AGM Information • Feb 23, 2015
AGM Information
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The shareholders in Swedbank AB are hereby given notice to the Annual General Meeting at Dansens Hus, Barnhusgatan 14, 111 24 Stockholm, on Thursday 26 March, 2015 at 10:00 am (CET).
Shareholders are welcome from 08:30 am (CET). Before the Meeting it will be possible for shareholders to ask questions to the management of Swedbank. Light refreshments will also be served before the Meeting.
As a service to non-Swedish speaking shareholders, the Meeting will be simultaneously interpreted into English.
Shareholders who wish to attend the Meeting must be recorded in the share register maintained by Euroclear Sweden AB ("Euroclear", the Swedish Central Securities Depository) on 20 March, 2015 (the "Record Date"), and must give notice of their attendance to Swedbank's head office no later than 20 March, 2015 preferably before 3 pm (CET).
The notification shall state the name and should in addition thereto state the personal/company registration number (for Swedish permanent residents or companies), address, telephone number and the number of any advisors (not more than two).
Entrance cards, which shall be presented at the entrance to the meeting venue, will be sent from 21 March, 2015.
Shareholders whose shares are nominee-registered must – in addition to giving notice of their attendance – request that the shares be temporarily re-registered in their own name at Euroclear. Such registration should be requested at the nominee well before the Record Date (i.e. 20 March, 2015).
Shareholders represented by proxy or a representative should submit a power of attorney, registration certificate or other documents of authority to Swedbank at the address above well before the Meeting, preferably no later than 20 March, 2015. Power of attorney forms are available on the bank's web site at www.swedbank.se/ir under the heading "Årsstämma" (AGM).
Personal data obtained from the share register, notices of attendance at the Meeting and information on proxies and advisors will be used for registration, preparation of the voting list for the Meeting and, where applicable, the minutes of the Meeting.
The addresses by the Chair of the Board of Directors and the CEO will be available, following the closing of the Meeting, at www.swedbank.se/ir.
The Nomination Committee consists of Lennart Anderberg, Chair, appointed by the owner group Föreningen Sparbanksgruppen, Ramsay Brufer, appointed by Alecta, Jens Henriksson, appointed by Folksam, Johan Sidenmark appointed by AMF and Anders Sundström, Chair of the Board of Directors of Swedbank AB.
The Nomination Committee proposes that Counsel (Sw. advokat ) Claes Zettermarck is elected Chair of the Meeting.
The Board of Directors proposes that of the amount approximately SEK 45 110m at the disposal of the Meeting, approximately SEK 12 537m is distributed as dividends to holders of shares and the balance, approximately SEK 32 573m, is carried forward. The proposed total amount to be distributed and the proposed total amount to be carried forward, are based on all shares outstanding as of 20 February 2015 and could be changed in the event of additional share repurchases or if treasury shares are disposed of before the record day. A dividend of SEK 11.35 for each share is proposed. The proposed record date is 30 March, 2015. With this record date, the dividend is expected to be paid through Euroclear on 2 April, 2015.
The Auditor recommends discharge from liability.
The Nomination Committee proposes that the number of Board members, which shall be appointed by the Meeting, shall be nine.
The Nomination Committee proposes, for the period until the close of the next AGM, to raise the remuneration for the Board of Directors calculated on an annual basis as follows:
SEK 205 000 to each of the other Board Audit Committee members (SEK 200 000),
SEK 255 000 to the Chair of the Board's Risk and Capital Committee (SEK 250 000),
Unchanged remuneration is proposed for each member of the Board's remuneration committee i.e. SEK 100 000.
The Nomination Committee proposes that the remuneration for the Board of Directors may, after agreements between the board member and Swedbank and if it could be done without increase of cost for Swedbank and the board member fulfills the formal requirements for such invoicing, be invoiced by entity fully owned by the board member. If such invoicing is done the remuneration might be raised with an amount equal to Swedbank's savings.
The Nomination Committee proposes that the auditor's fee, as previously and as customary, shall be payable by approved account.
