C31. Human resources

Employees, salaries, and social security expenses

During 2015, the number of employees from continuing operations increased by 449 to 21,342 at year-end from 20,893 at year-end 2014. The number of employees in discontinued operations increased by 280 to 5,553 from 5,273 at year-end 2014. The contribution from business combinations in 2015 was 495 employees, the major part of those came from the acquisition of Tele2 in Norway.

The average number of full-time employees by country was as follows.

Country

Jan–Dec 2015

Jan–Dec 2014

Total
(number)

of whom
men (%)

Total
(number)

of whom
men (%)

Sweden

8,172

60.5

7,997

59.2

Finland

3,326

59.9

3,577

63.1

Norway

1,158

64.8

841

67.4

Denmark

1,132

70.3

1,051

69.9

Lithuania

2,978

50.9

3,110

51.1

Latvia

958

48.2

917

48.4

Estonia

1,931

54.5

1,981

52.4

Spain

103

64.1

106

66.0

Russian Federation

37

54.1

28

42.9

United Kingdom

49

63.3

41

75.6

Other countries

192

70.3

295

70.2

Total from continuing operations

20,036

58.7

19,944

56.6

Kazakhstan

1,801

41.6

1,635

40.8

Azerbaijan

820

54.5

822

53.2

Uzbekistan

953

62.1

890

62.5

Tajikistan

569

67.0

460

67.0

Georgia

357

45.4

328

46.3

Moldova

344

46.8

353

47.0

Nepal

522

73.9

505

74.1

Other countries

48

58.3

36

55.6

Total from discontinued operations

5,414

53.7

5,029

53.3

Total

25,450

57.7

24,973

57.5

In total, for both 2015 and 2014, operations were conducted in 29 countries of which continuing operations were conducted in 21 countries.

The share of female and male senior executives was as follows. Boards of directors refer to board members in all consolidated group companies. Other senior executives include presidents and other members of executive management teams at the group level, region level and company level.

Percent

Dec 31, 2015

Dec 31, 2014

Boards of directors

Other senior executives

Boards of directors

Other senior executives

Women

26.1

32.6

26.0

30.9

Men

73.9

67.4

74.0

69.1

Total continuing operations

100.0

100.0

100.0

100.0

Women

3.4

34.7

3.1

30.0

Men

96.6

65.3

96.9

70.0

Total discontinued operations

100.0

100.0

100.0

100.0

Total salaries and other remuneration, along with social security expenses and other personnel expenses, were as follows.

SEK in millions

Jan–Dec 2015

Jan–Dec 2014

Salaries and other remuneration

9,408

8 ,645

Social security expenses

   

Employer’s social security contributions

1,992

1,790

Pension expenses

1,298

1,039

Total social security expenses

3,291

2,829

Capitalized work by employees

-969

-597

Other personnel expenses

441

372

Total personnel expenses recognized by nature, continuing operations

12,171

11,248

Total personnel expenses, discontinued operations

1,495

1,309

Salaries and other remuneration were divided between senior executives and other employees as follows. Variable pay was expensed in the respective year, but disbursed in the following year.

SEK in millions

Jan–Dec 2015

Jan–Dec 2014

Senior executives
(of which
variable pay)

Other
employees

Senior executives
(of which
variable pay)

Other
employees

Salaries and other remuneration, continuing operations

188 (11)

9,220

175 (10)

8,469

Salaries and other remuneration, discontinued operations

25 (1)

1,216

22 (1)

1,071

Pension expenses for all senior executives totaled SEK 32 million in 2015 and SEK 28 million in 2014.

In 2015 and 2014, employee profit-sharing costs in TeliaSonera’s Finnish subsidiaries amounted to SEK 38 million and SEK 73 million, respectively, and in its Nepalese subsidiary to SEK 223 million and SEK 168 million, respectively. In addition to these employee profit-sharing systems, all TeliaSonera regions apply performance-based variable compensation for different groups of employees. In Sweden, for example, all permanent employees are included in variable compensation schemes, one type for the sales force and one for all other staff.

Performance share programs

The 2010 to 2015 Annual General Meetings of shareholders in TeliaSonera AB resolved to implement performance share programs (PSP), which shall comprise of certain senior executives and key positions within the group (however, members of the Group Executive Management team are excluded). Provided that certain financial performance conditions are met during a defined performance period, participants in the programs shall be given the opportunity to receive final allotments of TeliaSonera shares without consideration (performance shares). The financial targets include a minimum level which must be achieved in order for any allotments to occur at all, as well as a maximum level in excess of which no additional allotments will occur. Each program shall in total comprise no more than 1,400,000 (PSP 2012), 1,360,000 (PSP 2013), 2,090,000 (PSP 2014) and 3,793,200 (PSP 2015) TeliaSonera shares, corresponding to approximately 0.03 percent of the total number of outstanding shares for PSP 2012 and PSP 2013, 0.05 percent for PSP 2014 and 0.08 for PSP 2015.

