Apr 2, 2019 8:01 AM CET
The shareholders of Tele2 AB (publ) are hereby invited to the Annual General Meeting on Monday 6 May 2019 at 3.00 p.m. CEST at the Hotel At Six, Brunkebergstorg 6 in Stockholm.
Shareholders who wish to attend the Annual General Meeting shall
Shareholders shall in their notice to attend state name, personal identification number or company registration number, address, phone number and number of advisors, if applicable. Shareholders whose shares are registered in the names of nominees must temporarily re-register such shares in their own name in order to be entitled to attend the Annual General Meeting. In order for such re-registration to be completed on Monday 29 April 2019 the shareholder must inform their nominees well before that day. Shareholders attending by a proxy or a representative should send documents of authorisation to the mail address above well before the Annual General Meeting. A template proxy form is available on the company's website www.tele2.com under the heading “Annual General Meeting 2019”, found under the section “Governance”. Shareholders cannot vote or, in other way, attend the Annual General Meeting by remote access.
RESOLUTIONS PROPOSED BY THE NOMINATION COMMITTEE
Election of Chairman of the Annual General Meeting (item 2)
The Nomination Committee proposes that Wilhelm Lüning, member of the Swedish Bar Association, is elected to be the Chairman of the Annual General Meeting.
Determination of the number of members of the Board and election of the members of the Board and the Chairman of the Board (items 13, 15(a)-(g) and 16)
The Nomination Committee proposes that the Board shall consist of seven members.
The Nomination Committee proposes that Andrew Barron, Anders Björkman, Georgi Ganev, Cynthia Gordon, Eva Lindqvist, Lars-Åke Norling and Carla Smits-Nusteling, shall be re-elected as members of the Board until the close of the next Annual General Meeting.
The Nomination Committee proposes that Carla Smits-Nusteling shall be elected as new Chairman of the Board.
Determination of the remuneration to the members of the Board and the auditor (item 14)
The Nomination Committee proposes remuneration to the Board with a total amount of SEK 6,525,000.
The proposed remuneration for ordinary Board work for the period until the end of the next Annual General Meeting amounts to a total of SEK 5,675,000 and shall be allocated in accordance with the following:
The proposed remuneration for work within the committees of the Board for the period until the end of the next Annual General Meeting amounts to a total of SEK 850,000 and shall be allocated in accordance with the following:
The Nomination Committee proposes that remuneration to the auditor shall be paid in accordance with approved invoices.
Determination of the number of Auditors and election of Auditor (item 17)
In accordance with the Audit Committee’s recommendation, the Nomination Committee proposes that the company shall have one registered accounting firm as auditor, and that the registered accounting firm Deloitte AB shall be re-elected as auditor until the close of the 2020 Annual General Meeting. Deloitte AB has informed Tele2 that the authorised public accountant Pontus Pålsson will continue as auditor-in-charge if Deloitte AB is re-elected as auditor.
RESOLUTIONS PROPOSED BY THE BOARD
Dividend (item 11)
The Board proposes a dividend of SEK 4.40 per share to be paid in two equal instalments of SEK 2.20 per share each. The record date for the first dividend payment shall be on Wednesday 8 May 2019 and for the second dividend payment Wednesday 2 October 2019. If the Annual General Meeting resolves in accordance with the proposal, it is estimated that Euroclear Sweden will execute the payments on Monday 13 May 2019 and Monday 7 October 2019, respectively.
Guidelines for remuneration to senior executives (item 18)
The Board proposes the following guidelines for determining remuneration for senior executives.
The objectives of Tele2’s remuneration guidelines are to offer competitive remuneration packages to attract, motivate, and retain key employees within the context of an international peer group. The aim is to create incentives for the management to execute strategic plans and deliver excellent operating results, and to align management’s incentives with the interests of the shareholders. Senior executives covered by the proposed guidelines include the CEO and members of the Leadership Team ("senior executives").
