Invitation to Ericsson's Annual General Meeting 2017
(Thomson Reuters ONE) -
The Annual General Meeting of shareholders of Telefonaktiebolaget LM Ericsson
will be held on Wednesday, March 29, 2017, at 3 p.m. at Kistamässan, Arne
Beurlings Torg 5, Kista/Stockholm.
The Nomination Committee proposes among other things:
* Jon Fredrik Baksaas, Jan Carlson and Eric A. Elzvik as new Board members
after resigning Ulf J. Johansson (item 11)
* Unchanged Board fee, fee to the Chairman of the Board of Directors and for
work on the current Committees of the Board and fees to the Chairman and
other members of the new Board Committee for Technology and Science in line
with the fees to the Chairman and other members of the Finance- and
Remuneration Committees (item 10)
The Board of Directors proposes among other things:
* A dividend of SEK 1 per share (item 8.3)
* A Long-term Variable Compensation Program for Ericsson's Global Leadership
Team (item 17)
* Transfer of treasury stock, directed share issue and authorization for the
Board of Directors to decide on an acquisition offer in relation to the
Long-Term Variable Compensation Program 2017 (item 17.2)
Welcome to the Annual General Meeting of shareholders 2017 of
Telefonaktiebolaget LM Ericsson
Telefonaktiebolaget LM Ericsson's shareholders are invited to participate in the
Annual General Meeting of shareholders to be held on Wednesday, March 29, 2017
at 3.00 p.m. at Kistamässan, Arne Beurlings Torg 5, Kista/Stockholm.
Registration to the Annual General Meeting starts at 1.30 p.m.
Registration and notice of attendance
Shareholders who wish to attend the Annual General Meeting must
* be recorded in the share register kept by Euroclear Sweden AB, the Swedish
securities registry, on Thursday, March 23, 2017; and
* give notice of attendance to the Company at the latest on Thursday, March
23, 2017. Notice of attendance can be given by telephone +46 (0)8 402 90 54
on weekdays between 10 a.m. and 4 p.m. or on Ericsson's website
www.ericsson.com.
Notice may also be given in writing to:
Telefonaktiebolaget LM Ericsson
General Meeting of shareholders
Box 7835
SE-103 98 Stockholm
Sweden
When giving notice of attendance, please state name, date of birth or
registration number, address, telephone number and number of attending
assistants, if any.
The Annual General Meeting will be conducted in Swedish and simultaneously
translated into English.
Shares registered in the name of a nominee
In addition to giving notice of attendance, shareholders having their shares
registered in the name of a nominee, must request the nominee to temporarily
enter the shareholder into the share register as per Thursday, March 23, 2017,
in order to be entitled to attend the Annual General Meeting. The shareholder
should inform the nominee to that effect well before that day.
Proxy
Shareholders represented by proxy shall issue a power of attorney for the
representative. A power of attorney issued by a legal entity must be accompanied
by a copy of the entity's certificate of registration (should no such
certificate exist, a corresponding document of authority must be submitted). In
order to facilitate the registration at the Annual General Meeting, the power of
attorney in the original, certificate of registration and other documents of
authority should be sent to the Company in advance to the address above for
receipt by Tuesday, March 28, 2017. Forms of power of attorney in Swedish and
English are available on Ericsson's website, www.ericsson.com.
Agenda
1. Election of the Chairman of the Annual General Meeting
2. Preparation and approval of the voting list
3. Approval of the agenda of the Annual General Meeting
4. Determination whether the Annual General Meeting has been properly
convened
5. Election of two persons approving the minutes
6. Presentation of the annual report, the auditor's report, the consolidated
accounts, the auditor's report on the consolidated accounts and the auditor's
report whether the guidelines for remuneration to group management have been
complied with, as well as the auditor's presentation of the audit work with
respect to 2016
7. The President's speech. Questions from the shareholders to the Board of
Directors and the management
8. Resolution with respect to
8.1. adoption of the income statement and the balance sheet, the consolidated
income statement and the consolidated balance sheet;
8.2. discharge of liability for the members of the Board of Directors and the
President; and
8.3. the appropriation of the profit in accordance with the approved balance
sheet and determination of the record date for dividend
9. Determination of the number of Board members and deputies of the Board of
Directors to be elected by the Annual General Meeting
10. Determination of the fees payable to members of the Board of Directors
elected by the Annual General Meeting and members of the Committees of the Board
of Directors elected by the Annual General Meeting
11. Election of the members and deputies of the Board of Directors
The Nomination Committee's proposal for Board members:
11.1. Jon Fredrik Baksaas (new election)
11.2. Jan Carlson (new election)
11.3. Nora Denzel
11.4. Börje Ekholm
11.5. Eric A. Elzvik (new election)
11.6. Leif Johansson
11.7. Kristin Skogen Lund
11.8. Kristin S. Rinne
11.9. Sukhinder Singh Cassidy
11.10. Helena Stjernholm
11.11. Jacob Wallenberg
12. Election of the Chairman of the Board of Directors
The Nomination Committee's proposal:
The Nomination Committee proposes that Leif Johansson be elected Chairman of the
Board.
