The Annual General Meeting of shareholders of
Telefonaktiebolaget LM Ericsson will be held on Wednesday, March
29, 2017, at 3 p.m. at Kistamässan, Arne Beurlings Torg 5,
Kista/Stockholm.
The Nomination Committee proposes among other
things:
-
Jon Fredrik Baksaas, Jan Carlson and Eric A.
Elzvik as new Board members after resigning Ulf J. Johansson (item
11)
-
Unchanged Board fee, fee to the Chairman of the
Board of Directors and for work on the current Committees of the
Board and fees to the Chairman and other members of the new Board
Committee for Technology and Science in line with the fees to the
Chairman and other members of the Finance- and Remuneration
Committees (item 10)
The Board of Directors proposes among other
things:
-
A dividend of SEK 1 per share (item 8.3)
-
A Long-term Variable Compensation Program for
Ericsson's Global Leadership Team (item 17)
-
Transfer of treasury stock, directed share issue
and authorization for the Board of Directors to decide on an
acquisition offer in relation to the Long-Term Variable
Compensation Program 2017 (item 17.2)
Welcome to the Annual General
Meeting of shareholders 2017 of Telefonaktiebolaget LM
Ericsson
Telefonaktiebolaget LM Ericsson's shareholders are
invited to participate in the Annual General Meeting of
shareholders to be held on Wednesday, March 29, 2017 at 3.00 p.m.
at Kistamässan, Arne Beurlings Torg 5, Kista/Stockholm.
Registration to the Annual General Meeting starts at 1.30 p.m.
Registration and notice of
attendance
Shareholders who wish to attend the Annual General Meeting
must
- be recorded in the share register kept by
Euroclear Sweden AB, the Swedish securities registry, on Thursday,
March 23, 2017; and
- give notice of attendance to the Company at the
latest on Thursday, March 23, 2017. Notice of attendance can be
given by telephone +46 (0)8 402 90 54 on weekdays between 10 a.m.
and 4 p.m. or on Ericsson's website www.ericsson.com.
Notice may also be given in writing to:
Telefonaktiebolaget LM Ericsson
General Meeting of shareholders
Box 7835
SE-103 98 Stockholm
Sweden
When giving notice of attendance, please state
name, date of birth or registration number, address, telephone
number and number of attending assistants, if any.
The Annual General Meeting will be conducted in
Swedish and simultaneously translated into English.
Shares registered in the name of a
nominee
In addition to giving notice of attendance, shareholders having
their shares registered in the name of a nominee, must request the
nominee to temporarily enter the shareholder into the share
register as per Thursday, March 23, 2017, in order to be entitled
to attend the Annual General Meeting. The shareholder should inform
the nominee to that effect well before that day.
Proxy
Shareholders represented by proxy shall issue a power of attorney
for the representative. A power of attorney issued by a legal
entity must be accompanied by a copy of the entity's certificate of
registration (should no such certificate exist, a corresponding
document of authority must be submitted). In order to facilitate
the registration at the Annual General Meeting, the power of
attorney in the original, certificate of registration and other
documents of authority should be sent to the Company in advance to
the address above for receipt by Tuesday, March 28, 2017. Forms of
power of attorney in Swedish and English are available on
Ericsson's website, www.ericsson.com.
Agenda
1. Election of the Chairman of
the Annual General Meeting
2. Preparation and approval of
the voting list
3. Approval of the agenda of the
Annual General Meeting
4. Determination whether the
Annual General Meeting has been properly convened
5. Election of two persons
approving the minutes
6. Presentation of the annual
report, the auditor's report, the consolidated accounts, the
auditor's report on the consolidated accounts and the auditor's
report whether the guidelines for remuneration to group management
have been complied with, as well as the auditor's presentation of
the audit work with respect to 2016
7. The President's speech.
Questions from the shareholders to the Board of Directors and the
management
8. Resolution with respect
to
8.1. adoption of the income statement and
the balance sheet, the consolidated income statement and the
consolidated balance sheet;
8.2. discharge of liability for the members
of the Board of Directors and the President; and
8.3. the appropriation of the profit in
accordance with the approved balance sheet and determination of the
record date for dividend
9. Determination of the number
of Board members and deputies of the Board of Directors to be
elected by the Annual General Meeting
10. Determination of the fees payable to
members of the Board of Directors elected by the Annual General
Meeting and members of the Committees of the Board of Directors
elected by the Annual General Meeting
11. Election of the members and deputies of
the Board of Directors
The Nomination Committee's proposal for Board members:
11.1.
Jon Fredrik Baksaas (new election)
11.2.
Jan Carlson (new election)
11.3.
Nora Denzel
11.4.
Börje Ekholm
11.5.
Eric A. Elzvik (new election)
11.6.
Leif Johansson
11.7.
Kristin Skogen Lund
11.8.
Kristin S. Rinne
11.9.
Sukhinder Singh Cassidy
11.10. Helena
Stjernholm
11.11. Jacob
Wallenberg
12. Election of the Chairman of the Board of
Directors
The Nomination Committee's proposal:
The Nomination Committee proposes that Leif Johansson be elected
Chairman of the Board.
13. Determination of the number of
auditors
14. Determination of the fees payable to the
auditors
15. Election of auditors
16. Resolution on the guidelines for
remuneration to Group Management
17. Long-Term Variable Compensation Program
2017 ("LTV 2017")
17.1.
