STOCKHOLM, Feb. 23, 2021 /PRNewswire/ -- The Annual General
Meeting of shareholders of Telefonaktiebolaget LM Ericsson (NASDAQ:
ERIC) will be held on Tuesday, March 30,
2021.
Due to the COVID-19 pandemic, the Board of Directors has decided
that the Annual General Meeting of shareholders 2021 will be
conducted without the physical presence of shareholders,
representatives and third parties and that the shareholders are
able to exercise their voting rights only by post before the
meeting no later than Monday, March 29,
2021. Information on the resolutions passed at the meeting
will be disclosed on Tuesday, March 30,
2021, as soon as the outcome of the postal voting has been
finally confirmed.
The company will also arrange a digital event, Friday March 26, 2021, where shareholders will be
able to listen to the management of the company and ask questions.
Information about this event will be made public shortly.
The Nomination Committee proposes among other things:
- Unchanged composition of the Board of Directors (item 10 and
item 11)
- Increase of the Board fees and the fees for work on the
Committees of the Board (item 9)
The Board of Directors proposes among other things:
- A dividend of SEK 2.00 per share,
to be paid in two equal installments (item 7.4)
- Amendments to the Articles of Association in order to
facilitate and increase the flexibility in conducting General
Meetings of shareholders (item 15)
- A Long-Term Variable Compensation Program for the Executive
Team, with a one-year Group operating income target for 2021 and
three-year total shareholder return targets, all targets with a
three-year vesting period (item 16)
- 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 2021 (item 16.2)
- Transfer of treasury stock in relation to the Long-Term
Variable Compensation Programs 2020, 2019 and 2018 (item 17 and
item 18)
Notice of the Annual General Meeting of shareholders 2021 of
Telefonaktiebolaget LM Ericsson
Telefonaktiebolaget LM Ericsson's (reg. no 556016-0680)
shareholders are hereby given notice of the Annual General Meeting
of shareholders to be held on Tuesday, March
30, 2021.
Due to the COVID-19 pandemic, the Board of Directors has decided
that the Annual General Meeting of shareholders 2021 will be
conducted without the physical presence of shareholders,
representatives and third parties and that the shareholders are
able to exercise their voting rights only by post before the
meeting. Information on the resolutions passed at the meeting will
be disclosed on Tuesday, March 30,
2021, as soon as the outcome of the postal voting has been
finally confirmed.
Registration and notification
A person who wishes to participate in the Annual General Meeting
by postal voting must
- be listed as a shareholder in the presentation of the share
register prepared by Euroclear Sweden AB concerning the
circumstances on Monday, March 22,
2021,
and
- give notice of participation no later than Monday, March 29, 2021, by casting its postal
vote in accordance with the instructions under the heading
Postal voting below so that the postal voting form is
received by Euroclear Sweden AB no later than that day.
Shares registered in the name of a nominee
In order to be entitled to participate in the meeting, a
shareholder whose shares are registered in the name of a nominee
must, in addition to giving notice of participation in the Annual
General Meeting by submitting its postal vote, register its shares
in its own name so that the shareholder is listed in the
presentation of the share register as of Monday, March 22, 2021. Such registration may be
temporary (so-called voting rights registration), and request for
such voting rights registration shall be made to the nominee, in
accordance with the nominee's routines, at such a time in advance
as decided by the nominee. Voting rights registrations that have
been made by the nominee no later than Wednesday, March 24, 2021 will be taken into
account in the presentation of the share register.
Postal voting
The Board of Directors has decided that shareholders should be
able to exercise their voting rights only by postal voting in
accordance with section 22 of the Act (2020:198) on temporary
exceptions to facilitate the execution of general meetings in
companies and other associations.
A special form must be used for the postal vote. The form for
postal voting is available on Ericsson's website www.ericsson.com.
Completed and signed forms for postal voting can be sent by mail to
Telefonaktiebolaget LM Ericsson, General Meeting of shareholders,
c/o Euroclear Sweden AB, Box 191, SE-101 23 Stockholm, Sweden, or by e-mail to
GeneralMeetingService@euroclear.com. Completed forms must be
received by Euroclear Sweden AB no later than Monday, March 29, 2021. Shareholders who are
natural persons may also cast their votes electronically through
verification with BankID via the Euroclear Sweden AB's website
https://anmalan.vpc.se/EuroclearProxy. Such electronic votes must
be submitted no later than Monday, March 29,
2021.
The shareholders may not provide special instructions or
conditions in the postal vote. If so, the entire postal vote is
invalid. Further instructions and conditions may be found in the
form for postal voting and at
https://anmalan.vpc.se/EuroclearProxy.
