Invitation to Ericsson's Annual General Meeting 2016
(Thomson Reuters ONE) -
The Annual General Meeting of shareholders of Telefonaktiebolaget LM Ericsson
will be held on Wednesday, April 13, 2016, at 3 p.m. at Stockholm Waterfront
Congress Centre, Nils Ericsons Plan 4, Stockholm.
The Nomination Committee proposes among other things:
* Kristin S. Rinne and Helena Stjernholm as new Board members after resigning
Roxanne S. Austin, Alexander Izosimov and Anders Nyrén (item 11)
* 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 (item 10)
The Board of Directors proposes among other things:
* A dividend of SEK 3.70 per share (item 8.3)
* A continued Long-term Variable Compensation Program consisting of an all
employee Stock Purchase Plan, a Key Contributor Retention Plan and an
Executive Performance Stock Plan (item 18)
* 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 2016 (item 18.2, 18.5 and 18.8)
Welcome to Telefonaktiebolaget LM Ericsson's Annual general meeting 2016
Telefonaktiebolaget LM Ericsson's shareholders are invited to participate in the
Annual General Meeting of shareholders to be held on Wednesday, April 13, 2016
at 3.00 p.m. at Stockholm Waterfront Congress Centre, Nils Ericsons Plan 4,
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 April 7, 2016; and
* give notice of attendance to the Company at the latest on Thursday April
7, 2016. 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 April 7, 2016, 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, April 12, 2016. 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 auditor's
report whether the guidelines for remuneration to group management have been
complied with, as well as the auditors' presentation of the audit work with
respect to 2015
7. The President's speech. Questions from the shareholders to the Board of
Directors and the management
8. Resolutions 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 Nora Denzel
11.2 Börje Ekholm
11.3 Leif Johansson
11.4 Ulf J. Johansson
11.5 Kristin Skogen Lund
11.6 Kristin S. Rinne (new election)
11.7 Sukhinder Singh Cassidy
11.8 Helena Stjernholm (new election)
11.9 Hans Vestberg
11.10 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. Resolution on the Board of Directors' proposal for amendments to the
articles of association
18. Long-Term Variable Compensation Program 2016
18.1 Resolution on implementation of the Stock Purchase Plan
18.2 Resolution on transfer of treasury stock, directed share issue and
acquisition offer for the Stock Purchase Plan
18.3 Resolution on Equity Swap Agreement with third party in relation to
the Stock Purchase Plan
18.4 Resolution on implementation of the Key Contributor Retention Plan
18.5 Resolution on transfer of treasury stock, directed share issue and
acquisition offer for the Key Contributor Retention Plan
18.6 Resolution on Equity Swap Agreement with third party in relation to
the Key Contributor Retention Plan
18.7 Resolution on implementation of the Executive Performance Stock Plan
18.8 Resolution on transfer of treasury stock, directed share issue and
acquisition offer for the Executive Performance Stock Plan
18.9 Resolution on Equity Swap Agreement with third party in relation to
the Executive Performance Stock Plan
19. Resolution on transfer of treasury stock in relation to the resolutions
on the Long-Term Variable Compensation Programs 2012, 2013, 2014 and 2015
20. 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 2017
21. 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
22. Resolution on proposal from the shareholder Thorwald Arvidsson to amend
the articles of association
22.1 with respect to the voting rights of shares
22.2 with respect to limitation of who can be appointed Board member
23. Resolution on proposal from the shareholder Thorwald Arvidsson that the
Annual General Meeting of shareholders resolve:
23.1 to adopt a vision of zero tolerance with respect to work place
accidents within the company;
23.2 to delegate to the Board to appoint a working group to realize this
vision of zero tolerance;
23.3 that the results shall be annually reported to the Annual General
Meeting of shareholders, for example by including the report in the printed
Annual Report;
23.4 to adopt a vision of absolute gender equality on all levels within the
company;
23.5 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;
23.6 to annually report to the Annual General Meeting, for example by
including the report in the printed Annual Report;
23.7 to delegate to the Board to take necessary action to create a
shareholders' association in the company;
23.8 that a member of the Board shall not be allowed to invoice the Board
fee via a legal entity, Swedish or non-Swedish;
23.9 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;
23.10 that the Nomination Committee, when fulfilling its tasks, shall in
particular consider matters related to ethics, gender and ethnicity;
23.11 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
23.12 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 2017, or any earlier held
extraordinary general shareholders meeting.
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), Leif Johansson (Chairman of the Board of Directors), and Marianne
Nilsson (Swedbank Robur Fonder). The Nomination Committee proposes that Advokat
Sven Unger be elected Chairman of the Annual General Meeting of shareholders
2016.
