Ericsson's Annual General Meeting 2013
(firmenpresse) - STOCKHOLM, SWEDEN -- (Marketwire) -- 03/06/13 -- Telefonaktiebolaget LM Ericsson's Annual
General Meeting of shareholders will be
held on Tuesday, April 9, 2013 at 3.00 p.m. at Kistamässan, Arne
Beurlings Torg
5, Kista/Stockholm.
The Nomination Committee proposes inter alia:
* Nora Denzel, Kristin Skogen Lund and Pär Östberg as new
members of the Board
of Directors after resigning Nancy McKinstry, Anders Nyrén and
Michelangelo
Volpi (item 9.3)
* Increase of the individual Board fee and of the fee to the Chairman of
the
Board of Directors and unchanged fees for work on the Committees of the
Board of Directors (item 9.2)
The Board of Directors proposes inter alia:
* A dividend of SEK 2.75 per share (item 8.3)
* Continued Long-Term Variable Remuneration Program consisting of an all
employee Stock Purchase Plan, a Key Contributor Retention Plan and an
Executive Performance Stock Plan (item 11)
WELCOME TO TELEFONAKTIEBOLAGET LM ERICSSON'S ANNUAL GENERAL MEETING 2013
Telefonaktiebolaget LM Ericsson's shareholders are invited to participate
in the
Annual General Meeting of Shareholders to be held on Tuesday, April 9, 2013
at
3.00 p.m. at Kistamässan, Arne Beurlings Torg 5, Kista/Stockholm.
Registration
to the Annual General Meeting starts at 1.30 p.m.
Registration and notice of attendance
Shareholders who wish to attend the Annual General Meeting must
* be recorded in the share register kept by Euroclear Sweden AB, the
Swedish
securities registry, on Wednesday, April 3, 2013; and
* give notice of attendance to the Company at the latest on Wednesday,
April
3, 2013. Notice of attendance can be given by telephone +46 (0)8 402 90
54
on weekdays between 10 a.m. and 4 p.m or on Ericsson's website
.
When giving notice of attendance, please state name, date of birth,
address,
telephone no. and number of attending assistants, if any.
The Annual General Meeting will be conducted in Swedish and simultaneously
interpreted into English.
Shares registered in the name of a nominee
In addition to giving notice of attendance, shareholders having their
shares
registered in the name of a nominee, must request the nominee to
temporarily
enter the shareholder into the share register as per Wednesday, April 3,
2013,
in order to be entitled to attend the Annual General Meeting. The
shareholder
should inform the nominee to that effect well before that day.
Proxy
Shareholders represented by proxy shall issue a power of attorney for the
representative. A power of attorney issued by a legal entity must be
accompanied
by a copy of the entity's certificate of registration (should no such
certificate exist, a corresponding document of authority must be
submitted). In
order to facilitate the registration at the Annual General Meeting, the
power of
attorney in the original, certificate of registration and other documents
of
authority should be sent to the Company in advance to the address above for
receipt by Monday, April 8, 2013. Forms of power of attorney in Swedish and
English are available on Ericsson's website, .
Agenda
1. Election of the Chairman of the Annual General Meeting.
2. Preparation and approval of the voting list.
3. Approval of the agenda of the Annual General Meeting.
4. Determination whether the Annual General Meeting has been properly
convened.
5. Election of two persons approving the minutes.
6. Presentation of the annual report, the auditors' report, the
consolidated
accounts, the auditors' report on the consolidated accounts and the
auditors' presentation of the audit work during 2012.
7. The President's speech and questions from the shareholders to the
Board of
Directors and the management.
8. Resolutions with respect to
1. adoption of the income statement and the balance sheet, the
consolidated income statement and the consolidated balance
sheet;
2. discharge of liability for the members of the Board of Directors
and
the President;
3. the appropriation of the profit in accordance with the approved
balance
sheet and determination of the record date for dividend.
9. Presentation of the proposals of the Nomination Committee, election of
the
Board of Directors etc.
1. Determination of the number of Board members and deputies of the
Board
of Directors to be elected by the Annual General Meeting.
2. Determination of the fees payable to non-employed members of the
Board
of Directors elected by the Annual General Meeting and
non-employed
members of the Committees of the Board of Directors elected by the
Annual General Meeting.
3. Election of the Chairman of the Board of Directors, other Board
members
and deputies of the Board of Directors.
4. Determination of the fees payable to the auditor.
5. Election of auditor.
10. Resolution on the Guidelines for remuneration to Group Management.
11. Long-Term Variable Remuneration Program 2013.
1. Resolution on implementation of the Stock Purchase Plan.
2. Resolution on transfer of treasury stock for the Stock Purchase
Plan.
3. Resolution on Equity Swap Agreement with third party in relation
to the
Stock Purchase Plan.
4. Resolution on implementation of the Key Contributor Retention
Plan.
5. Resolution on transfer of treasury stock for the Key Contributor
Retention Plan.
6. Resolution on Equity Swap Agreement with third party in relation
to the
Key Contributor Retention Plan.