13. Determination of the number of auditors
14. Determination of the fees payable to the auditors
15. Election of auditors
16. Resolution on the guidelines for remuneration to Group Management
17. Long-Term Variable Compensation Program 2017 ("LTV 2017")
17.1. Resolution on implementation of the LTV 2017
17.2. Transfer of treasury stock, directed share issue and acquisition
offer for the LTV 2017
17.3. Equity Swap Agreement with third party in relation to the LTV 2017
18. Resolution on transfer of treasury stock in relation to the resolutions on
the Long-Term Variable Compensation Programs 2013, 2014, 2015 and 2016
19. Resolution on proposal from the shareholder Einar Hellbom that the Annual
General Meeting resolve to delegate to the Board to present a proposal on equal
voting rights for all shares at the Annual General Meeting 2018
20. Resolution on proposal from the shareholder Thorwald Arvidsson that the
Annual General Meeting resolve to delegate to the Board of Directors to turn to
the Government of Sweden and underline the need for a change of the legal
framework to abolish the possibility to have voting power differences in Swedish
limited liability companies
21. Resolution on proposal from the shareholder Thorwald Arvidsson to amend the
articles of association
21.1. with respect to the voting rights of shares
21.2. with respect to limitation of who can be appointed Board member
22. Resolution on proposal from the shareholder Thorwald Arvidsson that the
Annual General Meeting of shareholders resolve:
22.1. to adopt a vision of zero tolerance with respect to work
place accidents within the company;
22.2. to delegate to the Board to appoint a working group to
realize this vision of zero tolerance;
22.3. that the results shall be annually reported to the Annual
General Meeting in writing, for example by including the report in the printed
Annual Report;
22.4. to adopt a vision of absolute gender equality on all levels
within the company;
22.5. to delegate to the Board to appoint a working group to
realize this vision in the long-term and carefully follow the developments
regarding gender equality and ethnicity;
22.6. to annually report to the Annual General Meeting in writing,
for example by including the report in the printed Annual Report;
22.7. to delegate to the Board to take necessary action to create a
shareholders' association in the company;
22.8. that a member of the Board shall not be allowed to invoice
the Board fee via a legal entity, Swedish or non-Swedish;
22.9. to delegate to the Board to turn to the relevant authority
(the Government and/or the tax office) to underline the need to amend the rules
in this area;
22.10. that the Nomination Committee, when fulfilling its tasks, shall
in particular consider matters related to ethics, gender and ethnicity;
22.11. delegate to the Board of Directors to turn to the Government of
Sweden to underline the need to introduce a national "cool-off period" for
politicians; and
22.12. to delegate to the Board to prepare a proposal for Board and
Nomination Committee representation for the small and midsize shareholders, to
be presented to the Annual General Meeting 2018, or any earlier held
extraordinary general shareholders meeting.
23. Resolution on proposal from the shareholder Thorwald Arvidsson for an
examination through a special examiner (Sw. särskild granskning) to examine if
corruption has occurred in the company's business.
24. Closing of the Annual General Meeting
______________________
Item 1 Chairman of the Annual General Meeting
The Nomination Committee, appointed in accordance with the Instruction for the
Nomination Committee resolved by the Annual General Meeting 2012, is composed of
the Chairman of the Committee, Petra Hedengran (Investor AB), Bengt Kjell (AB
Industrivärden and Svenska Handelsbankens Pensionsstiftelse), Johan Held (AFA
Försäkring), Anders Oscarsson (AMF Försäkring and Fonder) and Leif Johansson
(Chairman of the Board of Directors). The Nomination Committee proposes that
Advokat Sven Unger be elected Chairman of the Annual General Meeting of
shareholders 2017.
Item 8.3 Dividend and record date
The Board of Directors proposes a dividend of SEK 1 per share and Friday, March
31, 2017, as record date for dividend. Assuming this date will be the record
date, Euroclear Sweden AB is expected to disburse dividends on Wednesday, April
5, 2017.
Item 9 Number of Board members and deputies to be elected by the Annual General
Meeting
According to the articles of association, the Board shall consist of no less
than five and no more than twelve Board members, with no more than six deputies.
The Nomination Committee proposes that the number of Board members elected by
the Annual General Meeting of shareholders shall be eleven and that no deputies
be elected.
Item 10 Fees payable to members of the Board of Directors elected by the Annual
General Meeting and to members of the Committees of the Board elected by the
Annual General Meeting
The Nomination Committee proposes that fees to non-employee Board members
elected by the Annual General Meeting and non-employee members of the Committees
of the Board elected by the Annual General Meeting be paid as follows:
* SEK 4,075,000 to the Chairman of the Board of Directors (unchanged);
* SEK 990,000 each to the other Board members (unchanged);
* SEK 350,000 to the Chairman of the Audit Committee (unchanged);
* SEK 250,000 each to the other members of the Audit Committee (unchanged);
* SEK 200,000 each to the Chairmen of the Finance and the Remuneration
Committee (unchanged);
* SEK 175,000 each to the other members of the Finance and the Remuneration
Committee (unchanged);
* SEK 200,000 to the Chairman of the new Committee for Technology and Science;
and
* SEK 175,000 each to the other members of the new Committee for Technology
and Science.
It is important that Board fees are maintained at an appropriate level to make
it possible to recruit the best possible international competence to the Board
of Directors of Ericsson and to make it possible to keep such competence. When
assessing the level of fees, a comparison has been made in relation to the Board
fees in companies of equal size and complexity and it should be considered that
the Ericsson Group has customers in more than 180 countries and that sales in
2016 amounted to more than SEK 220 billion.
