Executive Remuneration overview
Ericsson applies the same remuneration principles globally. These are outlined in our Annual Report 2015 (p. 160), and are the principles of performance, competitiveness and fairness.
When it comes to the executive management team, the decisions around remuneration levels is set by the Board’s Remuneration Committee which is guided by the remuneration guidelines approved the shareholders on a yearly basis at the Annual General Meeting and adherence is verified by the company’s external auditors on an annual basis.
The Remuneration Committee consists of four Board members appointed by the Board, including an employee representative. In addition, the Remuneration Committee is supported by an independent remuneration advisor.
Ericsson is operating in a worldwide industry, where competition for market share as well as for competence is global. As a company, Ericsson believes it is important to have a diverse executive management team consisting of different nationalities and background. Ericsson also believes it is important to have members of the executive management team placed in locations which are important for Ericsson’s development, including, but not limited to Stockholm and Silicon Valley.
Like taxation systems, public benefits and costs of living, remuneration levels and compositions also vary in different parts of the world. A company with an executive management team consisting of different nationalities, based in different locations, will see an impact on the cost for the executive remuneration. In order to be able to attract strong talent in different geographies, remuneration needs to be adjusted in line with each country’s situation, the company’s situation and the availability of good talent.
The ability to move individuals in line with business needs is of vital importance to Ericsson and currently there are about 800 employees on so called expatriate contracts, or long term assignments. While we have a standard policy on how such contracts are set up, the number of possible combinations of home and host countries, family situations and other factors means that expatriate contracts can look very different.
Where Ericsson requests individuals, including the executive management team, to move on such long term assignment, the company provides certain benefits, including housing, in the host country. The housing benefit are determined and limited by location, seniority and family size. If an employee on an expatriate contract selects more expensive housing, the additional cost is borne by the individual.
Remuneration is ultimately a matter resolved at an individual basis. As a principle, Ericsson does not comment on the remuneration, or other employment conditions of individual employees, beyond the public information covering the remuneration of the CEO and the executive management team in the Annual Report 2015 (p. 97).