STOCKHOLM, Feb. 21, 2018 /PRNewswire/ -- The Annual General
Meeting of shareholders of Telefonaktiebolaget LM Ericsson will be
held on Wednesday, March 28, 2018, at
3 p.m. at Kistamässan, Arne Beurlings
Torg 5, Kista/Stockholm.
The Nomination Committee proposes among other things:
- Ronnie Leten as new Chairman of the Board after resigning
Leif Johansson (item 12)
- Kurt Jofs as new member of the
Board. Kristin Skogen Lund and
Sukhinder Singh Cassidy have decided
to leave the Board. (item 11)
- Unchanged Board fee, fee to the Chairman of the Board of
Directors and for work on the Committees of the Board (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 the
ExecutiveTeam, with a one-year Group operating income target for
2018 and three-year total shareholder return targets, all targets
with a three-year vesting period (item 17)
Welcome to the Annual General Meeting of shareholders 2018 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 28, 2018 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 22, 2018; and
- give notice of attendance to the Company at the latest on
Thursday, March 22, 2018. 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
c/o Euroclear Sweden AB
Box 191
SE-101 23 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 22,
2018, 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 27, 2018. 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
2017
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 results 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
DirectorsThe Nomination Committee's proposal for Board members:
11.1. Jon
Fredrik Baksaas
11.2.
Jan Carlson
11.3.
Nora Denzel
11.4. Börje
Ekholm
11.5. Eric A.
Elzvik
11.6.
Kurt Jofs (new election)
11.7. Ronnie
Leten (new election)
11.8.
Kristin S. Rinne
11.9.
Helena Stjernholm
11.10.
Jacob Wallenberg
12. Election of the Chairman of the Board of Directors
The Nomination Committee's proposal:
The Nomination Committee proposes that Ronnie Leten 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. Resolution on implementation of Long-Term Variable
Compensation Program 2018 ("LTV 2018")
18. Resolution on transfer of treasury stock in relation to the
resolutions on the Long-Term Variable Compensation Programs 2014,
2015, 2016 and 2017
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 2019
20. Resolution on proposal from the shareholder Mats Lagström
that the Annual General Meeting resolve to instruct the Nomination
Committee to propose to the next general meeting of shareholders a
differentiated fee plan for the members of the Board of Directors,
including the Chairman of the Board
21. 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
Johan Forssell (Investor AB),
Christer Gardell (Cevian Funds),
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 2018.
Item 8.3 Dividend and record date
The Board of Directors proposes a dividend of SEK 1 per share and Tuesday, April 3, 2018, as record date for
dividend. Assuming this date will be the record date, Euroclear
Sweden AB is expected to disburse dividends on Friday, April 6, 2018.
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 ten 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 and Compliance Committee (unchanged);
- SEK 250,000 each to the other
members of the Audit and Compliance Committee
(unchanged);
- SEK 200,000 each to the Chairmen
of the Finance, the Remuneration and the Technology and Science
Committee (unchanged); and
- SEK 175,000 each to the other
members of the Finance, the Remuneration and the Technology and
Science Committee (unchanged).
A basic principle when assessing Board fees is that these shall
be competitive and make it possible to recruit and retain
individuals with the best possible 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 2017 amounted to approximately
SEK 200 billion.
The Nomination Committee considers that the fees for Board and
Committee work are reasonable, and proposes that all fees remain
unchanged.
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 (excluding fees for Committee work), and that such holding be
kept during the time the Board member remain Board member in
Ericsson. In relation to previous years, the recommendation has
changed so that the holding shall correspond to the annual Board
fee instead of the annual Board fee after tax.
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 2018 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:
(i)
25 percent in cash – 75 percent in synthetic shares
(ii)
50 percent in cash – 50 percent in synthetic shares
(iii) 75
percent in cash – 25 percent in synthetic shares
(iv) 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 2018. 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 2023, 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
11.2
Jan Carlson
11.3
Nora Denzel
11.4
Börje Ekholm
11.5
Eric A. Elzvik
11.6
Kurt Jofs (new election)
11.7
Ronnie Leten (new election)
11.8
Kristin S. Rinne
11.9
Helena Stjernholm, and
11.10
Jacob Wallenberg
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 has applied the
Swedish Corporate Governance Code, Section 4.1, as diversity
policy. 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
met with the members of the Board of Directors to get their views
regarding the Board work. The Nomination Committee has further
thoroughly familiarized itself with the results of the Board work
evaluation that was led by the Chairman of the Board. 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.
