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Outrage over 'US-style' pay for Electrolux CEO

TT/The Local/vt · 26 Nov 2010, 16:18

Published: 26 Nov 2010 13:30 GMT+01:00
Updated: 26 Nov 2010 16:18 GMT+01:00

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McLoughlin, who starts his new job on January 1st, 2011, is set to receive up to 74.5 million kronor ($10.63 million) in compensation next year, newspaper Svenska Dagbladet (SvD) wrote on Friday.

The labour group Unionen, whose members had to settle for a 0.7 percent wage increase this year given current economic conditions, are angered by the news.

McLoughlin's monthly salary amounts to just over 800,000 kronor alone. In addition, he is also entitled to a 45 million kronor bonus.

Unionen's chairwoman at Electrolux, Gunilla Brandt, is shocked that there is plenty of money for McLoughlin while the vast majority of employees were forced to settle for modest salary increase this year.

"The management was very reluctant to provide anything beyond the agreement with reference to how things are going at the company," she said.

Given the sizeable salary in McLoughlin's back pocket, Brandt expects a higher pay increase following the next round of wage negotiations.

"My hope is that he opens up his wallet a little more next time," she said.

The company's owners justified the bonus McLoughlin will receiving by pointing to the fact that he is from the US, where pension benefits are higher.

However, Brandt refused to accept the argument that a Swedish company must pay higher wages in line with overseas firms to attract directors to Swedish companies.

Financial Markets Minister Peter Norman also spoke out against the sizeable compensation package.

"This is a private company and it is up to the owners to determine the terms for its CEO. However, generally it is obviously not good if the tensions become too great between high and low wages in society and this to me seems a little too high," he told news agency TT.

Norman did not have an opinion on whether it may have a negative influence on wage negotiations in Sweden.

"The compensation reflects what one has to pay to recruit American managers," Electrolux Chairman and Investor owner representative Marcus Wallenberg told Expressen.se on Friday.

Story continues below…

He said he understands that the compensation can be perceived as high.

"It is important to point out that the pension payment of $6.3 million is a one-time payment and is not distributed to Keith until he retires," Wallenberg told the newspaper.

However, Electrolux shareholders also reacted negatively to the news.

"It is clearly ridiculous to see how some CEOs are glorified and overrated," Carina Lundberg Markow, who represents Electrolux shareholders Folksam, told SvD.

TT/The Local/vt (news@thelocal.se)

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Your comments about this article

14:15 November 26, 2010 by calebian22
"However, Brandt refused to accept the argument that a Swedish company must pay higher wages in line with overseas firms to attract directors to Swedish companies."

What a stupid comment. While I agree that the salary is ridiculously high in comparison to the worker's increase, the idea that offering a Swedish CEO salary will attract the overseas CEO candidates, especially American candidates, is beyond fantasy.
14:36 November 26, 2010 by wolverine2k
Then stop attracting failed American CEOs. We have got a lot of talent in Sweden at home. But even Swedish CEOs get millions. Not 74.5million though in the first year itself. Ridiculous. And poor souls who actually toil hard for the success and delivery of products get 0.7% of what 25K?

Stupid materialistic corporates posing as socialist ones when it comes to increase in salary of the real workers.
15:59 November 26, 2010 by jazzIIIlove
I feel sorry for that guy:

74.5 million kronor ?

Come on let's round it to 80 or 100...
17:22 November 26, 2010 by Nemesis
A suggestion. Fired the American. We don't need wall street idiots who export jobs to China, close factories, reduce quality and asset strips good companies.

I will do the job for 500,000 Krona a year. Also I will actually turn up at work, put in a few extra hours and try my best to improve the company, instead of sitting on my ass.

I am sure others would be willing to take the job as well.

Fire the greedy american freeloader. We don't need people like that.
00:24 November 27, 2010 by kenny8076
NEMESIS...uummm well actually i guess you do need people like him...... and why is he such a bad guy? what because he excpeted a job? and Sweden DOES send jobs out of country..... Nobody wants to pay your crazy taxes here..... and if this guy asked for a price im sure taxes had something to do with it....60% income taxed on 74 million SEK is still less than what he would see in the states...... except now he has to pay more for EVERYTHING.......
10:27 November 27, 2010 by Nemesis
@ kenny8076

So just because a person is a graduate West Point and has worked for Du Pont they have to be head hunted, over more able local people.

There are far better people than him in Sweden, let alone the rest of Europe who would do the job at half the price. He is a yes man and a hatchet man into the bargain.

Just because someone is from the USA does not make them a better manager. We have all seen how managers on wall street have acted recently, by increasing there bonus's for failure and firing the ordinary workers. We don't need that in Europe.

