* Cash Conversion: Up to one third of the award will vest if cashconversion is at or above 70 percent during each of the years 2013-2015 andvesting one ninth of the total award for each year the target is achieved.Financing
The Board of Directors has considered different financing methods fortransferof shares to employees under the LTV 2013, such as transfer of treasurystockand an equity swap agreement with a third party.
The Board of Directors considers transfer of treasury stock as the mostcostefficient and flexible method to transfer shares under the LTV 2013.
The total effect on the income statement of the LTV 2013, includingfinancingcosts, is estimated to range between SEK 1,105 million and SEK 2,115millionunevenly distributed over the years 2013-2017. The costs constitute3.3 percentof Ericsson's total remuneration costs 2012, including social securityfees,amounting to SEK 64 billion.
The calculations are conservative and based on assumptions of presentparticipation rate in the Stock Purchase Plan and full participation in theKeyContributor Retention Plan and the Executive Performance Stock Plan, atmaximumcontribution levels and with maximum vesting levels for the latter plan.
Costs affecting the income statement, but not the cash flowCompensation costs, corresponding to the value of matching sharestransferred toemployees, are estimated to range between SEK 1,002 million and SEK1,296million, depending on the fulfillment of the performance targets oftheExecutive Performance Stock Plan. The compensation costs are distributedoverthe LTV 2013 period, i.e. 2013-2017.Social security charges as a result of transfer of shares to employeesdepend onthe performance against the Executive Performance Stock Plan targets andbasedon an assumed average share price at matching between SEK 30 and SEK175, thecosts are estimated to range between SEK 103 million and SEK 819 million.Thesocial security costs are expected to occur mainly during 2016-2017.
Costs affecting the income statement and the cash flow
Plan administration costs have been estimated to SEK 10 million,distributedover the LTV 2013 period, i.e. 2013-2017.
The administration cost for transfer of shares by way of an equity swapagreement is estimated to approximately SEK 183 million.
The Company has approximately 3.3 billion shares in issue. As per 31December,2012, the Company held 85 million shares in treasury. The number of sharesallocated to ongoing programs as per 31 December, 2012, amounts toapproximately 61 million shares, corresponding to approximately 1.89percent ofthe number of outstanding shares. However, it is not likely that allsharesallocated for ongoing programs will be required. In order to implement theLTV2013, a total of up to 32.2 million shares are required, which correspondstoapproximately 1 percent of the total number of outstanding shares.The effecton important key figures is only marginal.
The Long-Term Variable Remuneration Program 2013
The Board of Directors proposes that the Annual General Meeting resolve ontheimplementation of (1) a Stock Purchase Plan, (2) a Key ContributorRetentionPlan, and (3) an Executive Performance Stock Plan.
In order to implement the LTV 2013, the Board of Directors proposes that nomorethan in total 26,600,000 shares of series B in Telefonaktiebolaget LMEricsson(hereinafter referred to as "the Company" or "Ericsson") may be transferredtoemployees in the Ericsson Group and, moreover, that 5,600,000 shares may besoldon NASDAQ OMX Stockholm in order to cover, inter alia, social securitypayments.
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