The Nomination Committee considers that the fees for Board and Committee work
are reasonable, and proposes that all fees remain unchanged. The Board has
resolved to institute a new Technology and Science Committee. The Nomination
Committee proposes that the fees to the Chairman and other members of the new
Committee shall be the same as the fees to the Chairmen and members of the
Finance Committee and the Remuneration Committee.
Fees in the form of synthetic shares
Background
The Nomination Committee believes that it is appropriate that Board members
elected by the shareholders hold shares in Ericsson, in order to strengthen the
Board members' and the shareholders' mutual interests in the company. The
Nomination Committee recommends Board members elected by the shareholders to,
during a five-year period, build a holding of shares or synthetic shares in
Ericsson at least corresponding to the value of the annual Board fee (after tax)
(excluding fees for Committee work), and that such holding be kept during the
time the Board member remain Board member in Ericsson.
To make it possible for Board members to create an economic interest in the
company and considering that it is in many cases difficult for Board members to
trade in the company's share due to applicable insider rules, the Nomination
Committee proposes that the Board members should, as previously, be offered the
possibility of receiving part of the Board fees in the form of synthetic shares.
A synthetic share constitutes a right to receive payment of an amount which
corresponds to the market value of a share of series B in the Company on Nasdaq
Stockholm at the time of payment.
Proposal
The Nomination Committee therefore proposes that the Annual General Meeting of
shareholders 2017 resolve that part of the fees to the Directors, in respect of
their Board assignment (however, not in respect of Committee work), may be paid
in the form of synthetic shares, on the following terms and conditions.
* A nominated Director shall be able to choose to receive the fee in respect
of his or her Board assignment, according to the following four
alternatives:
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 2017. The synthetic
shares are vested during the term of office, with 25 percent per quarter of
the year.
* The synthetic shares give a right to, following the publication of
Ericsson's year-end financial statement in 2022, receive payment of a cash
amount per synthetic share corresponding to the market price of shares of
series B in the Company at the time of payment.
* An amount corresponding to dividend in respect of shares of series B in the
Company, resolved by the Annual General Meeting during the holding period,
shall be disbursed at the same time as the cash amount.
* Should the Director's assignment to the Board of Directors come to an end no
later than during the third calendar year after the year in which the Annual
General Meeting resolved on allocation of the synthetic shares, payment may
take place the year after the assignment came to an end.
* The number of synthetic shares may be subject to recalculation in the event
of bonus issues, split, rights issues and similar measures, under the terms
and conditions for the synthetic shares.
The complete terms and conditions for the synthetic shares are described in
Exhibit 1 to the Nomination Committee's proposal.
The financial difference for the Company, should all Directors receive part of
their fees in the form of synthetic shares compared with the fees being paid in
cash only, is assessed to be very limited.
Item 11 Election of Board members and deputies of the Board of Directors
The Nomination Committee proposes that the following persons be elected Board
members:
11.1 Jon Fredrik Baksaas (new election)
11.2 Jan Carlson (new election)
11.3 Nora Denzel
11.4 Börje Ekholm
11.5 Eric A. Elzvik (new election)
11.6 Leif Johansson
11.7 Kristin Skogen Lund
11.8 Kristin S. Rinne
11.9 Sukhinder Singh Cassidy
11.10 Helena Stjernholm
11.11 Jacob Wallenberg
Information on proposed new Board members
+------------------------------------------------------------------------------+
| |
|Jon Fredrik Baksaas |
|Born 1954. Master of Science in Economics, NHH Norwegian School of Economics &|
|Business Administration, Norway. |
|Board member: Svenska Handelsbanken AB. |
|Holdings in Ericsson: None.* |
|Principal work experience and other information: President and CEO of Telenor |
|(2002-2015). Previous positions within the Telenor Group since 1989, including|
|deputy CEO, Chief Financial Officer and CEO of TBK AS. Previous positions |
|include CFO of Aker AS, finance director of Stolt Nielsen Seaway AS and |
|controller at Det Norske Veritas, Norway and Japan. Member of the GSMA Board |
|(2008-2016) and Chairman of the GSMA Board (2014-2016). |
| |
|Jan Carlson |
|Born 1960. Master of Science degree in Engineering Physics and Electrical |
|Engineering, the University of Linköping, Sweden. |
|Board Chairman: Autoliv Inc. |
|Board member: BorgWarner Inc., Teknikföretagen, The Confederation of Swedish |
|Enterprise and Trelleborg AB. |
|Holdings in Ericsson: 7,900 Class B Shares.* |
|Principal work experience and other information: President and CEO of Autoliv |
|Inc. since 2007 and Chairman of Autoliv Inc. since 2014. Previous positions |
|within the Autoliv Group since 1999, including President Autoliv Europe, Vice |
|President Engineering of Autoliv and President Autoliv Electronics. Previous |
|positions include President of Saab Combitech and of Swedish Gate Array. |
| |
|Eric A. Elzvik |
|Born 1960. Master of Science in Business Administration, Stockholm School of |
|Economics, Sweden. |
|Board member: IMD Foundation, Lausanne and the Swiss Swedish Chamber of |
|Commerce, Zurich, Switzerland. |
|Holdings in Ericsson: 10,000 Class B shares*. |
|Principal work experience and other information: Chief Financial Officer and |
|member of the Group Executive Committee of ABB Ltd (2013-2017). Division CFO |
|ABB Discrete Automation & Motion (2010-2012) and division CFO Automation |
|Products Division (2006-2010). Previous positions within the ABB Group since |
|1984, including senior management positions within finance, mergers & |
|acquisitions and new ventures. |
| |
|* The holdings in Ericsson are as of the date of the notice convening the |
|Annual General Meeting and includes holdings by related persons as well as |
|holdings of ADS, if applicable. |
+------------------------------------------------------------------------------+
In the composition of the Board of Directors, the Nomination Committee
considers, among other things, experience and competence needed in the Board and
its Committees, and also the value of diversity in age, gender and
cultural/geographic background as well as the need for renewal. The Nomination
Committee also assesses the appropriateness of the number of members of the
Board and whether the Board members can devote the necessary time required to
fulfill their tasks as Board members in Ericsson. The Nomination Committee
primarily searches for potential Board member candidates for the upcoming
mandate period but also considers future competence needs.
