Ericsson's Annual General Meeting 2013
(Thomson Reuters ONE) -
Telefonaktiebolaget LM Ericsson's Annual General Meeting of shareholders will be
held on Tuesday, April 9, 2013 at 3.00 p.m. at Kistamässan, Arne Beurlings Torg
5, Kista/Stockholm.
The Nomination Committee proposes inter alia:
* Nora Denzel, Kristin Skogen Lund and Pär Östberg as new members of the Board
of Directors after resigning Nancy McKinstry, Anders Nyrén and Michelangelo
Volpi (item 9.3)
* Increase of the individual Board fee and of the fee to the Chairman of the
Board of Directors and unchanged fees for work on the Committees of the
Board of Directors (item 9.2)
The Board of Directors proposes inter alia:
* A dividend of SEK 2.75 per share (item 8.3)
* Continued Long-Term Variable Remuneration Program consisting of an all
employee Stock Purchase Plan, a Key Contributor Retention Plan and an
Executive Performance Stock Plan (item 11)
WELCOME TO TELEFONAKTIEBOLAGET LM ERICSSON'S ANNUAL GENERAL MEETING 2013
Telefonaktiebolaget LM Ericsson's shareholders are invited to participate in the
Annual General Meeting of Shareholders to be held on Tuesday, April 9, 2013 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 Wednesday, April 3, 2013; and
* give notice of attendance to the Company at the latest on Wednesday, April
3, 2013. 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, address,
telephone no. and number of attending assistants, if any.
The Annual General Meeting will be conducted in Swedish and simultaneously
interpreted 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 Wednesday, April 3, 2013,
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 Monday, April 8, 2013. 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 auditors' report, the consolidated
accounts, the auditors' report on the consolidated accounts and the
auditors' presentation of the audit work during 2012.
7. The President's speech and questions from the shareholders to the Board of
Directors and the management.
8. Resolutions with respect to
1. adoption of the income statement and the balance sheet, the
consolidated income statement and the consolidated balance sheet;
2. discharge of liability for the members of the Board of Directors and
the President;
3. the appropriation of the profit in accordance with the approved balance
sheet and determination of the record date for dividend.
9. Presentation of the proposals of the Nomination Committee, election of the
Board of Directors etc.
1. Determination of the number of Board members and deputies of the Board
of Directors to be elected by the Annual General Meeting.
2. Determination of the fees payable to non-employed members of the Board
of Directors elected by the Annual General Meeting and non-employed
members of the Committees of the Board of Directors elected by the
Annual General Meeting.
3. Election of the Chairman of the Board of Directors, other Board members
and deputies of the Board of Directors.
4. Determination of the fees payable to the auditor.
5. Election of auditor.
10. Resolution on the Guidelines for remuneration to Group Management.
11. Long-Term Variable Remuneration Program 2013.
1. Resolution on implementation of the Stock Purchase Plan.
2. Resolution on transfer of treasury stock for the Stock Purchase Plan.
3. Resolution on Equity Swap Agreement with third party in relation to the
Stock Purchase Plan.
4. Resolution on implementation of the Key Contributor Retention Plan.
5. Resolution on transfer of treasury stock for the Key Contributor
Retention Plan.
6. Resolution on Equity Swap Agreement with third party in relation to the
Key Contributor Retention Plan.
7. Resolution on implementation of the Executive Performance Stock Plan.
8. Resolution on transfer of treasury stock for the Executive Performance
Stock Plan.
9. Resolution on Equity Swap Agreement with third party in relation to the
Executive Performance Stock Plan.
12. Resolution on transfer of treasury stock in relation to the resolutions on
the Long-Term Variable Remuneration Programs 2009, 2010, 2011 and 2012.
13. Resolution on proposal from the shareholder Carl Axel Bruno to amend the
articles of association by adding the following wording to the section on
the Board of Directors in the articles of association: "At least one fourth
of the Directors on the Board of Directors shall be men and at least one
fourth of the Directors shall be women. The minimum number of proposed men
and the minimum number of proposed women shall be increased to the next
higher whole number."
14. Resolution on proposal from the shareholder Einar Hellbom that the Annual
General Meeting resolve to delegate to the Board of Directors to review how
shares are to be given equal voting rights and to present a proposal to
that effect at the Annual General Meeting 2014.
