Notice of Annual General Meeting in Epiroc AB

Stockholm, Sweden: The Annual General Meeting of Epiroc will take place on Thursday May 12, 2020 at 4.00 p.m. (CEST) at Norra Latin City Conference Centre, Barnhusgatan 7B, Stockholm. Registration starts at 3.30 p.m.

Measures due to the COVID-19 pandemic

In order to place health and safety first in response to the COVID-19 pandemic, Epiroc has decided to shorten the Annual General Meeting 2020 as much as possible.

  • No food or drinks will be served, neither before nor after the Meeting.
  • No speeches will be held at the Meeting. A speech with the President and CEO will be available after the Meeting on Epiroc’s website.
  • Questions at the Meeting will be concentrated to issues relating to decision points on the Meeting agenda.
  • Participation by the Company’s Group Management and Board of Directors will be limited.

Shareholders are requested to consider the possibility to issue a proxy and voting instructions to a proxy agent appointed by Euroclear. For more information about this possibility, which is offered free of charge by Euroclear, see www.euroclearproxy.se

Shareholders who are represented by proxy (other than the proxy offered by Euroclear) shall issue a written, dated proxy for the representative. Such proxy form is available on www.epirocgroup.com/agm

Epiroc has a strong financial position. The Board of Directors has thus proposed a dividend but is continuously evaluating the effects of the COVID-19 pandemic and may change its proposal before the Annual General Meeting.

Registration 

Shareholders, intending to participate in the Meeting, must

  • be recorded in the register of shareholders kept by Euroclear Sweden AB (“Euroclear”) on Wednesday May 6, 2020, and
  • notify the Company in writing of their intent to participate in the Meeting no later than Wednesday May 6, 2020, to the registration address Epiroc AB, "Årsstämma", c/o Euroclear Sweden AB, Box 191, 101 23 Stockholm, or by telephone +46 8 401 43 02 work days between 9.00 a.m. to 4.00 p.m. (CEST) or on the Company’s website www.epirocgroup.com/agm.02  work days between 9.00 a.m. to 4.00 p.m. (CEST) or on the Company’s website www.epirocgroup.com/agm

Please see the full Notice below, or visit www.epirocgroup.com/agm 

For more information, please contact:
Ola Kinnander 
Media Relations Manager
+46 70 347 2455

media@epiroc.com
Jörgen Ekelöw 
Senior Vice President General Counsel
+46 10 755 0108

jorgen.ekelow@epiroc.com

 

Unofficial Translation

Notice of Annual General Meeting in Epiroc AB

The Shareholders of Epiroc AB (the “Company”) are invited to attend the Annual General Meeting (the “Meeting”) Tuesday May 12, 2020 at 4.00 p.m. (CEST) at Norra Latin City Conference Centre, Barnhusgatan 7B, Stockholm, Sweden. Registration starts at 3.30 p.m.

Registration

Shareholders, intending to participate in the Meeting, must

  • be recorded in the register of shareholders kept by Euroclear Sweden AB (“Euroclear”) on Wednesday May 6, 2020, and
  • notify the Company in writing of their intent to participate in the Meeting no later than Wednesday May 6, 2020, to the registration address Epiroc AB, "Årsstämma", c/o Euroclear Sweden AB, Box 191, 101 23 Stockholm, or by telephone +46 8 401 43 02 work days between 9.00 a.m. to 4.00 p.m. (CEST) or on the Company’s website www.epirocgroup.com/agm.

Shareholders whose shares are held in trust by a bank or other trustee must temporarily register their shares in their own names in the register of shareholders of Euroclear to be able to participate in the Meeting. Such temporary registration must be recorded by Wednesday May 6, 2020. Shareholders should notify their trustees/banks well in advance of this date.

Shareholders who are represented by a proxy holder shall submit a proxy. A proxy form is available on www.epirocgroup.com/agm. The Company will also send a proxy form to those Shareholders who so request. Representatives of legal entities must be able to present a copy of the registration certificate or other similar authorization document to support the proxy. Please send such proxies and other authorization documents to the Company well in advance to ease the registration process at the Meeting.