The Nomination Committee proposes, for the period until the close of the next AGM, that all Board members are re-elected, i.e.: Ulrika Francke, Göran Hedman, Lars Idermark, Anders Igel, Pia Rudengren, Anders Sundström, Karl-Henrik Sundström, Siv Svensson and Maj-Charlotte Wallin.
The Nomination Committee proposes that Anders Sundström be elected as Chair of the Board of Directors.
All proposed members, except Göran Hedman, are, in the opinion of the Nomination Committee, considered as independent in relation to the bank, the management of the bank and the major shareholders of the bank. However, Göran Hedman is considered independent in relation to the management of the bank and the major shareholders of the bank.
The Nomination Committee proposes a nomination process in accordance with the Swedish Corporate Governance Code and the following principles:
Nomination Committee has been constituted, provided that such shareholder has not already appointed a member to the Nomination Committee. The co-opted member shall not participate in the Nomination Committee's decisions.
The Board of Directors proposes mainly the following guidelines for remuneration to top executives: Top executives refer to the CEO of the bank and the executives who at each time reports to the CEO and who also are members of the Group Executive Committee.
Remuneration and other terms of employment for top executives shall be designed so that they (i) are consistent with and promote effective risk management and counteract excessive risk-taking and (ii) ensures access to executives with the competence that the bank needs. The guidelines, which apply until the next AGM, shall be applied in relation to every commitment on and every change in remuneration. The Board of Directors shall decide on the remuneration terms and may deviate from the guidelines, if there exist special reasons in a specific case.
Remuneration may consist of the components: fixed compensation in the form of base salary, benefits and pension and variable compensation. There should be an appropriate balance between fixed and variable components. Each top executive shall receive a base salary and may be entitled to both general benefits that are offered to all staff and special extra benefits. Pension benefits shall generally be granted in accordance with rules, collective agreements and practice in the country where the top executive is permanently resident. Pension benefits may be defined benefit according to collective agreements and/or defined contribution and are vested once they have accrued. The Board of Directors shall decide on a cap on the pensionable income. If the bank terminates the employment, salary may be paid during a notice period of 6– 12 months. In addition, severance pay can be paid during 6–12 months. Variable compensation may be paid in the form of shares and limits for the maximum outcome shall be determined. Payment of variable remuneration shall be deferred and be conditional upon the criteria fulfilment on which the remuneration is based being proved long-term sustainable and on the group's position not having materially deteriorated. If the conditions for payment are not satisfied, the remuneration shall be reduced in whole or in part. The material terms of incentive programs shall be resolved by a General Meeting of Shareholders.
The Board of Directors has, subject to approval of the 2015 AGM, decided to implement a general performance and share based remuneration program for 2015 ("Eken 2015"). Top executives are as a general rule included in Eken 2015.
The Board of Directors has, subject to the approval of the AGM 2015, also resolved to establish an individual performance and share based remuneration program for 2015 ("IP 2015"). Top executives are as a general rule not included in IP 2015. However, the Board of Directors, or the Board of Directors' Remuneration Committee after a resolution by the Board of Directors, may grant exemptions from this where material grounds exist.
Item 16; Decision to acquire own shares in accordance with the Securities Market Act The Board of Directors proposes that the bank, to facilitate its securities operations, during the period until the AGM in 2016, in its securities operations shall be permitted to continuously acquire to its so called trading book its own shares in accordance with the Securities Market Act to the extent that the total holding of such shares at any given time does not exceed one (1) percent of the total number of shares in the bank. The price for such acquired shares shall at each time correspond to the prevailing market price.
Item 17; Decision regarding authorization for the Board of Directors to decide on acquisitions of own shares in addition to what has been stated in item 16 The Board of Directors proposes that the AGM authorizes the Board of Directors, for the period until the AGM in 2016, to resolve on acquisitions, in addition to what is stated in connection with item 16, of the bank's own shares on one or more occasions.