Resolution on implementation of the LTV 2017
17.2. Transfer
of treasury stock, directed share issue and acquisition offer for
the LTV 2017
17.3. Equity
Swap Agreement with third party in relation to the LTV 2017
18. Resolution on transfer of treasury stock
in relation to the resolutions on the Long-Term Variable
Compensation Programs 2013, 2014, 2015 and 2016
19. Resolution on proposal from the
shareholder Einar Hellbom that the Annual General Meeting resolve
to delegate to the Board to present a proposal on equal voting
rights for all shares at the Annual General Meeting 2018
20. Resolution on proposal from the
shareholder Thorwald Arvidsson that the Annual General Meeting
resolve to delegate to the Board of Directors to turn to the
Government of Sweden and underline the need for a change of the
legal framework to abolish the possibility to have voting power
differences in Swedish limited liability companies
21. Resolution on proposal from the
shareholder Thorwald Arvidsson to amend the articles of
association
21.1.
with respect to the voting rights of shares
21.2.
with respect to limitation of who can be appointed Board member
22. Resolution on proposal from the
shareholder Thorwald Arvidsson that the Annual General Meeting of
shareholders resolve:
22.1.
to adopt a vision of zero tolerance with respect to work place
accidents within the company;
22.2.
to delegate to the Board to appoint a working group to realize this
vision of zero tolerance;
22.3.
that the results shall be annually reported to the Annual General
Meeting in writing, for example by including the report in the
printed Annual Report;
22.4.
to adopt a vision of absolute gender equality on all levels within
the company;
22.5.
to delegate to the Board to appoint a working group to realize this
vision in the long-term and carefully follow the developments
regarding gender equality and ethnicity;
22.6.
to annually report to the Annual General Meeting in writing, for
example by including the report in the printed Annual Report;
22.7.
to delegate to the Board to take necessary action to create a
shareholders' association in the company;
22.8.
that a member of the Board shall not be allowed to invoice the
Board fee via a legal entity, Swedish or non-Swedish;
22.9.
to delegate to the Board to turn to the relevant authority (the
Government and/or the tax office) to underline the need to amend
the rules in this area;
22.10.
that the Nomination Committee, when fulfilling its tasks, shall in
particular consider matters related to ethics, gender and
ethnicity;
22.11.
delegate to the Board of Directors to turn to the Government of
Sweden to underline the need to introduce a national "cool-off
period" for politicians; and
22.12.
to delegate to the Board to prepare a proposal for Board and
Nomination Committee representation for the small and midsize
shareholders, to be presented to the Annual General Meeting
2018, or any earlier held extraordinary general shareholders
meeting.
23. Resolution on proposal from the
shareholder Thorwald Arvidsson for an examination through a special
examiner (Sw. särskild granskning) to examine
if corruption has occurred in the company's business.
24. Closing of the Annual General
Meeting
______________________
Item 1 Chairman of the Annual
General Meeting
The Nomination Committee, appointed in accordance with the
Instruction for the Nomination Committee resolved by the Annual
General Meeting 2012, is composed of the Chairman of the Committee,
Petra Hedengran (Investor AB), Bengt Kjell (AB Industrivärden and
Svenska Handelsbankens Pensionsstiftelse), Johan Held (AFA
Försäkring), Anders Oscarsson (AMF Försäkring and Fonder) and Leif
Johansson (Chairman of the Board of Directors). The Nomination
Committee proposes that Advokat Sven Unger be elected Chairman of
the Annual General Meeting of shareholders 2017.
Item 8.3 Dividend and record date
The Board of Directors proposes a dividend of SEK 1 per share and
Friday, March 31, 2017, as record date for dividend. Assuming this
date will be the record date, Euroclear Sweden AB is expected to
disburse dividends on Wednesday, April 5, 2017.
Item 9 Number of Board members and deputies to be
elected by the Annual General Meeting
According to the articles of association, the Board shall consist
of no less than five and no more than twelve Board members, with no
more than six deputies. The Nomination Committee proposes that the
number of Board members elected by the Annual General Meeting of
shareholders shall be eleven and that no deputies be
elected.
Item 10 Fees payable to members of the Board of
Directors elected by the Annual General Meeting and to members of
the Committees of the Board elected by the Annual General
Meeting
The Nomination Committee proposes that fees to non-employee Board
members elected by the Annual General Meeting and non-employee
members of the Committees of the Board elected by the Annual
General Meeting be paid as follows:
-
SEK 4,075,000 to the Chairman of the Board of
Directors (unchanged);
-
SEK 990,000 each to the other Board members
(unchanged);
-
SEK 350,000 to the Chairman of the Audit
Committee (unchanged);
-
SEK 250,000 each to the other members of the
Audit Committee (unchanged);
-
SEK 200,000 each to the Chairmen of the Finance
and the Remuneration Committee (unchanged);
-
SEK 175,000 each to the other members of the
Finance and the Remuneration Committee (unchanged);
-
SEK 200,000 to the Chairman of the new Committee
for Technology and Science; and
-
SEK 175,000 each to the other members of the new
Committee for Technology and Science.
It is important that Board fees are maintained at
an appropriate level to make it possible to recruit the best
possible international competence to the Board of Directors of
Ericsson and to make it possible to keep such competence. When
assessing the level of fees, a comparison has been made in relation
to the Board fees in companies of equal size and complexity and it
should be considered that the Ericsson Group has customers in more
than 180 countries and that sales in 2016 amounted to more than
SEK 220 billion.
