Notice Convening the Annual General Meeting of AB Electrolux

Guía de Regalos

STOCKHOLM–(BUSINESS WIRE)–Regulatory News:

The shareholders of AB Electrolux (STO:ELUXA)(STO:ELUXB) are invited to
participate in the Annual General Meeting to be held on Wednesday,
April 6, 2016 at 5 p.m. at Stockholm Waterfront Congress Centre, Nils
Ericsons plan 4, Stockholm, Sweden.

Registration and notification

Shareholders who wish to participate in the Annual General Meeting must

  • be recorded in the share register kept by Euroclear Sweden AB on
    Thursday, March 31, 2016, and
  • give notice of intent to participate to the company not later than on
    Thursday, March 31, 2016.

Notice of intent to participate can be given on the Group’s web site, www.electroluxgroup.com/agm2016,
by telephone +46‑8‑402 92 79 on weekdays between 9 a.m. and 4 p.m. or by
letter to AB Electrolux, c/o Euroclear Sweden AB, Box 191,
101 23 Stockholm, Sweden.

Please include in the notice name, personal or organization
identification number, address, telephone number and the number of
assistants attending (if any). Shareholders represented by proxy should
submit the proxy to the company prior to the Annual General Meeting.
Proxy forms in Swedish and English are available on the Group’s web
site, www.electroluxgroup.com/agm2016.

Shareholders that have their shares registered in the name of a nominee
must, in addition to giving notice of participation in the meeting,
temporarily be recorded in the share register in their own names (so
called voting-rights registration) to be able to participate in the
General Meeting. In order for such registration to be effectuated on
Thursday, March 31, 2016, shareholders should contact their bank or
trustee well in advance of that date.

Agenda

1. Election of Chairman of the Meeting.

2. Preparation and approval of the voting list.

3. Approval of the agenda.

4. Election of two minutes-checkers.

5. Determination as to whether the meeting has been properly convened.

6. Presentation of the Annual Report and the Audit Report as well as the
Consolidated Accounts and the Audit Report for the Group.

7. Speech by the President, Jonas Samuelson.

8. Resolution on adoption of the Income Statement and the Balance Sheet
as well as the Consolidated Income Statement and the Consolidated
Balance Sheet.

9. Resolution on discharge from liability of the Directors and the
President.

10. Resolution on dispositions in respect of the company’s profit
pursuant to the adopted Balance Sheet and determination of record date
for dividend.

11. Determination of the number of Directors and Deputy Directors.

12. Determination of fees to the Board of Directors.

13. Election of Board of Directors and Chairman of the Board of
Directors.

a) Election of Petra Hedengran as Director. (re-election)

b) Election of Hasse Johansson as Director. (re-election)

c) Election of Ronnie Leten as Director. (re-election)

d) Election of Ulla Litzén as Director. (new election)

e) Election of Bert Nordberg as Director. (re-election)

f) Election of Fredrik Persson as Director. (re-election)

g) Election of David Porter as Director. (new election)

h) Election of Jonas Samuelson as Director. (new election)

i) Election of Ulrika Saxon as Director. (re-election)

j) Election of Ronnie Leten as Chairman. (re-election)

14. Proposal for resolution on remuneration guidelines for the
Electrolux Group Management.

15. Proposal for resolution on implementation of a performance based,
long-term share program for 2016.

16. Proposal for resolutions on

a) acquisition of own shares,

b) transfer of own shares on account of company acquisitions and

c) transfer of own shares on account of the share program for 2014.

17. Closing of the meeting.

Item 1 – Chairman of the Meeting

The Electrolux nomination committee, consisting of the Chairman Johan
Forssell, Investor AB, and the members Mathias Leijon, Nordea Investment
Management, Kaj Thorén, Alecta, and Marianne Nilsson, Swedbank Robur
funds, Ronnie Leten and Torben Ballegaard Sørensen, Chairman and
Director, respectively, of the Board of Directors of the company,
proposes:

  • Eva Hägg, member of the Swedish Bar Association, as chairman of the
    Annual General Meeting.

Item 10 – Dividend and record date

The Board of Directors proposes a dividend for 2015 of SEK 6.50 per
share and Friday, April 8, 2016, as record date for the dividend.
Subject to resolution by the General Meeting in accordance with this
proposal, dividend is expected to be distributed by Euroclear Sweden AB
on Wednesday, April 13, 2016.

Item 11 – Number of Directors

The nomination committee proposes:

  • Nine Directors and no Deputy Directors.

Item 12 – Fees to the Board of Directors

The nomination committee proposes Directors’ fees as follows:

  • SEK 2,030,000 to the Chairman of the Board of Directors and
    SEK 560,000 to each of the other Directors appointed by the Annual
    General Meeting not employed by Electrolux; and
  • for committee work, to the members who are appointed by the Board of
    Directors: SEK 250,000 to the Chairman of the audit committee and
    SEK 95,000 to each of the other members of the committee and
    SEK 120,000 to the Chairman of the remuneration committee and
    SEK 60,000 to each of the other members of the committee.