The total holding of own shares (including shares acquired under item 16) may not exceed one tenth of the total numbers of shares in the bank at each time. Acquisitions may only be made through purchases on Nasdaq Stockholm. An acquisition may only be made at a price within the prevailing spread between the highest bid price and the lowest ask price.
The capital requirement for Swedbank, calculated as of 31 December 2014 and assuming that Swedbank's capital requirement for Pillar 2 risks is in line with the SFSA's standard value for Swedish banks (1.5 per cent), is equivalent to a Common Equity Tier 1 capital ratio of 19.3 percent. Consideration is also given to the introduction of a systemic risk buffer (January 2015) and a countercyclical buffer (September 2015). Swedbank's consolidated situation Common Equity Tier 1 ratio according to Basel 3 was 21.2 percent and the total capital ratio was 25.5 percent as per 31 December 2014.
Given the current capitalization and earnings capacity, the Board of Directors is of the opinion that the bank meets the regulatory requirements on Common Equity Tier 1 capital with an adequate buffer.
The conditions for the bank's business as well as the external conditions are constantly changing. Hence, it may become desirable to increase or decrease the capital base or change the composition between Common Equity Tier 1 capital and other capital, for example by repurchase of the bank's own shares, issue of loans eligible for inclusion in the capital base or a combination of different measures..
Against that background, the proposal on a buyback-authorization is justified as one of several measures to give the Board of Directors the possibility to continuously adapt the bank's capital structure to existing capital needs.
The Board of Directors proposes that the AGM authorizes the Board of Directors, for the period until the AGM in 2016, to resolve on the issuance of convertibles on one or more occasions, with or without deviation from the shareholders' preferential rights. The convertibles shall only convert mandatorily into shares on certain conditions but not be convertible at the option of the holders. The number of shares as a result of conversion may not exceed 100 000 000 (or the corresponding number due to bonus issue, share issue, conversion of convertibles, split or reversed share split or similar corporate events), including the number of shares resulting from any conversion of convertibles issued under authorisation from previous AGM(s). The Board of Directors resolves on all other terms and conditions for the issue.
According to regulations that came into force 1 January 2014, a loan must, in order for it to be eligible for inclusion as Additional Tier 1 capital in the capital base, contain conditions to the effect either that the loan may be converted into shares if a predetermined trigger event occur, for example that the bank's Common Equity Tier 1 ratio drops below a certain level, or that the loan will be written down under corresponding conditions. Debt instruments eligible for inclusion as Tier 2 capital in the capital base may also be issued with similar terms and conditions. An issue of debt instruments convertible into shares can only be made in accordance with the rules of the Swedish Companies Act on issuance of convertibles. Convertibles may be used to strengthen the bank's equity in the event of future actual or anticipated financial difficulties. This possibility should be advantageous also to current shareholders.
Since convertibles issued in accordance with the authorization would mainly be demanded by debt investors of the Swedish and international capital markets, it must be possible to offer them to the market with or without deviation from the shareholders' preferential rights. The purpose of this proposal is for the bank, without convening a General Meeting of Shareholders, through decision by the Board of Directors, to be able to issue convertibles if considered necessary in order to effectively handle the capital base.
Item 19; Approval of performance and share based remuneration programs for 2015 In conformity with previous years, the Board of Directors has decided on a performance and share based remuneration program for 2015 comprising a common program with deferred variable remuneration in the form of shares ("Eken 2015") (see item 19 a)) and an individual program ("IP 2015") with variable remuneration in two parts, cash and deferred variable remuneration in the form of shares (see item 19 b)). Eken 2015 and IP 2015 are in all material respects designed in the same manner as the programs of previous years. The Board of Directors of Swedbank 's decision on Eken 2015, and as far as it relates to deferred variable remuneration in the form of shares, IP 2015 has been made subject to the AGM's subsequent approval.
Eken 2015 includes approximately 14 500 employees within the Swedbank Group ("Group"). Also top executives are, as a general rule included, i.e. the executives of the Group Executive Committee ("GEC") who at each time report to the bank's CEO. Units that are excluded are amongst others the joint venture company Entercard and Ölands Sparbank. Staff working with any of these units may be included.