Personal data obtained from notifications, proxies and the register of shareholders kept by Euroclear will solely be used for the necessary registration and preparation of the voting list for the Meeting. For information on the treatment of personal data, please see Euroclear’s privacy notice available at

www.euroclear.com/dam/ESw/Legal/Privacy-notice-bolagsstammor-engelska.pdf.

Entrance cards will be sent to the Shareholders who have notified their intention to participate. The proceedings will be simultaneously translated into English. Electronic devices for voting will be used to some extent.

No speeches will be held at the Meeting. A speech with the President and CEO will be available after the Meeting on Epiroc’s website www.epirocgroup.com/agm.

Proposed agenda

  1. Opening of the Meeting and election of Chair
  2. Preparation and approval of voting register
  3. Approval of the agenda
  4. Election of one or two persons to attest the minutes
  5. Determination whether the Meeting has been duly convened
  6. Presentation of the Annual Report and the Auditor’s Report as well as the Consolidated Financial Statements and the Consolidated Auditor’s Report
  7. Questions from Shareholders to the Board of Directors and the Management
  8. Decisions regarding
    a) adoption of the income statement and balance sheet as well as the consolidated income statement and consolidated balance sheet 

    b) discharge from liability for Board members and the CEO
    c) allocation of the company’s profit or loss according to the adopted balance sheet
    d) record date for receiving the dividend
  9. Determination of the number of
    a) 
    Board members,
    b) a
    uditors and deputy auditors or registered auditing companies
  10. Election of
    a) Board members,
    b) Chair of the Board, and
    c) 
    Auditors and deputy auditors or registered auditing companies
  11. Determining the remuneration,
    a) in cash or partially in the form of synthetic shares, to the Board of Directors, and the remuneration to its committees, and
    b) to the auditors or registered auditing company
  12. The Board’s proposals regarding
    a) guidelines for executive remuneration

    b) a performance based personnel option plan for 2020
  13. The Board’s proposal regarding mandates to
    a) acquire A shares related to personnel option plan for 2020
    b) acquire A shares related to remuneration in the form of synthetic shares
    c) transfer A shares related to personnel option plan for 2020
    d) sell A shares to cover costs related to synthetic shares to Board members
    e) sell A shares to cover costs in relation to the performance based personnel option plans for 2015, 2016 and 2017
  14. Closing of the Meeting

Item 8 c) and d) - The Board of Directors’ proposals regarding dividend and record date

The Board proposes that the dividend for 2019 is decided to be SEK 2.40 per share to be paid in two equal instalments of SEK 1.20. The record date for the first instalment is proposed to be May 14, 2020 and for the second instalment October 29, 2020. If the Meeting decides as proposed, the first instalment is expected to be distributed by Euroclear on May 19, 2020 and the second instalment on November 3, 2020.

Item 1, 9 and 10 - Proposals from the Nomination Committee regarding Chair of the Meeting, number of Board members, Chair and other Board members and registered auditing company

The Nomination Committee, consisting of Petra Hedengran, the Chair of the Nomination Committee, Investor AB, Jan Andersson, Swedbank Robur Fonder, Ramsay Brufer, Alecta and Javiera Ragnartz, SEB Investment Management AB, who together represent more than 30% of the total number of votes in the Company, as well as Ronnie Leten, the Chair of the Board, propose as follows:

Item 1: That Sven Unger is elected Chair of the Meeting.

Item 9: That nine Board members be elected. That one registered auditing company be elected.

Item 10: Board: That the following Board members are re-elected: Lennart Evrell, Johan Forssell, Jeane Hull, Ronnie Leten, Ulla Litzén, Astrid Skarheim Onsum and Anders Ullberg. That Sigurd Mareels and Helena Hedblom are appointed as new Board members. That Ronnie Leten is re-elected Chair of the Board. Auditing company: That Deloitte AB is re-elected as the auditing company which also is the Audit Committee’s recommendation. 

Information regarding all proposed Board members is available on www.epirocgroup.com/agm.

Item 11 – Proposal from the Nomination Committee regarding remuneration to the Board of Directors and for committee work and audit fee

Remuneration of SEK 2,050,000 (2,050,000 previous year) to the Chair and SEK 640,000 (640,000) each to the other Board members not employed by the Company. To the Chair of the Audit Committee SEK 260,000 (260,000) and SEK 175,000 (175,000) each to the other members. To the Chair of the Remuneration Committee SEK 125,000 (125,000) and SEK 90,000 (90,000) each to the other members, and remuneration of SEK 70,000 (70,000) to each Board member who, in addition to the above, participates in a committee in accordance with a decision of the Board of Directors.