Proxy
If the shareholder submits its postal vote by proxy, a written
and dated power of attorney signed by the shareholder must be
attached to the postal voting form. 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). Forms of
power of attorney in Swedish and English are available on
Ericsson's website, www.ericsson.com.
Shareholders' right to receive information
The Board of Directors and the President and CEO 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.
A request for such information shall be made in writing to the
Company no later than ten days prior to the Annual General Meeting,
i.e. no later than Saturday, March 20,
2021, at the address Telefonaktiebolaget LM Ericsson, The
Board of Directors Secretariat, SE-164 83 Stockholm, Sweden or by e-mail to
boardsecretariat@ericsson.com. The questions and responses will be
made available on the Company's website www.ericsson.com and at the
Company's headquarters, Torshamnsgatan 21, SE-164 83 Stockholm, Sweden no later than Thursday, March 25, 2021. The information is also
sent to the shareholders who requested it and stated their
address.
Processing of personal data
For information on how your personal data is processed, see:
https://www.euroclear.com/dam/ESw/Legal/Privacy-notice-bolagsstammor-engelska.pdf
Agenda
- Election of the Chair of the Annual General Meeting
- Election of two persons approving the minutes
- Preparation and approval of the voting list
- Approval of the agenda of the Annual General Meeting
- Determination whether the Annual General Meeting has been
properly convened
- 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
- Resolution with respect
to
1. adoption of the income statement and the balance sheet, the
consolidated income statement and the consolidated balance
sheet;
2. adoption of the remuneration report;
3. discharge of liability for the members of the Board of Directors
and the President for 2020; and
4. the appropriation of the results in accordance with the approved
balance sheet and determination of the record dates for
dividend
- Determination of the number of Board members and deputies of
the Board of Directors to be elected by the Annual General
Meeting
- 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
- Election of the members and deputies of the Board of
Directors
The Nomination Committee's proposal for Board
members:
1. Jon Fredrik Baksaas
2. Jan Carlson
3. Nora Denzel
4. Börje Ekholm
5. Eric A. Elzvik
6. Kurt Jofs
7. Ronnie Leten
8. Kristin S. Rinne
9. Helena Stjernholm
10. Jacob Wallenberg
- Election of the Chair of the Board of
Directors
The Nomination Committee's
proposal:
The Nomination Committee proposes that Ronnie Leten be re-elected
Chair of the Board of Directors.
- Determination of the number of auditors
- Determination of the fees payable to the auditors
- Election of auditors
- Resolution on amendments to the Articles of Associatio
- Long-Term Variable Compensation Program 2021
("LTV 2021")
1. Resolution on implementation of LTV 202
2. Resolution on transfer of treasury stock, directed share issue
and acquisition offer for the LTV 2021
3. Resolution on Equity Swap Agreement with third party in relation
to the LTV 2021
- Resolution on transfer of treasury stock to employees and on an
exchange in relation to the earlier resolution on the Long-Term
Variable Compensation Program 2020
- Resolution on transfer of treasury stock in relation to the
resolutions on the ongoing Long-Term Variable Compensation Programs
2018 and 2019
Item 1 Chair 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 Chair of the Committee
Johan Forssell (Investor AB), Karl
Åberg (AB Industrivärden and Svenska Handelsbankens
Pensionsstiftelse), Jonas Synnergren (Cevian Capital Partners
Limited), Anders Oscarsson (AMF
Försäkring och Fonder) and Ronnie Leten (Chair of the Board of
Directors). The Nomination Committee proposes that Advokat Eva Hägg
be elected Chair of the Annual General Meeting of shareholders
2021, or, if she is prevented from participating, the person
instead appointed by the Chair of the Board of Directors.
Item 2 Election of two persons approving the minutes
Marianne Nilsson, Swedbank Robur
Fonder and Anders Oscarsson, AMF
Försäkring och Fonder, or if one or both of them are prevented from
participating, the person or persons instead appointed by the Chair
of the Board pf Directors, are proposed by the Board of Directors
to be elected to approve the minutes of the Annual General Meeting.
The task of approving the minutes of the Annual General Meeting
also includes verifying the voting list and that the postal votes
received are correctly stated in the minutes of the Annual General
Meeting.
Item 3 Preparation and approval of the voting list
The voting list proposed for approval is the voting list drawn
up by Euroclear Sweden AB on behalf of the Company, based on the
Annual General Meeting's register of shareholders and postal votes
received, as verified by the persons approving the minutes of the
Annual General Meeting.
Item 7.2 Adoption of the remuneration report
The Board of Directors proposes that the Annual General Meeting
resolve to adopt the Board of Directors' report regarding
remuneration pursuant to Chapter 8, Section 53 a of the Swedish
Companies Act.