A US CEO usually means they are a ruthless underhand devious money grabbing little toe rag, who is there purely to screw over local workers and get himself a massive bonus.

Before you claim anti US nonsense. I have worked in factories in Ireland and know exactly what happens when a US CEO is appointed. Maximum 6 months to get another job or be unemployed.

When the workers at Electrolux check this guy out, they will realise there jobs are leaving for China soon.
19:24 November 27, 2010 by kenny8076
im confused........... give one example of why in this weak economy would sweden would "headhunt" this guy for 75 millionSEK and according to you not a very good guy?!?! why if there are so many capable people to do it for cheaper would they go for him?!?! does that sound like smart business?!?!

Wall street is not AMERICA...... there are just as many EUROPEANS on wallstreet as there are AMERICANS....... last i checked America still has the strongest economy in the world.......even in a recession......so i would guess some moanagers arent that bad...... but i am still curious as to why your lovely europeans are after this guy and not someone you speak of.
21:23 November 27, 2010 by vancer
The headline should be changed to:

"Jealousy over 'US-style' pay for Electrolux CEO"

If a private company believes he is worth the money thats their decision and their choice. No point getting bitter and angry because someone has made a success of themselves.
21:56 November 27, 2010 by rabbemos
Vancer totally agree.

Swedes are easily upset by others successes. From being brought up as socialists they develop a small mans complex. If Electrolux needed a Swede as CEO they would have gotten one, truth is their management here just does not meet the requirements for the job, otherwise they wold have pulled one in.

Look at that moron Carl-Henric Svanberg who ran BP. Swedes are good at managing objects not people.

"Socialism is a philosophy of failure, the creed of ignorance, and the gospel of envy, its inherent virtue is the equal sharing of misery."

Winston Churchill
01:26 November 28, 2010 by anticommie
Lets hope the CEO lays off all the swedes for crying and moves the hole thing to india, screw the communist thinking swedes.
11:40 November 28, 2010 by Jonsol69.blogspot.com
It is well documented that if corporations as their owners were people, they would clearly display the pathologies of sociopaths.

Having worked in various countries and at various levels in international corporations, the modus operendi appears little changed in decades if not centuries. It is a pathology that does not suit the holistic symbiotic business model that is required today or in the future. I will forgo that analysis for time and space and because I'm not being paid anymore for solutions management steals.

When HP was big in Amsterdam a new CEO came in with a massive pre-signup bonus pay-out. The first order was to convince employees to take a 10% pay cut and pay raise for the good of the company. I refused as I knew what was going to happen (though in honesty not completely). The outsourcing round commenced, product by product, division by division. A substantial percentage of the laid off where cheaper to make redundant because they had volunteered for pay cuts. Training and support diminished. It was never calculated on a spread sheet how highly trained, equipped and professional support staff (of engineer quality) could increase revenues directly and indirectly. I offered to prepare a report on such a concept (but that's another story about bad management that talks about customers it has never dealt with, knows or wants to).

Then like currently in Spain; coercion to work more hours, less benefits and perks, more sacrifices and a greater squeeze to encourage employees to leave of their own accord. Nowadays of course the company is best at putting its label on other manufacturers' products and has completely lost the essence of its founders. Incidentally the CEO in question no longer works there.

What we are witnessing is a stepping back towards feudalism with the added effect of a massive incompetent state together with corporations that feeds of employees. It is this that is unsustainable, but like a heroin addict looking for a last fix the new methodologies cannot come from senior management or corporation owners.

I speak almost four languages, nine years in IT, five years consultancy, four years customer care in various industries and levels internationally, with graphic/ photographic, literary and other skills. I have not been fully employed for four years, am over forty and am unlikely to see another well paid long-term career. When organisations say they want out of the box capable thinkers, this is a lie. I find greater honour now temporarily cleaning the floors and toilets of a dagis. At least my customer satisfaction percentage is higher.
13:16 November 28, 2010 by glamelixir
Who the hell would like to attract american excecutives anyhow!?!?!

14:44 November 28, 2010 by Civical
Welcome to the world ushered in by Conservative politics. This sort of pay differential was set rolling in the U.K. some 30 years ago by the blessed 'Margaret' (Thatcher) and has gone on rising ever since such that it now stands around 200-1 times the lowest adult pay. With the reckless bankers collecting annual salaries as high as £40Million, approximately 420 Million SEK. It has made the U.K. the most unequal country in Europe.