Reflecting the ambition to further enhance the interest for the long term development of the Company, the Nomination Committee proposes that each Board member shall have the possibility to choose between receiving 50% of the remuneration in the form of synthetic shares and the rest in cash and to receive the whole remuneration in cash.

The Board proposes that the obligation of the Company to pay an amount corresponding to the synthetic shares as described above shall be hedged through the purchase of own A shares. Repurchased shares can be sold on the market in connection with the payment to the Board member in compliance with a request for mandate. The cost difference for the Company if all Board members choose to receive a part of their fee in the form of synthetic shares compared to receive the whole remuneration in cash is assessed to be very limited due to the hedging. 

Audit fee is proposed to be as per approved invoice.

Item 12 – The Board’s proposals regarding:
a) guidelines for executive remuneration
b) a performance based personnel option plan for 2020

12 a) guidelines for executive remuneration

The CEO and the other members in Group Management fall within the provisions of these guidelines and are hereinafter referred to as “senior executives”. The guidelines are forward-looking, i.e. they are applicable to remuneration agreed, and amendments to remuneration already agreed, after adoption of the guidelines by the Meeting 2020. These guidelines do not apply to remuneration decided or approved by the general meeting.

The guidelines’ promotion of the Company’s business strategy, long-term interests and sustainability

For more information regarding the Company’s business strategy, please see the most recent Annual Report on Epiroc group’s website: Link.

A prerequisite for the successful implementation of the Company’s business strategy and safeguarding of its long-term interests, including its sustainability, is that the Company is able to recruit and retain qualified personnel. To this end, it is necessary that the Company offers competitive remuneration.

Long-term share-related incentive programs have been implemented in the Company. Such programs have been resolved, and any future such program will be resolved, by the general meeting and are therefore excluded from these guidelines. For more information on the existing programs, please see the annual report or Epiroc group’s website: Link.

Types of remuneration, etc.

The remuneration may consist of a base salary, annual variable compensation, pension contributions and additional benefits and shall be on market terms. Additionally, the general meeting may – irrespective of these guidelines – resolve on, among other things, share-related or share price-related remuneration.

Base salary

The base salary shall reflect the position, competence and individual performance.

Variable cash remuneration

The satisfaction of criteria for awarding variable cash remuneration shall be measured over a period of one year. The variable cash remuneration compensation is limited to a maximum of 70% of the base salary. The variable cash remuneration shall be linked to criteria that can be financial or non-financial. The financial goals may be in relation to, for example, value creation, development of revenues, operating profit or working capital. The goals may be individualized, quantitative or qualitative objectives. The objective with the variable cash remuneration is to promote the fulfillment of annual short term goals in line with the Company’s business strategy and long-term interests, including its sustainability.

Further variable cash remuneration may be awarded in extraordinary circumstances, provided that such extraordinary arrangements are limited in time and only made on an individual basis, either for the purpose of recruiting or retaining executives, or as remuneration for extraordinary performance beyond the individual’s ordinary tasks. Any resolution on such remuneration shall be made by the Board of Directors based on a proposal from the remuneration committee.

To which extent the criteria for awarding variable cash remuneration has been satisfied shall be evaluated/determined when the measurement period has ended. The remuneration committee is responsible for the evaluation so far as it concerns variable remuneration to the CEO. For variable cash remuneration to other executives, the CEO is responsible for the evaluation.

Pension benefits

The pension benefits shall be defined contribution to a maximum of 35% of the base salary. Variable cash remuneration shall not qualify for pension benefits if not stipulated by mandatory law or by collective agreement covering the executive.

Other benefits

Other benefits may include, for example, life insurance, private medical insurance and company cars. Premiums and other costs relating to such benefits may amount to not more than 15% of the base salary.

Conditions for expatriates etc.

For a senior executive working on an international assignment outside of own home country certain other benefits apply in compliance with the Company’s Conditions for Expatriate Employees. For executives employed in other countries than Sweden the pension and other benefits will be according to local market practice.

