AGM Information • Mar 5, 2019
AGM Information
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Shareholders wishing to participate in the Meeting shall:
be entered in the register of shareholders maintained by Euroclear Sweden AB on Friday 5 April 2019;
give notice of participation by Friday 5 April 2019 at the latest, preferably before 17.00 CET, to Holmen AB, Group Legal Affairs, Box 5407, SE-114 84 Stockholm, Sweden, in which notice the number of assistants shall be stated. Notice may also be given by telephone: +46 (0)8 666 21 11 or via the company's website: www.holmen.com.
Shareholders whose shares are registered under a nominee name must temporarily re-register them in their own names with Euroclear Sweden to be entitled to participate. Such re-registration must be completed by Friday 5 April 2019. This means that shareholders must notify their account operator of their intention well ahead of this date. Shareholders who wish to be represented by a proxy may obtain a proxy form from the company. A proxy form is also available on the company's website, www.holmen.com.
11 Resolution concerning the discharge of the members of the Board and the CEO from liability
12 Decision on the number of Board members and auditors to be elected by the Meeting
The Annual General Meeting has previously decided to set up a Nomination Committee to submit the names of candidates for election to the Board, the fee to be paid to the Board and, in relevant years, the election of auditors and the auditors' fee. Pursuant to the Annual General Meeting's decision, the Nomination Committee shall consist of the Chairman of the Board and one representative of each of the three largest shareholders on 31 August each year. Prior to the 2019 Annual General Meeting, the Nomination Committee consists of Mats Guldbrand, L E Lundbergföretagen; Torbjörn Widmark, Kempe Foundations; Hans Hedström, Carnegie Fonder; and Fredrik Lundberg, Chairman of the Board. Chairman of the Nomination Committee is Mats Guldbrand.
The Nomination Committee has submitted the following proposals:
Compensation to the auditors is proposed to be paid against an approved invoice.
Section 14 It is proposed that Fredrik Lundberg, Carl Bennet, Lars Josefsson, Lars G Josefsson, Louise Lindh, Ulf Lundahl, Henrik Sjölund and Henriette Zeuchner be re-elected to the Board and that Alice Kempe be elected to the Board. Carl Kempe declined to stand for re-election.
Alice Kempe was born in 1967. She is Chairman of the Board of the Kempe Foundations and since 2001 employed at the Swedish Energy Agency.
It is proposed that Fredrik Lundberg be elected Chairman.
Section 15 It is proposed that authorised public accounting firm KPMG AB be reelected. KPMG AB has announced its intention to appoint authorised public accountant Joakim Thilstedt as principal auditor.
The Board proposes that a dividend of SEK 6.75 (6.50) per share be paid. The Board proposes that the date of record for entitlement to dividend be Monday 15 April 2019.
Provided the shareholders at the Annual General Meeting resolve in favour of the proposal, it is expected that the dividend will be distributed by Euroclear Sweden on Thursday 18 April 2019.
The Board proposes that the following guidelines be adopted for determining the salary and other remuneration of the CEO and senior executives, i.e. the business area managers and heads of Group staffs reporting directly to the CEO. The guidelines apply to agreements entered into after approval of the resolution by the Annual General Meeting.
Salary and other remuneration: The remuneration of the CEO and the senior management shall consist of a fixed market-based salary. Other benefits, principally car and accommodation, shall, insofar as they are provided, represent a limited part of the remuneration.
Over and above any share-based incentive programmes approved by the Annual General Meeting, no variable remuneration shall be paid.
Pension: The retirement age shall normally be 65 years. The pension benefit paid shall be premium-based, and in accordance with the ITP plan. Additional premium-based pension arrangements may apply.
Notice and severance pay: The period of notice shall be six months, whether at the initiative of the company or the employee. In the event of notice being given by the company, severance pay can be paid in an amount corresponding to no more than 18 months' salary.
Remuneration Committee: A Remuneration Committee appointed from among the members of the Board shall prepare business pertaining to the CEO's salary and other conditions of employment and submit proposals on such issues to the Board for decision. Detailed principles for determining the salaries, pension rights and other remuneration to senior management shall be laid down in a pay policy adopted by the Remuneration Committee.
Departures in individual cases: The Board is entitled to depart from these guidelines in individual cases if motivated by particular reasons. In the event of such a departure, information thereon and the reasons therefor shall be submitted to the next Annual General Meeting.
The Board of Directors proposes that the annual general meeting resolves on the implementation of a long-term share saving program (the "Program" or "LTIP 2019"). The Program is directed to the members of the Executive Management, the Business Area Managers and a number of key employees of the Holmen Group and shall be implemented after the annual general meeting 2019 in Holmen.