In essence, Eken 2015 means that to the extent certain performance targets are achieved during the financial year 2015 participants are awarded a variable remuneration in the beginning of 2016 ("Share Performance Amount") in the form of conditional, non-transferable performance rights. Each performance right carries a right to receive at no cost in year 2019 one share in the bank subject to certain conditions being fulfilled at the time of delivery. The allotment of performance rights and the outcome are dependent on the extent to which the performance targets are achieved. The performance targets are based on the profit, adjusted for capital costs and risks, of the Group and the individual performance under the bank's performance development process which comprises an assessment of a number of behaviors linked to the Group's values – open, simple and caring.
The maximum Share Performance Amount is normally limited to 1.6 months' salary for an individual participant employed in Estonia, Latvia or Lithuania and 0.8 months' salary for an individual participant employed in another country. Depending on the assessment, reallocation between participants may occur resulting in the maximum Share Performance Amount being three times the above mentioned limitations. The base salary is defined as the agreed fixed salary for December 2015.
The total Share Performance Amount for all participants is limited to approximately SEK 438m for Eken 2015.
Conversion of the allotted Share Performance Amount into performance rights is made by dividing such amount by the average daily volume weighted price paid per share in Swedbank at Nasdaq Stockholm during the last ten trading days in January 2016 (the "Translation Rate"), however, not lower than SEK 80 per share (the "Floor Price").
The total number of performance rights that may be allotted to the participants amounts to a maximum of approximately 5.5m, which equals the quotient of (a) the highest aggregate Share Performance Amount for all participants divided by (b) the Floor Price. If the Translation Rate is hypothetically assumed to be SEK 200, the total number of Performance Rights which may be allotted to the Participants amounts to a maximum of approximately 2.2m.
In the Group's financial accounting the total Share Performance Amount will normally be recognized as staff costs in the income statement during the accrual period which in the accounts is considered to correspond to the duration.
The maximum cost for the Share Performance Amount amounts to approximately SEK 438m, which corresponds to approximately 0.2 percent of the bank's market value as of 31 January 2015. The estimated cost for the Share Performance Amount amounts to approximately SEK 274m, which corresponds to approximately 0.1 percent of the bank's market value as of 31 January 2015.
The maximum annual cost in the income statement is expected to be approximately SEK 105m. The estimated annual cost in the income statement amounts to approximately SEK 66m.
The estimates of costs are standardized and based upon an achievement of the performance targets corresponding to approximately 60 percent of the total Share Performance Amount.
The bank's estimated maximum commitment, if hedged by way of transfer of own shares, results in a total dilution of not more than approximately 0.5 percent in relation to the outstanding number of shares and votes as of 31 December 2014.
The dilution is expected to have a marginal impact on the Group's key ratios, also when taken together with the proposed IP 2015 (according to the proposal under Item 19 b)).
The Board of Directors shall also have the right to resolve that Performance Rights (all or part of all Performance Rights) shall entitle to, without consideration, receive such financial instrument in the bank as set out in article 94 of CRD IV instead of shares.
IP 2015 comprises approximately 700 employees in the Swedbank Group (Group) in positions where individual performance is deemed to be of direct importance for creating revenue and where variable compensation is deemed to encourage performance.
IP 2015 provides a possibility to receive variable remuneration partly in the form of cash remuneration, partly in the form of deferred remuneration consisting of shares. In essence, the program means that to the extent certain performance targets are achieved during the financial year 2015 the participants are allotted a variable remuneration in the beginning of 2016 of which a part (Share Performance Amount) is allotted in the form of conditional, nontransferable performance rights. Each performance right carries a right to receive at no cost in year 2019 one share in the bank, subject to certain conditions being fulfilled at the time of delivery.