Remuneration to the senior executives should comprise annual base salary and variable short-term incentive (STI) and long-term incentive (LTI) programs.
The STI shall be based on the performance in relation to established objectives. The objectives shall be related to the company's overall result and the senior executives’ individual performance. The STI can amount to a maximum of 100 percent of the annual base salary.
The structure of the LTI shall ensure a long-term commitment for Tele2’s development and value creation, and may be both share and share price related as well as cash based.
Other benefits may include e.g. company cars and for expatriated senior executives e.g. housing benefits for a limited period of time. The senior executives may also be offered health care insurances.
The senior executives are offered defined contribution pension plans. Defined contributions for pensions to the CEO and the other senior executives can amount to a maximum of 20 percent (previously 25 percent for the CEO) of the annual remuneration (base salary and STI).
The maximum period of notice of termination of employment shall be 12 months in the event of termination by the CEO and 6 months in the event of termination by any of the other senior executives. In the event of termination by the company, the maximum notice period during which compensation is payable is 18 months for the CEO and 12 months for any of the other senior executives.
Under special circumstances, the Board may deviate from the above guidelines. In such a case, the Board is obligated to give account of the reason for the deviation during the following Annual General Meeting.
Board Members, elected at General Meetings, may in certain cases receive a fee for services performed within their respective areas of expertise, outside of their Board duties. Compensation for these services shall be paid at market terms and be approved by the Board.
Information regarding the guidelines for remuneration to senior executives
In accordance with the Swedish Corporate Governance Code rule 9.1 the Remuneration Committee within the Board monitors and evaluates the application of the guidelines for remuneration to the senior executives established by the Annual General Meeting. Also, the company's auditor has, pursuant to Chapter 8 Section 54 of the Companies Act (2005:551), provided a statement with regarding the application of the guidelines for remuneration to the senior executives which have been applied during 2018.
For information of the application of, and the deviations from, the guidelines for remuneration to senior executives please refer the Evaluation of remuneration to the Senior Executives (Report according to the Swedish Corporate Governance Code 9.1, and Chapter 8 Section 51 of the Swedish Companies Act (2005:551)) and the auditor’s statement which both are available at Tele2’s website www.tele2.com under the heading “Annual General Meeting 2019, found under the section “Governance”.
Incentive programme (items 19(a)-(e))
The Board proposes that the Annual General Meeting resolves to adopt a retention and performance-based incentive programme in accordance with items 19(a)-(e) below.
Tele2’s Remuneration Committee has prepared the incentive programme in consultation with external advisors and major shareholders. The incentive programme has been reviewed by the Board at board meetings during the end of 2018 and the first months of 2019.
The proposals below are supported by major shareholders.
Adoption of an incentive programme (item 19(a))
Summary of the programme
The Board proposes that the Annual General Meeting resolves to adopt a retention and performance-based incentive programme ("LTI 2019"), based on a similar structure as last year, but with removal of two allocation categories, as well as adjustment of the number of performance shares for one category.
LTI 2019 is proposed to include approximately 225 senior executives and other key employees within the Tele2 Group. The participants in LTI 2019 are required to hold Tele2 shares. These shares can either be shares already held or shares purchased on the market in connection with the notification to participate in LTI 2019. The personal investment will thereafter be matched by the company through free-of-charge granting of retention and performance rights on the terms stipulated below.
In the event delivery of shares under LTI 2019 cannot be achieved at reasonable costs, with reasonable administrative efforts or due to market conditions, participants may instead be offered a cash-based settlement.
The rationale for the proposal
The purpose of LTI 2019 is to create conditions for retaining competent employees in the Tele2 Group. LTI 2019 has been designed based on the view that it is desirable that senior executives and other key employees within the group are shareholders in the company. Participation in LTI 2019 requires a personal investment in Tele2 shares, be it shares already held or shares purchased on the market in connection with the notification to participate in LTI 2019.