Termination of employment

In case of termination of employment of a senior executive by the Company, the compensation can amount to a maximum of 24 months base salary depending on age, length of employment and possible income from other economic activity or employment. When the executive terminates the employment, the period of notice is six months. The executive will in the latter case not be entitled to severance pay unless bound by a non-compete obligation.

Salary and employment conditions for employees

In the preparation of the Board of Directors’ proposal for these remuneration guidelines, salary and employment conditions for other employees of the Company have been taken into account. This is done by including information on the employees’ total remuneration, the components of the remuneration and increase and growth rate over time, in the remuneration committee’s and the Board of Directors’ basis of decision when evaluating whether the guidelines and the limitations set out herein are reasonable.

The decision-making process to determine, review and implement the guidelines

The remuneration committee’s tasks include preparing the Board of Directors’ decision to propose guidelines for senior executive remuneration. The Board of Directors shall prepare a proposal for new guidelines at least every fourth year and submit it to the general meeting. The guidelines shall be in force until new guidelines are adopted by the general meeting. The remuneration committee shall also monitor and evaluate programs for variable remuneration for the executive management, the application of the guidelines for senior executive remuneration as well as the current remuneration structures and compensation levels in the Company.

Deviations from these guidelines

The Board of Directors may resolve to deviate from these guidelines, in whole or in part, if in a specific case there is special cause for the deviation and the Board deems a deviation is reasonable to serve the Company’s long-term interests or to ensure the Company’s financial viability. As set out above, the remuneration committee’s tasks include preparing the Board of Directors’ resolutions in remuneration-related matters. This includes any resolutions to deviate from the guidelines.

Further information provided in connection with the guidelines

Further information on senior executive remuneration may be found in the annual report.

12 b) a performance based personnel option plan for 2020 

The Board of Directors proposes that the Meeting resolves to approve a performance based personnel option plan for 2020.

As part of the Atlas Copco group, certain Epiroc employees have participated in Atlas Copco personnel option plans. The existing personnel stock option plans were split between Atlas Copco and the Company in connection with the distribution and listing of the Company. For 2019 a similar plan was approved by the Company’s annual general meeting.

The Board of Directors proposes a personnel stock option plan corresponding to the Company’s personnel option plan for 2019. It is important that key personnel in Epiroc have a long term interest in a good value development of the shares of the Company and align their performance in a manner that enhances such a development. In particular this applies to the group of key personnel that consists of the senior executives and the division presidents. It is also the assessment of the Board that a share-related option program increases the attractiveness of Epiroc on the global market and enhances the possibility to recruit and keep key personnel in the Epiroc group.

The personnel option plan for the Company 2020 and cost for it as per IFRS 2 will correspond to costs related to Epiroc employees approved previous years by the annual general meetings of Atlas Copco AB and Epiroc AB.

Scope and main principles

Granting

The Board has the right to decide on the issuing of performance stock options that can give a maximum of 100 key personnel in the Epiroc group the possibility to acquire a maximum of 2,315,425 A shares.

Issuing

The issuing is dependent on the value increase of the Epiroc group expressed as Economic Value Added during 2020. In an interval of SEK 700,000,000 the issue varies linear from zero to 100% of the maximum number. The size of the plan and the limits of the interval have been established by the Board and are compatible with the goals in the long term business plan of the Epiroc group.

The issue of performance stock options is maximized to the following number per person within the respective key group:

Category 1    President and CEO                        196,174 (305,970)

Category 2    Other Group Management 41,695 (58,194) options (average for the group)

Category 3    Other key employees                    19,127 (24,366)

The Board shall decide which persons shall be included in category 3 based on position, qualification and individual performance. The issuing of options will take place not later than March 20, 2021.

The Board shall have the right to introduce an alternative incentive plan for key personnel in such countries where the granting of options is not feasible. Such alternative incentive solutions (SAR) shall, to the extent possible, have terms and conditions corresponding to the ones applicable to the performance stock option plan.

The term of the performance stock options

The term of the options shall be seven years from the date of granting. The options are not transferable.

Exercise

The options are exercisable earliest three years from granting. The right to exercise only applies during the period a person is deemed employed.