Come on Sweden! Find an electable Social Democrat leader and set your country back on the path of prosperity, fairness and equality which was an example the rest of us could only look to and admire.
16:08 November 28, 2010 by americanska
Nemsis - you once again sound like a complete idiot.
16:47 November 28, 2010 by dizzy09
@ kenny8076

I think u are confusing the US economy being the largest to the strongest.these are 2 different things.u are also wrong when u said sweden has a weak economy when in fact its currently one of the strongest in the world.After all its not part of the nations of PIGS(sorry guys, I just couldn´t help it) let's not forget the us economy is still not completely out of recession.

Regarding electrolux, I think the company needed somebody with balls who is willing to take risk in other to compete with china.something we all know a swedish CEO may be afraid to do.
00:06 November 29, 2010 by volvoman9
As a union official for a company owned by one the world's richest men allow me to offer this insight.

it has been said that sociopaths comprise around 4% of the population of the U.S. Of this segment a fractional percentage have the skills to operate in the capacity of the CEO. These individuals are highly recruited for a very special set of skills indeed. These include ruthless behavior and a total lack of empathy for fellow human beings. This is the climate that corporate America is cultivating.

There is a concerted effort to return the world to the era of the "Robber Barons". This is born by greed and the the falsehood that the middle and lower socio- economic classes will benefit from the creation of wealth at the upper level. For the three decades after WWII America gained unparalleled prosperity by improving the lot of the middle class. Since that time there has been an effort by the rich to take those gains away with startling success. This is a recipe for economic suicide as it is the buying power of the middle class that creates and supports a consumer society. Much has been written on this very subject.

A complete revolt by the middle and lower classes will be needed to reverse this trend. However even in the short term the rich will gain obscene wealth and will continue to control the governments.

It is also widely believed that this economic downturn will be long and this will give momentum to the Sarah Palins of the world who will feed on the anger of the working class to gain power while having no real answers but only catchy rhetoric.

This has been happening in the U.S. for almost three decades now and if the vast unwashed hoards don't wake up from their collective stupor it may be un stoppable.

The notion that hard work and ingenuity offers success equally is a lie but is the foundation of the capitalist model. Americans have always been gullible and now are becoming increasingly so. They don't want to face the hard truths about their failed society. The notion that a "trickle down" economy is of benefit to them is self explanatory. They will receive no more than a trickle of the wealth that the rich will gain.

The modern CEO is a creation of this philosophy. A heartless winner take all figure who has no ownership in the success or often the failure of a company. This is why they must be compensated so lavishly. They create the short term wealth for their masters with no regard for the long term effect on the lives left in the wake of their destruction.

In the end we have not progressed all that far as humans but are allowing our history to completely repeat itself. Yes even in erudite Sweden.
00:17 November 30, 2010 by mkvgtired
Nemesis, if you would be willing to do the job for 500,000 SEK you should have applied for it. You obviously have the credentials or your "willingness" is really worthless, and certainly less valuable than 500,000 SEK. If a schizophrenic homeless high school drop out would be "willing" to do it for 400,000 SEK does that make him a better value?

Keith McLoughlin has worked for Electrolux since 2003 so he has had time to prove his worth. It is all about value, Electrolux is betting McLoughlin will earn them more than his salary or they would not promote him. Better yet since you have the credentials to be a CEO start your own company. You can put in the 80 hour weeks and then pay the guy that unloads trucks and smokes pot all day the same as yourself.

I've never been in upper management but did manage several people in real estate banking. I was originally resented for my age by many of the people that were "willing" to do my job. Many of them were promoted to similar functions and fell flat on their face, three asking for their old jobs back. A company expects a manager to be willing and eager, but pays for the skills that back it up. If Electrolux promoted a person that could not do the job they could not just ask for their old job back as in my example, and a whole lot of people would be lining up in unemployment lines.
10:17 November 30, 2010 by justagurlfromSeattle
I think EVERYBODY should send a STONG message to Electrolux and BOYCOT this OBSCENE CEO pay......

I come from the US... and I have NO interest of Sweden becoming ANYTHING like the US....

I think the GREED at the top of these companies is sick and depraved....

This needs to be nipped in the bud.... NOW.... cuz if this becomes OK with the Swedish citizens.... then more and more CEO's will be asking for this kind of pay..... and the MORE they make.... the LESS the people in the middle and at the bottom can make......

There is NO excuse for a CEO needing that kind of money in Sweden.....

Don't people get it???

The MORE a CEO makes..... the MUCH less the rest of the company workers can make.....

I would NEVER take that kind of money....

I would rather have a well paid work force.... they are the muscle behind the success..... and many times the brains as well......
02:50 December 2, 2010 by Emmaboda
Considering the size of the Electrolux Corporation, I can't see that $10.6 million is too much. After all, the stock holders make the final decision, and that's that. You whining people, I'm sure you wouldn't complain if you got that salary yourselves. Electrolux is major player in this world, and need to have a CEO that is well paid, right?
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