15. Resolution on proposals from the shareholder Thorwald Arvidsson that the
Annual General Meeting resolve to delegate to the Board of Directors:
1. to take necessary action to create a shareholders' association in the
company;
2. to write to the Government of Sweden, requesting a prompt appointment
of a commission instructed to propose legislation on the abolishment of
voting power differences in Swedish limited liability companies; and
3. to prepare a proposal regarding board representation for the small and
midsize shareholders.
16. Closing of the Annual General Meeting.
Item 1 Chairman of the Annual General Meeting
The Nomination Committee proposes that Advokat Sven Unger be elected Chairman of
the Annual General Meeting of shareholders 2013.
Item 8.3 Dividend and record date
The Board of Directors proposes a dividend of SEK 2.75 per share and Friday,
April 12, 2013, as record date for dividend. Assuming this date will be the
record day, Euroclear Sweden AB is expected to disburse dividends on Wednesday
April 17, 2013.
Item 9.1-9.3 Number of Board members and Deputies to be elected by the Annual
General Meeting, Directors' fees, election of the Chairman and other members of
the Board of Directors
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), Carl-Olof By
(AB Industrivärden and Svenska Handelsbankens Pensionsstiftelse), Johan Held
(AFA Försäkring), Marianne Nilsson (Swedbank Robur Fonder) and Leif Johansson
(Chairman of the Board of Directors).
Item 9.1 Number of Board members and deputies of the Board of Directors 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 remain twelve and that no deputies be
elected.
Item 9.2 Fees payable to non-employed members of the Board of Directors elected
by the Annual General Meeting and to non-employed members of the Committees of
the Board elected by the Annual General Meeting
The Nomination Committee proposes that fees to non-employed Board members
elected by the Annual General Meeting and non-employed members of the Committees
of the Board elected by the Annual General Meeting be paid as follows:
* SEK 3,850,000 to the Chairman of the Board of Directors (previously SEK
3,750,000);
* SEK 900,000 each to the other Board members (previously SEK 875,000);
* 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); and
* SEK 175,000 each to the other members of the Finance and the
Remuneration Committee (unchanged).
The Nomination Committee proposes that the individual fee to the Board members
and the fee to the Chairman of the Board of Directors be increased. Further, the
Nomination Committee proposes that the fees for work on the Committees of the
Board be unchanged.
It is important that the Board fees are maintained at an appropriate level to
make it possible to recruit the best possible competence to the Board of
Directors of Ericsson. The Nomination Committee has compared the Board fees in
Ericsson with the Board fees in other Nordic and European companies as well as
Board fees in certain U.S. high-tech companies. The Nomination Committee has
concluded that compared with the Board fees in companies of equal size and
complexity, Ericsson's Board fees are lower. When assessing the level of fees it
must be considered that the Ericsson group has customers in more than 180
countries and that sales amount to more than SEK 200 billion.
Against this background, the Nomination Committee considers well-justified the
proposed increases of the individual Board fee from SEK 875,000 to SEK 900,000
and of the fee to the Chairman of the Board from SEK 3,750,000 to SEK 3,850,000.
The Nomination Committee considers that the fees for Committee work are
reasonable, and proposes that these fees remain unchanged.
The proposal of the Nomination Committee implies all in all an increase of the
fees of less than 2.5 percent compared with the total fees to the Board members
for Board and Committee work resolved by the Annual General Meeting 2012.
Fees in the form of synthetic shares
Background
With the purpose of further increasing the mutual interest in the Company of
Directors and shareholders, the Nomination Committee proposes that the Directors
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 OMX Stockholm at the time of payment.
Proposal
The Nomination Committee therefore proposes that the Annual General Meeting of
shareholders 2013 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 OMX
Stockholm during a period of five trading days immediately following the
publication of Ericsson's interim report for the first quarter of 2013. 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 2018, 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 9.3 Election of the Chairman of the Board of Directors, other Board members
and deputies of the Board of Directors
Nancy McKinstry, Anders Nyrén and Michelangelo Volpi have declined re-election.
The Nomination Committee proposes that the following persons be elected Board
members:
Chairman of the Board:
re-election: Leif Johansson.
