Note 3 – Employees, personnel costs and executive remuneration

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

Average number of employees 2018 of whom men 2017 of whom men
Medelantalet anställda 2018 varav män 2017 varav män
Parent Company Moderbolag
Sweden Sverige 10 51% 8 50%
Total in the Parent Company Totalt i moderbolaget 10 51% 8 50%
Subsidiaries Dotterbolag
Sweden Sverige 309 83% 329 91%
Finland Finland 263 94% 272 91%
Estonia Estland 20 68% 21 68%
Latvia Lettland 11 70% 11 70%
Lithuania Litauen 10 76% 10 70%
Poland Polen 29 92% 27 86%
Czech Republic Tjeckien 16 68% 20 64%
Slovakia Slovakien 2 50%
Total for subsidiaries Totalt i dotterbolag 658 86% 692 88%
Group total Koncernen totalt 668 86% 700 88%

Specification of gender distribution in Group management

2018 2017
Gender distribution, Group management Percentage women Percentage women
2018 2017
Könsfördelning i företagsledningen Andel kvinnor Andel kvinnor
Parent Company Moderbolag
Board Styrelsen 18% 17%
Other senior executives Övriga ledande befattningshavare 25% 25%
Group Koncern totalt
Board Styrelsen 10% 9%
Other senior executives Övriga ledande befattningshavare 11% 9%

Salaries, other remuneration and social security expenses

Group Koncern 2018 2017
Salaries and remunerations Löner och ersättningar 294,914 298,257
Pension expense, defined-contribution plans Pensionskostnader, avgiftsbaserade 36,484 34,421
Social security contributions Sociala avgifter 64,689 69,612
396,087 402,290
Parent Company 2018 2017
Salaries and remunerations  Social security expenses Salaries and remunerations Social security expenses
Moderbolag 2018 2017
Löner och ersättningar Sociala kostnader Löner och ersättningar Sociala kostnader
Parent Company Moderbolaget 12,099 7,114 10,734 6,168
(of which, pension expenses)1) (varav pensionskostnad) 1) (2,490) (2,254)
1) Of the Parent Company’s pension expenses, 1,473 (1,420) 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)

2018 2017
Senior executives2)   Other employees Senior executives2)  Other employees
2018  2017
Ledande befattningshavare2)   Övriga anställda Ledande befattningshavare2)   Övriga anställda
Parent Company Moderbolag 7,641 4,458 7,710 3,024
(of which, bonuses, etc.) (varav tantiem o.d.) (967) (215) (1,074) (165)
Subsidiaries Dotterbolag 6,488 271,227 6,313 276,260
(of which, bonuses, etc.) (varav tantiem o.d.) (314) (7,675) (824) (11,520)
Group total Koncernen totalt 14,129 275,685 14,023 279,284
(of which, bonuses, etc.) (varav tantiem o.d.) (1,281) (7,890) (1,898) (11,685)
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 5.6 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 2018, Alecta’s surplus expressed as the collective funding ratio amounted to 142 percent (154).

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 2018 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 2018 and 2017 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.

1) Charlotte Hansson withdrew from the Board of Directors in connection with the Annual General Meeting in April, 2018.
2) Carina Andersson became board member in connection with the Annual General Meeting in April, 2018.
3) Esa Niemi withdrew from the Board of Directors in connection with the Annual General Meeting in April, 2018.
4) 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.
5) Other senior executives consist of three persons.
6) Other benefits include supplementary vacation pay.
1) Other senior executives consist of 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.

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 1,260 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 2,364 M (2,280). 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 fulfillment of financial 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.