Item 7.4 Dividend and record dates
The Board of Directors proposes a dividend to the shareholders
of SEK 2.00 per share. The dividend
is proposed to be paid in two equal installments, SEK 1.00 per share with the record date
Thursday, April 1, 2021, and
SEK 1.00 per share with the record
date Friday, October 1, 2021.
Assuming these dates will be the record dates, Euroclear Sweden AB
is expected to disburse SEK 1.00 per
share on Thursday, April 8, 2021, and
SEK 1.00 per share on Wednesday, October 6, 2021.
Item 8 Number of Board members and deputies to be elected by
the Annual General Meeting
According to the articles of association, the Board of Directors
shall consist of no less than five and no more than twelve Board
members, with no more than six deputies. The Nomination Committee
proposes that the number of Board members elected by the Annual
General Meeting of shareholders shall be ten and that no deputies
be elected.
Item 9 Fees payable to members of the Board of Directors
elected by the Annual General Meeting and to members of the
Committees of the Board of Directors 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 of Directors
elected by the Annual General Meeting be paid as follows:
- SEK 4,225,000 to the Chair of the
Board of Directors (previously SEK
4,075,000);
- SEK 1,060,000 to each of the
other Board members (previously SEK
1,020,000);
- SEK 420,000 to the Chair of the
Audit and Compliance Committee (previously SEK
400,000);
- SEK 270,000 to each of the other
members of the Audit and Compliance Committee (previously
SEK 250,000);
- SEK 205,000 to each Chair of the
Finance, the Remuneration and the Technology and Science Committee
(previously SEK 200,000);
and
- SEK 180,000 to each of the other
members of the Finance, the Remuneration and the Technology and
Science Committee (previously SEK
175,000).
A basic principle when assessing Board fees is that these shall
be competitive and enable the recruitment and retainment of
individuals with the best possible competence. When assessing the
level of fees, a comparison has been made in relation to the Board
fees in companies of equal size and complexity and it should be
considered that the Ericsson Group has customers in 180 countries
and that sales in 2020 amounted to approximately SEK 230 billion.
The Nomination Committee has compared the Board fees in Ericsson
with Board fees in other international high-tech companies and has
concluded that an increase of all fees in accordance with the above
is reasonable and well-justified, in order to secure that the fees
remain relevant compared to other companies in the market. The
proposal of the Nomination Committee implies all in all an increase
of the fees of approximately 3.9% compared with the total fees to
the corresponding number of Board and Committee members for Board
and Committee work resolved by the Annual General Meeting 2020.
Fees in the form of synthetic shares
Background
The Nomination Committee believes that it is appropriate that
Board members elected by the shareholders hold shares in
Ericsson, in order to strengthen the Board members' and the
shareholders' mutual interests in the Company. The Nomination
Committee recommends Board members elected by the shareholders to,
during a five year period, build a holding of shares or synthetic
shares in Ericsson at least corresponding to the value of the
annual Board fee (excluding fees for Committee work), and that such
holding be kept during the time the Board member remain Board
member in Ericsson.
To enable 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 2021 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 2021. 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 2026, receive payment
of a cash amount per synthetic share corresponding to the market
price of shares of series B in the Company in close connection with
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, splits, 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
limited.
Item 10 Election of Board members and deputies of the Board
of Directors
The Nomination Committee proposes that the following persons be
re-elected Board members:
10.1
Jon Fredrik Baksaas;
10.2
Jan Carlson;
10.3
Nora Denzel;
10.4
Börje Ekholm;
10.5
Eric A. Elzvik;
10.6
Kurt Jofs;
10.7
Ronnie Leten;
10.8
Kristin S. Rinne;
10.9
Helena Stjernholm; and
10.10
Jacob Wallenberg.
The Nomination Committee primarily searches for potential Board
member candidates for the upcoming mandate period, but also
considers future competence needs. It is a long journey to identify
the right candidates and long-term planning is essential. In
assessing the appropriate composition of the Board of Directors,
the Nomination Committee considers, among other things, experience
and competence needed in the Board and its Committees, and the
value of diversity in age, gender and cultural/geographic
background as well as the need for renewal. The Nomination
Committee has applied the Swedish Corporate Governance Code,
Section 4.1, as diversity policy. Focusing on improving the gender
balance over time, the Nomination Committee particularly works to
identify women candidates matching the current and futures needs on
the Board. The Nomination Committee also assesses the
appropriateness of the number of Board members and whether the
Board members can devote the necessary time required to fulfill
their tasks as Board members in Ericsson.
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 Committee has
familiarized itself with the results of the Board work evaluation
that was led by the Chair of the Board of Directors. The Nomination
Committee aims to propose a Board of Directors that constitutes a
good team to lead Ericsson and believes that it is very important
that the composition of Board members proposed includes
complementing experiences and competencies to enable the Board of
Directors to contribute to a positive development of Ericsson.