Other Board members:
re-election: Roxanne S. Austin, Sir Peter L. Bonfield, Börje Ekholm, Alexander
Izosimov, Ulf J. Johansson, Sverker Martin-Löf, Hans Vestberg and Jacob
Wallenberg; and
new election: Nora Denzel, Kristin Skogen Lund and Pär Östberg.
+------------------------------------------------------------------------------+
|Nora Denzel |
| |
|Born 1962. Master of Science in Business Administration, Santa Clara |
|University, USA. Bachelor of Science in Computer Science, State University of |
|New York, USA. |
| |
|Board member: Coinstar, Inc., FirstRain Software, Saba Software, the Anita |
|Borg Institute and YWCA of Santa Clara County. |
| |
|Holdings in Ericsson:* None. |
| |
|Principal work experience and other information: Senior Vice President for Big|
|Data, Social Design and Marketing at Intuit 2011-2012 and Senior Vice |
|President, Small Business Payroll Division at Intuit 2008-2011. Previous |
|positions include Senior Vice President and General Manager of Hewlett- |
|Packard's (HP) global software business and other positions within HP, Senior |
|Vice President of product operations at Legato Systems Inc. (now a part of |
|EMC) and a number of positions within IBM. |
| |
|Kristin Skogen Lund |
| |
|Born 1966. Master of Business Administration, INSEAD, France; Bachelor in |
|International Studies and Business Administration, University of Oregon, USA. |
| |
|Board member: None. |
| |
|Holdings in Ericsson:* None. |
| |
|Principal work experience and other information: Director General of the |
|Confederation of Norwegian Enterprise (NHO) since 2012. Executive Vice |
|President and Head of Digital Services and Broadcast and Executive Vice |
|President and Head of Nordic Region, Group Executive Management at Telenor |
|2010-2012. Previous positions include Chief Executive Officer and Commercial |
|Director at Aftenposten, Chief Executive Officer at Scanpix, Managing Director|
|and Editor in Chief at Scandinavia Online, and several positions at the Coca- |
|Cola Company, Unilever and Norges Eksportråd. |
| |
|Pär Östberg |
| |
|Born 1962. Master of Business Administration, Gothenburg School of Economics, |
|Gothenburg, Sweden |
| |
|Board member: None. |
| |
|Holdings in Ericsson:* None. |
| |
|Principal work experience and other information: Executive Vice President of |
|AB Industrivärden since 2012. Executive Vice President at Volvo Group Truck |
|Joint Ventures between January 2012 and October 2012. Several senior |
|managerial positions within the Volvo group including Senior Vice President |
|and President Trucks Asia at AB Volvo, Chairman of the Board of VE Commercial |
|Vehicles Ltd, Senior Vice President and CFO at AB Volvo, CFO at Volvo Trucks |
|France and senior positions at Volvo Treasury Asia Ltd, Singapore and Volvo |
|Treasury Europe AB. Previous positions also include Senior Vice President, CFO|
|at Renault Trucks and positions within Renault Crédit International (RCI) |
|and Renault SA. |
| |
|*The number of shares reflects ownership as of March 1, 2013 and includes |
|holdings by related natural or legal persons, as well as holdings of any ADS, |
|if applicable. |
+------------------------------------------------------------------------------+
In the composition of the Board of Directors, the Nomination Committee
considers, among other things, necessary experience and competence but also the
value of diversity, gender balance and renewal, and assesses the appropriateness
of the number of members of the Board.
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. The Nomination Committee considers it
important that Board members can devote the necessary time and care required to
fulfill their tasks as Board members in Ericsson, and has therefore also
familiarized itself with the proposed Board members' engagements outside of
Ericsson and the time they require.
The Nomination Committee has further thoroughly familiarized itself with the
Board work and the work of individual Board members. The Nomination Committee is
of the opinion that the current Board is well functioning and that the Board
fulfils high expectations in terms of composition and expertise. All Board
members contribute meritoriously with their respective expertise. Nancy
McKinstry. Anders Nyrén and Michelangelo Volpi have however notified their
intention to leave the Board after several years on Ericsson's Board of
Directors.