7. Resolution on implementation of the Executive Performance Stock
Plan.
8. Resolution on transfer of treasury stock for the Executive
Performance
Stock Plan.
9. Resolution on Equity Swap Agreement with third party in relation
to the
Executive Performance Stock Plan.
12. Resolution on transfer of treasury stock in relation to the
resolutions on
the Long-Term Variable Remuneration Programs 2009, 2010, 2011 and
2012.
13. Resolution on proposal from the shareholder Carl Axel Bruno to amend
the
articles of association by adding the following wording to the section
on
the Board of Directors in the articles of association: "At least one
fourth
of the Directors on the Board of Directors shall be men and at least
one
fourth of the Directors shall be women. The minimum number of proposed
men
and the minimum number of proposed women shall be increased to the
next
higher whole number."
14. Resolution on proposal from the shareholder Einar Hellbom that the
Annual
General Meeting resolve to delegate to the Board of Directors to
review how
shares are to be given equal voting rights and to present a proposal
to
that effect at the Annual General Meeting 2014.
15. Resolution on proposals from the shareholder Thorwald Arvidsson that
the
Annual General Meeting resolve to delegate to the Board of Directors:
1. to take necessary action to create a shareholders' association in
the
company;
2. to write to the Government of Sweden, requesting a prompt
appointment
of a commission instructed to propose legislation on the
abolishment of
voting power differences in Swedish limited liability companies;
and
3. to prepare a proposal regarding board representation for the small
and
midsize shareholders.
16. Closing of the Annual General Meeting.
Item 1 Chairman of the Annual General Meeting
The Nomination Committee proposes that Advokat Sven Unger be elected
Chairman of
the Annual General Meeting of shareholders 2013.
Item 8.3 Dividend and record date
The Board of Directors proposes a dividend of SEK 2.75 per share and
Friday,
April 12, 2013, as record date for dividend. Assuming this date will be the
record day, Euroclear Sweden AB is expected to disburse dividends on
Wednesday
April 17, 2013.
Item 9.1-9.3 Number of Board members and Deputies to be elected by the
Annual
General Meeting, Directors' fees, election of the Chairman and other
members of
the Board of Directors
The Nomination Committee, appointed in accordance with the Instruction for
the
Nomination Committee resolved by the Annual General Meeting 2012, is
composed
of the Chairman of the Committee, Petra Hedengran (Investor AB), Carl-Olof
By
(AB Industrivärden and Svenska Handelsbankens Pensionsstiftelse),
Johan Held
(AFA Försäkring), Marianne Nilsson (Swedbank Robur Fonder) and
Leif Johansson
(Chairman of the Board of Directors).
Item 9.1 Number of Board members and deputies of the Board of Directors to
be
elected by the Annual General Meeting
According to the articles of association, the Board shall consist of no
less
than five and no more than twelve Board members, with no more than six
deputies.
The Nomination Committee proposes that the number of Board members elected
by
the Annual General Meeting of shareholders remain twelve and that no
deputies be
elected.
Item 9.2 Fees payable to non-employed members of the Board of Directors
elected
by the Annual General Meeting and to non-employed members of the Committees
of
the Board elected by the Annual General Meeting
The Nomination Committee proposes that fees to non-employed Board members
elected by the Annual General Meeting and non-employed members of the
Committees
of the Board elected by the Annual General Meeting be paid as follows:
* SEK 3,850,000 to the Chairman of the Board of Directors (previously
SEK
3,750,000);
* SEK 900,000 each to the other Board members (previously SEK
875,000);
* SEK 350,000 to the Chairman of the Audit Committee (unchanged);
* SEK 250,000 each to the other members of the Audit Committee
(unchanged);
* SEK 200,000 each to the Chairmen of the Finance and the
Remuneration
Committee (unchanged); and
* SEK 175,000 each to the other members of the Finance and the
Remuneration Committee (unchanged).
The Nomination Committee proposes that the individual fee to the Board
members
and the fee to the Chairman of the Board of Directors be increased.
Further, the
Nomination Committee proposes that the fees for work on the Committees of
the
Board be unchanged.
It is important that the Board fees are maintained at an appropriate level
to
make it possible to recruit the best possible competence to the Board of
Directors of Ericsson. The Nomination Committee has compared the Board fees
in
Ericsson with the Board fees in other Nordic and European companies as well
as
Board fees in certain U.S. high-tech companies. The Nomination Committee
has
concluded that compared with the Board fees in companies of equal size and
complexity, Ericsson's Board fees are lower. When assessing the level of
fees it
must be considered that the Ericsson group has customers in more than 180
countries and that sales amount to more than SEK 200 billion.
Against this background, the Nomination Committee considers well-justified
the
proposed increases of the individual Board fee from SEK 875,000 to SEK
900,000
and of the fee to the Chairman of the Board from SEK 3,750,000 to SEK
3,850,000.
The Nomination Committee considers that the fees for Committee work are
reasonable, and proposes that these fees remain unchanged.
The proposal of the Nomination Committee implies all in all an increase of
the
fees of less than 2.5 percent compared with the total fees to the Board
members
for Board and Committee work resolved by the Annual General Meeting 2012.
