benefit retirement pension and family pension is calculated individually, depending on salary, already earned pension and anticipated remaining period of service. Anticipated fees for the next reporting period for ITP 2 insurance subscribed with Alecta amounts to SEK 5.5 M (5.5).

The collective funding ratio is comprised of the fair value of Alecta’s assets as a percentage of insurance obligations computed according to Alecta’s actuarial assumptions, which do not accord with IAS 19. The collective consolidation level shall normally be allowed to vary between 125 and 155 percent. If Alecta’s collective consolidation level is below 125 percent or exceeds 155 percent, action should be taken with the aim of creating conditions for the consolidation level to return to the normal interval. In the event of low consolidation, one action may be to raise the agreed price for new subscription and expansion of existing benefits. In the event of high consolidation, one action may be to introduce premium reductions. At the end of 2017, Alecta’s surplus expressed as the collective funding ratio amounted to 154 percent (149).

Defined contribution pension plans

The Group has defined contribution pension plans for employees in Sweden for which expenses are fully paid by the companies. Pension plans in Finland and other countries are treated as defined contribution plans. For defined contribution plans, pension contributions are paid to a pension insurance company and recognized as an expense in profit and loss for the accounting period in which they occur. There are defined contribution plans in other countries for which the expenses are paid partially by the subsidiaries and partially by employee contributions. Payments are made regularly to these plans according to plan rules.

Executive remuneration

Total remuneration to the President and CEO and other senior executives consists of base pay, variable remuneration, pension and other benefits. These remuneration components are based on the guidelines for executive remuneration adopted by the 2017 Annual General Meeting, which are detailed in the Board of Directors’ Report.

The following tables provide details of actual remunerations and other benefits paid in financial years 2017 and 2016 to Board members, the President (who is also the CEO) and other senior executives. The latter are those individuals who, alongside the President and CEO are members of Group Management.

Remunerations and benefits 2017 Basic salary/Board fee Variable remuneration Others benefits 3) Pension expenses Other remuneration Total Pension commitments
Chairman of the Board
Petter Stillström 460 460
Directors
Charlotte Hansson 210 210
Lars Olof Nilsson 280 280
Jörgen Zahlin 250 250
Esa Niemi 210 210
Mikael Sjölund 2) 210 35 245
President and CEO
Anders Martinsson 2,280 671 210 713 39 3,913
Other senior executives 1) 4,089 817 448 1,066 9 6,429
Total 7,989 1,488 658 1,779 83 11,997
Recognized as an expense in the Parent Company 6,336 1,074 470 1,420 46 9,346

1) Other senior executives consist three persons.
2) Mikael Sjölund has during the year had a separate assignment for Lecor Stålteknik AB. This has not been related to his assignment at the Board.
3) Other benefits include supplementary vacation pay.

Remunerations and benefits 2016 Basic salary/Board fee Variable remuneration Others benefits4) Pension expenses Other remuneration Total Pension commitments
Chairman of the Board
Petter Stillström 460 460
Directors
Roger Bergqvist 1) 70 4 74
Charlotte Hansson 210 210
Lars Olof Nilsson 280 280
Jörgen Zahlin 250 250
Esa Niemi 2) 140 140
Mikael Sjölund 2) 140 30 170
President and CEO
Anders Martinsson 2,160 51 671 1 2,883
Other senior executives 3) 3,721 272 804 91 4,888
Total 7,431 323 1,475 126 9,355
Recognized as an expense in the Parent Company 5,488 184 1,076 38 6,786

1) Roger Bergqvist withdrew from the Board of Directors in connection with the 2016 Annual General Meeting.
2) Esa Niemi and Mikael Sjölund become board members in connection with the 2016 Annual General Meeting. Mikael Sjölund has during the year had a separate assignment regarding consulting services with Lecor Stålteknik AB. This has not been related to his assignment at the Board.
3) Other senior executives consist of four persons until April 7 2016, then by three persons.
4) Other benefits include supplementary vacation pay.

Detailed below are the agreed terms for remuneration to the Board, the President and CEO and other senior executives. For an account of guidelines approved by the Annual General Meeting, see the Board of Directors’ Report.

Board remuneration

The Chairman and other Board members are paid Board member fees as resolved by the Annual General Meeting. The Annual General Meeting resolved that Board member fees totaling SEK 1,470 thousands (1,470) will be distributed among the Board members as follows: SEK 420 thousands (420) to the Chairman of the Board and SEK 210 thousands (210) to each of the remaining Board members who are not employees of the Company. In addition, remuneration of SEK 70 thousands (70) will be paid to the Chairman of the Audit Committé and SEK 40 thousands (40) for each of the other members of the Audit Committee. No fees are paid to members of the Remunerations Committee. Other remuneration has been paid in the form of taxable travel expense reimbursements.

Remuneration to the President and CEO

Remuneration

In accordance with a decision by the Board of Directors, remuneration to the President and CEO normally takes the form of base salary, variable remuneration, pension and other benefits. The base salary of the President and CEO amounted to SEK 2,280 M (2,160). For the President and CEO, maximum variable remuneration payable is 50 percent of base salary. Potential bonus payments and the size of them are related to targets defined in advance and set by the Board.

Term of notice and severance pay

The President and CEO has a 12-month period of notice in the event of termination by the company and six months upon resignation. During the term of notice, the President and CEO is entitled to full pay and other benefits of employment, regardless of whether there is a duty to work or not. Members of Group management are not entitled to severance pay.

Pension benefits

In addition to benefits in accordance with the National Income Replacement Pension Act, pension contributions are made corresponding to 30 percent (30) of fixed annual salary plus vacation pay, which constitutes pensionable pay. BE Group AB’s commitment is limited to paying the annual premium. Pension rights are not conditional on future employment.

Remunerations for other senior executives of the Parent Company and Group

Remuneration

Remuneration consists of base salary, variable remuneration, pensions and other benefits. The maximum variable remuneration payable to other senior executives is 30 percent of base salary. Whether or not bonuses are distributed and bonus amounts are determined by the CEO based on attainment of financial targets and individual targets.

Term of notice and severance pay

Other senior executives have a period of notice of up to 12 months when notice of termination is issued by BE Group. The senior executives are required to give six months’ notice when resigning. During the term of notice, the senior executives are entitled to full pay and other benefits of employment. Members of Group management are not entitled to severance pay.

Pension benefits

For other senior executives, contribution-defined pension solutions are applied. BE Group’s commitment is limited to paying the annual premium. Pension rights are not conditional on future employment. Pensionable pay consists of fixed annual salary plus average bonus for the past three years.

Remuneration Committee

Please see the Corporate Governance Report for more information about BE Group’s preparation and decision process regarding executive remuneration.