The Nomination Committee considers that the fees
for Board and Committee work are reasonable, and proposes that all
fees remain unchanged. The Board has resolved to institute a new
Technology and Science Committee. The Nomination Committee proposes
that the fees to the Chairman and other members of the new
Committee shall be the same as the fees to the Chairmen and members
of the Finance Committee and the Remuneration Committee.
Fees in the form of synthetic
shares
Background
The Nomination Committee believes that it is appropriate that Board
members elected by the shareholders hold shares in Ericsson, in
order to strengthen the Board members' and the shareholders' mutual
interests in the company. The Nomination Committee recommends Board
members elected by the shareholders to, during a five-year period,
build a holding of shares or synthetic shares in Ericsson at least
corresponding to the value of the annual Board fee (after tax)
(excluding fees for Committee work), and that such holding be kept
during the time the Board member remain Board member in
Ericsson.
To make it possible for Board members to create an
economic interest in the company and considering that it is in many
cases difficult for Board members to trade in the company's share
due to applicable insider rules, the Nomination Committee proposes
that the Board members should, as previously, be offered the
possibility of receiving part of the Board fees in the form of
synthetic shares. A synthetic share constitutes a right to receive
payment of an amount which corresponds to the market value of a
share of series B in the Company on Nasdaq Stockholm at the time of
payment.
Proposal
The Nomination Committee therefore proposes that the Annual General
Meeting of shareholders 2017 resolve that part of the fees to the
Directors, in respect of their Board assignment (however, not in
respect of Committee work), may be paid in the form of synthetic
shares, on the following terms and conditions.
- A nominated Director shall be able to choose to
receive the fee in respect of his or her Board assignment,
according to the following four alternatives:
-
25 percent in cash - 75 percent in synthetic
shares
-
50 percent in cash - 50 percent in synthetic
shares
-
75 percent in cash - 25 percent in synthetic
shares
-
100 percent in cash.
- The number of synthetic shares to be allocated
shall be valued to an average of the market price of shares of
series B in the Company on Nasdaq Stockholm during a period of five
trading days immediately following the publication of Ericsson's
interim report for the first quarter of 2017. The synthetic shares
are vested during the term of office, with 25 percent per quarter
of the year.
- The synthetic shares give a right to, following
the publication of Ericsson's year-end financial statement in 2022,
receive payment of a cash amount per synthetic share corresponding
to the market price of shares of series B in the Company at the
time of payment.
- An amount corresponding to dividend in respect of
shares of series B in the Company, resolved by the Annual General
Meeting during the holding period, shall be disbursed at the same
time as the cash amount.
- Should the Director's assignment to the Board of
Directors come to an end no later than during the third calendar
year after the year in which the Annual General Meeting resolved on
allocation of the synthetic shares, payment may take place the year
after the assignment came to an end.
- The number of synthetic shares may be subject to
recalculation in the event of bonus issues, split, rights issues
and similar measures, under the terms and conditions for the
synthetic shares.
The complete terms and conditions for the
synthetic shares are described in Exhibit 1 to
the Nomination Committee's proposal.
The financial difference for the Company, should
all Directors receive part of their fees in the form of synthetic
shares compared with the fees being paid in cash only, is assessed
to be very limited.
Item 11 Election of Board members
and deputies of the Board of Directors
The Nomination Committee proposes that the following persons be
elected Board members:
11.1
Jon Fredrik Baksaas (new election)
11.2
Jan Carlson (new election)
11.3
Nora Denzel
11.4
Börje Ekholm
11.5
Eric A. Elzvik (new election)
11.6
Leif Johansson
11.7
Kristin Skogen Lund
11.8
Kristin S. Rinne
11.9
Sukhinder Singh Cassidy
11.10
Helena Stjernholm
11.11
Jacob Wallenberg
Information on proposed new Board
members
Jon Fredrik Baksaas
Born 1954. Master of Science in Economics, NHH Norwegian School of
Economics & Business Administration, Norway.
Board member: Svenska Handelsbanken
AB.
Holdings in Ericsson:
None.*
Principal work experience and other
information: President and CEO of Telenor (2002-2015).
Previous positions within the Telenor Group since 1989, including
deputy CEO, Chief Financial Officer and CEO of TBK AS. Previous
positions include CFO of Aker AS, finance director of Stolt Nielsen
Seaway AS and controller at Det Norske Veritas, Norway and Japan.
Member of the GSMA Board (2008-2016) and Chairman of the GSMA Board
(2014-2016).
Jan Carlson
Born 1960. Master of Science degree in Engineering Physics and
Electrical Engineering, the University of Linköping,
Sweden.
Board Chairman: Autoliv Inc.
Board member: BorgWarner Inc.,
Teknikföretagen, The Confederation of Swedish Enterprise and
Trelleborg AB.
Holdings in Ericsson: 7,900 Class B
Shares.*
Principal work experience and other
information: President and CEO of Autoliv Inc. since 2007 and
Chairman of Autoliv Inc. since 2014. Previous positions within the
Autoliv Group since 1999, including President Autoliv Europe, Vice
President Engineering of Autoliv and President Autoliv Electronics.
Previous positions include President of Saab Combitech and of
Swedish Gate Array.
