Note 6. Salaries and remunerations

The Swedish ITP plan is a multi-employer plan insured by Alecta. It is a defined benefit plan, but since the plan assets and liabilities cannot be allocated on each employer it is reported as a defined contribution plan according to IAS 19. The construction of the plan does not enable Alecta to provide each employer with its share of the assets and liabilities or the information to be disclosed. The cost for the plan is reported above, together with the costs for other defined contribution plans. Alecta reported a collective consolidation level at December 31, 2024 of 162 (158) percent. The collective consolidation level is defined as the fair value of Alecta’s plan assets in percent of the insured pension commitments calculated according to Alecta’s actuarial assumptions, which are not in accordance with IAS 19. Such a surplus can be distributed among the employers or the beneficiaries, but there is no agreement concerning this that enables the company to report a receivable on Alecta.

Equity compensation benefits

During the period 2023 to 2024 no equity related benefits existed within Alfa Laval.

Variable remunerations

All employees have either a fixed salary or a fixed base salary. For certain personnel categories the remuneration package also includes a variable element. This relates to personnel categorizes where it is customary or part of a market offer to pay a variable part. Variable remunerations are most common in sales related jobs and on higher managerial positions. Normally the variable part constitutes a minor part of the total remuneration package.

Cash-based long-term incentive programme

The Board of Directors decided in 2024 to implement another step of the cash based long-term incentive programme for maximum 150 senior managers in the Group including the Chief Executive Officer and the persons defined as executive officers. The outcome of the programme depends on how the adjusted EBITA margin and the net sales growth have developed during the three-year period, with a 50/50 weight between the targets. This means that there will be no award during the first two years since it is first in year three that it can be determined to what extent the targets have been achieved. Maximum outcome is awarded when the targets are exceeded. The remuneration from the modified long-term incentive programme can constitute maximum 25, 40 or 50 percent of the fixed remuneration depending on position. Payment to the participants in the programme is made after year three, provided that they are still employed at the date of payment (except in case of termination of employment due to retirement, death or disability). If the employee resigns or is dismissed before the end of the three-year period, the employee will not be entitled to any pay-out. If the employee moves to a position that is not eligible for this programme, a pro-rata payment will be made after the end of the three year period. Paid remunerations from the long-term incentive programme do normally not affect the pensionable income or the holiday pay. Each year, three long term incentive plans are running in parallel.

The performance targets were:

The actual outcome and the resulting award were:

There are three opportunity levels in the plan and the award per opportunity level and the total cost for the plan was:

Remuneration policy for executive officers

The remuneration policy for executive officers is established by the Annual General Meeting. The complete policy is found in Note 37.

The remunerations to the Chief Executive Officer/Managing Director are decided by the Board of Directors based on proposals from the Remuneration Committee according to the guidelines established by the Annual General Meeting. The remunerations to the other members of Group Management are decided by the Remuneration Committee according to the same guidelines. The principle used when deciding the remunerations to executive officers is to offer a competitive remuneration where the remuneration package is mainly based on a fixed monthly salary, with an option for a company car and in addition to that a variable remuneration of up to 50 percent of the salary (managing director up to 60 percent of the salary). The outcome of the variable remuneration depends on the level of fulfilment of the established mainly financial targets and to a limited extent also qualitative objectives. The guidelines for pension, termination and severance pay differ between the Chief Executive Officer/Managing Director and the other executive officers, see the table below.

 

¹⁾ Value of company car, housing benefit, taxable daily allowances, holiday pay and payment for vacation taken in cash.

²⁾ Refers to what was paid during the year.

³⁾ Defined contribution based.

⁴⁾ Defined benefit based.

⁵⁾ Based on current base salary.

⁶⁾ From the age of 62. A defined contribution solution for early retirement with a premium of 15 percent of the pensionable salary.

7) If Alfa Laval terminates his employment:
–before the age of 64, he will receive 24 months’ base salary
–after the age of 64 he will receive 12 months’ base salary.

⁸⁾ Maximum 2 years’ salary. The commitments define the conditions that must be fulfilled in order for them to become valid.

⁹⁾ Is not included in the ITP plan. He has a defined contribution benefit comprising 50 percent of the base salary. In addition, he may exchange salary and variable remunerations for a temporary old age and family pension.

¹⁰⁾ For salaries above 30 base amounts there is a defined contribution pension solution with a premium of 30 percent of the pensionable salary above 30 base amounts. In addition, they may exchange salary and variable remunerations for a temporary old age and family pension.

Sammy Hulpiau, took on the role of President of the Food & Water Division, effective 1 September 2024, replacing Nish Patel. Sammy Hulpiau earlier held the role as President Business Unit High Speed Separators. Nish Patel has moved to a new role and leads several important group initiatives, reporting to Tom Erixon. Each person’s costs are included in the above table for the period they have been part of Group Management.

One of the other executive officers in Group Management, Mikael Tydén left the company on September 30, 2023. He has continued as Chairman of the Board for Tranter and LHE and will focus on industrial relations as Senior Technical Advisor to Tom Erixon. His costs are included in the above table for the period he has been part of Group Management during 2023.

Board of Directors

For 2024, the Board of Directors receive a total fixed remuneration of SEK 8,375 (7,975) thousand, which is distributed among the members elected at the Annual General Meeting that are not employed by the company. These Directors do not receive any variable remuneration.

* Elected at the Annual General Meeting and not employed by the company.

The reported remunerations refer to the period between two Annual General Meetings.

The Chairman of the Board does not have any agreement on future retirement or severance pay with Alfa Laval.

The audit committee and the remuneration committee have had the following members during the last two years:

The members of the committees are appointed at the constituent meeting of the Board of Directors directly after the Annual General Meeting.