Following consultation with Ericsson's major shareholders, the Ericsson (NASDAQ:ERIC) Board of Directors has proposed that the Long-Term Variable Compensation Program 2007 be modified to meet the company's needs and shareholder interests. The Board of Directors has decided to make two changes to the previous proposal: the threshold for the awarding of shares to top executives has been raised, and the proposal has been separated into a number of individual components.

The program is now divided into three plans: a Stock Purchase Plan designed to award one matching share for each share invested under the plan; a plan for up to 6 300 key contributors to receive a second matching share; and a third plan embracing 220 top executives who earn a further four, six or eight matching shares provided that certain financial goals are met.

The program is based on the same principles as the proposal put to the 2007 Annual General Meeting: that each and every employee is invited to participate in the program, and that those participating need to invest in Ericsson shares. Key contributors asked to participate in plans with higher acquisitions of shares are identified based on criteria such as individual performance, competence and potential. For the 220 top executives, the Board proposes an increase in the threshold for the allocation of shares to 5 percent average annual earnings per share growth during the three years performance measurement period. The previous proposal required 3 percent.

The current proposal gives Ericsson's shareholders the opportunity to vote for each of the respective plans, including financing. The plans can be financed in different ways. The Board of Directors has evaluated two alternative suggestions for financing and proposes that treasury stock is used for matching. This alternative is significantly cheaper, and demands a 90 percent majority approval. The second alternative, which requires a simple majority, is an agreement with a third party to transfer shares to employees.

The Long-Term Variable Compensation Program aims to encourage commitment among employees and stimulate long-term value creation throughout Ericsson. Major shareholders have declared their support for the proposal.

 

According to Swedish law, a 90 percent majority is required in decisions on the allocation of new shares to employees. The Long-Term Variable Compensation Program presented to the Annual General Meeting in April 2007 was approved by 88.5 percent of the shares represented. The Chairman of the Board, Michael Treschow, has since consulted major shareholders. These consultations have included both the owners that supported the original proposal and those who voted against it. As a result of these consultations, the Board has made some modifications to the original proposal.

The Board of Directors intends to evaluate all share-based compensation programs before the 2008 AGM.

Notices to the shareholders, including the Board of Directors' complete proposals for resolutions, frequently asked questions and a summary of the proposals, are available at www.ericsson.com. The proposals will be sent to shareholders on request.

Notice of the 2007 Extraordinary General Meeting will be published in Svenska Dagbladet, Dagens Nyheter, the Financial Times (European edition) and in Post- och Inrikes Tidningar at the website www.bolagsverket.se.

The Extraordinary General Meeting will be held at the Globen Annex, Globentorget, Stockholm, Thursday, June 28, at 3pm.

 

The notice to shareholders, as well as a summary of the proposals, is attached to this press release as PDF documents.

 

FOR FURTHER INFORMATION, PLEASE CONTACT

Ericsson Media Relations

Phone: +46 8 719 6992

E-mail: press.relations@ericsson.com

Ericsson Investor Relations

Phone: +46 8 719 0000

E-mail: investor.relations.se@ericsson.com