By offering an allotment of performance rights which are based on the fulfilment of defined profits and activity-based conditions, the participants are rewarded for increased shareholder value. Further, LTI 2019 rewards employees’ loyalty and long-term value growth in the company. Against this background, the Board believes the adoption of LTI 2019 will have a positive effect on the Tele2 Group’s future development and thus be beneficial for both the company and its shareholders.
Employees must own Tele2 shares in order to participate in LTI 2019. These shares can either be shares already held, provided that the shares are not used as investment shares under the share-based incentive programmes for the years 2017 or 2018, or shares purchased on the market in connection with notification to participate in LTI 2019. The maximum number of shares that the employee can hold under LTI 2019 will correspond to approximately 15 - 25 per cent of the employee’s annual base salary as further described below. For each Tele2 share held under LTI 2019, the participants will be granted retention and performance rights by the company.
General terms and conditions
Subject to fulfilment of certain retention and performance-based conditions during the period 1 April 2019 – 31 March 2022 (the "Measurement Period") and the participant maintaining the invested shares at the release of the interim report for January – March 2022 and, with certain exceptions, maintaining the employment within the Tele2 Group, each right entitles the participant to receive one Tele2 share free-of-charge. The retention and performance rights do not entitle the holder to receive dividends, but in order to align the participants’ and the shareholders’ interests, the company will compensate the participants for any dividends paid on the underlying shares during the Measurement Period by increasing the number of shares that each retention and performance right entitles to at the end of the vesting period. It should be noted that the participants in LTI 2019 will not be compensated for dividend proposed at the Annual General Meeting 2019.
Retention and performance conditions
The rights are divided into Series A (retention rights) and Series B (performance rights). The number of Class B shares the respective participant will receive after vesting depends on which category the participant belongs to and on the fulfilment of the following defined retention and performance-based conditions:
Series A The total shareholder return on the Tele2 shares (TSR) during the Measurement Period exceeding 0 per cent as entry level.
Series B The total shareholder return on the Tele2 shares (TSR) during the Measurement Period being equal to the median TSR for a peer group comprising BT Group, Deutsche Telekom, DNA, Elisa, Freenet (Xet), Koninklijke KPN, NOS SGPS, Orange, Proximus, Swisscom, Sunrise Communications, Telecom Italia, Telefonica, Telefonica Deutschland, Telenet Group Holding, Telekom Austria, Telenor, Telia Company and Vodafone as entry level, and exceeding the median TSR for the peer group with 20 percentage points as the stretch level.
The determined levels of the conditions include an “entry” and a “stretch” with a linear interpolation applied between these levels as regards the number of rights that vest. The entry level constitutes the minimum level which must be reached in order to enable vesting of the rights in the relevant series. If the entry level is reached, the number of rights that vests and give right to Class B shares is proposed to be 100 per cent for Series A and 50 per cent for Series B. If the entry level is not reached for a certain series, all retention or performance rights (as applicable) in that series lapse. If the stretch level for Series B is met, all retention and performance rights vest. The Board intends to disclose the outcome of the retention and performance-based conditions in the annual report for the financial year 2022.
Retention and performance rights
The retention and performance rights shall be governed by the following terms and conditions:
Preparation and administration
The Board, or a committee established by the Board for these purposes, shall be responsible for preparing the detailed terms and conditions of LTI 2019, in accordance with the mentioned terms and guidelines. To this end, the Board shall be entitled to make adjustments to meet foreign regulations or market conditions. The Board may also make other adjustments if significant changes in the Tele2 Group or its operating environment would result in a situation where the decided terms and conditions of LTI 2019 no longer serve their purpose. The Board’s possibility to make such adjustments does not include the grant of continued participation for senior executives in the company’s long-term incentive programmes after the termination of their respective employments.