Fees in the form of synthetic shares
Background
With the purpose of further increasing the mutual interest in the Company
of
Directors and shareholders, the Nomination Committee proposes that the
Directors
should, as previously, be offered the possibility of receiving part of the
Board
fees in the form of synthetic shares. A synthetic share constitutes a
right to
receive payment of an amount which corresponds to the market value of a
share of
series B in the Company on NASDAQ OMX Stockholm at the time of payment.
Proposal
The Nomination Committee therefore proposes that the Annual General Meeting
of
shareholders 2013 resolve that part of the fees to the Directors, in
respect of
their Board assignment (however, not in respect of Committee work), may be
paid
in the form of synthetic shares, on the following terms and conditions.
* A nominated Director shall be able to choose to receive the fee in
respect
of his or her Board assignment, according to the following four
alternatives:
i. 25 percent in cash - 75 percent in synthetic shares
ii. 50 percent in cash - 50 percent in synthetic shares
iii. 75 percent in cash - 25 percent in synthetic shares
iv. 100 percent in cash.
* The number of synthetic shares to be allocated shall be valued to an
average
of the market price of shares of series B in the Company on NASDAQ OMX
Stockholm during a period of five trading days immediately following
the
publication of Ericsson's interim report for the first quarter of 2013.
The
synthetic shares are vested during the term of office, with 25 percent
per
quarter of the year.
* The synthetic shares give a right to, following the publication of
Ericsson's year-end financial statement in 2018, receive payment of a
cash
amount per synthetic share corresponding to the market price of
shares of
series B in the Company at the time of payment.
* An amount corresponding to dividend in respect of shares of series B in
the
Company, resolved by the Annual General Meeting during the holding
period,
shall be disbursed at the same time as the cash amount.
* Should the Director's assignment to the Board of Directors come to an
end no
later than during the third calendar year after the year in which
the
Annual General Meeting resolved on allocation of the synthetic
shares,
payment may take place the year after the assignment came to an end.
* The number of synthetic shares may be subject to recalculation in the
event
of bonus issues, split, rights issues and similar measures, under the
terms
and conditions for the synthetic shares.
The complete terms and conditions for the synthetic shares are described in
Exhibit 1 to the Nomination Committee's proposal.
The financial difference for the Company, should all Directors
receive part of
their fees in the form of synthetic shares compared with the fees being
paid in
cash only, is assessed to be very limited.
Item 9.3 Election of the Chairman of the Board of Directors, other Board
members
and deputies of the Board of Directors
Nancy McKinstry, Anders Nyrén and Michelangelo Volpi have declined
re-election.
The Nomination Committee proposes that the following persons be elected
Board
members:
Chairman of the Board:
re-election: Leif Johansson.
Other Board members:
re-election: Roxanne S. Austin, Sir Peter L. Bonfield, Börje Ekholm,
Alexander
Izosimov, Ulf J. Johansson, Sverker Martin-Löf, Hans Vestberg and
Jacob
Wallenberg; and
new election: Nora Denzel, Kristin Skogen Lund and Pär Östberg.
In the composition of the Board of Directors, the Nomination Committee
considers, among other things, necessary experience and competence but also
the
value of diversity, gender balance and renewal, and assesses the
appropriateness
of the number of members of the Board.
In its appraisal of qualifications and performance of the individual Board
members, the Nomination Committee takes into account the competence and
experience of each individual member along with the individual
member's
contribution to the Board work as a whole. The Nomination Committee
considers it
important that Board members can devote the necessary time and care
required to
fulfill their tasks as Board members in Ericsson, and has therefore also
familiarized itself with the proposed Board members' engagements outside of
Ericsson and the time they require.
The Nomination Committee has further thoroughly familiarized itself with
the
Board work and the work of individual Board members. The Nomination
Committee is
of the opinion that the current Board is well functioning and that the
Board
fulfils high expectations in terms of composition and expertise. All Board
members contribute meritoriously with their respective expertise. Nancy
McKinstry. Anders Nyrén and Michelangelo Volpi have however notified
their
intention to leave the Board after several years on Ericsson's Board of
Directors.
The Nomination Committee proposes that Nora Denzel, Kristin Skogen Lund and
Pär
Östberg be elected new Board members. Information regarding the
proposed Board
members is presented in Exhibit 2 to the Nomination Committee's proposal.
It is
the Nomination Committee's assessment that each of the proposed Board
members,
with their respective experiences, will add valuable expertise to the Board
and
that they are therefore well suited as Board members in Ericsson. It could
be
specifically mentioned that Nora Denzel has industrial experience of
relevance
to Ericsson within among other things software and technological
development,
that Kristin Skogen Lund has broad experience, of value for Ericsson,
within the
media industry, among other things with respect to content distribution,
and
that Pär Östberg has solid financial experience and knowledge
with focus in
Asia, an important market for Ericsson.
Information regarding proposed Board members
Information regarding all the proposed Board members is presented in
Exhibit 2
to the Nomination Committee's proposal.