In its appraisal of qualifications and performance of the individual Board
members, the Nomination Committee takes into account the competence and
experience of each individual member along with the individual member's
contribution to the Board work as a whole and to the Committee work. The
Nomination Committee has further thoroughly familiarized itself with the results
of the Board work evaluation and of the work of the Board and the individual
Board members. The Nomination Committee believes that it is very important that
the composition of Board members proposed includes complementing experiences and
competencies to make it possible for the Board to contribute to a positive
development of Ericsson. The Nomination Committee aims to propose a Board of
Directors that constitutes a good team to lead Ericsson.
The Nomination Committee is of the opinion that the current Board and Board work
is well functioning. Further it is the Nomination Committee's view that the
Board fulfils high expectations in terms of composition and that the Board as
well as the individual Board members fulfil high expectations in terms of
expertise.
Ulf J. Johansson has advised that he wishes to leave the Board. The Nomination
Committee proposes that three new Board members be elected: Jon Fredrik Baksaas,
Jan Carlson and Eric A. Elzvik. It is the Nomination Committee's assessment that
each of the proposed Board members, with their respective experiences, will add
valuable expertise and experience to the Board. Jon Fredrik Baksaas has
extensive international experience from work within the telecommunications
business, among other things from his previous positions within Telenor where he
was President and CEO during more than ten years. He also has extensive
experience within finance from previous positions. Jan Carlson is Chairman, CEO
and President of Autoliv, listed at the New York Stock Exchange and Nasdaq
Stockholm, and has long-term experience from managing a large international
corporation. Eric A. Elzvik has long-term international experience from senior
management positions within the ABB Group, most recently as Chief Financial
Officer and member of the Group Executive Committee. He also has broad and
extensive experiences from previous positions within ABB Ltd., among others
within finance, mergers and acquisitions and new ventures.
Out of the proposed Board members to be elected by the Annual General Meeting of
shareholders (excluding the President) 50% are women.
Information regarding proposed Board members
Information regarding the proposed Board members is presented in Exhibit 2 to
the Nomination Committee's proposal.
Independence of Board members
The Nomination Committee has made the following assessments in terms of
applicable Swedish independence requirements:
(i) The Nomination Committee considers that at least the following Board
members are independent of the Company and its senior management:
a. Jon Fredrik Baksaas
b. Jan Carlson
c. Nora Denzel
d. Eric A. Elzvik
e. Leif Johansson
f. Kristin Skogen Lund
g. Kristin S. Rinne
h. Sukhinder Singh Cassidy
i. Helena Stjernholm
j. 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. Jon Fredrik Baksaas
b. Jan Carlson
c. Nora Denzel
d. Eric A. Elzvik
e. Leif Johansson
f. Kristin Skogen Lund
g. Kristin S. Rinne
h. 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. Jon Fredrik Baksaas
b. Jan Carlson
c. Nora Denzel
d. Eric A. Elzvik
e. Leif Johansson
f. Kristin Skogen Lund
g. Kristin S. Rinne
h. Sukhinder Singh Cassidy
Item 12 Election of the Chairman of the Board
The Nomination Committee proposes that Leif Johansson be re-elected Chairman of
the Board.
Item 13 Number of auditors
According to the articles of association, the company shall have no less than
one and no more than three registered public accounting firms as auditor. The
Nomination Committee proposes that the company should have one registered public
accounting firm as auditor.
Item 14 Fees payable to the auditor
The Nomination Committee proposes, like previous years, that the auditor fees be
paid against approved account.
Item 15 Election of auditor
In accordance with the recommendation of the Audit Committee, the Nomination
Committee proposes that PricewaterhouseCoopers AB be appointed auditor for the
period as of the end of the Annual General Meeting 2017 until the end of the
Annual General Meeting 2018 (re-election).
Item 16 Guidelines for remuneration to Group Management
The Board of Directors proposes that the Annual General Meeting resolve on the
following guidelines for remuneration to Group Management for the period up to
the 2018 Annual General Meeting. Compared to the guidelines resolved by the
2016 Annual General Meeting, it has been added that targets for variable
compensation may also include share price-related targets. Information on
estimated costs for variable remuneration is appended to the proposal.