The Nomination Committee is of the opinion that the current
Board of Directors 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 of
Directors as well as the individual Board members fulfil high
expectations in terms of expertise. The Nomination Committee does
not propose any changes to the composition of the Board of
Directors this year, focusing on stability and continuity. The
Committee believes that the proposed Board composition provides the
Company with the right conditions for realizing its long-term
potential. Out of the proposed Board members to be elected by the
Annual General Meeting of shareholders (excluding the President and
CEO) 33% are women. Gender balance continues to be a key priority
for the Nomination Committee, and the Committee works to improve
the gender balance on the Board of Directors over time.
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:
1. a. Jon Fredrik Baksaas
b. Jan Carlson
c.
Nora Denzel
d. Eric A.
Elzvik
e.
Kurt Jofs
f. Ronnie
Leten
g. Kristin S. Rinne
h.
Helena Stjernholm
i. Jacob Wallenberg
ii. From among the Board members reported in (i) above, the
Nomination Committee considers that at least the following are
independent of the Company's major shareholders:
a. Jon
Fredrik Baksaas
b. Jan Carlson
c.
Nora Denzel
d. Eric A.
Elzvik
e.
Kurt Jofs
f.
Kristin S. Rinne
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. Kurt
Jofs
f. Kristin S.
Rinne
The Nomination Committee concludes that the proposed composition
of the Board of Directors meets the independence requirements
applicable to Ericsson.
Item 11 Election of the Chair of the Board of
Directors
The Nomination Committee proposes that Ronnie Leten be
re-elected Chair of the Board of Directors.
Item 12 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 13 Fees payable to the auditor
The Nomination Committee proposes, like previous years, that the
auditor fees be paid against approved account.
Item 14 Election of auditor
In accordance with the recommendation by the Audit and
Compliance Committee, the Nomination Committee proposes that
Deloitte AB be appointed auditor for the period from the end of the
Annual General Meeting 2021 until the end of the Annual General
Meeting 2022 (re-election).
Item 15 Amendments to the Articles of Association
The Board of Directors proposes that the Articles of Association
be amended as follows:
Due to certain legislative amendments, editorial amendments are
proposed to § 1 and § 8. The amendment to § 1 will only affect
the Swedish language version of the Articles of Association (change
from "firma" to "företagsnamn" in Swedish).
In order to facilitate and increase the flexibility in
conducting General Meetings of shareholders, it is proposed to
include a new paragraph to enable collecting proxies and conducting
postal voting in connection with General Meetings of shareholders
(§ 15).
In order to facilitate and increase the flexibility in
conducting General Meetings of shareholders, it is also proposed to
include a new paragraph to enable the Board of Directors to decide
upon attendance by other persons than shareholders at General
Meetings of shareholders (§ 16).
The numbering of the Company's Articles of Association are
proposed to be adjusted accordingly to allow for the proposed new
paragraphs above, i.e current § 15 will become new § 17 and current
§ 16 will become new § 18.
Current
Language
§ 1
The name of the Company is Telefonaktiebolaget LM Ericsson. The
company is a public company (publ).
|
Proposed
Language
§ 1
The name of the Company is Telefonaktiebolaget LM Ericsson. The
Company is a public company (publ).[1]
|
§ 8The Company's
shares shall be registered in a central securities depository
register pursuant to the Financial Instruments Accounts Act (Sw:
lagen (1998:1479) om kontoföring av finansiella
instrument).
|
§ 8The Company's
shares shall be registered in a central securities depository
register pursuant to the Central Securities Depository and
Financial Instruments Accounts Act (1998:1479).
|
|
§ 15The Board of
Directors may collect proxies pursuant to the procedure stated in
Chapter 7, Section 4, second paragraph the Companies Act
(2005:551).The Board of Directors may decide before a General
Meeting that the shareholders shall be able to exercise their
voting rights by post before the General Meeting pursuant to the
procedure stated in Chapter 7, Section 4 a of the Companies Act
(2005:551).
|
|
§ 16The Board of
Directors may resolve that persons not being shareholders of the
Company shall be entitled, on the conditions stipulated by the
Board, to attend or in any other manner follow the discussions at a
General Meeting.
|
The Board of Directors proposes that the President and CEO shall
be authorized to make the minor adjustments to the above resolution
that may prove to be necessary in connection with the registration
of the Articles of Association with the Swedish Companies
Registration Office.
Majority rules
The resolution by the Annual General Meeting on amendments to
the articles of association under item 15 above requires that
shareholders representing at least two-thirds of the votes cast as
well as the shares represented at the Annual General Meeting
approve the proposal.