Independence of Board members
The Nomination Committee has made the following assessments in terms of
applicable Swedish independence requirements:
Moreover, the Nomination Committee considers that at least the following
Board
members are independent in respect of all applicable independence
requirements:
a. Roxanne S. Austin
b. Sir Peter L. Bonfield
c. Nora Denzel
d. Alexander Izosimov
e. Leif Johansson
f. Ulf J. Johansson
g. Kristin Skogen Lund
Item 9.4 Fees payable to the auditor
The Nomination Committee proposes, like previous years, that the auditor
fees be
paid against approved account.
Item 9.5 Election of auditor
The Nomination Committee proposes that the company should have one
registered
public accounting firm as auditor and that PricewaterhouseCoopers AB be
appointed auditor for the period as of the end of the Annual General
Meeting
2013 until the end of the Annual General Meeting 2014.
Item 10 Guidelines for remuneration to Group Management
The Board of Directors proposes that the Annual General Meeting resolve on
the
following guidelines for remuneration to Group Management for the period up
to
the 2014 Annual General Meeting. Compared to the guidelines resolved by the
2012 Annual General Meeting, these guidelines have been amended to enable
consecutive time limited arrangements according to the third paragraph.
Further,
information on estimated costs for variable remuneration has been removed
from
the guidelines and is instead appended to the proposal.
Guidelines for remuneration to Group Management
For Group Management consisting of the Executive Leadership Team, including
the
President and CEO, total remuneration consists of fixed salary, short- and
long-term variable remuneration, pension and other benefits.
The following guidelines apply for the remuneration to the Executive
Leadership
Team:
* Variable remuneration is through cash and stock-based programs awarded
against specific business targets derived from the long term business
plan
approved by the Board of Directors. Targets may include financial
targets at
either Group or unit level, operational targets, employee engagement
targets
and customer satisfaction targets.
* All benefits, including pension benefits, follow the competitive
practice in
the home country taking total compensation into account. The retirement
age
is normally 60 to 65 years of age.
* By way of exception, additional arrangements can be made when deemed
necessary. An additional arrangement can be renewed but each such
arrangement shall be limited in time and shall not exceed a period of
36
months and twice the remuneration that the individual concerned would
have
received had no additional arrangement been made.
* The mutual notice period may be no more than six months. Upon
termination of
employment by the Company, severance pay amounting to a maximum of 18
months
fixed salary is paid. Notice of termination given by the employee due
to
significant structural changes, or other events that in a determining
manner
affect the content of work or the condition for the position, is
equated
with notice of termination served by the Company.
Item 11.1-11.9 Long-Term Variable Remuneration Program 2013 (LTV 2013)
including
the Board of Directors' proposal for resolutions on implementation of an
all
employee Stock Purchase Plan, a Key Contributor Retention Plan and an
Executive
Performance Stock Plan and, under each plan respectively, transfer of
treasury
stock
The LTV program is an integral part of the Company's remuneration strategy,
in
particular the Board of Directors wishes to encourage all employees to
become
and remain shareholders and the leadership to build significant equity
holdings.
Following the Board of Directors' annual evaluation of total remuneration
and
ongoing programs, it proposes to make no changes to the structure of
Ericsson's
Long-Term Variable Remuneration Program.
It is anticipated that the LTV 2013 will require up to 32.2 million shares,
corresponding to a dilution of up to 1 percent of the total number of
outstanding shares, at a cost between SEK 1,105 million and SEK 2,115
million
unevenly distributed over the years 2013-2017. The number of shares covered
by
ongoing programs as per 31 December, 2012, amounts to approximately
61 million
shares, corresponding to approximately 1.89 percent of the number of
outstanding shares.
Three plans
The LTV 2013 builds on a common platform, but consists of three separate
plans.
The Stock Purchase Plan is an all employee plan and is designed to create
an
incentive for all employees to become shareholders. The aim is to
secure
commitment to long-term value creation throughout Ericsson.
The Key Contributor Retention Plan is part of Ericsson's talent strategy
and is
designed to ensure long-term retention of top-talent with critical skills
vital
to Ericsson's future performance. Up to ten percent of the Company's
employees
are defined as "key contributors", based on a rigorous selection
process
incorporating elements such as individual performance, possession of
critical
skills and future potential. The Remuneration Committee of the Board
of
Directors monitors the selection process and nominations for bias of
factors
such as seniority, gender, age and frequency of award.
The Executive Performance Stock Plan is designed to encourage long-term
value
creation in alignment with shareholders' interests. The plan is
offered to a
defined group of senior managers, up to 0.5 percent of the total employee
population. The aim is to attract, retain and motivate executives in a
competitive market through performance-based share related incentives and
to
encourage the build-up of significant equity stakes.
The Executive Performance Stock Plan 2011 introduced three new performance
measures of Net Sales Growth, Operating Income Growth and Cash Conversion
to
better reflect the business strategy and long term value creation of the
Company. The Executive Performance Stock Plan 2012 includes the same
criteria
and it is proposed that the Executive Performance Stock Plan 2013 shall
have the
same performance criteria for the period 2013 - 2015.