Guidelines for remuneration to Group Management
For Group Management consisting of the Executive Leadership Team, including the
President and CEO, total remuneration consists of fixed salary, short- and long-
term variable compensation, pension and other benefits.
The following guidelines apply for the remuneration of the Executive Leadership
Team:
* Variable compensation is in cash and stock-based programs, awarded against
specific business targets derived from the long-term business plan approved
by the Board of Directors. Targets may include share-price related or
financial targets at either Group or unit level, operational targets,
employee engagement targets or customer satisfaction targets.
* All benefits, including pension benefits, follow the competitive practice in
the home country taking total compensation into account.
* By way of exception, additional arrangements can be made when deemed
necessary. An additional arrangement can be renewed but each such
arrangement shall be limited in time and shall not exceed a period of 36
months and twice the remuneration that the individual would have received
had no additional arrangement been made.
* The mutual notice period may be no more than six months. Upon termination of
employment by the Company, severance pay amounting to a maximum of 18 months
fixed salary is paid. Notice of termination given by the employee due to
significant structural changes, or other events that in a determining manner
affect the content of work or the condition for the position, is equated
with notice of termination served by the Company.
+------------------------------------------------------------------------------+
|Appendix to proposal on guidelines for remuneration to Group Management |
|Details of our Remuneration Policy and how we deliver on our policy and |
|guidelines, including information on previously decided long term variable |
|compensation that has not yet become due for payment, can be found in the |
|Remuneration Report and in Note C28, "Information regarding Members of the |
|Board of Directors, the Group Management and Employees" in the annual report |
|2016. |
| |
|With the current composition of the Executive Leadership Team, the Company's |
|cost during 2017 for variable remuneration to the Executive Leadership Team |
|can, at a constant share price, be estimated to amount to between 0 and 220 |
|percent of the aggregate fixed salary cost, all excluding social security |
|costs. |
| |
+------------------------------------------------------------------------------+
Item 17.1 - 17.3 Long-Term Variable Compensation Program 2017 ("LTV 2017")
including transfer of treasury stock, directed share issue and authorization for
the Board of Directors to decide on an acquisition offer
Following its continuous evaluation of the company's long-term variable
compensation, the Board of Directors has concluded that the structure of the
previous and ongoing LTV programs results in an unsustainable share dilution
effect. The Board of Directors has therefore decided not to propose a Stock
Purchase Plan for all employees with connected Key Contributor Plan and
Executive Performance Stock Plan for 2017. As a result, LTV 2017 is proposed to
replace part of the previous Executive Performance Stock Plan.
LTV 2017 is an integral part of the Company's remuneration strategy, in
particular the Board of Directors wishes to encourage the leadership to build
significant equity holdings to align the interests of the LTV Program
participants with those of shareholders.
Proposals
The Long-Term Variable Compensation Program 2017
The Board of Directors proposes that the Annual General Meeting resolve on the
implementation of a Long-Term Variable Compensation Program 2017 in accordance
with the proposals set out below.
17.1 Implementation of the LTV 2017
The Board of Directors proposes that the Annual General Meeting resolves on the
LTV 2017 for members of the Global Leadership Team, comprising a maximum of 3
million shares of series B in Ericsson as set out below.
Objectives of the LTV Program
The LTV Program is designed to provide long-term incentives for members of the
Global Leadership Team (the "Participants") and to incentivise the Company's
performance creating long-term value. The aim is to attract, retain and motivate
executives in a competitive market through performance-based share related
incentives and to encourage the build-up of significant equity holdings to align
the interests of the Participants with those of shareholders.
The LTV Program in brief
The LTV Program is proposed to include all members (current and future) of the
Global Leadership Team, currently comprising of 28 employees. Awards under LTV
2017 will be granted free of charge entitling the participant, provided that
i.a. certain performance conditions set out below are met, to receive a number
of shares, free of charge, following expiration of the three-year vesting period
("Performance Share Awards"). Allotment of shares pursuant to Performance Share
Awards will be subject to the achievement of performance conditions, as set out
below, and will generally require that the Participant retains his or her
employment over a period of three years from the date of grant (the "Vesting
Period"). All major decisions relating to LTV 2017 will be taken by the
Remuneration Committee, with approval by the full Board of Directors as
required.
Granting of Performance Share Awards
Granting of Performance Share Awards to the Participants will generally take
place as soon as practicably possible following the Annual General Meeting
2017. For 2017, the value of the underlying shares in respect of the Performance
Share Award made to the President & CEO will not exceed 180% of the annual base
salary at the time of grant, and for other participants, the value will not
exceed 22.5% of the participants' respective annual base salaries at the time of
grant. The share price used to calculate the number of shares to which the
Performance Share Award entitles will be the volume-weighted average of the
market price of Ericsson B shares on Nasdaq Stockholm during the five trading
days immediately following the publication of the Company's interim report for
the first quarter 2017.
Performance criteria
The vesting of Performance Share Awards will be subject to the satisfaction of
challenging performance conditions which will determine what portion (if any) of
the Performance Share Awards will vest at the end of the Performance Period, as
defined below. The two performance criteria are based on absolute TSR[1]
development and relative TSR development for the Ericsson B share over the
period January 1, 2017 - December 31, 2019 (the "Performance Period").[2] The
two performance criteria relate to 50% each of the Performance Share Award and
the maximum vesting level for each of the performance criteria is 200%.