The annual general meeting 2016 resolved on a long-term share saving program that expires in connection with the announcement of Holmen's interim report for the first calendar quarter 2019 ("LTIP 2016"). The Board of Directors considers the program to be structured in an appropriate way and proposes that the annual general meeting 2019 adopts a long-term share saving program on, in all material respects, the same terms and conditions as LTIP 2016. However, as opposed to LTIP 2016, the Board of Directors proposes that LTIP 2019 shall have a matching condition, which shall relate to Total Shareholder Return (TSR). The Board of Directors further proposes that the performance condition shall, similar to LTIP 2016, be based on the average return on capital employed. However, the Board of Directors proposes that the level at which performance shares are allotted shall be higher than in LTIP 2016.
The overall purpose of the Program is to closely align the participants' interests with those of the employees and shareholders and continue to promote a long-term commitment to Holmen when LTIP 2016 expires. The Program is intended to attract and retain employees who are critical to Holmen's on-going success.
The Program shall be achievable, easy to understand, cost effective to administrate and easy to communicate.
The Board of Directors proposes that the implementation of the Program be made in accordance with the principal terms and conditions set out below.
5 (11)
d) The allotment of Performance Shares shall depend on the degree of fulfilment of the performance condition for the Program. The performance condition shall be based on a Program specific financial target related to the average return on capital employed ("ROCE") 1 for the financial years 2019, 2020 and 2021 (the "Performance Condition"). In connection with the expiry of the Vesting Period, the Board of Directors will publish information about to what extent the Performance Condition has been fulfilled.
The number of Performance Shares that may be allotted shall be calculated in accordance with the following:
1 Operating profit/loss (excl. items affecting comparability) expressed as a percentage of average capital employed as defined in the annual report for each year.
g) Participants must invest in Saving Shares during the period 9 May–31 May 2019, however with the right for the Board of Directors to extend (or postpone) the period for investment.
h) Matching Shares and Performance Shares may normally be allotted only after the expiration of the Vesting Period.
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n) The number of Matching Shares and Performance Shares will be subject to recalculation as a result of intervening bonus issues, share splits, rights issues, dividends exceeding 6 per cent of the equity in respect of a certain financial year and/or other similar corporate events.
The costs for the Program, which are charged in the profit and loss account, are calculated according to the accounting standard IFRS 2 and distributed over the Vesting Period. The calculation has been made based on the quoted closing price of Series B shares in Holmen as of 25 February 2019, i.e. SEK 196.00 per share, and the following assumptions: (i) an annual dividend yield of approximately 4 per cent, (ii) an estimated annual turnover of personnel of 5 per cent, (iii) an average fulfilment of the Performance Condition of 50 per cent, and (iv) a total maximum of 190 000 Matching Shares and Performance Shares eligible for
allotment. In addition to what is set forth above, the costs for the Program have been based on that the Program comprises no more than 60 Participants and that each Participant makes a maximum investment. In total, the costs for the Program according to IFRS 2 are estimated to approximately SEK 15 million excluding social security costs (SEK 28 million if the average fulfilment of the Performance Condition is 100 per cent). The costs for social security charges are calculated to approximately SEK 8 million, based on the above assumptions, and also assuming an annual share price increase of 10 per cent during the Program and a social security tax rate of 30 per cent (SEK 14 million if the average fulfilment of the Performance Condition is 100 per cent).
The expected annual costs of SEK 8 million, including social security charges, correspond to approximately 0.3 per cent of the Holmen Group's total employee costs for the financial year 2018 (0.6 per cent if the average fulfilment of the Performance Condition is 100 per cent).
Assuming that the Cap is reached (for this purpose calculated based on the quoted closing price of Series B shares in Holmen as of 25 February 2019, i.e. SEK 392.00 per share) and that all Participants are entitled to allotment of the maximum number of Matching Shares and Performance Shares in the Program and remain in the Program until the end of the Vesting Period, the maximum cost according to IFRS 2 for Holmen will amount to SEK 32 million and the maximum social security charges will amount to SEK 22 million.
Allotment of repurchased shares to fulfil the obligations under the Program would result in the following dilution effects (under the below mentioned assumptions). Upon maximum allotment of Matching Shares and Performance Shares and assuming annual dividends that do not exceed 6 per cent of the equity in respect of a certain financial year, the number of shares to be allotted free of charge under the Program amounts to 190,000 Series B shares in Holmen, corresponding to approximately 0.1 per cent of the share capital and approximately 0.03 per cent of the votes (calculated based on the number of Holmen Series B shares as of 25 February 2019). The effects on key ratios and profit per share are marginal.
The Board of Directors proposes that the annual general meeting resolves, as a main alternative, on transfers of Series B treasury shares free of charge to the Participants and that transfers of Series B treasury shares free of charge may be made to subsidiaries of Holmen in order to secure Holmen's obligations to deliver Series B shares to the Participants. The company currently holds 1,520,000 Series B shares in treasury. The detailed conditions of the Board of Directors' main alternative are set out in item 17.B.1 below.
Should the majority required under item 17.B.1 below not be reached, the Board of Directors proposes that Holmen shall be able to enter into an equity swap agreement with a third party, in accordance with item 17.B.2 below.