Item 8.3 Dividend and record date
The Board of Directors proposes a dividend of SEK 3.70 per share and Friday,
April 15, 2016, as record date for dividend. Assuming this date will be the
record date, Euroclear Sweden AB is expected to disburse dividends on Wednesday,
April 20, 2016.
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 (previously SEK
4,000,000);
* SEK 990,000 each to the other Board members (previously SEK 975,000);
* 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).
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 must be done in relation to the Board
fees in companies of equal size and complexity and it must be considered that
the Ericsson Group has customers in more than 180 countries and that sales in
2015 amounted to more than SEK 240 billion. The Nomination Committee has
compared the Board fees in Ericsson with Board fees in other international high-
tech companies and has concluded that the proposed increase of the Board fee
from SEK 975,000 to SEK 990,000 and of the fee to the Chairman of the Board from
SEK 4,000,000 to SEK 4,075,000 is reasonable and well-justified.
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 1.5 percent compared with the total fees to the corresponding
number of Board members for Board and Committee work resolved by the Annual
General Meeting 2015.
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 2016 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 2016. 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 2021, 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 Nora Denzel
11.2 Börje Ekholm
11.3 Leif Johansson
11.4 Ulf J. Johansson
11.5 Kristin Skogen Lund
11.6 Kristin S. Rinne (new election)
11.7 Sukhinder Singh Cassidy
11.8 Helena Stjernholm (new election)
11.9 Hans Vestberg
11.10 Jacob Wallenberg
+------------------------------------------------------------------------------+
|Kristin S. Rinne |
|Born 1954. Bachelor of Arts, Washburn University, USA. |
|Board member: None. |
|Holdings in Ericsson: None. |
|Principal work experience and other information: Previously Senior Vice |
|President, Network Technology, Network Architecture & Planning, at AT&T (2007-|
|2014). CTO of Cingular Wireless (2005-2007) and VP Technology & New Product |
|Development of Cingular Wireless (2000-2005). Previous positions within |
|Southwestern Bell and SBC (1976-2000). Non-profit Board member of Curing Kids |
|Cancer, Washburn University Foundation and Wycliffe Associates. |
| |
+------------------------------------------------------------------------------+
|Helena Stjernholm |
|Born 1970. Master of Science in Business Administration, Stockholm School of |
|Economics, Sweden. |
|Board member: None. |
|Holdings in Ericsson: 60 Class B shares*. |
|Principal work experience and other information: President and CEO of AB |
|Industrivärden since 2015. Partner in the private equity firm IK Investment |
|Partners (2008-2015), with responsibility for the Stockholm office from 2011 |
|to 2015. Chief Investment Officer at IK Investment Partners (1998-2008). |
|Previous experience as consultant for Bain & Company (1997-1998). |
| |
|* The number of shares includes holdings by related natural and legal 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. Before the Annual
General Meeting 2016, the Committee has made particular efforts to identify
potential female candidates that would bring relevant expertise and competence
to the Board while also improving the gender balance.
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.
Roxanne S. Austin, Alexander Izosimov and Anders Nyrén have advised that they
wish to leave the Board. The Nomination Committee proposes that Kristin S. Rinne
and Helena Stjernholm be elected new Board members. 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.
Kristin S. Rinne has extensive industrial experience from work within telecom
and from the US market. She also has deep technological competence and extensive
technical experiences, for example from her previous positions with AT&T. Helena
Stjernolm has long-term experience from private equity and investments. She has
broad and extensive commercial and international experience of relevance to
Ericsson as well as experience from working with new businesses from being a
partner with the private equity firm IK Investment Partners.
Out of the proposed Board members to be elected by the Annual General Meeting of
shareholders (excluding the President) more than 55% 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:
a. Nora Denzel
b. Börje Ekholm
c. Leif Johansson
d. Ulf J. Johansson
e. Kristin Skogen Lund
f. Kristin S. Rinne
g. Sukhinder Singh Cassidy
h. Helena Stjernholm
i. 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:
a. Nora Denzel
b. Leif Johansson
c. Ulf J. Johansson
d. Kristin Skogen Lund
e. Kristin S. Rinne
f. Sukhinder Singh Cassidy
Moreover, the Nomination Committee considers that at least the following Board
members are independent in respect of all applicable independence requirements:
a. Nora Denzel
b. Leif Johansson
c. Ulf J. Johansson
d. Kristin Skogen Lund
e. Kristin S. Rinne
f. 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
The Nomination Committee proposes that PricewaterhouseCoopers AB be appointed
auditor for the period as of the end of the Annual General Meeting 2016 until
the end of the Annual General Meeting 2017 (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 2017 Annual General Meeting. The guidelines proposed do not comprise any
changes compared to the guidelines resolved by the 2015 Annual General Meeting.