Items 13 – Election of the Board of Directors and Chairman of the Board

The nomination committee proposes:

  • Re-election of the Directors Petra Hedengran, Hasse Johansson, Ronnie
    Leten, Bert Nordberg, Fredrik Persson and Ulrika Saxon.
  • Election of Ulla Litzén, David Porter and Jonas Samuelson as new
    Directors.
  • Ronnie Leten as Chairman of the Board of Directors.

Item 14 – Remuneration guidelines for the Electrolux Group Management

The Board of Directors proposes that the Annual General Meeting approve
guidelines for remuneration and other terms of employment for the
Electrolux Group Management on the following terms:

The guidelines set forth herein, that in all material respects
correspond to those resolved at the Annual General Meeting 2015, shall
apply to the remuneration and other terms of employment for the
President and CEO and other members of Group Management of Electrolux
(“Group Management”). Group Management currently comprises twelve
executives.

The principles shall be applied for employment agreements entered into
after the Annual General Meeting in 2016 and for changes made to
existing employment agreements thereafter.

Remuneration for the President and CEO is resolved upon by the AB
Electrolux Board of Directors, based on the recommendation of the
Remuneration Committee. Remuneration for other members of Group
Management is resolved upon by the Remuneration Committee and reported
to the Board of Directors.

Note 27 of the Annual Report includes a detailed description of existing
remuneration arrangements for Group Management, including fixed and
variable compensation, long-term incentive programs and other benefits.

Guidelines

Electrolux shall strive to offer total remuneration that is fair and
competitive in relation to the country or region of employment of each
Group Management member. The remuneration terms shall emphasize ‘pay for
performance’, and vary with the performance of the individual and the
Group. The total remuneration for Group Management may comprise the
components set forth hereafter.

Fixed compensation

The Annual Base Salary (“ABS”) shall be competitive relative to the
relevant country market and reflect the scope of the job
responsibilities. Salary levels shall be reviewed periodically (usually
annually) to ensure continued competitiveness and to recognize
individual performance.

Variable compensation

Following the ‘pay for performance’ principle, variable compensation
shall represent a significant portion of the total compensation for
Group Management. Variable compensation shall always be measured against
pre-defined targets and have a maximum above which no pay out shall be
made.

Variable compensation shall principally relate to financial performance
targets.

Non-financial targets may also be used in order to strengthen the focus
on delivering on the Group’s strategic plans. The targets shall be
specific, clear, measurable and time bound and be determined by the
Board of Directors.

Short Term Incentive (STI)

Group Management members shall participate in an STI (short term
incentive) plan under which they may receive variable compensation. The
objectives in the STI plan shall mainly be financial. These shall be set
based on annual financial performance of the Group and, for the sector
heads, of the sector for which the Group Management member is
responsible.

The maximum STI entitlements shall be dependent on job position and may
amount up to a maximum of 100 per cent of ABS. Reflecting current market
conditions, the STI entitlement for Group Management members in the U.S.
may amount up to a maximum of 150 per cent of ABS if the maximum
performance level is reached.

STI payments for 2016 are estimated[1] to range between no payout at
minimum level and SEK 67m (excluding social costs) at maximum level.

Long Term Incentive (LTI)

Each year, the Board of Directors will evaluate whether or not a
long-term incentive program shall be proposed to the General Meeting.
Long-term incentive programs shall always be designed with the aim to
further enhance the common interest of participating employees and
Electrolux shareholders of a good long-term development for Electrolux.

The costs for the LTI program proposed for 2016 are estimated[2] to
SEK 319m (including social costs) at maximum level. For information on
the proposed LTI program, please refer to the Board’s separate proposal.

Extraordinary arrangements

Other variable compensation may be approved in extraordinary
circumstances, under the conditions that such extraordinary arrangement
shall, in addition to the target requirements set out above, be made for
recruitment or retention purposes, are agreed on an individual basis,
shall never exceed three (3) times the ABS and shall be earned and/or
paid out in installments over a minimum period of two (2) years.

Costs for extraordinary arrangements during 2015 amounts to
approximately SEK 8.8m. Costs for extraordinary arrangements which have
not yet been paid out are currently estimated to approximately SEK 9.5m.

Pension and Benefits

Old age pension, disability benefits and medical benefits shall be
designed to reflect home country practices and requirements. When
possible, pension plans shall be based on defined contribution. In
individual cases, depending on tax and/or social security legislation to
which the individual is subject, other schemes and mechanisms for
pension benefits may be approved.

Other benefits may be provided on individual level or to the entire
Group Management. These benefits shall not constitute a material portion
of total remuneration.

Notice of Termination and Severance Pay

The notice period shall be twelve months if the Group takes the
initiative and six months if the Group Management member takes the
initiative.