Item 16 Implementation of Long-Term Variable
Compensation Program 2021 ("LTV 2021") including transfer of
treasury stock, directed share issue and authorization for the
Board of Directors to decide on an acquisition offer
Background
The Remuneration Committee and the Board of Directors evaluate
Ericsson's long-term variable compensation programs to the
Executive Team on an ongoing basis for effectiveness in serving
their purpose to support achieving the Company's strategic business
objectives and sustainable long-term interests as well as their
facility to secure the long-term focus of the members of the
Executive Team and align their interests with the long-term
expectations and the interests of the shareholders. As a result of
this evaluation, the Board of Directors, upon recommendation from
the Remuneration Committee, has concluded to propose an LTV 2021
materially unchanged compared to the Long-Term Variable
Compensation Programs 2018, 2019 and 2020.
LTV 2021 is an integral part of the Company's remuneration
strategy and the Board of Directors in particular aims to encourage
the Company leadership to build significant equity holdings to
align the interests and expectations of the LTV Program
participants with those of the shareholders.
Proposals
The Long-Term Variable Compensation Program 2021
The Board of Directors proposes that the Annual General Meeting
resolve on the implementation of a Long-Term Variable Compensation
Program 2021 in accordance with the proposals set out below.
16.1 Implementation of the LTV 2021
The Board of Directors proposes that the Annual General Meeting
resolve on the LTV 2021 for members of the Executive Team,
comprising a maximum of 2.1 million shares of series B in Ericsson
as set out below.
Objectives of the LTV Program
The LTV Program is designed to provide long-term incentives for
members of the Executive Team (the "Participants") and to
incentivize the Company's performance creating long-term value. The
aim is to attract, retain and motivate executives in a competitive
market through performance-based share related incentives and to
encourage the build-up of significant equity holdings to align the
interests of the Participants with those of shareholders
The LTV Program in brief
The LTV Program is proposed to include all members (current and
future) of the Executive Team, currently comprising of 15
employees, including the President and CEO. Awards under LTV 2021
("Performance Share Awards") 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 a three year vesting period
(the "Vesting Period"). 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 the
Vesting Period. All major decisions relating to LTV 2021 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 2021. For 2021, the value of the underlying
shares in respect of the Performance Share Awards made to the
President and CEO will not exceed 190% of the annual base salary at
the time of grant, and for other participants, the value will not
exceed 70% of the participants' respective annual base salaries at
the time of grant.
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 series B shares on Nasdaq
Stockholm during the five trading days immediately following the
publication of the Company's interim report for the fourth quarter
2020.
Performance criteria
The vesting of Performance Share Awards will be subject to the
satisfaction of performance criteria related to 2021 Group
Operating Income and total shareholder return ("TSR"[2]),
which will determine what portion (if any) of the Performance Share
Awards will vest at the end of the Vesting Period.
The performance criterion based on 2021 Group Operating Income
relates to 50% of the Performance Share Awards and the maximum
vesting level is 200%.
The performance criteria based on TSR are absolute TSR
development and relative TSR development for the Ericsson series B
share over the period January 1, 2021
- December 31, 2023 (the "TSR
Performance Period"[3]). The TSR performance criteria relate to
a total of 50% of the Performance Share Awards and the maximum
vesting level for each of the TSR performance criteria is 200%.
The following conditions will apply to the performance
criteria:
2021 Group Operating Income criterion
50% of the Performance Share Awards granted to a Participant
will be subject to fulfilment of a performance criterion based on
Group Operating Income for the financial year 2021. The 2021 Group
Operating Income target established by the Board of Directors will
stipulate a minimum level and a maximum level. The 2021 Group
Operating Income target is not disclosed due to stock market and
competition considerations. The vesting level of Performance Share
Awards related to 2021 Group Operating Income will be determined by
the Board of Directors when the audited result for the financial
year 2021 is available.
If the maximum performance level is reached or exceeded, the
vesting will amount to (and will not exceed) the maximum level of
200% of the Performance Share Awards related to the 2021 Group
Operating Income performance criterion. If performance is below the
maximum level but exceeds the minimum level, a linear pro-rata
vesting of shares will occur. No vesting will occur if performance
amounts to or is below the minimum level. The allotment of the
shares will not occur until the end of the Vesting Period in
2024.
TSR performance criteria:
Absolute TSR performance criterion:
30% of the Performance Share Awards granted to a Participant
will be subject to fulfilment of an absolute TSR performance
criterion over the TSR Performance Period. If the absolute TSR
development reaches or exceeds 14% per annum compounded, the
maximum vesting of 200% of the Performance Share Awards related to
absolute TSR performance criterion 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 Awards
related to the absolute TSR performance criterion. A linear
pro-rata vesting from 0% to 200% of the Performance Share Awards
related to the absolute TSR performance criterion shall apply if
the Company's absolute TSR performance is between 6% and 14% per
annum compounded.