The three performance criteria for the Executive Performance Stock Plan
2013
are:
* Net Sales Growth: Up to one third of the award will vest if the
compound
annual growth rate of consolidated net sales is between 2 and 8 percent
comparing 2015 financial results to 2012, which corresponds to
consolidated
sales of SEK 241.7 billion and SEK 286.9 billion for the financial year
2015.
* Operating Income Growth: Up to one third of the award will vest if the
compound annual growth rate of consolidated operating income is between
5
and 15 percent comparing 2015 financial results to 2012, which
corresponds
to operating income of SEK 21.4 billion and SEK 28.1 billion for the
financial year 2015.
* Cash Conversion: Up to one third of the award will vest if cash
conversion
is at or above 70 percent during each of the years 2013-2015 and
vesting one
ninth of the total award for each year the target is achieved.
Financing
The Board of Directors has considered different financing methods for
transfer
of shares to employees under the LTV 2013, such as transfer of treasury
stock
and an equity swap agreement with a third party.
The Board of Directors considers transfer of treasury stock as the most
cost
efficient and flexible method to transfer shares under the LTV 2013.
Costs
The total effect on the income statement of the LTV 2013, including
financing
costs, is estimated to range between SEK 1,105 million and SEK 2,115
million
unevenly distributed over the years 2013-2017. The costs constitute
3.3 percent
of Ericsson's total remuneration costs 2012, including social security
fees,
amounting to SEK 64 billion.
The calculations are conservative and based on assumptions of present
participation rate in the Stock Purchase Plan and full participation in the
Key
Contributor Retention Plan and the Executive Performance Stock Plan, at
maximum
contribution levels and with maximum vesting levels for the latter plan.
Costs affecting the income statement, but not the cash flow
Compensation costs, corresponding to the value of matching shares
transferred to
employees, are estimated to range between SEK 1,002 million and SEK
1,296
million, depending on the fulfillment of the performance targets of
the
Executive Performance Stock Plan.[1] The compensation costs are distributed
over
the LTV 2013 period, i.e. 2013-2017.
Social security charges as a result of transfer of shares to employees
depend on
the performance against the Executive Performance Stock Plan targets and
based
on an assumed average share price at matching between SEK 30 and SEK
175, the
costs are estimated to range between SEK 103 million and SEK 819 million.
The
social security costs are expected to occur mainly during 2016-2017.
Costs affecting the income statement and the cash flow
Plan administration costs have been estimated to SEK 10 million,
distributed
over the LTV 2013 period, i.e. 2013-2017.
The administration cost for transfer of shares by way of an equity swap
agreement is estimated to approximately SEK 183 million.
Dilution
The Company has approximately 3.3 billion shares in issue. As per 31
December,
2012, the Company held 85 million shares in treasury. The number of shares
allocated to ongoing programs as per 31 December, 2012, amounts to
approximately 61 million shares, corresponding to approximately 1.89
percent of
the number of outstanding shares. However, it is not likely that all
shares
allocated for ongoing programs will be required. In order to implement the
LTV
2013, a total of up to 32.2 million shares are required, which corresponds
to
approximately 1 percent of the total number of outstanding shares.
The effect
on important key figures is only marginal.
Proposals
The Long-Term Variable Remuneration Program 2013
The Board of Directors proposes that the Annual General Meeting resolve on
the
implementation of (1) a Stock Purchase Plan, (2) a Key Contributor
Retention
Plan, and (3) an Executive Performance Stock Plan.
In order to implement the LTV 2013, the Board of Directors proposes that no
more
than in total 26,600,000 shares of series B in Telefonaktiebolaget LM
Ericsson
(hereinafter referred to as "the Company" or "Ericsson") may be transferred
to
employees in the Ericsson Group and, moreover, that 5,600,000 shares may be
sold
on NASDAQ OMX Stockholm in order to cover, inter alia, social security
payments.
The Board of Directors proposes that the Annual General Meeting resolve in
accordance with the proposals set out below.
Item 11.1 Implementation of the Stock Purchase Plan
All employees within the Ericsson Group, except for what is mentioned in
the
fourth paragraph below, will be offered to participate in the Stock
Purchase
Plan.
Employees who participate in the Stock Purchase Plan shall, during a 12
month
period from the implementation of the plan, be able to invest up to 7.5
percent
of gross fixed salary in shares of series B in the Company on NASDAQ OMX
Stockholm or in ADSs on NASDAQ New York. The CEO shall have the right to
invest
up to 10 percent of gross fixed salary and 10 percent of short term
variable
remuneration for purchase of shares.
If the purchased shares are retained by the employee for three years from
the
investment date and the employment with the Ericsson Group
continues during
that time, the employee will be given a corresponding number of shares of
series
B or ADSs, free of consideration.
Participation in the Stock Purchase Plan presupposes that such
participation is
legally possible in the various jurisdictions concerned and that the
administrative costs and financial efforts are reasonable in the opinion of
the
Company.