The Nomination Committee proposes that Nora Denzel, Kristin Skogen Lund and Pär
Östberg be elected new Board members. Information regarding the proposed Board
members is presented in Exhibit 2 to the Nomination Committee's proposal. It is
the Nomination Committee's assessment that each of the proposed Board members,
with their respective experiences, will add valuable expertise to the Board and
that they are therefore well suited as Board members in Ericsson. It could be
specifically mentioned that Nora Denzel has industrial experience of relevance
to Ericsson within among other things software and technological development,
that Kristin Skogen Lund has broad experience, of value for Ericsson, within the
media industry, among other things with respect to content distribution, and
that Pär Östberg has solid financial experience and knowledge with focus in
Asia, an important market for Ericsson.
Information regarding proposed Board members
Information regarding all 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:
a. Roxanne S. Austin
b. Sir Peter L. Bonfield
c. Nora Denzel
d. Börje Ekholm
e. Alexander Izosimov
f. Leif Johansson
g. Ulf J. Johansson
h. Kristin Skogen Lund
i. Pär Östberg
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:
a. Roxanne S. Austin
b. Sir Peter L. Bonfield
c. Nora Denzel
d. Alexander Izosimov
e. Leif Johansson
f. Ulf J. Johansson
g. Kristin Skogen Lund
Moreover, the Nomination Committee considers that at least the following Board
members are independent in respect of all applicable independence requirements:
a. Roxanne S. Austin
b. Sir Peter L. Bonfield
c. Nora Denzel
d. Alexander Izosimov
e. Leif Johansson
f. Ulf J. Johansson
g. Kristin Skogen Lund
Item 9.4 Fees payable to the auditor
The Nomination Committee proposes, like previous years, that the auditor fees be
paid against approved account.
Item 9.5 Election of auditor
The Nomination Committee proposes that the company should have one registered
public accounting firm as auditor and that PricewaterhouseCoopers AB be
appointed auditor for the period as of the end of the Annual General Meeting
2013 until the end of the Annual General Meeting 2014.
Item 10 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 2014 Annual General Meeting. Compared to the guidelines resolved by the
2012 Annual General Meeting, these guidelines have been amended to enable
consecutive time limited arrangements according to the third paragraph. Further,
information on estimated costs for variable remuneration has been removed from
the guidelines and is instead 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 remuneration, pension and other benefits.
The following guidelines apply for the remuneration to the Executive Leadership
Team:
* Variable remuneration is through 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 financial targets at
either Group or unit level, operational targets, employee engagement targets
and customer satisfaction targets.
* All benefits, including pension benefits, follow the competitive practice in
the home country taking total compensation into account. The retirement age
is normally 60 to 65 years of age.
* 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 concerned 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 |
|remuneration 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 |
|2012. |
| |
| |
| |
|With the current composition of the Executive Leadership Team, the Company's |
|cost during 2013 for variable remuneration to the Executive Leadership Team |
|can, at a constant share price, be estimated to amount to between 0 and 200 |
|percent of the aggregate fixed salary cost, all excluding social security |
|costs. |
| |
| |
+------------------------------------------------------------------------------+
Item 11.1-11.9 Long-Term Variable Remuneration Program 2013 (LTV 2013) including
the Board of Directors' proposal for resolutions on implementation of an all
employee Stock Purchase Plan, a Key Contributor Retention Plan and an Executive
Performance Stock Plan and, under each plan respectively, transfer of treasury
stock
The LTV program is an integral part of the Company's remuneration strategy, in
particular the Board of Directors wishes to encourage all employees to become
and remain shareholders and the leadership to build significant equity holdings.
Following the Board of Directors' annual evaluation of total remuneration and
ongoing programs, it proposes to make no changes to the structure of Ericsson's
Long-Term Variable Remuneration Program.
It is anticipated that the LTV 2013 will require up to 32.2 million shares,
corresponding to a dilution of up to 1 percent of the total number of
outstanding shares, at a cost between SEK 1,105 million and SEK 2,115 million
unevenly distributed over the years 2013-2017. The number of shares covered by
ongoing programs as per 31 December, 2012, amounts to approximately 61 million
shares, corresponding to approximately 1.89 percent of the number of
outstanding shares.
Three plans
The LTV 2013 builds on a common platform, but consists of three separate plans.