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 to 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 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 |
|2015. |
| |
|With the current composition of the Executive Leadership Team, the Company's |
|cost during 2015 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 The Board of Directors' proposal for amendments to the articles of
association
The Board of Directors proposes that the articles of association be amended as
follows.
The maximum number of shares of series C that may be issued by the Company is
proposed to be increased from a maximum of 30,000,000 shares of series C to a
maximum of 40,000,000 shares of series C, for purposes of meeting the needs
under the Company's stock purchase plans from time to time (§ 6).
Since it is possible to have classes of shares that do not entitle the holders
to dividend, it is proposed that shares of series C shall not entitle to
dividend (§ 6 and § 15). Further, it is proposed that the limitation in time
when the Board can resolve to reduce the share capital through redemption of all
shares of series C is taken out in order to increase the flexibility of the
Board (§ 15).
The matters to be addressed at Annual General Meetings are slightly amended so
that "when appropriate" is deleted in relation to election of auditors. The
articles of association of Ericsson do not prescribe any other mandate period
than one year which means that auditor election takes place annually (§ 12, item
11).
The time of day when notice of attendance to General Meetings must be given is
proposed to be deleted (§ 14).
+---------------------------------------+--------------------------------------+
| |Proposed language |
|Current language | |
+---------------------------------------+--------------------------------------+
|§ 6 |§ 6 |
| | |
|Shares may be issued in three classes, |Shares may be issued in three classes,|
|series A, series B and series C. Shares|series A, series B and series C. |
|of series A may be issued to a maximum |Shares of series A may be issued to a |
|amount of 12,000,000,000, Shares of |maximum amount of 12,000,000,000, |
|series B to a maximum amount of |Shares of series B to a maximum amount|
|12,000,000,000, and Shares of series C |of 12,000,000,000, and Shares of |
|to a maximum amount of 30,000,000. In |series C to a maximum amount of |
|voting at a General Meeting each Share |40,000,000. In voting at a General |
|of series A confers one vote, each |Meeting each Share of series A confers|
|Share of series B one tenth part of one|one vote, each Share of series B one |
|vote and each Share of series C one |tenth part of one vote and each Share |
|thousandth part of one vote. |of series C one thousandth part of one|
| |vote. Shares of series C does not |
| |entitle to dividend. |
+---------------------------------------+--------------------------------------+
|§ 12 |§ 12 |
| | |
|The following matters shall be dealt |The following matters shall be dealt |
|with at the Annual General Meeting: |with at the Annual General Meeting: |
|1. election of a Chairman at the |1. election of a Chairman at the |
|General Meeting; |General Meeting; |
|2. preparation and approval of a |2. preparation and approval of a |
|voting list; |voting list; |
|3. approval of the agenda; |3. approval of the agenda; |
|4. examination whether the Meeting has|4. examination whether the Meeting |
|been properly convened; |has been properly convened; |
|5. election of two persons to check |5. election of two persons to check |
|the minutes; |the minutes; |
|6. presentation of the Annual Report |6. presentation of the Annual Report |
|and the Auditors' report and of the |and the Auditors' report and of the |
|Consolidated Accounts and the Auditors'|Consolidated Accounts and the |
|report on the Group; |Auditors' report on the Group; |
|7. resolutions in respect to |7. resolutions in respect to |
|a. adoption of the Profit and Loss |a. adoption of the Profit and Loss |
|Statement and the Balance Sheet and of |Statement and the Balance Sheet and of|
|the Consolidated Profit and Loss |the Consolidated Profit and Loss |
|Statement and the Consolidated Balance |Statement and the Consolidated Balance|
|Sheet, |Sheet, |
|b. the Directors' and the Managing |b. the Directors' and the Managing |
|Directors' discharge from liability, |Directors' discharge from liability, |
|c. appropriation of the Company's |c. appropriation of the Company's |
|profit or loss according to the adopted|profit or loss according to the |
|Balance Sheet; |adopted Balance Sheet; |
|8. determining the number of |8. determining the number of |
|Directors, Deputy Directors and |Directors, Deputy Directors and |
|Auditors; |Auditors; |
|9. determining the remuneration |9. determining the remuneration |
|payable to the Board of Directors and |payable to the Board of Directors and |
|to Auditor; |to Auditor; |
|10. elections of Directors and of |10. elections of Directors and of |
|Deputy Directors; |Deputy Directors; |
|11. when appropriate elections of |11. elections of Auditor; |
|Auditor; |12. other matters which shall be |
|12. other matters which shall be dealt |dealt with at the Meeting. |
|with at the Meeting. | |
| | |
+---------------------------------------+--------------------------------------+
|§ 14 |§ 14 |
| | |
|In order to be admitted to a General |In order to be admitted to a General |