Item 11.2 Transfer of treasury stock for the Stock Purchase Plan
a) Transfer of treasury stock to employees
Transfer of no more than 11,900,000 shares of series B in the Company may
occur
on the following terms and conditions:
* The right to acquire shares shall be granted to such persons within the
Ericsson Group covered by the terms and conditions of the Stock
Purchase
Plan. Furthermore, subsidiaries within the Ericsson Group shall have
the
right to acquire shares, free of consideration, and such subsidiaries
shall
be obligated to immediately transfer, free of consideration,
shares to
their employees covered by the terms and conditions of the Stock
Purchase
Plan.
* The employee shall have the right to receive shares during the period
when
the employee is entitled to receive shares pursuant to the terms and
conditions of the Stock Purchase Plan, i.e. during the period
from November
2013 up to and including November 2017.
* Employees covered by the terms and conditions of the Stock Purchase
Plan
shall receive shares of series B in the Company, free of consideration.
b) Transfer of treasury stock on an exchange
The Company shall have the right to, prior to the Annual General Meeting in
2014, transfer no more than 2,400,000 shares of series B in the Company, in
order to cover certain expenses, mainly social security payments. Transfer
of
the shares shall be effected on NASDAQ OMX Stockholm at a price within the
at
each time prevailing price interval for the share.
Item 11.3 Equity Swap Agreement with third party in relation to the Stock
Purchase Plan
In the event that the required majority is not reached under item 11.2
above,
the financial exposure of the Stock Purchase Plan shall be hedged by
the
Company entering into an equity swap agreement with a third party, under
which
the third party shall, in its own name, acquire and transfer shares in the
Company to employees covered by the Stock Purchase Plan.
Item 11.4 Implementation of the Key Contributor Retention Plan
In addition to the regular matching of one share pursuant to the Stock
Purchase
Plan described above, up to 10 percent of the employees (presently
approximately
10,000 persons) are selected as key contributors and will be offered
additional
matching shares, free of consideration, within the Key Contributor
Retention
Plan.
If the shares purchased in accordance with the terms and conditions of the
Stock
Purchase Plan are retained by an employee for three years from the
investment
date and the employment with the Ericsson Group continues during that time,
the
employee will be entitled to an additional matching share, free of
consideration, for every share purchased, in addition to the regular
matching
of one share.
Participation in the Key Contributor Retention Plan presupposes that such
participation is legally possible in the various jurisdictions
concerned and
that the administrative costs and financial efforts are reasonable in the
opinion of the Company. The Board of Directors shall however be entitled,
but
not obligated, to arrange for an alternative cash plan for key contributors
in
specific jurisdictions, should any of the aforementioned
presuppositions prove
not to be at hand. Such alternative cash plan shall, as far as
practical
correspond to the terms and conditions of the Key Contributor
Retention Plan.
Item 11.5 Transfer of treasury stock for the Key Contributor Retention Plan
a) Transfer of treasury stock to employees
Transfer of no more than 8,700,000 shares of series B in the Company may
occur
on the following terms and conditions.
* The right to acquire shares shall be granted to such persons within the
Ericsson Group covered by the terms and conditions of the Key
Contributor
Retention Plan. Furthermore, subsidiaries within the Ericsson Group
shall
have the right to acquire shares, free of consideration, and such
subsidiaries shall be obligated to immediately transfer, free of
consideration, shares to their employees covered by the terms and
conditions
of the Key Contributor Retention Plan.
* The employee shall have the right to receive shares during the period
when
the employee is entitled to receive shares pursuant to the terms and
conditions of the Key Contributor Retention Plan, i.e. during the
period
from November 2013 up to and including November 2017.
* Employees covered by the terms and conditions of the Key Contributor
Retention Plan shall receive shares of series B in the Company, free of
consideration.
b) Transfer of treasury stock on an exchange
The Company shall have the right to, prior to the Annual General Meeting in
2014, transfer no more than 1,700,000 shares of series B in the Company, in
order to cover certain expenses, mainly social security payments. Transfer
of
the shares shall be effected on NASDAQ OMX Stockholm at a price within the
at
each time prevailing price interval for the share.
Item 11.6 Equity Swap Agreement with third party in relation to the Key
Contributor Retention Plan
In the event that the required majority is not reached under item 11.5
above,
the financial exposure of the Key Contributor Retention Plan shall be
hedged by
the Company entering into an equity swap agreement with a third party,
under
which the third party shall, in its own name, acquire and transfer shares
in the
Company to employees covered by the Key Contributor Retention Plan.
Item 11.7 Implementation of the Executive Performance Stock Plan
In addition to the regular matching of shares pursuant to the Stock
Purchase
Plan described above, senior managers, up to 0.5 percent of the employees
(presently approximately 500 persons, although it is anticipated that the
number
of participants will be lower) will be offered an additional matching of
shares,
free of consideration, within the Executive Performance Stock Plan.
If the shares purchased in accordance with the terms and conditions of the
Stock
Purchase Plan are retained by an employee for three years from the
investment
date and the employment with the Ericsson Group continues during that time,
the
employee will be entitled to the following matching of shares, free of
consideration, in addition to the regular matching of one
share:
* The President may be entitled to an additional performance match of
up
to nine shares for each one purchased.