Eric A. Elzvik Born 1960.
Master of Science in Business Administration, Stockholm School of
Economics, Sweden.
Board member: IMD Foundation, Lausanne and the
Swiss Swedish Chamber of Commerce, Zurich, Switzerland.
Holdings in Ericsson: 10,000 Class B
shares*.
Principal work experience and other
information: Chief Financial Officer and member of the Group
Executive Committee of ABB Ltd (2013-2017). Division CFO ABB
Discrete Automation & Motion (2010-2012) and division CFO
Automation Products Division (2006-2010). Previous positions within
the ABB Group since 1984, including senior management positions
within finance, mergers & acquisitions and new
ventures.
* The holdings in Ericsson are as of the date of the notice
convening the Annual General Meeting and includes holdings by
related persons as well as holdings of ADS, if applicable. |
In the composition of the Board of Directors, the
Nomination Committee considers, among other things, experience and
competence needed in the Board and its Committees, and also the
value of diversity in age, gender and cultural/geographic
background as well as the need for renewal. The Nomination
Committee also assesses the appropriateness of the number of
members of the Board and whether the Board members can devote the
necessary time required to fulfill their tasks as Board members in
Ericsson. The Nomination Committee primarily searches for potential
Board member candidates for the upcoming mandate period but also
considers future competence needs.
In its appraisal of qualifications and performance
of the individual Board members, the Nomination Committee takes
into account the competence and experience of each individual
member along with the individual member's contribution to the Board
work as a whole and to the Committee work. The Nomination Committee
has further thoroughly familiarized itself with the results of the
Board work evaluation and of the work of the Board and the
individual Board members. The Nomination Committee believes that it
is very important that the composition of Board members proposed
includes complementing experiences and competencies to make it
possible for the Board to contribute to a positive development of
Ericsson. The Nomination Committee aims to propose a Board of
Directors that constitutes a good team to lead Ericsson.
The Nomination Committee is of the opinion that
the current Board and Board work is well functioning. Further it is
the Nomination Committee's view that the Board fulfils high
expectations in terms of composition and that the Board as well as
the individual Board members fulfil high expectations in terms of
expertise.
Ulf J. Johansson has advised that he wishes to
leave the Board. The Nomination Committee proposes that three new
Board members be elected: Jon Fredrik Baksaas, Jan Carlson and Eric
A. Elzvik. It is the Nomination Committee's assessment that each of
the proposed Board members, with their respective experiences, will
add valuable expertise and experience to the Board. Jon Fredrik
Baksaas has extensive international experience from work within the
telecommunications business, among other things from his previous
positions within Telenor where he was President and CEO during more
than ten years. He also has extensive experience within finance
from previous positions. Jan Carlson is Chairman, CEO and President
of Autoliv, listed at the New York Stock Exchange and Nasdaq
Stockholm, and has long-term experience from managing a large
international corporation. Eric A. Elzvik has long-term
international experience from senior management positions within
the ABB Group, most recently as Chief Financial Officer and member
of the Group Executive Committee. He also has broad and extensive
experiences from previous positions within ABB Ltd., among others
within finance, mergers and acquisitions and new ventures.
Out of the proposed Board members to be elected by
the Annual General Meeting of shareholders (excluding the
President) 50% are women.
Information regarding proposed
Board members
Information regarding the proposed Board members is presented in
Exhibit 2 to the Nomination Committee's
proposal.
Independence of Board
members
The Nomination Committee has made the following assessments in
terms of applicable Swedish independence requirements:
(i) The Nomination Committee considers that
at least the following Board members are independent of the Company
and its senior management:
-
Jon Fredrik Baksaas
-
Jan Carlson
-
Nora Denzel
-
Eric A. Elzvik
-
Leif Johansson
-
Kristin Skogen Lund
-
Kristin S. Rinne
-
Sukhinder Singh Cassidy
-
Helena Stjernholm
-
Jacob Wallenberg
(ii) From among the Board members reported
in (i) above, the Nomination Committee considers that at least the
following are independent of the Company's major shareholders:
-
Jon Fredrik Baksaas
-
Jan Carlson
-
Nora Denzel
-
Eric A. Elzvik
-
Leif Johansson
-
Kristin Skogen Lund
-
Kristin S. Rinne
-
Sukhinder Singh Cassidy
Moreover, the Nomination Committee considers that
at least the following Board members are independent in respect of
all applicable independence requirements:
-
Jon Fredrik Baksaas
-
Jan Carlson
-
Nora Denzel
-
Eric A. Elzvik
-
Leif Johansson
-
Kristin Skogen Lund
-
Kristin S. Rinne
-
Sukhinder Singh Cassidy
Item 12 Election of the Chairman
of the Board
The Nomination Committee proposes that Leif Johansson be re-elected
Chairman of the Board.
Item 13 Number of
auditors
According to the articles of association, the company shall have no
less than one and no more than three registered public accounting
firms as auditor. The Nomination Committee proposes that the
company should have one registered public accounting firm as
auditor.
Item 14 Fees payable to the
auditor
The Nomination Committee proposes, like previous years, that the
auditor fees be paid against approved account.
Item 15 Election of
auditor
In accordance with the recommendation of the Audit Committee, the
Nomination Committee proposes that PricewaterhouseCoopers AB be
appointed auditor for the period as of the end of the Annual
General Meeting 2017 until the end of the Annual General Meeting
2018 (re-election).