Recalculation of final allotments of performance shares shall take place in the event of an intervening bonus issue, a split, a rights issue and/or other similar events.

Performance share program 2012 to 2014

Financial targets are earnings per share (EPS) and total shareholder return (TSR). The final allotments of performance shares will be based 50 percent on EPS development for each of the three years of the performance period in relation to EPS for the preceding year, and 50 percent on TSR during the full performance period of three years in relation to TSR in a group of comparable telecom companies defined by the Board of Directors.

Participation in the program requires that the participant has invested in or allocated already held TeliaSonera shares to the program corresponding to a value of 2 percent of the participant’s annual base salary. The maximum financial outcome for a participant, and the maximum number of performance shares that may finally be allotted in a program, shall be capped at such number of performance shares which aggregated market value corresponds to 37.5 percent of each participant’s base salary.

PSP 2012 vested during the spring 2015 and shares were distributed to 66 participants remaining in the program. TeliaSonera AB acquired 270,783 own shares in April 2015, to an average price of SEK 51.7908 to cover the commitments under the PSP 2012 program which corresponds to a cost of SEK 14,024,068.

Performance share program 2015

Financial targets are earnings before interest, tax, depreciation and amortization (EBITDA) and total shareholder return (TSR). The final allotments of performance shares will be based 50 percent on accumulated EBITDA and 50 percent on TSR during the full performance period of three years. TSR is measured in relation to TSR in a group of comparable telecom companies defined by the Board of Directors.

Participants are not required to invest in TeliaSonera shares. The final number of performance shares awarded shall be capped at such number where the aggregated market value corresponds to 60 percent of each participant’s base salary.

The summarized performance share program activity in 2015 was as follows.

Performance share program

2015/2018

2014/2017

2013/2016

2012/2015

Participants

       

Number of participants, December 31, 2014

144

84

73

New participants in 2015

202

Terminated employments in 2015

-11

-8

–9

-7

Vested employees in 2015

–66

Number of participants, December 31, 20151

191

136

75

Allotted shares

       

Preliminary allotments, December 31, 2014

112,220

146,766

295,778

Preliminary allotments in 2015

816,348

Forfeited shares

0

0

0

Cancelled shares

-38,818

-6,675

-17,556

-30,007

Final allotments

-265,771

Number of allotted shares, December 31, 2015

777,530

105,545

129,210

1 25 participants, in total for all performance share programs, are part of discontinued operations.

The estimated fair values at the date of allotment and the assumptions used when estimating the achievements of the performance conditions were as follows.

Performance share program

2015/2018

2014/2017

2013/2016

2012/2015

Fair value at the date of allotment (SEK in millions)

41

19

15

16

Assumptions used (percentages)

       

Achievement of EBITDA-based performance condition

50

Achievement of EPS-based performance condition

50

50

50

Achievement of TSR-based performance condition was based on

       

Estimated volatility, TeliaSonera

18

21

21

24

Estimated volatility, peer group companies

15-36

21-35

20-27

20-31

Average reciprocal correlation between TeliaSonera and the peer group companies

33

37

41

44

Risk-free interest rate

-0.3

0.9

1.0

2.1

The achievement of the TSR-based performance condition was estimated using a Monte Carlo simulation model.

The estimated fair value of each performance share program and related social security expenses are amortized to expense over the performance period. Total personnel expenses were as follows.

SEK in millions

Jan–Dec 2015

Jan–Dec 2014

Salaries and other remuneration

23

18

Social security expenses

6

5

Total personnel expenses, performance share programs

29

23

Remuneration to corporate officers

Board of Directors

As resolved by the 2015 Annual General Meeting of shareholders (AGM) in TeliaSonera AB, annual remuneration is paid to the members of the Board of Directors in the amount of SEK 1,550,000 (SEK 1,240,000) to the Chair, SEK 750,000 (SEK 750,000) to the Vice-Chair and SEK 530,000 (SEK 470,000) to each of the other directors, elected by the AGM. In addition, annual remuneration is paid to the members of the Board’s Audit Committee in the amount of SEK 150,000 (SEK 150,000) to the Chair and SEK 100,000 (SEK 100,000) to each of the other members. Additional annual remuneration is also paid to the members of the Board’s Remuneration Committee in the amount of SEK 65,000 (SEK 65,000) to the Chair and SEK 45,000 (SEK 45,000) to each of the other members. Remuneration to the Chair of the Sustainability and Ethics Committee is SEK 150,000 (SEK 150,000) and SEK 100,000 (SEK 100,000) is paid to each of the other members.