The Stock Purchase Plan is an all employee plan and is designed to create an
incentive for all employees to become shareholders. The aim is to secure
commitment to long-term value creation throughout Ericsson.
The Key Contributor Retention Plan is part of Ericsson's talent strategy and is
designed to ensure long-term retention of top-talent with critical skills vital
to Ericsson's future performance. Up to ten percent of the Company's employees
are defined as "key contributors", based on a rigorous selection process
incorporating elements such as individual performance, possession of critical
skills and future potential. The Remuneration Committee of the Board of
Directors monitors the selection process and nominations for bias of factors
such as seniority, gender, age and frequency of award.
The Executive Performance Stock Plan is designed to encourage long-term value
creation in alignment with shareholders' interests. The plan is offered to a
defined group of senior managers, up to 0.5 percent of the total employee
population. 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 stakes.
The Executive Performance Stock Plan 2011 introduced three new performance
measures of Net Sales Growth, Operating Income Growth and Cash Conversion to
better reflect the business strategy and long term value creation of the
Company. The Executive Performance Stock Plan 2012 includes the same criteria
and it is proposed that the Executive Performance Stock Plan 2013 shall have the
same performance criteria for the period 2013 - 2015.
The three performance criteria for the Executive Performance Stock Plan 2013
are:
* Net Sales Growth: Up to one third of the award will vest if the compound
annual growth rate of consolidated net sales is between 2 and 8 percent
comparing 2015 financial results to 2012, which corresponds to consolidated
sales of SEK 241.7 billion and SEK 286.9 billion for the financial year
2015.
* Operating Income Growth: Up to one third of the award will vest if the
compound annual growth rate of consolidated operating income is between 5
and 15 percent comparing 2015 financial results to 2012, which corresponds
to operating income of SEK 21.4 billion and SEK 28.1 billion for the
financial year 2015.
* Cash Conversion: Up to one third of the award will vest if cash conversion
is at or above 70 percent during each of the years 2013-2015 and vesting one
ninth of the total award for each year the target is achieved.
Financing
The Board of Directors has considered different financing methods for transfer
of shares to employees under the LTV 2013, such as transfer of treasury stock
and an equity swap agreement with a third party.
The Board of Directors considers transfer of treasury stock as the most cost
efficient and flexible method to transfer shares under the LTV 2013.
Costs
The total effect on the income statement of the LTV 2013, including financing
costs, is estimated to range between SEK 1,105 million and SEK 2,115 million
unevenly distributed over the years 2013-2017. The costs constitute 3.3 percent
of Ericsson's total remuneration costs 2012, including social security fees,
amounting to SEK 64 billion.
The calculations are conservative and based on assumptions of present
participation rate in the Stock Purchase Plan and full participation in the Key
Contributor Retention Plan and the Executive Performance Stock Plan, at maximum
contribution levels and with maximum vesting levels for the latter plan.
Costs affecting the income statement, but not the cash flow
Compensation costs, corresponding to the value of matching shares transferred to
employees, are estimated to range between SEK 1,002 million and SEK 1,296
million, depending on the fulfillment of the performance targets of the
Executive Performance Stock Plan.[1] The compensation costs are distributed over
the LTV 2013 period, i.e. 2013-2017.
Social security charges as a result of transfer of shares to employees depend on
the performance against the Executive Performance Stock Plan targets and based
on an assumed average share price at matching between SEK 30 and SEK 175, the
costs are estimated to range between SEK 103 million and SEK 819 million. The
social security costs are expected to occur mainly during 2016-2017.
Costs affecting the income statement and the cash flow
Plan administration costs have been estimated to SEK 10 million, distributed
over the LTV 2013 period, i.e. 2013-2017.
The administration cost for transfer of shares by way of an equity swap
agreement is estimated to approximately SEK 183 million.
Dilution
The Company has approximately 3.3 billion shares in issue. As per 31 December,
2012, the Company held 85 million shares in treasury. The number of shares
allocated to ongoing programs as per 31 December, 2012, amounts to
approximately 61 million shares, corresponding to approximately 1.89 percent of
the number of outstanding shares. However, it is not likely that all shares
allocated for ongoing programs will be required. In order to implement the LTV
2013, a total of up to 32.2 million shares are required, which corresponds to
approximately 1 percent of the total number of outstanding shares. The effect
on important key figures is only marginal.