* Other senior managers may be entitled to an additional performance
match
of up to either four or six shares for each one purchased.
The nomination of senior managers will be on the basis of position,
seniority
and performance at the discretion of the Remuneration Committee,
which will
approve participation and matching share opportunity.
The terms and conditions of the additional performance match under the
Executive
Performance Stock Plan will be based on the outcome of three targets, which
are
independent of each other and have equal weighting. The three targets are:
* Up to one third of the award shall vest provided the compound annual
growth
rate (CAGR) of consolidated net sales between year 0 (2012 financial
year)
and year 3 (2015 financial year) is between 2 and 8 percent, which
corresponds to consolidated sales of SEK 241.7 billion and SEK 286.9
billion
for the financial year 2015. Matching will begin at a threshold level
of 2
percent CAGR and increase on a linear scale to full vesting of this
third of
the award at 8 percent CAGR.
* Up to one third of the award shall vest provided the compound annual
growth
rate (CAGR) of consolidated operating income between year 0 (2012
financial
year) and year 3 (2015 financial year) is between 5 and 15 percent,
which
corresponds to consolidated operating income of SEK 21.4 billion and
SEK
28.1 billion for the financial year 2015. For the purpose of
establishing
the Operating Income Growth base, the non-cash charge for ST-Ericsson,
has
been excluded from the consolidated financial results for 2012.
Matching
will begin at a threshold level of 5 percent CAGR and increase on a
linear
scale to full vesting of this third of the award at 15 percent CAGR.
* Up to one third of the award will be based on the cash conversion
during
each of the years during the performance period, calculated as cash
flow
from operating activities divided by net income reconciled to cash. One
ninth of the total award will vest for any year, i.e. financial years
2013, 2014 and 2015, if cash conversion is at or above 70 percent.
The Board of Directors considers that long-term value creation will be
reflected
in the success of these targets, aligning executives with long-term
shareholder
interests. There will be no allocation of shares if none of the
threshold
levels have been achieved, i.e. CAGR is less than 2 percent for net sales
and
less than 5 percent for operating income, and a 70 percent cash conversion
has
not been achieved during the performance period. The minimum matching at
the
threshold levels is 0. The maximum number of performance matching
shares - 4
shares, 6 shares and 9 shares respectively - will be allocated if the
maximum
performance levels of CAGR of 8 percent for net sales and 15 percent for
operating income have been achieved, or exceeded, and a cash conversion of
70
percent or more has been achieved each year during the period.
Before the number of performance shares to be matched are finally
determined,
the Board of Directors shall examine whether the performance matching is
reasonable considering the Company's financial results and position,
conditions
on the stock market and other circumstances, and if not, as determined by
the
Board of Directors, reduce the number of performance shares to be matched
to the
lower number of shares deemed appropriate by the Board of Directors. When
undertaking its evaluation of performance outcomes the Board of Directors
will
consider, in particular, the impact of larger acquisitions, divestitures,
the
creation of joint ventures and any other significant capital event on the
three
targets on a case by case basis.
Item 11.8 Transfer of treasury stock for the Executive Performance Stock
Plan
a) Transfer of treasury stock to employees
Transfer of no more than 6,000,000 shares of series B in the Company may
occur
on the following terms and conditions.
* The right to acquire shares shall be granted to such persons within the
Ericsson Group covered by the terms and conditions of the Executive
Performance Stock Plan. Furthermore, subsidiaries within the Ericsson
Group
shall have the right to acquire shares, free of consideration, and such
subsidiaries shall be obligated to immediately transfer, free of
consideration, shares to their employees covered by the terms and
conditions
of the Executive Performance Stock Plan.
* The employee shall have the right to receive shares during the period
when
the employee is entitled to receive shares pursuant to the terms and
conditions of the Executive Performance Stock Plan, i.e. during
the period
from November 2013 up to and including November 2017.
* Employees covered by the terms and conditions of the Executive
Performance
Stock Plan shall receive shares of series B in the Company, free of
consideration.
b. Transfer of treasury stock on an exchange
The Company shall have the right to, prior to the Annual General
Meeting in
2014, transfer no more than 1,500,000 shares of series B in the
Company, in
order to cover certain expenses, mainly social security payments.
Transfer
of the shares shall be effected on NASDAQ OMX Stockholm at a price
within
the at each time prevailing price interval for the share.
Item 11.9 Equity Swap Agreement with third party in relation to the
Executive
Performance Stock Plan
In the event that the required majority is not reached under item 11.8
above,
the financial exposure of the Executive Performance Stock Plan shall
be hedged
by the Company entering into an equity swap agreement with a third party,
under
which the third party shall, in its own name, acquire and transfer shares
in the
Company to employees covered by the Executive Performance Stock Plan.