Remuneration to Board members

SEK in thousands

Board1

Audit
Committee

Remuneration Committee

Sustainability
and Ethics Committee

Total
remuneration

Board of Directors, AGM 2015

         

Marie Ehrling, Chair

1,466

100

65

100

1,731

Olli-Pekka Kallasvuo, Vice-Chair

750

45

795

Mats Jansson

514

45

559

Mikko Kosonen

514

150

664

Nina Linander

514

150

664

Martin Lorentzon

514

100

100

714

Per-Arne Sandström

514

100

614

Kersti Strandqvist

514

100

614

Total

5,297

450

155

450

6,353

SEK in thousands

Board

Audit
Committee

Remuneration Committee

Sustainability
and Ethics Committee

Total
remuneration

Board of Directors, AGM 2014

         

Marie Ehrling, Chair

1,230

74

65

100

1,469

Olli-Pekka Kallasvuo, Vice-Chair

750

45

795

Mats Jansson

465

45

510

Mikko Kosonen

465

150

615

Nina Linander

465

150

615

Martin Lorentzon

465

100

100

665

Per-Arne Sandström

465

100

565

Kersti Strandqvist

465

100

565

Total

4,769

424

155

450

5,799

1 Board remuneration, remuneration for Audit Committee, remuneration for Remuneration Committee and remuneration for Sustainability and Ethics Committee are presented in separate columns above. The remuneration is paid monthly. All Board members, including Chair and Vice-Chair, were re-elected at the 2015 AGM. Numbers may not add up due to rounding.

Group Executive Management

The Chief Executive Officer (CEO) and the “Other members of the Group Executive Management” referring to the two EVPs and the six SVPs directly reporting to the CEO, constituted the TeliaSonera Group Executive Management.

The 2015 Annual General Meeting decided to approve the following guidelines for remuneration to the Group Executive Management.

TeliaSonera’s objective is to offer remuneration levels and other employment conditions required to attract, retain and motivate high calibre executives needed to maintain the success of the business. Remuneration should be built upon a total reward approach allowing for a market relevant – but not market leading – and cost effective executive remuneration based on the following compensation components: (1) base salary; (2) pension; and (3) other benefits. The base salary should reflect the competence required in the position and the responsibility, complexity and the business contribution of the executive. The base salary should also reflect the performance of the executive and consequently be individual and differentiated. Pension and other retirement benefits should be based on the defined contribution method.

The termination period may be up to six (6) months (twelve (12) for the CEO) when given by the employee and up to twelve (12) months when given by the Company. In case the termination is given by the Company, the individual may be entitled to a severance payment up to twelve (12) months.

The severance payment is not included when calculating vacation pay or pension benefits. The severance payment will be reduced if the executive should receive income from either a new employer or conducting his/her own business.

Acting Group Executive Management members keep their previous terms regarding Short term and Long term variable pay, pensions and benefits remain during the acting period. They also keep their existing notice periods.

The executive may be entitled to a company car benefit, health care provisions, travel insurance etc. in accordance with local labor market practice. The Board of Directors are allowed to make minor deviations on an individual basis from the principles stated above.

Remuneration to the CEO and other permanent members of Group Executive Management consists of base salary, certain taxable benefits and pension benefits. As per December 31, 2015, TeliaSonera does not operate any share related incentive program in relation to the CEO, and other permanent members of Group Executive Management.

Applying the remuneration policy adopted at the AGM, the CEO’s total remuneration package is decided by the Board of Directors based on the recommendation of its Remuneration Committee.

Total remuneration packages to other members of Group Executive Management (EVPs and SVPs) are approved by the Remuneration Committee, based on the CEO’s recommendation.

Remuneration and other benefits during the year, capital value of pension commitments

SEK in thousands

Base salary

Other
remuneration1

Other
benefits2

Pension
expense3

Total
remuneration

Capital value
of pension
commitment5

Group Executive Management, 2015

           

Johan Dennelind, CEO

14,490

147

74

5,685

20,396

Other members of Group Executive Management (including 2 EVPs and 6 SVPs)

36,032

1,589

1,174

11,045

49,840

1,167

Total

50,522

1,736

1,249

16,730

70,236

1,167

Other former members of Group
Executive Management

           

Other former members of Group Executive
Management (5 individuals) 4

33,828

715

376

8,301

43,219

9,615

Other former CEOs and EVPs (8 individuals)