Relative TSR performance criterion:
20% of the Performance Share Awards granted to a Participant
will be subject to fulfilment of a relative TSR performance
criterion over the TSR Performance Period, compared to a peer group
consisting of 11 peer companies (the "Peer Group"[4]). The
vesting of the relative TSR related Performance Share Awards 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 equal to or below the TSR development of the company
ranked 6 or lower in the Peer Group, no vesting will occur in
respect of the Performance Share Awards related to the relative TSR
performance criterion. Vesting of the Performance Share Awards
related to the relative TSR performance criterion 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
6 or
lower
0%
5
50%
4
100%
3
150%
2 or
higher
200%
If the Company's TSR performance is between two of the ranked
companies, a linear pro-rata vesting shall apply between the
vesting percentage levels for the relevant ranked positions.
Information about the outcome of the performance criteria will
be provided no later than in the annual report for the financial
year 2023.
Allotment of shares
Provided that the performance criteria above have been met and
that the Participant has retained his or her employment (unless
special circumstances are at hand) during the Vesting Period,
allotment of vested shares will take place as soon as practicably
possible following the expiration of the Vesting Period.
When determining the final vesting level of Performance Share
Awards, the Board of Directors shall examine whether the vesting
level is reasonable considering the Company's financial results and
position, conditions on the stock market and other circumstances,
and if not, as determined by the Board of Directors, reduce the
vesting level to the lower level deemed appropriate by the Board of
Directors.
In the event delivery of shares to Participants cannot take
place under applicable law or at a reasonable cost and employing
reasonable administrative measures, the Board of Directors will be
entitled to decide that Participants may, instead, be offered a
cash settlement.
Financing
The Board of Directors has considered different financing
methods for transfer of shares under the LTV 2021 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
2021.
The Company's current holding of treasury stock is not
sufficient for the implementation of the LTV 2021. Therefore, the
Board of Directors proposes a directed share issue and buy back of
shares as further set out below under item 16.2. Under the proposed
transactions, shares are issued at the share's quota 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 totalling
SEK 75,000, corresponding to less
than SEK 0.04 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, 2016 and 2017.
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 and that an equity swap agreement with a third party is an
alternative in the event that the required majority for approval is
not reached.
Costs
The total effect on the income statement of the LTV 2021,
including financing costs and social security fees, is estimated to
range between SEK 70 million and
SEK 125 million distributed over the
years 2021-2024. The costs will depend on the future development of
the stock price.
The administration cost for transfer of shares by way of an
equity swap agreement is estimated to approximately SEK 10.3 million, compared to the administration
cost of approximately SEK 75,000 for using newly issued and
acquired shares in treasury.
Dilution
The Company has approximately 3.3 billion shares in issue. As
per December 31, 2020 the Company
held approximately 6 million shares in treasury. The number of
shares that may be required for ongoing long-term variable
compensation programs as per December 31,
2020 is estimated to approximately 5.3 million shares,
corresponding to approximately 0.2 percent of the number of
outstanding shares. In order to implement the LTV 2021, a total of
up to 2.1 million shares are required, which corresponds to
approximately 0.1 percent of the total number of outstanding
shares, hence an issue of new treasury stock is proposed for the
implementation of LTV 2021. The effect on important key figures is
marginal.
16.2 Transfer of treasury stock, directed share issue and
acquisition offer for the LTV 2021
a. Transfer of treasury stock under the LTV
2021
Transfer of no more than 1.6 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 2021. 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 2021.
- 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 2021, i.e. in 2024.
- Employees covered by the terms and conditions of the LTV 2021
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 2022, transfer no more than 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 Stockholm at a price within the, at each time, prevailing
price interval for the share as disseminated by Nasdaq
Stockholm.
c. Directed issue of shares of Series C
Increase of the share capital in the Company with SEK 10,500,000.01 by an issue of 2.1 million
shares of series C, each share with a quota value of approximately
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 its
subsidiaries.
- The new shares shall be subscribed for during the period as
from Thursday, April 29, 2021 up to
and including Monday, May 3, 2021.
Over-subscription may not occur.
- The amount that shall be paid for each new share shall be the
quota value (approximately SEK
5).
- Payment for the subscribed shares shall be made at the time of
subscription.
- The Board of Directors shall be entitled to extend the period
for subscription and payment.
- 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 2.1
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 2022.
- The acquisition shall be made at a price corresponding to the
quota value of the share (approximately SEK
5) per share.
- Payment for acquired shares shall be made in cash.