The following two performance criteria will apply to Performance Share Awards
granted in 2017:
* Absolute TSR performance
50% of a Performance Share Award granted to a Participant will be subject to
fulfilment of an absolute TSR performance requirement over the Performance
Period. If the absolute TSR development reaches or exceeds 14% per annum
compounded, the maximum vesting of 200% of the Performance Share Award related
to absolute TSR shall occur. If the absolute TSR development is below or reaches
only 6% per annum compounded, no vesting will occur in respect of the
Performance Share Award related to the absolute TSR. A linear pro-rata vesting
from 0% to 200% of the Performance Share Award related to absolute TSR shall
apply if the Company's absolute TSR performance is between 6% and 14% per annum
compounded.
* Relative TSR performance
The remaining 50% of a Performance Share Award granted to a Participant will be
subject to fulfilment of a relative TSR performance requirement over the
Performance Period, compared to a peer group consisting of 18 peer companies
(the "Peer Group")[3]. The vesting of the relative TSR related Performance Share
Award varies depending on the Company's TSR performance ranking versus the other
companies in the Peer Group. If the Company's relative TSR performance is below
the TSR development of the company ranked 12th in the Peer Group, no vesting
will occur in respect of the Performance Share Award related to relative TSR
performance. Vesting of the Performance Share Award related to relative TSR
performance will occur at the following percentage levels, based on which
ranking position in the Peer Group the Company's TSR Performance corresponds
to:
Position within the Peer Group Associated vesting percentage
level
12 or lower
0%
11
40%
10
80%
9
120%
8
140%
7
160%
6
180%
5 or higher
200%
If the Company's TSR performance is between two of the ranked companies, a
linear pro-rata vesting shall apply between the vesting percentage levels for
the relevant ranked positions.
Information about the outcome of the performance criteria will be provided in
the annual report for the financial year 2019.
Allotment of shares
Provided that the performance critera above have been met during the Performance
Period and that the Participant has retained his or her employment (unless
special circumstances are at hand) during the Vesting Period, allotment of
vested shares will take place as soon as practicably possible following the
expiration of the Vesting Period.
When determining the final vesting level of Performance Share Awards, the Board
of Directors shall examine whether the vesting level is reasonable considering
the Company's financial results and position, conditions on the stock market and
other circumstances, and if not, as determined by the Board of Directors, reduce
the vesting level to the lower level deemed appropriate by the Board of
Directors.
In the event delivery of shares to Participants cannot take place under
applicable law or at a reasonable cost and employing reasonable administrative
measures, the Board of Directors will be entitled to decide that Participants
may, instead, be offered a cash settlement.
Financing
The Board of Directors has considered different financing methods for transfer
of shares under the LTV 2017, such as transfer of treasury stock and an equity
swap agreement with a third party.
The Board of Directors considers that a directed issue of C shares, followed by
buy-back and transfer of treasury stock is the most cost efficient and flexible
method to transfer shares under the LTV 2017.
The Company's current holding of treasury stock is not sufficient for the
carrying out of the LTV 2017. Therefore, the Board of Directors proposes a
directed share issue and buy back of shares as further set out below under item
17.2. Under the proposed transactions, shares are issued at the share's ratio
value and bought back as soon as the shares have been subscribed for and
registered. The purchase price paid by the Company to the subscriber equals the
subscription price. As compensation to the subscriber for its assistance in the
issuance and buy-back of shares, the Company will pay to the subscriber an
amount totaling SEK 50,000, corresponding to less than 1.7 öre (SEK 0.017) per
new issued and re-purchased share.
The procedure of issuance and buy-back of shares for the Company's long-term
variable compensation programs has previously been decided by the Annual General
Meetings of shareholders in 2001, 2003, 2008, 2009, 2012 and 2016.
Since the costs for the Company in connection with an equity swap agreement will
be significantly higher than the costs in connection with transfer of treasury
stock, the main alternative is that the financial exposure is secured by
transfer of treasury stock.
Costs
The total effect on the income statement of the LTV 2017, including financing
costs and social security fees, is estimated to range between SEK 51 million and
SEK 141 million distributed over the years 2017-2020.
The administration cost for transfer of shares by way of an equity swap
agreement is estimated to approximately SEK 4.6 million, compared to
approximately SEK 50,000 for using new issued and acquired shares in treasury.
Dilution
The Company has approximately 3.3 billion shares in issue. As per December
31, 2016, the Company held approximately 62.2 million shares in treasury. The
number of shares that may be required for ongoing programs as per December
31, 2016 is estimated to approximately 64 million shares, corresponding to
approximately 2 percent of the number of outstanding shares. The number of
shares required for the ongoing 2016 LTV program cannot be determined until the
end of the investment period in August 2017. In order to implement LTV 2017, a
total of up to 3 million shares are required, which corresponds to approximately
0.1 percent of the total number of outstanding shares. The effect on important
key figures is only marginal.
Item 17.2 Transfer of treasury stock, directed share issue and acquisition offer
for the LTV 2017
a. Transfer of treasury stock under the LTV 2017
Transfer of no more than 2.2 million shares of series B in the Company may occur
on the following terms and conditions.