168,468

Total

33,828

715

376

8,301

43,219

178,083

Grand total

84,349

2,450

1,624

25,031

113,455

179,250

SEK in thousands

Base salary

Other
remuneration

Other
benefits

Pension
expense

Total
remuneration

Capital value
of pension
commitment5

Group Executive Management, 2014

           

Johan Dennelind, CEO

14,000

206

93

5,491

19,790

Other members of Group Executive
Management (including 3 EVPs and 8 SVPs)

47,031

3,068

1,306

15,433

66,839

11,430

Total

61,031

3,275

1,399

20,925

86,630

11,430

Other former members of Group
Executive Management

           

Other former members of Group Executive Management (4 individuals)

2,047

455

62

785

3,349

Other former CEOs and EVPs (8 individuals)

190,294

Total

2,047

455

62

785

3,349

190,294

Grand total

63,078

3,729

1,461

21,710

89,978

201,724

1 One Group Executive Management member and one former member have outcome from long term incentive programs related to positions held before the Group Executive Management membership. The amounts are included in Other remuneration. Other remuneration for the CEO are holiday allowance SEK 144,846 (SEK 206,213) and minor taxable expenses SEK 2,060 (SEK 2,279).

2 Other benefits refer to company cars and a number of other taxable benefits. Other benefits for the CEO refer to car allowance SEK 60,000 (SEK 60,000) and health insurance SEK 14,400 (SEK 30,700).

3 See further disclosures concerning the terms and conditions of pension benefits below.

4 Other former members of Group Executive Management includes two individuals who have left TeliaSonera, one individual who have left Group Executive Management and two individuals who have been temporary members of the Group Executive Management. Provisions for the twelve months’ notice period for base salary and pension costs for the two individuals who left TeliaSonera are included in the figures as well as provisions for base salary for the 12 months’ severance period. The salary during the notice period and severance pay will be reduced by any other income. The provision will then be reduced.

5 Capital value of pension commitment includes defined benefit plans for eight former CEOs and EVPs (left TeliaSonera before 2015). Comments on the table related to 2014 can be found in the Annual and Susatainability Report 2014. Numbers may not add up due to rounding.

Pension benefits

TeliaSonera offers permanent members of the Group Executive Management defined contribution pension schemes. A defined contribution scheme provides premium contributions to the pension scheme as a percentage of the pensionable salary. The level of pension benefits at retirement will be determined by the contributions paid and the return on investments and the costs associated to the plan. The reasons behind the decrease in the capital value of defined benefit pension commitments are due to changes in discount rate and retirement benefits paid to retirees.

CEO

The CEO is eligible to a defined contribution pension scheme with contributions corresponding to 4.5 percent of base salary up to 7.5 income base amounts and to 30 percent for such salary above 7.5 income base amounts. In addition, contributions of 10 percent of base salary are paid into the scheme. These contributions add up to a total pension contribution per annum of SEK 5,684,884 (compared to base salary for 2015 SEK 14,490,000 representing 39.2 percent). The contributions into the scheme are vested immediately. The income base amount is determined annually by the Swedish Government and was SEK 58,100 for 2015.

The retirement age is variable. Contributions to the pension scheme will cease at retirement or earlier if leaving the company for any other reason.

Other members of Group Executive Management

The EVPs and the SVPs are eligible to defined contribution pension schemes similar to the ITP plan section 1 providing contributions corresponding to 4.5 percent of their base salary up to 7.5 income base amounts and 30 percent of such salary above 7.5 income base amounts. Two members of Group Executive Mangement have an additional contribution of 10 percent of their base salary. The contributions to the pension schemes are vested immediately. The retirement age for members of Group Executive Management is 65 or variable.

Other former members of Group Executive Management

During the year there have been two members with temporary acting positions within Group Executive Management. They kept their existing pension plans plans during their acting periods. Three permanent Group Executive Management members left their position before the end of the year.

Defined pension benefits earned by former CEOs and EVPs until 2008 are pledged and calculated as capital values (debt) until all their lifelong pensions are fully paid out by TeliaSonera. Their pensions are paid out from the age of 60. Within the total capital value for this category of SEK 168,467,937 (SEK 190,293,748), the capital value for Marie Ehrling of SEK 8,121,577 (SEK 9,296,036) is included relating to her period as president of TeliaSonera Sweden during 2002–2006. The main reason behind the decrease in the capital value of the defined benefit pension commitment for Marie Ehrling is changes in discount rate and pension paid to her in the amount of SEK 411,355. Since 2008, TeliaSonera does not offer any defined benefit pension schemes to CEOs and EVPs.

© TeliaSonera 2015
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