Proposals
The Long-Term Variable Remuneration Program 2013
The Board of Directors proposes that the Annual General Meeting resolve on the
implementation of (1) a Stock Purchase Plan, (2) a Key Contributor Retention
Plan, and (3) an Executive Performance Stock Plan.
In order to implement the LTV 2013, the Board of Directors proposes that no more
than in total 26,600,000 shares of series B in Telefonaktiebolaget LM Ericsson
(hereinafter referred to as "the Company" or "Ericsson") may be transferred to
employees in the Ericsson Group and, moreover, that 5,600,000 shares may be sold
on NASDAQ OMX Stockholm in order to cover, inter alia, social security payments.
The Board of Directors proposes that the Annual General Meeting resolve in
accordance with the proposals set out below.
Item 11.1 Implementation of the Stock Purchase Plan
All employees within the Ericsson Group, except for what is mentioned in the
fourth paragraph below, will be offered to participate in the Stock Purchase
Plan.
Employees who participate in the Stock Purchase Plan shall, during a 12 month
period from the implementation of the plan, be able to invest up to 7.5 percent
of gross fixed salary in shares of series B in the Company on NASDAQ OMX
Stockholm or in ADSs on NASDAQ New York. The CEO shall have the right to invest
up to 10 percent of gross fixed salary and 10 percent of short term variable
remuneration for purchase of shares.
If the purchased shares are retained by the employee for three years from the
investment date and the employment with the Ericsson Group continues during
that time, the employee will be given a corresponding number of shares of series
B or ADSs, free of consideration.
Participation in the Stock Purchase Plan presupposes that such participation is
legally possible in the various jurisdictions concerned and that the
administrative costs and financial efforts are reasonable in the opinion of the
Company.
Item 11.2 Transfer of treasury stock for the Stock Purchase Plan
a) Transfer of treasury stock to employees
Transfer of no more than 11,900,000 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 of the Stock Purchase
Plan. 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
their employees covered by the terms and conditions of the Stock Purchase
Plan.
* 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 Stock Purchase Plan, i.e. during the period from November
2013 up to and including November 2017.
* Employees covered by the terms and conditions of the Stock Purchase Plan
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
2014, transfer no more than 2,400,000 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 OMX Stockholm at a price within the at
each time prevailing price interval for the share.
Item 11.3 Equity Swap Agreement with third party in relation to the Stock
Purchase Plan
In the event that the required majority is not reached under item 11.2 above,
the financial exposure of the Stock Purchase Plan 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 Stock Purchase Plan.
Item 11.4 Implementation of the Key Contributor Retention Plan
In addition to the regular matching of one share pursuant to the Stock Purchase
Plan described above, up to 10 percent of the employees (presently approximately
10,000 persons) are selected as key contributors and will be offered additional
matching shares, free of consideration, within the Key Contributor Retention
Plan.
If the shares purchased in accordance with the terms and conditions of the Stock
Purchase Plan are retained by an employee for three years from the investment
date and the employment with the Ericsson Group continues during that time, the
employee will be entitled to an additional matching share, free of
consideration, for every share purchased, in addition to the regular matching
of one share.
Participation in the Key Contributor Retention Plan presupposes that such
participation is legally possible in the various jurisdictions concerned and
that the administrative costs and financial efforts are reasonable in the
opinion of the Company. The Board of Directors shall however be entitled, but
not obligated, to arrange for an alternative cash plan for key contributors in
specific jurisdictions, should any of the aforementioned presuppositions prove
not to be at hand. Such alternative cash plan shall, as far as practical
correspond to the terms and conditions of the Key Contributor Retention Plan.
Item 11.5 Transfer of treasury stock for the Key Contributor Retention Plan
a) Transfer of treasury stock to employees
Transfer of no more than 8,700,000 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 of the Key Contributor
Retention Plan. 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 their employees covered by the terms and conditions
of the Key Contributor Retention Plan.
* 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 Key Contributor Retention Plan, i.e. during the period
from November 2013 up to and including November 2017.
* Employees covered by the terms and conditions of the Key Contributor
Retention Plan 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
2014, transfer no more than 1,700,000 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 OMX Stockholm at a price within the at
each time prevailing price interval for the share.