LTI 2019 is estimated to comprise up to 388,500 shares held by the participants entitling to allotment of up to 1,794,000 rights, whereof 388,500 retention rights and 1,405,500 performance rights. The participants are divided into different categories and in accordance with the above, LTI 2019 will comprise the following number of shares and maximum number of rights for the different categories:
Scope and costs
LTI 2019 will be accounted for in accordance with IFRS 2 which stipulates that the rights should be recorded as a personnel expense in the income statement during the vesting period. Based on the assumptions of a share price of SEK 120.10 (closing share price of the Tele2 Class B share on 6 March 2019 of SEK 122.30 reduced by the proposed dividend of SEK 2.20 per share, which is distributed from underlying share before the launch of LTI 2019), a maximum participation, an annual employee turnover of 10 per cent among the participants, a fulfilment of performance conditions of 50 per cent including a full vesting of retention rights, the cost for LTI 2019, including financing costs, but excluding social security costs, is estimated to approximately SEK 74 million. The cost will be allocated over the years 2019 – 2022. At a 100 per cent fulfilment of the performance conditions the total cost is still approximately SEK 74 million, given the performance conditions are market-related according to IFRS 2.
The calculated social security cost will be recorded as a personnel expense in the income statement by current reservations. The social security cost is estimated to approximately SEK 43 million with the assumptions above (approximately SEK 70 million at a 100 per cent fulfilment of the performance conditions), an average social security charge rate of 30 per cent and an annual share price increase for Tele2’s Class B shares of 10 per cent during the vesting period.
The participant’s maximum profit per right in LTI 2019 is limited to SEK 463, which equals to four times the average closing share price of the Tele2 Class B share during February 2019 with deduction for the proposed dividend, which is distributed from underlying share before the launch of LTI 2019. If the value of the Tele2 B-share exceeds SEK 463 at vesting, the number of Class B shares that each right entitles the participant to receive at vesting will be reduced correspondingly.
The maximum dilution is up to 0.30 per cent of outstanding shares, 0.23 per cent of votes and 0.12 per cent in terms of costs for LTI 2019. The calculation is made in accordance with IFRS 2, divided by Tele2’s market capitalisation, excluding the dividend proposed to the Annual General Meeting 2019. Together with rights granted under the incentive programmes for the years 2016, 2017 and 2018, the maximum dilution is up to 0.73 per cent of outstanding shares and 0.56 per cent of votes.
If the maximum profit of SEK 463 per right is reached, all invested shares are retained under LTI 2019 and a fulfilment of the retention and performance conditions of 100 per cent, the maximum cost, as defined in IFRS 2, is approximately SEK 101 million and the maximum social security cost is approximately SEK 249 million.
For information on Tele2’s other equity-related incentive programmes, reference is made to the annual report for 2018, note 33.
Effect on key ratios
If LTI 2019 had been introduced in 2018 with the assumptions above, the impact on basic earnings per share would have resulted in a dilution of 2.0 per cent or from SEK 3.01 to SEK 2.95 on a pro forma basis.
The annual cost of LTI 2019, including financing costs and social security costs, is estimated to approximately SEK 40 million given the above assumptions. This cost can be related to the company’s total personnel costs, including social security costs, of SEK 3,540 million in 2018.
Delivery of Class B shares
To ensure the delivery of shares under LTI 2019, as well as other outstanding equity-related incentive programmes, the Board proposes that the Annual General Meeting resolves to authorise the Board to resolve on a directed issue of Class C shares to Nordea Bank in accordance with item 19(b), and further to authorise the Board to subsequently resolve to repurchase the Class C shares from Nordea Bank in accordance with item 19(c). The Class C shares will then be held by the company, whereafter the appropriate number of Class C shares will be reclassified into Class B shares and subsequently be delivered to the participants under LTI 2019 as well as other outstanding equity-related incentive programmes.
The Board further proposes that the Annual General Meeting resolves that a maximum of 2,100,000 Class B shares may be transferred to the participants in accordance with the terms of LTI 2019. These shares can either be Class B treasury shares held by the company or Class B shares held by the company after reclassification from Class C shares.