The allotment of performance rights and the outcome are dependent on the extent to which the performance targets are achieved. The performance targets are, for the majority of the participants, determined on the following three evaluation levels (1) the profit after tax,
adjusted for capital costs and risks, for the Group (2) the profit after tax, adjusted for capital costs and risks, for the respective business area and whether this has been achieved in accordance with the business area's strategic plan and a sound risk attitude and (3) the risk adjusted results on an individual level and team level, which is assessed inter alia of individual performance under the bank's performance development process which comprises both financial and operational factors. Further, a number of behaviors linked to the Group's values – open, simple and caring – are assessed and (4) risk evaluation, which is made on Group- and/or business area level and/or individual level.
The maximum Gross Performance Amount is individually predetermined for each Participant and is dependent on, inter alia, business area or function, the Participant's individual position and/or areas of responsibility. The maximum Gross Performance Amount, which also include Eken 2015, if applicable, for all staff categories across the Group, cannot exceed the variable pay cap as decided by applicable laws or other regulations.
The total Share Performance Amount for all participants is limited to a maximum of approximately SEK 185m.
Conversion of the allotted Share Performance Amount into performance rights is made on the basis of a translation rate based on the average daily volume weighted price paid per share in Swedbank at Nasdaq Stockholm during the last ten trading days in January 2016, however, not lower than SEK 80 per share (the Floor Price).
The total number of performance rights that may be allotted to the participants amounts to a maximum of approximately 2.3m, which equals the quotient of (a) the highest aggregate Share Performance Amount for all participants divided by (b) the Floor Price. If the Translation Rate is hypothetically assumed to be SEK 200, the total number of performance rights which may be allotted to the Participants amounts to a maximum of approximately 0.9m.
In the Group's financial accounting the total Share Performance Amount will be recognized as staff costs in the income statement during the accrual period which in the accounts is considered to correspond to the duration.
The maximum annual cost is expected to be approximately SEK 44m in the income statement. The estimated annual cost amounts to approximately SEK 21m in the income statement.
The cost estimates are standardized and based upon an achievement of the performance targets corresponding to approximately 50 percent of the total Share Performance Amount.
The bank's estimated maximum commitment, if hedged by way of transfer of own shares, results in a total dilution of not more than approximately 0.2 percent in relation to the outstanding number of shares and votes as of 31 December 2014. The dilution is expected to have a marginal impact on the Group's key ratios, also when taken together with the proposed Eken 2015 (according to item 19 a)).
The Board of Directors shall have the right to resolve that Performance Rights (all or part of all Performance Rights) shall entitle its holder to, without consideration, receive such financial instruments in the bank as set out in article 94 of CRD IV instead of shares.
The Board of Directors shall have the right to resolve that the Share Performance Amount shall form a higher proportion of the Gross Performance Amount than 40 percent, and in such case resolve on how large share of the Share Performance Amount which shall be postponed in accordance with what is set out in CRD IV.
Considering that the bank holds an amount of own repurchased shares – which the Board of Directors deems sufficient to also hedge the bank's commitment in relation to Eken 2015 and IP 2015 (together referred to as "Program 2015") – the Board of Directors proposes that Swedbank's commitment under Program 2015, and previous common and individual performance and share based remuneration programs within the Swedbank Group – that in whole or in part – have been resolved by or adopted subject to subsequent approval by a General Meeting of Shareholders' of Swedbank ("Previous Programs") – is to be secured by the transfer, with deviation from the Shareholders' rights, at no cost, of own shares held by Swedbank and acquired by virtue of authorization by an AGM to eligible participants in Program 2015 and Previous Programs.
The Board of Directors' proposal consists of transfer of own shares partly, at no cost, to entitled participants under Program 2015 and Previous Programs, directly or where applicable through the bank's subsidiaries or an external party engaged for this purpose and partly at Nasdaq Stockholm if the Board of Directors deems it appropriate, to cover certain costs, in particular social security costs and ancillary salary costs.
Not more than 27 300 000 shares in aggregate (or such adjusted higher number of shares which may be a result of a bonus issue, share split or corresponding corporate events) may be transferred in accordance with the above. If transfer of the maximum amount of shares (27 300 000) occurs, this would result in a total dilution of approximately 2.5 percent in relation to the outstanding number of shares and votes as of 31 December 2014.