The proposed Program has, pursuant to the guidelines issued by Holmen's Board of Directors, been prepared by the Remuneration Committee of Holmen with the assistance of external advisors. The Remuneration Committee has informed the Board of Directors of the work, who has subsequently resolved that the Program shall be proposed to the annual general meeting 2019.
1. Resolution on transfers of acquired Series B treasury shares to the Participants
The Board of Directors proposes that the Annual General Meeting resolves, as a main alternative, that transfers of Holmen's Series B treasury shares may be made on the following terms.
The Board of Directors proposes that the annual general meeting, should the majority required under item 17.B.1 above not be reached, resolves that the expected financial exposure resulting from the Program may be hedged by Holmen entering into an equity swap agreement with a third party. Such swap agreement shall be on terms in accordance with market practice, whereby the third party against a fee undertakes to, in its own name, acquire and transfer Series B shares in Holmen to the Participants in accordance with the terms and conditions of the Program.
The shareholders' meeting's resolution on the implementation of the Program according to item 17.A above is conditional upon the meeting resolving either in accordance with the proposal on transfer of Series B treasury shares to the Participants under item 17.B.1 above or in accordance with the proposal on entering into a swap agreement with third party under item 17.B.2 above.
The shareholders' meeting's resolution on implementation of the Program according to item 17.A above requires simple majority among the votes cast. A valid resolution on transfer of Series B treasury shares to the Participants under item 17.B.1 above requires approval by shareholders representing not less than nine-tenths of the votes cast as well as of the shares represented at the meeting. A valid resolution on entering into a swap agreement with third party under item 17.B.2 above requires simple majority among the votes cast.
Holmen has since 2016 a three-year long-term incentive program, which is based on the same terms and conditions as the above proposed LTIP 2019 with the exceptions that the 2016 program does not contain any Matching Condition and that the level at which performance shares are allotted is lower in the 2016 program. LTIP 2016, which expires in connection with the announcement of Holmen's interim report for the first calendar quarter 2019, is further described in note 04 of Holmen's annual report for the financial year 2017.
The Board proposes that the Annual General Meeting resolve that the Board be mandated, for the period until the end of the next Annual General Meeting, to buy back, on one or more occasions, series B shares in the company to the extent that the company's holding of its own shares does not at any time exceed 10 per cent of all the shares in the company. The share purchases shall be transacted via Nasdaq Stockholm within the prevailing applicable range of prices (spread).
The Board further proposes that it be mandated by the Annual General Meeting to make decisions between now and the next Annual General Meeting to use the company's holding of its own shares as payment in connection with the acquisition of companies or lines of business or to finance such acquisitions, in which case the shares may also be sold via Nasdaq Stockholm. The mandate may be exercised on one or more occasions and may include the company's entire holding of its own shares at the time of the Board's decision. The mandate includes the right to decide to depart from shareholders' preferential rights. The transfer of shares on Nasdaq Stockholm shall take place within the prevailing applicable range of prices (spread). For share transfers outside Nasdaq Stockholm, payment will be possible in cash, with payment in kind or through offset, and the price shall correspond to an assessed market value at the time of such transfer.
The purpose of the mandates for repurchases and transfers of own shares, and the reason for deviation from shareholders' preferential rights, is to give the company the opportunity to use treasury shares to pay for or finance, without delay and in a flexible, cost-effective manner, acquisitions of companies or business operations. The purpose of this mandate to repurchase shares in the company is also to enable the Board to adjust the capital structure, thereby generating a higher value for shareholders.
A resolution in accordance with the proposal requires shareholders representing a minimum of two-thirds of both votes cast and shares represented at the Annual General Meeting to support the resolution.
If requested by a shareholder and the Board deems that it can take place without causing material damage to the company, the Board and the CEO shall provide information about circumstances that may affect the assessment of an item on the agenda, circumstances that may affect the assessment of the company's or its subsidiaries' financial situation, and the company's relationship with another Group company.
The annual report, the auditor's report, the Board's dividend proposal and its reasons therefore, the Board's proposal for guidelines for determining the salary and other remuneration of the CEO and senior management, the auditor's statement in accordance with Chap. 8 § 54 of the Swedish Companies Act, the Board's proposal for a share saving programme for senior executives and the Board's proposal for a mandate to acquire and transfer the company's own shares and the Board's reasons in support thereof shall be made available at the company's offices as of Thursday 21 March 2019 inclusive and shall also be published on the company's website, www.holmen.com.
Holmen AB has a total of 169,512,324 shares in issue, divided into 45,246,468 series A shares and 124,265,856 series B shares. Each series A share carries ten votes and each series B share one vote. The total number of votes is 576,730,536. Following previous buy-backs, the company holds 1,520,000 of its own series B shares, corresponding to approximately 0.9 per cent of all shares.
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For information om how personal data is processed, please visit https://www.euroclear.com/dam/ESw/Legal/Privacy-notice-bolagsstammorengelska.pdf.
Stockholm, March 2019
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