The Board of Directors proposes that the President and CEO shall
be authorized to make the minor adjustments to the above
resolutions that may prove to be necessary in connection with the
registration with the Swedish Companies Registration Office.
16.3 Equity Swap Agreement with third party in relation to
the LTV 2021
In the event that the required majority for approval is not
reached under item 16.2 above, the financial exposure of the LTV
2021 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 of series B in the
Company to employees covered by the LTV 2021.
Majority rules
The resolution of the Annual General Meeting on implementation
of the program according to item 16.1 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 to the Board
of Directors to decide on an offer to acquire treasury stock
according to item 16.2 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 16.3 above requires that more than
half of the votes cast at the Annual General Meeting approve the
proposal.
Description of other ongoing long-term variable compensation
programs
In addition to the LTV-programs, which are directed at the
members of the Executive Team, the Company also has other ongoing
long-term variable compensation programs directed at other
employees within the Group. These programs are an integral part of
the Company's remuneration strategy as well as a part of the
Company's talent management strategy. The Company has decided to
implement two other share-related compensation programs for
2021.
The Executive Performance Plan 2021 ("EPP
2021")
EPP 2021 is designed to attract, retain and motivate senior
managers in a competitive market through performance based
long-term cash incentive supporting the achievement of the
Company's long-term strategies and business objectives.
Approximately 200 senior managers will be eligible for the EPP
2021. Participants are assigned a potential award defined as a
percentage of the participants' annual gross salary, which is
converted into a number of synthetic shares based on the same
market price of Ericsson series B shares used for the LTV 2021 at
the time of grant. There are two award levels called "High" and
"Regular" which are differentiated as below between the
USA and the rest of the world to
bring greater alignment with the local market conditions:
Award
level
USA
Rest of the world
High
35%
25%
Regular
25%
15%
The vesting level of the awards, occurring after a three-year
vesting period, is subject to the achievement of the same
performance criteria as for the LTV 2021, and generally requires
that the participant retains his or her employment over the
three-year vesting period. At the end of the Vesting Period, the
allotted synthetic shares are converted into a cash amount, based
on the market price of Ericsson series B shares at Nasdaq Stockholm
at the payout date, and this final amount is paid to the
Participant in cash gross before tax. It is estimated that
approximately one million synthetic shares will be awarded under
the EPP 2021. The maximum total cost effect of the EPP 2021 on the
income statement, including social security fees, is estimated to
be approximately SEK 300 million
distributed over the years 2021-2024. The costs will depend on the
future development of the stock price.
The Key Contribution Plan 2021 ("KC Plan
2021")
KC Plan 2021 is designed to recognize the best talent,
individual performance, potential and critical skills as well as
encourage the retention of key employees. Approximately 7,500
employees will be eligible for the KC Plan 2021. There are three
award levels at 10%, 25% and 30% of the participants' annual gross
salary. Participants are assigned a potential award, which is
converted into a number of synthetic shares based on the same
market price of Ericsson series B shares used for the LTV 2021 at
the time of grant. The program has a three year total service
period during which the awards are paid on an annual rolling bases
following the below payment schedule:
- 25% of the award at the end of the first year,
- 25% of the award at the end of the second year, and
- 50% of the award at the end of the full vesting period.
The value of each synthetic share is driven by the absolute
share price performance of Ericsson series B shares during the
service period. At the date of payout for each instalment of the
above described annual rolling payment schedule, the synthetic
shares are converted into a cash amount, based on the market price
of Ericsson Series B shares at Nasdaq Stockholm at the respective
payout date, and this final amount is paid to the Participant in
cash gross before tax. It is estimated that approximately 10
million synthetic shares will be awarded under the KC Plan 2021.
The maximum total cost effect of the KC Plan 2021 on the income
statement, including social security fees, is estimated to be
approximately SEK 1.5 billion
distributed over the years 2021-2024. The costs will depend on the
future development of the stock price.
The Company's ongoing variable compensation programs are
described in further detail in the Annual Report 2020 in the Notes
to the consolidated financial statements, Note G3: Share-based
compensation and on the Company's website.
Item 17 The Board of Directors' proposal for resolution on
transfer of treasury stock to employees and on an exchange in
relation to the earlier resolution on the Long-Term Variable
Compensation Program 2020 ("LTV 2020")
Background
The Annual General Meeting 2020 resolved to implement LTV 2020.
The Annual General Meeting 2020 resolved to secure the Company's
undertakings under the program through equity swap agreements with
a third party. The Board of Directors considers that transfer of
treasury stock is the most cost efficient and flexible method to
secure the undertakings under LTV 2020, and therefore proposes that
the Annual General Meeting resolve as follows.