* The right to acquire shares shall be granted to such persons within the
Ericsson Group covered by the terms and conditions pursuant to the LTV
2017. Furthermore, subsidiaries within the Ericsson Group shall have the
right to acquire shares, free of consideration, and such subsidiaries shall
be obligated to immediately transfer, free of consideration, shares to
employees covered by the terms and conditions of the LTV 2017.
* The employee shall have the right to receive shares during the period when
the employee is entitled to receive shares pursuant to the terms and
conditions of the LTV 2017, i.e. in 2020.
* Employees covered by the terms and conditions of the LTV 2017 shall receive
shares of series B in the Company, free of consideration.
b. Transfer of treasury stock on an exchange
The Company shall have the right to, prior to the Annual General Meeting in
2018, transfer no more than 800,000 shares of series B in the Company, in order
to cover certain expenses, mainly social security payments. Transfer of the
shares shall be effected on Nasdaq Stockholm at a price within the, at each
time, prevailing price interval for the share as diseminated by Nasdaq
Stockholm.
c. Directed issue of shares of Series C
Increase of the share capital in Ericsson with SEK 15,000,000 by an issue of 3
million shares of series C, each share with a ratio value of SEK 5. The terms
and conditions of the share issue are the following.
* The new shares shall - with deviation from the shareholders' preferential
right - be subscribed for only by Investor AB or subsidiaries of this
company.
* The new shares shall be subscribed for during the period May 4-8, 2017.
Over-subscription may not occur.
* The amount that shall be payable for each new share shall be SEK 5.
* Payment for the subscribed shares shall be made at the time of subscription.
* The new shares shall not entitle the holders to dividend payment.
* It is noted that the new shares are subject to restrictions pursuant to
chapter 4, section 6 (conversion clause) and chapter 20, section 31
(redemption clause) of the Swedish Companies Act.
d. Authorization for the Board of Directors to decide on a directed acquisition
offer
Authorization for the Board of Directors to decide that 3 million shares of
series C in Ericsson be acquired according to the following.
* Acquisition may occur by an offer to acquire shares directed to all holders
of shares of series C in Ericsson.
* The authorization may be exercised until the Annual General Meeting in 2018.
* The acquisition shall be made at a price of SEK 5 per share.
* Payment for acquired shares shall be made in cash.
Item 17.3 Equity Swap Agreement with third party in relation to the LTV 2017
In the event that the required majority is not reached under item 17.2 above,
the financial exposure of the LTV 2017 shall be hedged by the Company entering
into an equity swap agreement with a third party, under which the third party
shall, in its own name, acquire and transfer shares in the Company to employees
covered by the LTV 2017.
Special authorization for the President
The Board of Directors further proposes that the President be authorized to make
such minor adjustments to the resolutions above as may prove necessary in
connection with the registration with the Swedish Companies Registration Office.
Majority rules
The resolution of the Annual General Meeting on implementation of the program
according to item 17.1 above requires that more than half of the votes cast at
the Annual General Meeting approve the proposal. The Annual General Meeting's
resolution on transfer of treasury stock, directed share issue and authorization
for the Board of Directors to decide on an offer to acquire treasury stock
according to item 17.2 above requires that shareholders representing at least
nine-tenths of the votes cast as well as the shares represented at the Annual
General Meeting approve the proposal. A valid resolution in accordance with the
proposal for an equity swap agreement under item 17.3 above requires that more
than half of the votes cast at the Annual General Meeting approve the proposal.
Description of ongoing variable compensation programs
The Company's ongoing variable compensation programs are described in detail in
the Annual Report 2016 in the note to the Consolidated Financial Statements,
Note C28 and on the Company's website. The Remuneration Report published in the
Annual Report outlines how the Company implements its guidelines on remuneration
to Group management in line with the Swedish Corporate Governance Code.
Item 18 The Board of Directors' proposal for resolution on transfer of treasury
stock in relation to the resolutions on the Long-Term Variable Compensation
Programs 2013, 2014, 2015 and 2016
Background
The Annual General Meetings 2013, 2014, 2015 and 2016 resolved on a right for
the Company to transfer in total not more than 19,800,000 shares of series B in
the Company on a stock exchange to cover certain payments, mainly social
security charges, which may occur in relation to the Long-Term Variable
Compensation Programs 2013, 2014, 2015 and 2016.
Each resolution has only been valid up to the following Annual General Meeting.
Resolutions on transfer of treasury stock for the purpose of the above mentioned
programs have therefore been repeated at the subsequent Annual General Meeting.
In accordance with the resolutions on transfer of in total not more than
19,800,000 shares, 512,300 shares of series B have been transferred up to
February 20, 2017.
Proposal
The Board of Directors proposes that the Annual General Meeting resolve that the
Company shall have the right to transfer, prior to the Annual General Meeting
2018, not more than 19,287,700 shares of series B in the Company, or the lower
number of shares of series B, which as per March 29, 2017 remains of the
original 19,800,000 shares, for the purpose of covering certain payments,
primarily social security charges that may occur in relation to the Long-Term
Variable Compensation Programs 2013, 2014, 2015 and 2016. Transfer of shares
shall be effected on Nasdaq Stockholm at a price within the, at each time,
prevailing price interval for the share.
Majority rules
The resolution of the Annual General Meeting on a transfer of treasury stock
requires that shareholders holding at least two-thirds of the votes cast as well
as the shares represented at the Annual General Meeting vote in favor of the
proposal.