|Meeting, a Shareholder shall have given|Meeting, a Shareholder shall have |
|notice of his attendance to the company|given notice of his attendance to the |
|not later than 4.00 p.m. on the day |company not later than the day |
|mentioned in the notice convening the |mentioned in the notice convening the |
|Meeting, at which time also the number |Meeting, at which time also the number|
|of advisors shall be stated. This day |of advisors shall be stated. This day |
|may not be a Sunday, another public |may not be a Sunday, another public |
|holiday, Saturday, Midsummer Eve, |holiday, Saturday, Midsummer Eve, |
|Christmas Eve or New Year's Eve and may|Christmas Eve or New Year's Eve and |
|not fall earlier than five weekdays |may not fall earlier than five |
|before the General Meeting. |weekdays before the General Meeting. |
+---------------------------------------+--------------------------------------+
|§ 15 |§ 15 |
| | |
|Shares of series C shall entail a right|The Company's Board of Directors is |
|to an annual dividend from the |authorized to decide on a reduction of|
|Company's assets with an amount |the share capital through redemption |
|equivalent to STIBOR with terms to |of all series C shares. |
|maturity of 360 days commencing from | |
|April 30 one year up to and including |In conjunction with the adoption of a |
|April 30 the following year and |resolution regarding redemption, |
|calculated on the ratio value of the |holders of series C shares shall be |
|Company's share. |obliged to surrender their shares for |
| |an amount equal to the ratio value of |
|During the period from June 1 - June |the shares. Payment of the redemption |
|15 each year, the Company's Board of |amount shall take place immediately. |
|Directors is authorized to decide on a | |
|reduction of the share capital through | |
|redemption of all series C shares. | |
| | |
|In conjunction with the adoption of a | |
|resolution regarding redemption, | |
|holders of series C shares shall be | |
|obliged to surrender their shares for | |
|an amount equal to the ratio value of | |
|the shares. Payment of the redemption | |
|amount shall take place immediately. | |
+---------------------------------------+--------------------------------------+
Majority rules
The resolutions of the Annual General Meeting to amend the articles of
association under item 17 require that shareholders representing at least two
thirds of the votes cast as well as the shares represented at the Annual General
Meeting approve the proposals.
Item 18.1-18.9 Long-Term Variable Compensation Program 2016 (LTV 2016) 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, directed share issue and authorization for the Board of Directors to
decide on an acquisition offer
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 Compensation Program.
It is anticipated that the LTV 2016 will require up to 26.1 million shares,
corresponding to a dilution of up to 0.8 percent of the total number of
outstanding shares, at a cost between SEK 1,525 million and SEK 2,262 million
unevenly distributed over the years 2016-2020. The number of shares that may be
required for ongoing programs as per December 31, 2015, is estimated to
approximately 60.7 million shares, corresponding to approximately 1.87 percent
of the number of outstanding shares.
Three plans
The LTV 2016 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.
Since 2011 the performance measures have been Net Sales Growth, Operating Income
Growth and Cash Conversion in order to reflect the business strategy and long
term value creation of the Company. It is proposed that the Executive
Performance Stock Plan 2016 shall have the same performance criteria for the
period 2016 - 2018.
The three performance criteria for the Executive Performance Stock Plan 2016
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 6 percent
comparing 2018 financial results to 2015, which corresponds to consolidated
sales of SEK 262 billion and SEK 294 billion for the financial year 2018.
* 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 2018 financial results to 2015, which corresponds
to operating income of SEK 25 billion and SEK 33 billion for the financial
year 2018. Extraordinary restructuring charges from the cost and efficiency
program announced in November 2014 shall be excluded.
* 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 2016-2018 and vesting one
ninth of the total award for each year the target is achieved. Extraordinary
restructuring charges from the cost and efficiency program announced in
November 2014 shall be excluded.
Financing
The Board of Directors has considered different financing methods for transfer
of shares to employees under the LTV 2016, 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 2016.
The Company's current holding of treasury stock is not sufficient for the
carrying out of the LTV 2016. Therefore, the Board of Directors proposes a
directed share issue and buy back of shares as further set out below under
heading "Proposals". 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 subscribers
equals the subscription price. As compensation to the subscribers for their
assistance in the issuance and buy-back of shares, the Company will pay to each
of the subscribers an amount totaling SEK 100,000 each, corresponding to less
than 0.8 öre (SEK 0.008) 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 and 2012.