Leif Johansson, Kristin Skogen Lund and Sukhinder Singh Cassidy have advised that they
wish to leave the Board. The Nomination Committee proposes that two
new Board members be elected: Ronnie Leten is proposed as new
Chairman of the Board and Kurt Jofs
is proposed as new Board member. As President and CEO of Atlas
Copco, Ronnie Leten has successfully led Atlas Copco during many
years and he also has valuable experience as Board Chairman, for
example from Electrolux. Ronnie Leten is a skilled businessman,
technically savvy and strategically versatile and he has
significant experience from digitalization of major operations,
which the Nomination Committee believes will be beneficial for
Ericsson's focused work together with its customers. Kurt Jofs has deep knowledge of and background
from the telecom and IT-industry, for example from his experiences
as Head of Ericsson Networks between 2003 and 2008 and as Board
Chairman of Tieto. It is the Nomination Committee's assessment that
the proposed Board members, with their respective experiences, will
add valuable expertise and experience to the Board. With these
changes, the Nomination Committee believes that the company is
given the right conditions for realizing its long-term potential.
Out of the proposed Board members to be elected by the Annual
General Meeting of shareholders (excluding the President and CEO)
33% are women.
Information regarding proposed Board members
Information regarding the proposed Board members is presented in
Exhibit 2 to the Nomination Committee's proposal.
Information on proposed new Board members
Kurt
Jofs
Born 1958. Master of
Science in Engineering, Royal Institute of Technology, Stockholm,
Sweden.
Nationality:
Sweden
Board
Chairman: Tieto Corporation and Vesper Group.
Board Member:
FEAL AB, Höganäs AB and Silver Resorts AB.
Holdings in
Ericsson: None*.
Principal work
experience and other information: Entrepreneur and investor
with extensive experience in various industries. Previous positions
include Executive Vice President and responsible for Ericsson's
Networks business 2003-2008, CEO of Segerström & Svensson
1999-2001, CEO of Linjebuss 1996-1999, and various positions within
ABB and Ericsson.
Ronnie Leten
Born 1956. Master of
Science in Applied Economics, University of Hasselt,
Belgium.
Nationality:
Belgium
Board Chairman:
AB Electrolux
(resigning in connection with the AB Electrolux Annual General
Meeting 2018)
Board Member:
AB
SKF
Holdings in Ericsson:
55,620 Class B
shares*.
Principal work experience and other information:
President and
CEO of Atlas Copco AB 2009-2017 and various leadership positions
within the Atlas Copco Group 1997-2009 and 1985-1995. Previous
positions include plant manager of Tenneco Automotive Inc, Belgium,
1995-1997 and various positions within General Biscuits 1979-1985.
Chairman of the Board of Epiroc AB.
* 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.
|
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
- Kurt Jofs
- Ronnie Leten
- Kristin S. Rinne
- 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
- Kurt Jofs
- Kristin S. Rinne
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
- Kurt Jofs
- Kristin S. Rinne
Item 12 Election of the Chairman of the Board
The Nomination Committee proposes that Ronnie Leten be elected
Chairman of the Board (new election).
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 2018 until the end of the Annual General Meeting
2019 (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 2019 Annual General Meeting.
Compared to the guidelines resolved by the 2017 Annual General
Meeting, it has been added that the mutual notice period can be
increased to a maximum of 12 months on a case by case basis, with
the condition that in all circumstances, fixed salary during the
notice period plus any severance pay payable in total will not
exceed an amount equivalent to the individual's 24 months fixed
salary. 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 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 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 standard mutual notice period is 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.
- On a case to case basis, the mutual notice period can be
increased to no more than 12 months in which case there will be a
corresponding reduction in severance pay (where applicable). In all
circumstances, fixed salary during the notice period plus any
severance pay payable will not together exceed an amount equivalent
to the individual's 24 months fixed salary.
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 2017.
With the current
composition of the Executive Team, the Company's cost during 2018
for variable remuneration to the Executive Team can, at a constant
share price, be estimated to amount to between 0 and 360 percent of
the aggregate fixed salary cost, all excluding social security
costs.
|
Item 17 Implementation of Long-Term Variable Compensation
Program 2018 ("LTV 2018")
Following its continuous evaluation of the company's long-term
variable compensation, the Board of Directors has concluded to
propose LTV 2018. LTV 2018 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. While LTV 2017 only included three-year targets
relating to total shareholder return (TSR[1]), the targets for LTV
2018 have been developed to also include a one-year Group Operating
Income target for 2018 to support achieving the Company's 2020
targets as communicated at the Capital Markets Day on 8 November 2017. All targets have a three-year
vesting period.
Proposals
The Long-Term Variable Compensation Program 2018
The Board of Directors proposes that the Annual General Meeting
resolve on the implementation of a Long-Term Variable Compensation
Program 2018 in accordance with the proposals set out below.
Implementation of the LTV 2018
The Board of Directors proposes that the Annual General Meeting
resolves on the LTV 2018 for members of the Executive 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 Executive 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 Executive Team, currently comprising of 14
employees, including the President and CEO. Awards under LTV 2018
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 2018 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 2018. For 2018, 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 70% of the participants' respective annual base salaries
at the time of grant.