The Board of Directors' proposal as per above is conditional upon the resolution of the Board of Directors regarding Eken 2015 and/or deferred variable remuneration in the form of shares under IP 2015 having been approved by the AGM.
If the AGM does not approve the proposal as per above, the Board of Directors may instead hedge the bank's commitment to deliver shares – in whole or in part – for Program 2015 by way of an agreement (equity swap agreement, certificate or similar) with a financial institution engaged for this particular purpose, which according to such agreement will in its own name acquire and transfer to the Participants shares in Swedbank.
The shareholder Thorwald Arvidsson proposes that the AGM resolves on an examination through a special examiner regarding the bank's attempted acquisition in the real estate agent business and the bank's equity fund management, as regards background as well as consequences for the bank.
The shareholder Thorwald Arvidsson proposes that the AGM resolves on an examination through a special examiner regarding the economic consequences of the decisions of strategic importance which were taken during the period when Carl Eric Stålberg was Chair of the Board of Directors and Anders Sundströms connections to the so called SCA-sphere (travels in so called private jets etc.) and any current or former business relations of the bank with this sphere.
The shareholder Thorwald Arvidsson proposes that the AGM resolves that an economic historian be retained in order to evaluate the Stålberg-era.
The proposal is conditional of that the AGM does not resolve in accordance with the proposal under item 21.
The shareholder Thorwald Arvidsson proposes that the AGM resolves to instruct the Board of Directors to take the necessary measures to form an independent shareholders' association.
The shareholder Thorwald Arvidsson proposes that the AGM resolves to instruct the Board of Directors to acquire a private jet for the disposition of the current Chair of the Board of Directors.
The shareholder Göran Westman proposes that the AGM resolves to instruct the Board of Directors and/or the CEO to, prior to the AGM 2016, implement the Lean-concept in all operations of the Swedbank group.
At the time of issuance of this notice the total number of shares in Swedbank amounts to 1,132,005,722, all shares, and the number of voting rights in Swedbank amounts to 1,132,005,722.
27 226 240 shares are held by the bank itself at the time of issuance of this notice.
Approval of the Board of Directors' proposal according to items 16-18 requires that the AGM's resolution is supported by shareholders representing at least two thirds of the votes cast and shares represented at the Meeting. Approval of the Board of Director's proposal according to item 19 c) requires that the AGM's resolution is supported by shareholders representing at least nine tenths of the votes cast and shares represented at the Meeting. Approval of Thorwald Arvidsson's proposals according to item 20 and 21 requires that the AGM's
resolution is supported by shareholders representing either at least one tenth of all shares in the bank or at least one third of the shares represented at the Meeting.
The accounts and auditor's reports, the complete proposals of the Board of Directors in respect of items 9 and 15-19, the Board of Director's statements pursuant to items 9, 16 and 17, the statement from the bank's Auditor according to Chapter 8, Section 54 of the Swedish Companies Act, the complete proposals of the Nomination Committee and the matter submitted by the shareholders Thorwald Arvidsson in respect of items 20-24 and Göran Westman in respect of item 25, will be made available at Swedbank, the Company Secretary, Landsvägen 40, Sundbyberg, no later than from and including 5 March, 2015. The documents will be sent to shareholders who so request and provide their postal address. The documents, together with the annual report, will also be made available no later than from and including 5 March, 2015 at www.swedbank.se/ir.
At the AGM, the Board of Directors and the CEO are under a duty to, upon request by any shareholder and where the Board of Directors believes that such may take place without material damage to the bank and without any appreciable inconvenience to any person, provide information, regarding any circumstances which may affect the assessment of a matter on the agenda or of the bank's financial situation. Such duty to provide information applies also to the bank's relation to other group companies, the consolidated accounts and such circumstances regarding subsidiaries as specified in the foregoing sentence.
The shareholders are warmly welcomed to the AGM.
Stockholm in February 2015 Swedbank AB (publ) The Board of Directors
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