Proposal
a. Transfer of treasury stock under the LTV
2020
To secure the delivery of Performance Shares in accordance with
the terms of the LTV 2020, the Board of Directors proposes that the
Annual General Meeting resolve that the Company shall have the
right to transfer no more than 1.9 million shares of series B in
the Company 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 2020. 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 2020.
- 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 2020, i.e. in 2023.
- Employees covered by the terms and conditions of the LTV 2020
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 2022, transfer no more than 600,000 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 disseminated by Nasdaq
Stockholm.
Majority rules
The Annual General Meeting's resolution on transfer of treasury
stock according to item 17 a) 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 and the Annual General Meeting's resolution on transfer of
treasury stock according to item 17
b) above requires that shareholders representing at least
two-thirds of the votes cast as well as the shares represented at
the Annual General Meeting approve the proposal.
Item 18 The Board of Directors' proposal for resolution on
transfer of treasury stock in relation to the resolutions on the
ongoing Long-Term Variable Compensation Programs 2018 ("LTV 2018")
and 2019 ("LTV 2019")
Background
The Annual General Meeting 2020 resolved on a right for the
Company to transfer in total not more than 1.6 million 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 LTV 2018 and the LTV 2019.
The resolution was valid up to the following Annual General
Meeting. Resolutions on transfer of treasury stock for the purpose
of the above-mentioned programs must therefore be repeated at
subsequent Annual General Meetings.
In accordance with the resolutions on transfer of in total not
more than 1.6 million shares, no shares of series B have been
transferred up to February 23,
2021.
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 2022, not more than 1.6 million shares
of series B in the Company, or the lower number of shares of series
B, which as per March 30, 2021
remains of the original 1.6 million shares for the purposes of
covering certain payments, primarily social security charges that
may occur in relation to the LTV 2018 and LTV 2019. Transfer of the
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 approve the proposal.
______________________
Shares and votes
There are in total 3,334,151,735 shares in the Company;
261,755,983 shares of series A and 3,072,395,752 shares of series
B, corresponding to in total 568,995,558.2 votes. The Company's
holding of treasury stock as of February 23,
2021, amounts to 6,043,960 shares of series B, corresponding
to 604,396 votes.
Documents
The complete proposals of the Nomination Committee with respect
to items 1, 2, and 8 - 14 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 are
available at the Company's website www.ericsson.com. In respect of
all other items, complete proposals are provided under the
respective item in the notice. The documents will be sent upon
request to shareholders providing their address to the Company.
The annual report (including the Board of Directors' statement
relating to the proposal under item 7.4 above), the auditor's
report, the remuneration report, the auditor's statement regarding
the guidelines for remuneration to Group management and the Board
of Directors' statement relating to the proposal under item 16.2
above, are presented by being available at the Company and 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. The
general meeting share register will be available at the Company's
headquarters, Torshamnsgatan 21, SE-164 83 Stockholm, Sweden.
Stockholm, February 2021
Telefonaktiebolaget LM Ericsson (publ)
The Board of Directors
[1] A change is proposed to be made in the Swedish language
version that does not affect the English language version.
[2] Total shareholder return, i.e. share price growth including
dividends.
[3] 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 TSR Performance Period.
[4] The Peer Group consists of the following companies: Cap
Gemini, CGI Group, Cisco Systems, Cognizant, Corning, F5 Networks,
International Business Machines, Juniper Networks, Motorola
Solutions, Nokia, and Qualcomm. TSR will be measured in Swedish
Krona (SEK) for all companies in line with best practice.
NOTES TO EDITORS:
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FOR FURTHER INFORMATION, PLEASE CONTACT:
Contact person
Peter Nyquist, Head of Investor
Relations
Phone: +46 705 75 29 06
E-mail: peter.nyquist@ericsson.com
Investors
Stefan Jelvin, Director, Investor Relations
Phone: +46 709 86 02 27
E-mail: stefan.jelvin@ericsson.com
Lena Häggblom, Director, Investor Relations
Phone: +46 72 593 27 78
E-mail: lena.haggblom@ericsson.com
Media
Peter Olofsson, Head of Corporate
Communications
Phone: +46 702 67 34 45
E-mail: media.relations@ericsson.com
Corporate Communications
Phone: +46 10 719 69 92
E-mail: media.relations@ericsson.com
ABOUT ERICSSON
Ericsson enables communications service providers to capture the
full value of connectivity. The company's portfolio spans Networks,
Digital Services, Managed Services, and Emerging Business and is
designed to help our customers go digital, increase efficiency and
find new revenue streams. Ericsson's investments in innovation have
delivered the benefits of telephony and mobile broadband to
billions of people around the world. The Ericsson stock is listed
on Nasdaq Stockholm and on Nasdaq New
York. www.ericsson.com
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Notice to
Ericsson’s Annual General Meeting 2021
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