In 2018, the maximum value of the underlying shares in respect
of the Performance Share Award made to Executive Team members other
than the President & CEO is proposed to be increased from 22,5%
to a maximum of 70% of the participants' respective annual base
salaries at the time of grant. This is proposed to be done by way
of transferring some part of the short-term variable compensation
opportunity to long-term variable compensation following the
principle of total remuneration to remain unchanged. The intention
is to increase the long-term focus and alignment with the long-term
expectations of the shareholders.
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
2018.
Performance criteria
The vesting of Performance Share Awards will be subject to the
satisfaction of challenging performance criteria related to 2018
Group Operating Income target and TSR, which will determine what
portion (if any) of the Performance Share Awards will vest at the
end of the Vesting Period.
The 2018 Group Operating Income target relates to 50% of the
Performance Share Award and the maximum vesting level is 200%.
The performance criteria based on TSR are absolute TSR
development and relative TSR development for the Ericsson B share
over the period January 1, 2018 -
December 31, 2020 (the "TSR
Performance Period").[2] The TSR performance criteria relate to
a total of 50% of the Performance Share Award and the maximum
vesting level for each of the TSR performance criteria is 200%.
The following conditions will apply to the performance
criteria:
- 2018 Group Operating Income target
50% of a Performance Share Award granted to a Participant will
be subject to fulfilment of a Group Operating Income target for the
2018 financial year. The 2018 Group Operating Income target
established by the Board of Directors will stipulate a minimum
level and a maximum level. The vesting level of Performance Share
Awards related to 2018 Group Operating Income will be determined by
the Board of Directors when the audited result for the financial
year 2018 is available.
If the maximum performance level is reached or exceeded, the
vesting will amount to (and will not exceed) the maximum level of
200% of the Performance Share Award related to the 2018 Group
Operating Income target. If performance is below the maximum level
but exceeds the minimum level, a linear pro-rata vesting of shares
will occur. No vesting will occur if performance amounts to or is
below the minimum level. The allotment of the shares will not occur
until the end of the Vesting Period in 2021.
Absolute TSR performance
30% of a Performance Share Award granted to a Participant will
be subject to fulfilment of an absolute TSR performance requirement
over the TSR 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.
Relative TSR performance
20% of a Performance Share Award granted to a Participant will
be subject to fulfilment of a relative TSR performance requirement
over the TSR Performance Period, compared to a peer group
consisting of 12 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 7th
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
7 or
lower
0%
6
40%
5
80%
4
120%
3
160%
2 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 not later than in the annual report for the financial
year 2020.
Allotment of shares
Provided that the performance critera above have been met 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 does not currently propose any method for
securing the undertakings under the LTV 2018. Delivery of
Performance Shares in accordance with the terms of the LTV 2018
will take place in 2021.
Costs
The total effect on the income statement of the LTV 2018,
including financing costs and social security fees, is estimated to
range between SEK 55 million and
SEK 131 million distributed over the
years 2018-2021.
Dilution
The Company has approximately 3.3 billion shares in issue. As
per December 31, 2017, the Company
held approximately 50.3 million shares in treasury. The number of
shares that may be required for ongoing long-term variable
compensation programs as per December 31,
2017 is estimated to approximately 45 million shares,
corresponding to approximately 1.4 percent of the number of
outstanding shares. In order to implement LTV 2018, 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.
Majority rules
The resolution of the Annual General Meeting on implementation
of the program 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 2017 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 2014,
2015, 2016 and 2017
Background
The Annual General Meetings 2014, 2015, 2016 and 2017 resolved
on a right for the Company to transfer in total not more than
15,000,000 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
2014, 2015, 2016 and 2017.
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 15,000,000 shares, 436,100 shares of series B have been
transferred up to February 20,
2018.
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 2019, not more than 14,563,900 shares of
series B in the Company, or the lower number of shares of series B,
which as per March 28, 2018 remains
of the original 15,000,000 shares, for the purpose of covering
certain payments, primarily social security charges that may occur
in relation to the Long-Term Variable Compensation Programs 2014,
2015, 2016 and 2017. 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.
______________________
Shares and votes
There are in total 3,334,151,735 shares in the Company;
261,755,983 shares of series A and 3,072,395,752 shares of series
B, corresponding to in total 568,995,558.2 votes. The Company's
holding of treasury stock amounts to 47,386,842 shares of series B,
corresponding to 4,738,684.2 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
shareholder letters (in original language) under items 19 and 20,
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 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 2018
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: Cap
Gemini, CGI Group, Cisco Systems, Cognizant, Corning, F5 Networks,
Harris, International Business Machines, Juniper Networks, Motorola
Solutions, Nokia, and Qualcomm. TSR will be measured in Swedish
Krona (SEK) for all companies in line with best practice.
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Invitation to Annual
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SOURCE Ericsson