Item 11.1-11.9 Long-Term Variable Remuneration Program 2013 (LTV 2013)includingthe Board of Directors' proposal for resolutions on implementation of anallemployee Stock Purchase Plan, a Key Contributor Retention Plan and anExecutivePerformance Stock Plan and, under each plan respectively, transfer oftreasurystock
The LTV program is an integral part of the Company's remuneration strategy,inparticular the Board of Directors wishes to encourage all employees tobecomeand remain shareholders and the leadership to build significant equityholdings.Following the Board of Directors' annual evaluation of total remunerationandongoing programs, it proposes to make no changes to the structure ofEricsson'sLong-Term Variable Remuneration Program.
It is anticipated that the LTV 2013 will require up to 32.2 million shares,corresponding to a dilution of up to 1 percent of the total number ofoutstanding shares, at a cost between SEK 1,105 million and SEK 2,115millionunevenly distributed over the years 2013-2017. The number of shares coveredbyongoing programs as per 31 December, 2012, amounts to approximately61 millionshares, corresponding to approximately 1.89 percent of the number ofoutstanding shares.
The LTV 2013 builds on a common platform, but consists of three separateplans.
The Stock Purchase Plan is an all employee plan and is designed to createanincentive for all employees to become shareholders. The aim is tosecurecommitment to long-term value creation throughout Ericsson.
The Key Contributor Retention Plan is part of Ericsson's talent strategyand isdesigned to ensure long-term retention of top-talent with critical skillsvitalto Ericsson's future performance. Up to ten percent of the Company'semployeesare defined as "key contributors", based on a rigorous selectionprocessincorporating elements such as individual performance, possession ofcriticalskills and future potential. The Remuneration Committee of the BoardofDirectors monitors the selection process and nominations for bias offactorssuch as seniority, gender, age and frequency of award.
The Executive Performance Stock Plan is designed to encourage long-termvaluecreation in alignment with shareholders' interests. The plan isoffered to adefined group of senior managers, up to 0.5 percent of the total employeepopulation. The aim is to attract, retain and motivate executives in acompetitive market through performance-based share related incentives andtoencourage the build-up of significant equity stakes.
The Executive Performance Stock Plan 2011 introduced three new performancemeasures of Net Sales Growth, Operating Income Growth and Cash Conversiontobetter reflect the business strategy and long term value creation of theCompany. The Executive Performance Stock Plan 2012 includes the samecriteriaand it is proposed that the Executive Performance Stock Plan 2013 shallhave thesame performance criteria for the period 2013 - 2015.
The three performance criteria for the Executive Performance Stock Plan2013are:
* Net Sales Growth: Up to one third of the award will vest if thecompound annual growth rate of consolidated net sales is between 2 and 8 percent comparing 2015 financial results to 2012, which corresponds toconsolidated sales of SEK 241.7 billion and SEK 286.9 billion for the financial year 2015.
* Operating Income Growth: Up to one third of the award will vest if the compound annual growth rate of consolidated operating income is between5 and 15 percent comparing 2015 financial results to 2012, whichcorresponds to operating income of SEK 21.4 billion and SEK 28.1 billion for the financial year 2015.
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