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 2016, including financing
costs, is estimated to range between SEK 1,525 million and SEK 2,262 million
unevenly distributed over the years 2016-2020. The costs constitute
approximately 3 percent of Ericsson's total remuneration costs 2015, including
social security fees, amounting to approximately SEK 80 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 1,331 million and SEK 1,597
million, depending on the fulfilment of the performance targets of the Executive
Performance Stock Plan.[1] The compensation costs are distributed over the LTV
2016 period, i.e. 2016-2020.
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 54 and SEK 148, the
costs are estimated to range between SEK 194 million and SEK 665 million. The
social security costs are expected to occur mainly during 2019-2020.
Costs affecting the income statement and the cash flow
Plan administration costs have been estimated to SEK 10 million, distributed
over the LTV 2016 period, i.e. 2016-2020.
The administration cost for transfer of shares by way of an equity swap
agreement is estimated to approximately SEK 55 million, compared to
approximately SEK 200,000 for using new issued and acquired shares in treasury.
Dilution
The Company has approximately 3.3 billion shares in issue. As per December
31, 2015, the Company held approximately 49.5 million shares in treasury. The
number of shares that may be required for ongoing programs as per December
31, 2015 is estimated to approximately 60.7 million shares, corresponding to
approximately 1.87 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 2016, a total of up to 26.1 million shares are
required, which corresponds to approximately 0.8 percent of the total number of
outstanding shares. The effect on important key figures is only marginal.
Proposals
The Long-Term Variable Compensation Program 2016 (LTV 2016)
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 2016, the Board of Directors proposes that no more
than in total 21,600,000 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 4,500,000 shares may be sold
on Nasdaq Stockholm in order to cover, inter alia, social security payments.
The Company's current holding of shares in treasury is not sufficient for the
carrying out of the LTV 2016. Therefore, the Board of Directors proposes a
directed share issue of in total 26,100,000 shares of series C to AB
Industrivärden and/or Investor AB or subsidiaries of these companies, with a
subscription price equivalent to the ratio value of the share (SEK 5).
Furthermore, it is proposed that the Board be authorized to decide on a directed
offer to acquire all shares of series C at a price corresponding to the ratio
value of the share (SEK 5). As compensation to the subscribers for their
assistance with the issuance and buy-back, the company will pay to each of AB
Industrivärden and Investor AB an amount totaling SEK 100,000 each,
corresponding to less than 0.8 öre (SEK 0.008) per new issued and re-purchased
share.
Following the acquisition of all shares of series C, these shares will be
converted into shares of series B, in accordance with the Articles of
Association, thereafter to be transferred according to the proposals.
The Board of Directors proposes that the Annual General Meeting resolve in
accordance with the proposals set out below.
Item 18.1 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 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 compensation
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 18.2 Transfer of treasury stock, directed share issue and acquisition offer
for the Stock Purchase Plan
a) Transfer of treasury stock to employees
Transfer of no more than 11,950,000 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
2016 up to and including November 2020.
* 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
2017, 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 Stockholm at a price within the, at each
time, prevailing price interval for the share.
c) Directed issue of shares of series C
Increase of the share capital in Ericsson with SEK 71,750,000 by an issue of
14,350,000 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 AB Industrivärden and / or Investor AB or
subsidiaries of these companies.
* The new shares shall be subscribed for during the period April 29-May
2, 2016. 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 14,350,000 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 2017.
* The acquisition shall be made at a price of SEK 5 per share.
* Payment for acquired shares shall be made in cash.
Item 18.3 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 18.2 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 18.4 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
11,000 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 18.5 Transfer of treasury stock, directed share issue and acquisition offer
for the Key Contributor Retention Plan
a) Transfer of treasury stock to employees
Transfer of no more than 6,050,000 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 2016 up to and including November 2020.
* 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
2017, transfer no more than 1,200,000 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.
c) Directed issue of shares of series C
Increase of the share capital in Ericsson with SEK 36,250,000 by an issue of
7,250,000 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 AB Industrivärden and/or Investor AB or
subsidiaries of these companies.
* The new shares shall be subscribed for during the period April 29-May
2, 2016. 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 7,250,000 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 2017.
* The acquisition shall be made at a price of SEK 5 per share.
* Payment for acquired shares shall be made in cash.
Item 18.6 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 18.5 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 18.7 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 550 persons, although it is anticipated that the number
of participants will be lower) will be offered an additional matching of shares,
Unternehmensinformation / Kurzprofil:
Datum: 10.03.2016 - 08:00 Uhr
Sprache: Deutsch
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