Majority rules
The resolutions of the Annual General Meeting implementation of the three
plans
according to items 11.1, 11.4 and 11.7 above require that more than half of
the
votes cast at the Annual General Meeting approve the proposals. The Annual
General Meeting's resolutions on transfers of treasury stock to employees
and on
an exchange according to items 11.2, 11.5 and 11.8 above, shall be
adopted as
one resolution for each of the three items, and require that shareholders
representing at least nine-tenths of the votes cast as well as the shares
represented at the Annual General Meeting approve the proposals. A valid
resolution in accordance with the proposals for an equity swap agreement
under
items 11.3, 11.6 and 11.9 above requires that more than half of the votes
cast
at the Annual General Meeting approve the proposals.
Description of ongoing variable remuneration programs
The Company's ongoing variable remuneration programs are described in
detail in
the Annual Report 2012 in the note to the Consolidated Financial
Statements,
Note C28 and on the Company's website. The Remuneration Report published in
the
Annual Report outlines how the Company implements its remuneration policy
in
line with the Swedish Corporate Governance Code.
Item 12 The Board of Directors' proposal for resolution on transfer of
treasury
stock in relation to the resolutions on the Long-Term Variable Remuneration
Programs 2009, 2010, 2011 and 2012
Background
The Annual General Meetings 2009, 2010, 2011 and 2012 resolved on a right
for
the Company to transfer in total not more than 18,200,000 shares of series
B in
the Company on a stock exchange to cover certain payments, mainly social
security charges, which may occur in relation to the Long-Term Variable
Remuneration Programs 2009, 2010, 2011 and 2012.
Each resolution has for legal reasons only been valid up to the following
Annual
General Meeting. Resolutions on transfer of treasury stock for the purpose
of
the above mentioned plan and programs have therefore been repeated at the
subsequent Annual General Meeting.
In accordance with the resolutions on transfer of in total not more than
18,200,000 shares,
521,100 shares of series B have been transferred up to March 1, 2013.
Proposal
The Board of Directors proposes that the Annual General Meeting resolve
that the
Company shall have the right to transfer, prior to the Annual General
Meeting
2014, not more than 17,678,900 shares of series B in the Company, or the
lower
number of shares of series B, which as per April 9, 2013 remains of the
original
18,200,000 shares, for the purpose of covering certain payments, primarily
social security charges that may occur in relation to the Long-Term
Variable
Remuneration Programs 2009, 2010, 2011 and 2012. Transfer of shares shall
be
effected on NASDAQ OMX Stockholm at a price within the, at each time,
prevailing
price interval for the share.
Majority rules
The resolution of the Annual General Meeting on a transfer of treasury
stock requires that shareholders holding at least
two-thirds of the votes cast aswell
as the shares represented at the Annual General Meeting vote in favor of
the
proposal.
Items 13 - 15 Proposals from shareholders
The proposals are set out in the agenda.
Majority rules
The resolution of the Annual General Meeting to amend the articles of
association under item 13 requires that shareholders representing at least
two-
thirds of the votes cast as well as the shares represented at the Annual
General
Meeting vote in favor of the proposal. The resolutions of the Annual
General
Meeting under items 14 and 15.1 - 15.3 require a majority of more than half
of
the votes cast at the meeting.
Shares and votes
There are in total 3,305,051,735 shares in the Company; 261,755,983 shares
of
series A and 3,043,295,752 shares of series B, corresponding to in total
approximately 566,085,558 votes. The Company's holding of treasury stock
amounts
to 82,354,366 shares of series B, corresponding to 8,235,436.6 votes.
Information at the Annual General Meeting
The Board of Directors and the President shall, if any shareholder so
requests
and the Board of Directors believes that it can be done without material
harm to
the Company, provide information regarding circumstances that may affect
the
assessment of an item on the agenda and circumstances that can affect the
assessment of the Company's or its subsidiaries' financial situation and
the
Company's relation to other companies within the Group.
Documents
The complete proposals of the Nomination Committee with respect to Items 1
and
9 above, including Exhibit 1 and 2 to the Nomination Committee's proposals,
and
the proposals from shareholders (in original language) under items 13 - 15,
are
available at the Company's website and will be sent to
shareholders upon request. In respect of all other items, complete
proposals are
provided under the respective item in the Notice.
The Annual Report and the Auditor's Report as well as the Auditor's report
regarding Guidelines for remuneration to Group Management will be made
available
at the Company and posted on the Company's website no
later
than three weeks prior to the Annual General Meeting. The documents will be
sent
to shareholders upon request.
Stockholm, March 2013
THE BOARD OF DIRECTORS
[1] The compensation costs for an alternative Key Contributor Retention
Cash
Program may vary depending on the development of the stock price during the
qualifying period. This has been disregarded in the calculations since
these
costs represent a minor part of the overall compensation costs.
Notice to Annual General Meeting 2013 :
This announcement is distributed by Thomson Reuters on behalf of
Thomson Reuters clients. The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: Ericsson via Thomson Reuters ONE
[HUG#1683132]
Ericsson Corporate Communications
Phone: +46 10 719 69 92
Ericsson Investor Relations
Phone: +46 10 719 00 00
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Datum: 06.03.2013 - 02:09 Uhr
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