Item 19 - 23 Proposals from shareholders
The proposals under item 19, 20, 22 and 23 are set out in the agenda.
Item 21.1 - 21.2 Proposals from the shareholder Thorwald Arvidsson to amend the
articles of association with respect to voting rights of shares and with respect
to limitations as to who may be appointed Board member
21.1
The shareholder Thorwald Arvidsson proposes firstly that the articles of
association (§ 6, item two), be amended as follows:
"At elections at General Meetings of shareholders shares of series A, B and C
carry one vote each."
In case that the proposal above is not approved by the General Meeting of
shareholders, it is secondarily proposed that the language be amended as
follows:
"At elections at General Meetings of shareholders, shares of series A carry one
vote each and shares of series B and C carry one tenth of one vote each."
21.2
The shareholder Thorwald Arvidsson proposes that the articles of association (§
9) be amended by adding a second and third paragraph as follows.
"A previous minister of state must not be elected member of the Board of
Directors earlier than two years from the termination of the appointment as
minister of state.
In the absence of special reasons, other politicians who have obtained full
salary from the public must not be elected members of the Board of Directors
earlier than one year following the termination of the appointment."
Majority rules
The resolution of the Annual General Meeting to amend the articles of
association under item 21.1, in regards to the first proposal, is valid if all
shareholders represented at the meeting vote in favor of the proposal and those
shareholders represent at least nine-tenths of all shares in the company,
alternatively if shareholders representing at least two-thirds of the votes cast
as well as the shares represented at the meeting vote in favor of the proposal
and holders of half of all shares of series A and nine-tenths of the shares of
series A represented at the meeting agree to the change. The resolution by the
Annual General Meeting under item 21.1, in regards to the secondary proposal, is
valid if shareholders holding at least two-thirds of the votes cast as well as
the shares represented at the Annual General Meeting vote in favor of the
proposal.
The resolution of the Annual General Meeting under item 21.2 requires that
shareholders holding at least two-thirds of the votes cast as well as the shares
represented at the Annual General Meeting vote in favor of the proposal.
The proposal for an examination through a special examiner (Sw. särskild
granskning) under item 23 implies that if holders of at least one tenth of all
shares in the company or of at least one third of the shares represented at the
Annual General Meeting, the Swedish Companies Office shall, at the request of a
shareholder, appoint one or several special examiners.
______________________
Shares and votes
There are in total 3,331,151,735 shares in the Company; 261,755,983 shares of
series A and 3,069,395,752 shares of series B, corresponding to in total
568,695,558.2 votes. The Company's holding of treasury stock amounts to
59,710,513 shares of series B, corresponding to 5,971,051.3 votes.
Information at the Annual General Meeting
The Board of Directors and the President shall, if any shareholder so requests
and the Board of Directors believes that it can be done without material harm to
the Company, provide information regarding circumstances that may affect the
assessment of an item on the agenda and circumstances that can affect the
assessment of the Company's or its subsidiaries' financial situation and the
Company's relation to other companies within the Group.
Documents
The complete proposals of the Nomination Committee with respect to Items 1 and
9 - 15 above, including a description of the work of the Nomination Committee
before the Annual General Meeting and Exhibit 1 and 2 to the Nomination
Committee's proposals, and the proposals from shareholders (in original
language) under items 19 - 23, are available at the Company's website
www.ericsson.com. The documents will be sent upon request to shareholders
providing their address to the company. In respect of all other items, complete
proposals are provided under the respective item in the invitation.
The Annual Report and the Auditor's Report as well as the Auditor's statement
regarding the guidelines for remuneration to Group management and the Board of
Directors' statement under the Swedish Companies Act, chapter 19, section 22,
will be made available at the Company and posted on the Company's website
www.ericsson.com no later than three weeks prior to the Annual General Meeting.
The documents will be sent upon request to shareholders providing their address
to the company.
______________________
Stockholm, February 2017
THE BOARD OF DIRECTORS
--------------------------------------------------------------------------------
[1] Total shareholder return, i.e. share price growth including dividends.
[2] To provide a stable assessment of performance, the TSR development will be
calculated based on the average closing price of the Ericsson B share on Nasdaq
Stockholm (or the corresponding closing share price of the relevant peer group
company) for the three-month period immediately prior to the commencement and
expiration of the Performance Period.
[3] The Peer Group consists of the following companies: Accenture, ASML Holding,
Cap Gemini, CGI Group, Cisco Systems, Cognizant, Corning, F5 Networks, Harris,
Hewlett Packard Enterprises, Infosys, International Business Machines, Juniper
Networks, Motorola Solutions, Nokia, NTT Data, Qualcomm and SAP. TSR will be
measured in Swedish Krona (SEK) for all companies in line with best practice.
Invitation to Ericsson's Annual General Meeting 2017:
http://hugin.info/1061/R/2081451/784184.pdf
This announcement is distributed by Nasdaq Corporate Solutions on behalf of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: Ericsson via GlobeNewswire
Unternehmensinformation / Kurzprofil:
Datum: 24.02.2017 - 08:00 Uhr
Sprache: Deutsch
News-ID 526349
Anzahl Zeichen: 59185
contact information:
Town:
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Kategorie:
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