Item 16 Guidelines for
remuneration to Group Management
The Board of Directors proposes that the Annual General Meeting
resolve on the following guidelines for remuneration to Group
Management for the period up to the 2018 Annual General Meeting.
Compared to the guidelines resolved by the 2016 Annual General
Meeting, it has been added that targets for variable compensation
may also include share price-related targets. Information on
estimated costs for variable remuneration is appended to the
proposal.
Guidelines for remuneration to
Group Management
For Group Management consisting of the Executive Leadership Team,
including the President and CEO, total remuneration consists of
fixed salary, short- and long-term variable compensation, pension
and other benefits.
The following guidelines apply for the
remuneration of the Executive Leadership Team:
- Variable compensation is in cash and stock-based
programs, awarded against specific business targets derived from
the long-term business plan approved by the Board of Directors.
Targets may include share-price related or financial targets at
either Group or unit level, operational targets, employee
engagement targets or customer satisfaction targets.
- All benefits, including pension benefits, follow
the competitive practice in the home country taking total
compensation into account.
- By way of exception, additional arrangements can
be made when deemed necessary. An additional arrangement can be
renewed but each such arrangement shall be limited in time and
shall not exceed a period of 36 months and twice the remuneration
that the individual would have received had no additional
arrangement been made.
- The mutual notice period may be no more than six
months. Upon termination of employment by the Company, severance
pay amounting to a maximum of 18 months fixed salary is paid.
Notice of termination given by the employee due to significant
structural changes, or other events that in a determining manner
affect the content of work or the condition for the position, is
equated with notice of termination served by the Company.
Appendix to proposal on guidelines
for remuneration to Group Management
Details of our Remuneration Policy and how we deliver on our policy
and guidelines, including information on previously decided long
term variable compensation that has not yet become due for payment,
can be found in the Remuneration Report and in
Note C28, "Information regarding Members of the
Board of Directors, the Group Management and Employees" in the
annual report 2016.
With the current composition of the Executive Leadership Team, the
Company's cost during 2017 for variable remuneration to the
Executive Leadership Team can, at a constant share price, be
estimated to amount to between 0 and 220 percent of the aggregate
fixed salary cost, all excluding social security costs.
|
Item 17.1 - 17.3 Long-Term
Variable Compensation Program 2017 ("LTV 2017") including transfer
of treasury stock, directed share issue and authorization for the
Board of Directors to decide on an acquisition offer
Following its continuous evaluation of the
company's long-term variable compensation, the Board of Directors
has concluded that the structure of the previous and ongoing LTV
programs results in an unsustainable share dilution effect. The
Board of Directors has therefore decided not to propose a Stock
Purchase Plan for all employees with connected Key Contributor Plan
and Executive Performance Stock Plan for 2017. As a result, LTV
2017 is proposed to replace part of the previous Executive
Performance Stock Plan.
LTV 2017 is an integral part of the Company's
remuneration strategy, in particular the Board of Directors wishes
to encourage the leadership to build significant equity holdings to
align the interests of the LTV Program participants with those of
shareholders.
Proposals
The Long-Term Variable
Compensation Program 2017
The Board of Directors proposes that the Annual
General Meeting resolve on the implementation of a Long-Term
Variable Compensation Program 2017 in accordance with the proposals
set out below.
17.1 Implementation of the LTV
2017
The Board of Directors proposes that the Annual
General Meeting resolves on the LTV 2017 for members of the Global
Leadership Team, comprising a maximum of 3 million shares of series
B in Ericsson as set out below.
Objectives of the LTV
Program
The LTV Program is designed to provide long-term incentives for
members of the Global Leadership Team (the "Participants") and to incentivise the Company's
performance creating long-term value. The aim is to attract, retain
and motivate executives in a competitive market through
performance-based share related incentives and to encourage the
build-up of significant equity holdings to align the interests of
the Participants with those of shareholders.
The LTV Program in
brief
The LTV Program is proposed to include all members (current and
future) of the Global Leadership Team, currently comprising of 28
employees. Awards under LTV 2017 will be granted free of charge
entitling the participant, provided that i.a. certain performance
conditions set out below are met, to receive a number of shares,
free of charge, following expiration of the three-year vesting
period ("Performance Share Awards"). Allotment
of shares pursuant to Performance Share Awards will be subject to
the achievement of performance conditions, as set out below, and
will generally require that the Participant retains his or her
employment over a period of three years from the date of grant (the
"Vesting Period"). All major decisions
relating to LTV 2017 will be taken by the Remuneration Committee,
with approval by the full Board of Directors as required.
Granting of Performance Share
Awards
Granting of Performance Share Awards to the Participants will
generally take place as soon as practicably possible following the
Annual General Meeting 2017. For 2017, the value of the underlying
shares in respect of the Performance Share Award made to the
President & CEO will not exceed 180% of the annual base salary
at the time of grant, and for other participants, the value will
not exceed 22.5% of the participants' respective annual base
salaries at the time of grant. The share price used to calculate
the number of shares to which the Performance Share Award entitles
will be the volume-weighted average of the market price of Ericsson
B shares on Nasdaq Stockholm during the five trading days
immediately following the publication of the Company's interim
report for the first quarter 2017.