Item 11.6 Equity Swap Agreement with third party in relation to the Key
Contributor Retention Plan
In the event that the required majority is not reached under item 11.5 above,
the financial exposure of the Key Contributor Retention Plan 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 Key Contributor Retention Plan.
Item 11.7 Implementation of the Executive Performance Stock Plan
In addition to the regular matching of shares pursuant to the Stock Purchase
Plan described above, senior managers, up to 0.5 percent of the employees
(presently approximately 500 persons, although it is anticipated that the number
of participants will be lower) will be offered an additional matching of shares,
free of consideration, within the Executive Performance Stock Plan.
If the shares purchased in accordance with the terms and conditions of the Stock
Purchase Plan are retained by an employee for three years from the investment
date and the employment with the Ericsson Group continues during that time, the
employee will be entitled to the following matching of shares, free of
consideration, in addition to the regular matching of one share:
* The President may be entitled to an additional performance match of up
to nine shares for each one purchased.
* Other senior managers may be entitled to an additional performance match
of up to either four or six shares for each one purchased.
The nomination of senior managers will be on the basis of position, seniority
and performance at the discretion of the Remuneration Committee, which will
approve participation and matching share opportunity.
The terms and conditions of the additional performance match under the Executive
Performance Stock Plan will be based on the outcome of three targets, which are
independent of each other and have equal weighting. The three targets are:
* Up to one third of the award shall vest provided the compound annual growth
rate (CAGR) of consolidated net sales between year 0 (2012 financial year)
and year 3 (2015 financial year) is between 2 and 8 percent, which
corresponds to consolidated sales of SEK 241.7 billion and SEK 286.9 billion
for the financial year 2015. Matching will begin at a threshold level of 2
percent CAGR and increase on a linear scale to full vesting of this third of
the award at 8 percent CAGR.
* Up to one third of the award shall vest provided the compound annual growth
rate (CAGR) of consolidated operating income between year 0 (2012 financial
year) and year 3 (2015 financial year) is between 5 and 15 percent, which
corresponds to consolidated operating income of SEK 21.4 billion and SEK
28.1 billion for the financial year 2015. For the purpose of establishing
the Operating Income Growth base, the non-cash charge for ST-Ericsson, has
been excluded from the consolidated financial results for 2012. Matching
will begin at a threshold level of 5 percent CAGR and increase on a linear
scale to full vesting of this third of the award at 15 percent CAGR.
* Up to one third of the award will be based on the cash conversion during
each of the years during the performance period, calculated as cash flow
from operating activities divided by net income reconciled to cash. One
ninth of the total award will vest for any year, i.e. financial years
2013, 2014 and 2015, if cash conversion is at or above 70 percent.
The Board of Directors considers that long-term value creation will be reflected
in the success of these targets, aligning executives with long-term shareholder
interests. There will be no allocation of shares if none of the threshold
levels have been achieved, i.e. CAGR is less than 2 percent for net sales and
less than 5 percent for operating income, and a 70 percent cash conversion has
not been achieved during the performance period. The minimum matching at the
threshold levels is 0. The maximum number of performance matching shares - 4
shares, 6 shares and 9 shares respectively - will be allocated if the maximum
performance levels of CAGR of 8 percent for net sales and 15 percent for
operating income have been achieved, or exceeded, and a cash conversion of 70
percent or more has been achieved each year during the period.
Before the number of performance shares to be matched are finally determined,
the Board of Directors shall examine whether the performance matching 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 number of performance shares to be matched to the
lower number of shares deemed appropriate by the Board of Directors. When
undertaking its evaluation of performance outcomes the Board of Directors will
consider, in particular, the impact of larger acquisitions, divestitures, the
creation of joint ventures and any other significant capital event on the three
targets on a case by case basis.
Item 11.8 Transfer of treasury stock for the Executive Performance Stock Plan
a) Transfer of treasury stock to employees
Transfer of no more than 6,000,000 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 of the Executive
Performance Stock Plan. 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 their employees covered by the terms and conditions
of the Executive Performance Stock Plan.
* 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 Executive Performance Stock Plan, i.e. during the period
from November 2013 up to and including November 2017.