Authorisation to issue Class C shares (item 19(b))
The Board proposes that the Annual General Meeting resolves to authorise the Board, during the period until the Annual General Meeting 2020, to increase the company’s share capital by not more than SEK 2,550,000 by the issue of not more than 2,040,000 Class C shares, each with a ratio value of SEK 1.25. With disapplication of the shareholders' preferential rights, Nordea Bank shall be entitled to subscribe for the new Class C shares at a subscription price corresponding to the ratio value of the shares. The purpose of the authorisation and the reason for the disapplication of the shareholders' preferential rights in connection with the issue of shares is to ensure delivery of Class B shares to participants under LTI 2019.
Authorisation to resolve to repurchase own Class C shares (item 19(c))
The Board proposes that the Annual General Meeting resolves to authorise the Board, during the period until the Annual General Meeting 2020, to repurchase its own Class C shares. The repurchase may only be effected through a public offer directed to all holders of Class C shares and shall comprise all outstanding Class C shares. The purchase may be effected at a purchase price corresponding to not less than SEK 1.25 and not more than SEK 1.35 per share. Payment for the Class C shares shall be made in cash. The purpose of the repurchase is to ensure the delivery of Class B shares under LTI 2019.
Resolution on the transfer of own Class B shares (item 19(d))
The Board proposes that the Annual General Meeting resolves that Class C shares that the company purchases by virtue of the authorisation to repurchase its own Class C shares in accordance with item 19(c) above, following reclassification into Class B shares, may be transferred to participants in LTI 2019, to participants in other outstanding equity-related incentive programmes in accordance with the approved terms, or sold on Nasdaq Stockholm as set out in accordance with item 19(e) below.
The Board proposes that the Annual General Meeting resolves that a maximum of 2,100,000 Class B shares may be transferred to participants in accordance with the terms of LTI 2019. These shares can either be Class B treasury shares held by the company or Class B shares held by the company after reclassification from Class C shares.
Resolution on the sale of own Class B shares (item 19(e))
The Board proposes that the Annual General Meeting authorises the Board to resolve, on one or more occasions, for the period up until the Annual General Meeting 2020, to sell Class B shares on Nasdaq Stockholm. The number of Class B shares to be sold may not exceed the number of Class B shares that the company holds at the point in time of the Board’s resolution. Sale of Class B shares may only be in consideration of cash payment at a price within the share price interval registered at that time, meaning the interval between the highest purchase price and the lowest selling price.
The purpose of the authorisation is to ensure the company’s undertakings, including social security costs and payment of preliminary salary tax, in connection with delivery of shares to the participants in Tele2's long-term incentive programme LTI 2017 – LTI 2019.
Authorisation for the Board to resolve to repurchase own shares (item 20)
The Board proposes that the Board is authorised to resolve on repurchasing the company's own shares if the purpose is to retire shares through a decrease of the share capital, as well as to ensure delivery of B-shares to the participants in the Tele2’s long-term incentive programmes LTI 2017 – 2019, in accordance with the following conditions:
The purpose of the authorisation is both to give the Board flexibility to continuously decide on changes to the capital structure during the upcoming year, and thereby contribute to increased shareholder value, as well as to hedge delivery of B-shares to the participants in Tele2’s long-term incentive programmes LTI 2017 – 2019, in accordance with the resolutions under items 19(d) and (e) and previous Annual General Meetings’ resolutions.
RESOLUTIONS PROPOSED BY THE SHAREHOLDERS
Proposals from shareholder Martin Green (items 21(a)-(c))
Shareholder Martin Green proposes that the Annual General Meeting resolves:
(a) that an investigation is carried out regarding the company's procedures to ensure that the current members of the board and Leadership Team fulfil the relevant legislative and regulatory requirements, as well as the demands that the public opinions ethical values places on persons in leading positions. In addition, the investigation shall include the current attitude and practical handling performed by the company's administrators and executives,
(b) in the event that the investigation clarifies that there is need, swift, relevant measures shall be taken to ensure that the requirements are fulfilled, and
(c) taking into consideration the nature and scope of any needs, the investigation and any measures should be presented as soon as possible, however not later than during the Annual General Meeting 2020.