Performance
criteria
The vesting of Performance Share Awards will be subject to the
satisfaction of challenging performance conditions which will
determine what portion (if any) of the Performance Share Awards
will vest at the end of the Performance Period, as defined below.
The two performance criteria are based on absolute TSR[1] development
and relative TSR development for the Ericsson B share over the
period January 1, 2017 - December 31, 2019 (the "Performance Period").[2] The two
performance criteria relate to 50% each of the Performance Share
Award and the maximum vesting level for each of the performance
criteria is 200%.
The following two performance criteria will apply
to Performance Share Awards granted in 2017:
50% of a Performance Share Award granted to a
Participant will be subject to fulfilment of an absolute TSR
performance requirement over the Performance Period. If the
absolute TSR development reaches or exceeds 14% per annum
compounded, the maximum vesting of 200% of the Performance Share
Award related to absolute TSR shall occur. If the absolute TSR
development is below or reaches only 6% per annum compounded, no
vesting will occur in respect of the Performance Share Award
related to the absolute TSR. A linear pro-rata vesting from 0%
to 200% of the Performance Share Award related to absolute TSR
shall apply if the Company's absolute TSR performance is between 6%
and 14% per annum compounded.
The remaining 50% of a Performance Share Award
granted to a Participant will be subject to fulfilment of a
relative TSR performance requirement over the Performance
Period, compared to a peer group consisting of 18 peer
companies (the "Peer Group")[3]. The
vesting of the relative TSR related Performance Share Award varies
depending on the Company's TSR performance ranking versus the other
companies in the Peer Group. If the Company's relative TSR
performance is below the TSR development of the company ranked 12th
in the Peer Group, no vesting will occur in respect of the
Performance Share Award related to relative TSR performance.
Vesting of the Performance Share Award related to relative TSR
performance will occur at the following percentage levels, based on
which ranking position in the Peer Group the Company's TSR
Performance corresponds to:
Position within
the Peer
Group
Associated vesting percentage
level
12 or lower
0%
11
40%
10
80%
9
120%
8
140%
7
160%
6
180%
5 or higher
200%
If the Company's TSR performance is between two of the ranked
companies, a linear pro-rata vesting shall apply between the
vesting percentage levels for the relevant ranked positions.
Information about the outcome of the performance
criteria will be provided in the annual report for the financial
year 2019.
Allotment of shares
Provided that the performance critera above have been met during
the Performance Period and that the Participant has retained his or
her employment (unless special circumstances are at hand) during
the Vesting Period, allotment of vested shares will take place as
soon as practicably possible following the expiration of the
Vesting Period.
When determining the final vesting level of
Performance Share Awards, the Board of Directors shall examine
whether the vesting level is reasonable considering the Company's
financial results and position, conditions on the stock market and
other circumstances, and if not, as determined by the Board of
Directors, reduce the vesting level to the lower level deemed
appropriate by the Board of Directors.
In the event delivery of shares to Participants
cannot take place under applicable law or at a reasonable cost and
employing reasonable administrative measures, the Board of
Directors will be entitled to decide that Participants may,
instead, be offered a cash settlement.
Financing
The Board of Directors has considered different financing methods
for transfer of shares under the LTV 2017, such as transfer of
treasury stock and an equity swap agreement with a third party.
The Board of Directors considers that a directed
issue of C shares, followed by buy-back and transfer of treasury
stock is the most cost efficient and flexible method to transfer
shares under the LTV 2017.
The Company's current holding of treasury stock is
not sufficient for the carrying out of the LTV 2017. Therefore, the
Board of Directors proposes a directed share issue and buy back of
shares as further set out below under item 17.2. Under the proposed
transactions, shares are issued at the share's ratio value and
bought back as soon as the shares have been subscribed for and
registered. The purchase price paid by the Company to the
subscriber equals the subscription price. As compensation to the
subscriber for its assistance in the issuance and buy-back of
shares, the Company will pay to the subscriber an amount totaling
SEK 50,000, corresponding to less than 1.7 öre (SEK 0.017) per new
issued and re-purchased share.
The procedure of issuance and buy-back of shares
for the Company's long-term variable compensation programs has
previously been decided by the Annual General Meetings of
shareholders in 2001, 2003, 2008, 2009, 2012 and 2016.
Since the costs for the Company in connection with
an equity swap agreement will be significantly higher than the
costs in connection with transfer of treasury stock, the main
alternative is that the financial exposure is secured by transfer
of treasury stock.
Costs
The total effect on the income statement of the LTV 2017, including
financing costs and social security fees, is estimated to range
between SEK 51 million and SEK 141 million distributed over the
years 2017-2020.
The administration cost for transfer of shares by
way of an equity swap agreement is estimated to approximately SEK
4.6 million, compared to approximately SEK 50,000 for using new
issued and acquired shares in treasury.
Dilution
The Company has approximately 3.3 billion shares in issue. As per
December 31, 2016, the Company held approximately 62.2 million
shares in treasury. The number of shares that may be required for
ongoing programs as per December 31, 2016 is estimated to
approximately 64 million shares, corresponding to approximately 2
percent of the number of outstanding shares. The number of shares
required for the ongoing 2016 LTV program cannot be determined
until the end of the investment period in August 2017. In order to
implement LTV 2017, a total of up to 3 million shares are required,
which corresponds to approximately 0.1 percent of the total number
of outstanding shares. The effect on important key figures is only
marginal.