Exercise price

The exercise price shall be set to an amount corresponding to 110% of the average of the closing rates at Nasdaq Stockholm of A shares of the Company during a period of ten business days next following the date of the publishing of the interim report Q4 and full-year summary for 2020.   

Maximized outcome

A single payment/assignment of shares under the stock option plan can never exceed four times the value of the exercise price.

Recalculation

In case there would be a decision at a general shareholders meeting regarding, for example, a reduction or increase of outstanding shares or a dividend beyond the dividend policy of the Company a recalculation can take place to preserve the value of the options.

A decision regarding such recalculation shall be taken by the Board.

Theoretical Value for the Recipient

A theoretical value on a personnel option has been established based on the Black & Scholes model for valuating options. As a base for the calculation, among other factors, a share price of SEK 117.98 for the Company and an expected volatility of 30% have been used. The theoretical value is calculated to amount to SEK 20.39 per personnel option or in total a maximum of SEK 47,211,516 for the whole plan.

Requirement for group management regarding own investment

As prerequisite for the participation of Group Management (eleven persons) in the personnel stock option plan 2020 implies that they have invested a maximum of 10% of their respective base salary for 2020, before tax, in A shares of the Company (20% for expatriates with net salary).

The investment may be in cash or by pre-owned shares, however, not by shares that are obtained as part of the participation in the stock option plan for 2018 and 2019. The participation in the plan corresponds proportionally to the investment made. Those who have chosen to invest in A shares will get, in addition to the proportional participation in the plan, the right to acquire (matching options), three years after the investment year, the number of shares that correspond to the number of shares acquired under 2020 at a price of 75% of the market value upon which the exercise price for the shares in the 2020 plan was based, subject to continued employment and continued ownership of the shares. If the number of the acquired shares has been reduced, the right to matching options is reduced on a share by share basis.

The theoretical value for this is calculated to be SEK 35.38 per matching option or in total approximately SEK 1,409,292.

Delivery of shares
The personnel options shall give the right to acquire already issued A shares in the Company.
Item 13 – The Board’s proposal regarding mandates to:
a) acquire A shares related to personnel option plan for 2020
b) acquire A shares related to remuneration in the form of synthetic shares
c) transfer A shares related to personnel option plan for 2020
d) sell A shares to cover costs related to synthetic shares to Board members
e) sell A shares to cover costs in relation to the performance based personnel option plans for 2015, 2016 and 2017.

In order for the resolutions by the Meeting in accordance with 13 a), b), d) and e) above to be adopted, the resolutions must be supported by Shareholders holding at least two-thirds of the votes cast as well as of the shares represented at the Meeting. In order for the resolution by the Meeting in accordance with 13 c) above to be adopted, the resolution must be supported by Shareholders holding at least nine tenths of both the votes cast as well as of the shares represented at the Meeting. Should majority votes not be achieved, the intention of the Company is to hedge the financial exposure in connection with the 2020 personnel option plan and secure delivery of shares by entering into an equity swap agreement with a financial institution.

13 a) acquire A shares related to personnel option plan for 2020

The Board proposes that the Board is granted the mandate until the next Annual General Meeting to decide, on one or more occasions, on the acquisition of shares in the Company as follows:

1. Acquisition of not more than 2,500,000 A shares
2. The shares may only be acquired on Nasdaq Stockholm
3. The shares may only be acquired at a price per share within the registered trading interval, at any given point in time.

The acquisition is made with the intention to limit the economic risk caused by an increase of the share value during the period the performance stock options remain outstanding, to be able to fulfil future delivery obligations under personnel option and matching option agreements, to cover alternative solutions and cash settlements as well as to cover, primarily, social charges.  

13 b) acquire A shares related to remuneration in the form of synthetic shares

The Board proposes that the Board is granted the mandate until the next Annual General Meeting to decide, on one or more occasions, on the acquisition of shares in the Company as follows:

1. Acquisition of not more than 16,000 A shares
2. The shares may only be acquired on Nasdaq Stockholm
3. The shares may only be acquired at a price per share within the registered trading interval, at any given point in time.

The acquisition is made with the intention to hedge the obligation of the Company to pay remuneration, including social charges, to a Board member who has chosen to receive 50% of the remuneration in synthetic shares.