* Employees covered by the terms and conditions of the Executive Performance
Stock Plan 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
2014, transfer no more than 1,500,000 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 OMX Stockholm at a price within
the at each time prevailing price interval for the share.
Item 11.9 Equity Swap Agreement with third party in relation to the Executive
Performance Stock Plan
In the event that the required majority is not reached under item 11.8 above,
the financial exposure of the Executive Performance Stock Plan 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 Executive Performance Stock Plan.
Majority rules
The resolutions of the Annual General Meeting implementation of the three plans
according to items 11.1, 11.4 and 11.7 above require that more than half of the
votes cast at the Annual General Meeting approve the proposals. The Annual
General Meeting's resolutions on transfers of treasury stock to employees and on
an exchange according to items 11.2, 11.5 and 11.8 above, shall be adopted as
one resolution for each of the three items, and require that shareholders
representing at least nine-tenths of the votes cast as well as the shares
represented at the Annual General Meeting approve the proposals. A valid
resolution in accordance with the proposals for an equity swap agreement under
items 11.3, 11.6 and 11.9 above requires that more than half of the votes cast
at the Annual General Meeting approve the proposals.
Description of ongoing variable remuneration programs
The Company's ongoing variable remuneration programs are described in detail in
the Annual Report 2012 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 remuneration policy in
line with the Swedish Corporate Governance Code.
Item 12 The Board of Directors' proposal for resolution on transfer of treasury
stock in relation to the resolutions on the Long-Term Variable Remuneration
Programs 2009, 2010, 2011 and 2012
Background
The Annual General Meetings 2009, 2010, 2011 and 2012 resolved on a right for
the Company to transfer in total not more than 18,200,000 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
Remuneration Programs 2009, 2010, 2011 and 2012.
Each resolution has for legal reasons only been valid up to the following Annual
General Meeting. Resolutions on transfer of treasury stock for the purpose of
the above mentioned plan and programs have therefore been repeated at the
subsequent Annual General Meeting.
In accordance with the resolutions on transfer of in total not more than
18,200,000 shares,
521,100 shares of series B have been transferred up to March 1, 2013.
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
2014, not more than 17,678,900 shares of series B in the Company, or the lower
number of shares of series B, which as per April 9, 2013 remains of the original
18,200,000 shares, for the purpose of covering certain payments, primarily
social security charges that may occur in relation to the Long-Term Variable
Remuneration Programs 2009, 2010, 2011 and 2012. Transfer of shares shall be
effected on NASDAQ OMX 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.
Items 13 - 15 Proposals from shareholders
The proposals are set out in the agenda.
Majority rules
The resolution of the Annual General Meeting to amend the articles of
association under item 13 requires that shareholders representing 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 resolutions of the Annual General
Meeting under items 14 and 15.1 - 15.3 require a majority of more than half of
the votes cast at the meeting.
Shares and votes
There are in total 3,305,051,735 shares in the Company; 261,755,983 shares of
series A and 3,043,295,752 shares of series B, corresponding to in total
approximately 566,085,558 votes. The Company's holding of treasury stock amounts
to 82,354,366 shares of series B, corresponding to 8,235,436.6 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 above, including Exhibit 1 and 2 to the Nomination Committee's proposals, and
the proposals from shareholders (in original language) under items 13 - 15, are
available at the Company's website www.ericsson.com and will be sent to
shareholders upon request. In respect of all other items, complete proposals are
provided under the respective item in the Notice.
The Annual Report and the Auditor's Report as well as the Auditor's report
regarding 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
to shareholders upon request.
Stockholm, March 2013
THE BOARD OF DIRECTORS
[1] The compensation costs for an alternative Key Contributor Retention Cash
Program may vary depending on the development of the stock price during the
qualifying period. This has been disregarded in the calculations since these
costs represent a minor part of the overall compensation costs.
Notice to Annual General Meeting 2013 :
http://hugin.info/1061/R/1683132/550787.pdf
This announcement is distributed by Thomson Reuters on behalf of
Thomson Reuters clients. The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: Ericsson via Thomson Reuters ONE
[HUG#1683132]
Unternehmensinformation / Kurzprofil:
Datum: 06.03.2013 - 08:02 Uhr
Sprache: Deutsch
News-ID 236458
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contact information:
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