Item 17.2 Transfer of treasury
stock, directed share issue and acquisition offer for the LTV
2017
a. Transfer of treasury stock
under the LTV 2017
Transfer of no more than 2.2 million shares of
series B in the Company may occur on the following terms and
conditions.
- The right to acquire shares shall be granted to
such persons within the Ericsson Group covered by the terms and
conditions pursuant to the LTV 2017. Furthermore, subsidiaries
within the Ericsson Group shall have the right to acquire shares,
free of consideration, and such subsidiaries shall be obligated to
immediately transfer, free of consideration, shares to employees
covered by the terms and conditions of the LTV 2017.
- The employee shall have the right to receive
shares during the period when the employee is entitled to receive
shares pursuant to the terms and conditions of the LTV 2017, i.e.
in 2020.
- Employees covered by the terms and conditions of
the LTV 2017 shall receive shares of series B in the Company, free
of consideration.
b. Transfer of treasury stock on
an exchange
The Company shall have the right to, prior to the
Annual General Meeting in 2018, transfer no more than 800,000
shares of series B in the Company, in order to cover certain
expenses, mainly social security payments. Transfer of the shares
shall be effected on Nasdaq Stockholm at a price within the, at
each time, prevailing price interval for the share as diseminated
by Nasdaq Stockholm.
c. Directed issue of shares of
Series C
Increase of the share capital in Ericsson with SEK
15,000,000 by an issue of 3 million shares of series C, each share
with a ratio value of SEK 5. The terms and conditions of the share
issue are the following.
- The new shares shall - with deviation from the
shareholders' preferential right - be subscribed for only by
Investor AB or subsidiaries of this company.
- The new shares shall be subscribed for during the
period May 4-8, 2017. Over-subscription may not occur.
- The amount that shall be payable for each new
share shall be SEK 5.
- Payment for the subscribed shares shall be made
at the time of subscription.
- The new shares shall not entitle the holders to
dividend payment.
- It is noted that the new shares are subject to
restrictions pursuant to chapter 4, section 6 (conversion clause)
and chapter 20, section 31 (redemption clause) of the Swedish
Companies Act.
d. Authorization for the Board of
Directors to decide on a directed acquisition offer
Authorization for the Board of Directors to decide
that 3 million shares of series C in Ericsson be acquired according
to the following.
- Acquisition may occur by an offer to acquire
shares directed to all holders of shares of series C in
Ericsson.
- The authorization may be exercised until the
Annual General Meeting in 2018.
- The acquisition shall be made at a price of SEK 5
per share.
- Payment for acquired shares shall be made in
cash.
Item 17.3 Equity Swap Agreement
with third party in relation to the LTV 2017
In the event that the required majority is not
reached under item 17.2 above, the financial exposure of the LTV
2017 shall be hedged by the Company entering into an equity swap
agreement with a third party, under which the third party shall, in
its own name, acquire and transfer shares in the Company to
employees covered by the LTV 2017.
Special authorization for the
President
The Board of Directors further proposes that the President be
authorized to make such minor adjustments to the resolutions above
as may prove necessary in connection with the registration with the
Swedish Companies Registration Office.
Majority rules
The resolution of the Annual General Meeting on implementation of
the program according to item 17.1 above requires that more than
half of the votes cast at the Annual General Meeting approve the
proposal. The Annual General Meeting's resolution on transfer of
treasury stock, directed share issue and authorization for the
Board of Directors to decide on an offer to acquire treasury stock
according to item 17.2 above requires that shareholders
representing at least nine-tenths of the votes cast as well as the
shares represented at the Annual General Meeting approve the
proposal. A valid resolution in accordance with the proposal for an
equity swap agreement under item 17.3 above requires that more than
half of the votes cast at the Annual General Meeting approve the
proposal.
Description of ongoing variable
compensation programs
The Company's ongoing variable compensation programs are described
in detail in the Annual Report 2016 in the note to the Consolidated
Financial Statements, Note C28 and on the Company's website. The
Remuneration Report published in the Annual Report outlines how the
Company implements its guidelines on remuneration to Group
management in line with the Swedish Corporate Governance Code.
Item 18 The
Board of Directors' proposal for resolution on transfer of treasury
stock in relation to the resolutions on the Long-Term Variable
Compensation Programs 2013, 2014, 2015 and 2016
Background
The Annual General Meetings 2013, 2014, 2015 and 2016 resolved on a
right for the Company to transfer in total not more than 19,800,000
shares of series B in the Company on a stock exchange to cover
certain payments, mainly social security charges, which may occur
in relation to the Long-Term Variable Compensation Programs 2013,
2014, 2015 and 2016.
Each resolution has only been valid up to the
following Annual General Meeting. Resolutions on transfer of
treasury stock for the purpose of the above mentioned programs have
therefore been repeated at the subsequent Annual General
Meeting.
In accordance with the resolutions on transfer of
in total not more than 19,800,000 shares, 512,300 shares of series
B have been transferred up to February 20, 2017.
Proposal
The Board of Directors proposes that the Annual General Meeting
resolve that the Company shall have the right to transfer, prior to
the Annual General Meeting 2018, not more than 19,287,700 shares of
series B in the Company, or the lower number of shares of series B,
which as per March 29, 2017 remains of the original 19,800,000
shares, for the purpose of covering certain payments, primarily
social security charges that may occur in relation to the Long-Term
Variable Compensation Programs 2013, 2014, 2015 and 2016. Transfer
of shares shall be effected on Nasdaq Stockholm at a price within
the, at each time, prevailing price interval for the share.