13 c) transfer A shares related to personnel option plan for 2020

The Board further proposes that the Meeting decides to transfer shares in the Company in relation to the Company’s personnel option plan 2020, including the matching options part, according to the following:

1. A maximum of 2,450,000 A shares may be transferred. Right to acquire shares is to be granted the persons participating in the Company’s proposed performance stock option plan 2020, with a right for each participant to acquire the maximum number of shares stipulated in the terms and conditions of this plan. The participant’s right to acquire shares is conditional upon all terms and conditions of the Company’s performance stock option plan 2020 being fulfilled. Shares are to be transferred on the terms and conditions stipulated by the plan, meaning inter alia, that what is stated therein regarding price and time during which the participants are to be entitled to use their right to acquire shares is also applicable to the transfer. Participants are to pay for the shares within the time and on the terms stipulated in the performance stock option plan 2020.

2. With respect to the number of shares that may be transferred under the Company’s performance stock option plan, customary terms for recalculation as a result of bonus issue, share split, rights issues and similar measures apply in accordance with the terms and conditions of the plan.

As reason for the deviation from the Shareholders’ right of first refusal and as the base for the transfer price in connection with the transfer of own shares, the Board states that the transfer of own shares is a part of the proposed performance stock option plan for 2020.

13 d) sale of A shares to cover costs related to synthetic shares to Board members

The Board proposes that the Board is granted the mandate until the next Annual General Meeting to decide, on one or more occasions, to sell not more than 33,000 A shares in the Company to cover the costs of giving a counter value of earlier issued synthetic shares and to, primarily, cover social charges.

Shares proposed to be sold were acquired based on mandates given at the Annual General Meeting each respective year to acquire the shares for the stated purpose. The sale shall take place on Nasdaq Stockholm at a price within the registered price interval at any given time. 

As reason for the deviation from the Shareholders’ right of first refusal and as the base for the price in connection with the sale of own shares, the Board states that the sale of own shares is a part of the previously adopted decision regarding synthetic shares to the Board.

13 e) sale of A shares to cover costs in relation to the performance based personnel option plans for 2015, 2016 and 2017

The Board proposes that the Board is granted the mandate until the next Annual General Meeting to sell, at one or more occasions, a maximum of 5,900,000 A shares, in connection with the exercise of rights under the above mentioned performance stock option plans and related costs in order to cover costs, primarily cash settlements in Sweden, SAR and social costs.

Shares proposed to be sold were acquired each respective year based on mandate given at that year’s Annual General Meeting to acquire the shares for the stated purpose. The sale shall take place on Nasdaq Stockholm at a price within the registered price interval at any given time.

As reason for the deviation from the Shareholders’ right of first refusal and as the base for the price in connection with the sale of own shares, the Board states that the sale of own shares is an integrated part of the previously adopted performance stock option plans. Due to current legislation, this has to be re-approved annually.

Shares and Votes

The Company has issued in total 1,213,738,703 shares of which 823,765,854 are A shares and 389,972,849 are B shares. A shares have one vote and B shares have one tenth of a vote. On March 27, 2020, the Company held 9,966,767 A shares, which corresponds to the same number of votes.

Information at the Annual General Meeting

If a Shareholder so requires and the Board believes that the information can be given without causing harm to the Company, the Board and the President and CEO shall give information regarding an item on the agenda or circumstances that might affect the evaluation thereof or circumstances that could affect the evaluation of the economic position of the Company or a subsidiary company or the Company’s relation to another company within the Epiroc group.

If a Shareholder wishes to submit questions in advance, such should be sent to: Epiroc AB, Attn: General Counsel, Epiroc AB, P.O. Box 4015, SE-131 04 Nacka, Sweden or to board@epiroc.com.

Documentation

The Annual Report and the Auditor’s Report as well as the proposals from the Nomination Committee and the Board, information regarding all Board members and the statement by the Nomination Committee regarding the Board, statements by the auditor and the Board will be available at the Meeting and is available on www.epirocgroup.com/agm and with the Company, and can be sent free of charge to those shareholders who so requests and state their address as of April 7, 2020.

Nacka, April 2020

Epiroc AB (publ)

The Board of Directors

About Us

Performance to succeed today. Technology to lead tomorrow. Epiroc -- a leading productivity partner for the mining and infrastructure industries.