Shares and votes
There are a total number of 690,341,597 shares in Tele2, whereof 22,606,922 Class A shares, 665,835,675 Class B shares and 1,899,000 Class C shares, corresponding to a total of 894,170,825 votes. As at the date on which this notice is disclosed Tele2 holds 1,339,081 of its own Class B shares and 1,899,000 of its own Class C shares corresponding to 3,238,081 votes which cannot be represented at the Annual General Meeting.
Special majority requirements and conditions with respect to the proposed resolutions in items 19 and 20
Resolutions under items 19(b), 19(c), 19(e) and 20 are valid only if supported by shareholders holding not less than two-thirds of both the votes cast and the shares represented at the Annual General Meeting.
Resolution under item 19(d) is valid only if supported by shareholders holding not less than nine-tenth of both the votes cast and the shares represented at the Annual General Meeting.
The Board, or the person that the Board will appoint, shall be authorised to make the minor adjustments in the Annual General Meeting's resolutions as may be required in connection with registration at the Swedish Companies Registration Office and Euroclear Sweden.
The nomination committee’s motivated statement regarding its proposal to Board and information about the proposed board members are available on the company’s website, www.tele2.com.
The reasoned statement of the Board pursuant to Chapter 18 Section 4 and Chapter 19 Section 22 of the Companies Act (2005:551), the Remuneration Committee's evaluation (Report according to the Swedish Corporate Governance Code 9.1, and Chapter 8 Section 51 of the Swedish Companies Act (2005;551)), the Auditor's statement pursuant to Chapter 8 Section 54 of the Companies Act (2005:551) are available at the company's website www.tele2.com under the heading “Annual General Meeting 2019, found under the section “Governance”. The annual report is available at the company’s website www.tele2.com under the heading “Reports and presentations”, found under the section “Investors”. All documentation are also available at the company's premises at Skeppsbron 18 in Stockholm and will be sent to those shareholders who so request and state their postal address or email address.
The documentation can be ordered by telephone at +46 (0) 771-246 400 or at the address Computershare AB ”AGM Tele2”, P.O. Box 610, SE-182 16 Danderyd, Sweden.
Shareholders' right to request information
The Board and the Chief Executive Officer shall, if any shareholder so requests and the Board 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, 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 and the consolidated accounts.
Processing of personal data
For information on how your personal data is processed, see Tele2’s Privacy notice for General Meetings of Shareholders at www.tele2.com under the heading “Annual General Meeting 2019”, found under the section “Governance”.
Stockholm, April 2019
TELE2 AB (PUBL)
Schedule for the Annual General Meeting:
The doors open for shareholders at 2.00 p.m. CEST.
The Annual General Meeting commences at 3.00 p.m. CEST.
The Annual General Meeting will be held in Swedish. As a service to the shareholders, simultaneous interpretation from Swedish to English will be provided. This service may be requested when attendance to the Annual General Meeting is notified.
TELE2’S MISSION IS TO FEARLESSLY LIBERATE PEOPLE TO LIVE A MORE CONNECTED LIFE. We constantly strive to be the truly integrated challenger – providing speed, data and video content, no matter where or when. Ever since Tele2 was founded in 1993, we have continued to challenge prevailing norms and dusty monopolies. Today, our award winning networks enable mobile and fixed connectivity, telephony, data network services, TV, streaming and global IoT solutions for millions of customers. We drive growth through customer satisfaction and smart combined offerings. Tele2 has been listed on Nasdaq Stockholm since 1996. In 2018, Tele2 generated revenue of SEK 30 billion and reported an adjusted EBITDA of SEK 9 billion. For latest news and definitions of measures, please see our homepage www.tele2.com