Majority rules
The resolution of the Annual General Meeting on a transfer of
treasury stock requires that shareholders holding at least
two-thirds of the votes cast as well as the shares represented at
the Annual General Meeting vote in favor of the proposal.
Item 19 - 23 Proposals from
shareholders
The proposals under item 19, 20, 22 and 23 are set out in the
agenda.
Item 21.1 - 21.2 Proposals from
the shareholder Thorwald Arvidsson to amend the articles of
association with respect to voting rights of shares and with
respect to limitations as to who may be appointed Board
member
21.1
The shareholder Thorwald Arvidsson proposes firstly that the
articles of association (§ 6, item two), be amended as follows:
"At elections at General Meetings of shareholders
shares of series A, B and C carry one vote each."
In case that the proposal above is not approved by
the General Meeting of shareholders, it is secondarily proposed
that the language be amended as follows:
"At elections at General Meetings of shareholders,
shares of series A carry one vote each and shares of series B and C
carry one tenth of one vote each."
21.2
The shareholder Thorwald Arvidsson proposes that the articles of
association (§ 9) be amended by adding a second and third paragraph
as follows.
"A previous minister of state must not be elected
member of the Board of Directors earlier than two years from the
termination of the appointment as minister of state.
In the absence of special reasons, other
politicians who have obtained full salary from the public must not
be elected members of the Board of Directors earlier than one year
following the termination of the appointment."
Majority rules
The resolution of the Annual General Meeting to amend the articles
of association under item 21.1, in regards to the first proposal,
is valid if all shareholders represented at the meeting vote in
favor of the proposal and those shareholders represent at least
nine-tenths of all shares in the company, alternatively if
shareholders representing at least two-thirds of the votes cast as
well as the shares represented at the meeting vote in favor of the
proposal and holders of half of all shares of series A and
nine-tenths of the shares of series A represented at the meeting
agree to the change. The resolution by the Annual General Meeting
under item 21.1, in regards to the secondary proposal, is valid if
shareholders holding at least two-thirds of the votes cast as well
as the shares represented at the Annual General Meeting vote in
favor of the proposal.
The resolution of the Annual General Meeting under
item 21.2 requires that shareholders holding at least two-thirds of
the votes cast as well as the shares represented at the Annual
General Meeting vote in favor of the proposal.
The proposal for an examination through a special
examiner (Sw. särskild granskning) under item
23 implies that if holders of at least one tenth of all shares in
the company or of at least one third of the shares represented at
the Annual General Meeting, the Swedish Companies Office shall, at
the request of a shareholder, appoint one or several special
examiners.
______________________
Shares and votes
There are in total 3,331,151,735 shares in the Company; 261,755,983
shares of series A and 3,069,395,752 shares of series B,
corresponding to in total 568,695,558.2 votes. The Company's
holding of treasury stock amounts to 59,710,513 shares of series B,
corresponding to 5,971,051.3 votes.
Information at the Annual General
Meeting
The Board of Directors and the President shall, if any shareholder
so requests and the Board of Directors believes that it can be done
without material harm to the Company, provide information regarding
circumstances that may affect the assessment of an item on the
agenda and circumstances that can affect the assessment of the
Company's or its subsidiaries' financial situation and the
Company's relation to other companies within the Group.
Documents
The complete proposals of the Nomination Committee with respect to
Items 1 and 9 - 15 above, including a description of the work of
the Nomination Committee before the Annual General Meeting and
Exhibit 1 and 2 to the Nomination Committee's proposals, and the
proposals from shareholders (in original language) under items 19 -
23, are available at the Company's website www.ericsson.com. The
documents will be sent upon request to shareholders providing their
address to the company. In respect of all other items, complete
proposals are provided under the respective item in the
invitation.
The Annual Report and the Auditor's Report as well
as the Auditor's statement regarding the guidelines for
remuneration to Group management and the Board of Directors'
statement under the Swedish Companies Act, chapter 19, section 22,
will be made available at the Company and posted on the Company's
website www.ericsson.com no later than three weeks prior to the
Annual General Meeting. The documents will be sent upon request to
shareholders providing their address to the company.
______________________
Stockholm,
February 2017
THE BOARD OF DIRECTORS
[1] Total
shareholder return, i.e. share price growth including
dividends.
[2] To provide
a stable assessment of performance, the TSR development will be
calculated based on the average closing price of the Ericsson B
share on Nasdaq Stockholm (or the corresponding closing share price
of the relevant peer group company) for the three-month period
immediately prior to the commencement and expiration of the
Performance Period.
[3] The Peer
Group consists of the following companies: Accenture, ASML Holding,
Cap Gemini, CGI Group, Cisco Systems, Cognizant, Corning, F5
Networks, Harris, Hewlett Packard Enterprises, Infosys,
International Business Machines, Juniper Networks, Motorola
Solutions, Nokia, NTT Data, Qualcomm and SAP. TSR will be measured
in Swedish Krona (SEK) for all companies in line with best
practice.
Invitation to Ericsson's Annual
General Meeting 2017
This
announcement is distributed by Nasdaq Corporate Solutions on behalf
of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the
information contained therein.
Source: Ericsson via Globenewswire
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