In individual cases, severance pay may be approved in addition to the
notice periods. Severance pay may only be payable upon the Group’s
termination of the employment arrangement or where a Group Management
member gives notice as the result of an important change in the working
situation, because of which he or she can no longer perform to standard.
This may be the case in e.g. the event of a substantial change in
ownership of Electrolux in combination with a change in reporting line
and/or job scope.

Severance pay may for the individual include the continuation of the ABS
for a period of up to twelve months following termination of the
employment agreement; no other benefits shall be included. These
payments shall be reduced with the equivalent value of any income that
the individual earns during that period of up to twelve months from
other sources, whether from employment or independent activities.

Deviations from the guidelines

The Board of Directors shall be entitled to deviate from these
guidelines if special reasons for doing so exist in any individual case.

Item 15 – Implementation of a performance based long-term share program
for 2016

The Board of Directors has decided to propose a long-term incentive
program for 2016. The Board is convinced that the proposed program will
be beneficial to the company’s shareholders as it will contribute to the
possibilities to recruit and retain competent employees, is expected to
increase the commitment and the motivation of the program participants
and will strengthen the participants’ ties to the Electrolux Group and
its shareholders.

The Board of Directors proposes, in view of the above, that the Annual
General Meeting resolves to implement a performance based, long-term
share program for 2016 (the “Share Program 2016”) with the following
principal terms and conditions:

a) The program is proposed to include up to 250 senior managers and key
employees of the Electrolux Group, who are divided into five groups; the
President and CEO (“Group 1”), other members of Group Management (“Group
2”), and three additional groups for other senior managers and key
employees (“Group 3-5”). Invitation to participate in the program shall
be provided by Electrolux no later than on May 16, 2016.

b) Participants are offered to be allocated Performance Shares, provided
that the participant remains employed until January 1, 2019. Exemptions
to this requirement may be prescribed in specific cases, including a
participant’s death, disability, retirement or the divestiture of the
participant’s employing company from the Electrolux Group.

c) The Performance Shares shall be based on maximum performance values
for each participant category. The maximum performance value for the
participants in Group 1 will be 100 per cent of the participant’s annual
base salary for 2016, for participants in Group 2, 90 per cent of the
participant’s annual base salary for 2016, for participants in Group 3,
80 per cent of the participant’s annual base salary for 2016, for
participants in Group 4, 60 per cent of the participant’s annual base
salary for 2016, and for participants in Group 5, 40 per cent of the
participant’s annual base salary for 2016. The total sum of the maximum
values of the Performance Shares thus defined for all participants will
not exceed SEK 296m excluding social costs.

d) Each maximum value shall thereafter be converted into a maximum
number of Performance Shares[3], based on the average closing price paid
for Electrolux B shares on Nasdaq Stockholm during a period of ten
trading days before the day the participants are invited to participate
in the program, reduced by the present value of estimated dividend
payments for the period until shares are allotted.

e) The calculation of the number of Performance Shares shall be
connected to performance targets for the Group established by the Board
for (i) earnings per share, (ii) return on net assets,[4] and (iii)
organic sales growth, for the 2016 financial year. The performance
targets adopted by the Board will stipulate a minimum level and a
maximum level, with the relative weight of the performance targets (i),
(ii) and (iii) being 25 per cent, 50 per cent and 25 per cent
respectively.

f) Performance outcome of the established performance targets will be
determined by the Board after the expiry of the one-year performance
period. If the maximum performance level is reached or exceeded, the
allocation will amount to (and will not exceed) the maximum number of
Performance Shares following from c) and d). If performance is below the
maximum level but exceeds the minimum level, a proportionate allocation
of shares will be made. No allocation will be made if performance
amounts to or is below the minimum level. Information on the performance
targets and the outcome will be provided no later than in connection
with the allocation of Performance Shares in accordance with h).

g) The total award of Performance Shares may never exceed one (1) per
cent of the total number of shares in Electrolux. If required,
allotments shall be reduced to ensure that this dilution cap is observed.

h) If all conditions in the Share Program 2016 are met, allocation of
Performance Shares will take place in the first half of 2019. Allocation
will be free of charge except for tax liabilities.

i) Certain deviations in or adjustments of the terms and conditions for
the Share Program 2016 may be made based on local rules and regulations
as well as applicable market practice or market conditions.

j) The Board of Directors, or a committee established by the Board for
these purposes, shall be responsible for the preparation and management
of the Share Program 2016, within the framework of the aforementioned
terms and conditions.

k) If material changes would occur within the Electrolux Group or on the
market that, according to the Board’s assessment, would lead to the
conditions for allocation of Performance Shares no longer being
reasonable, the Board will have the right to make also other adjustments
of the Share Program 2016, including e.g. a right to resolve on a
reduced allotment of shares.

Costs for the Share Program 2016

The total costs for the Share Program 2016 if the maximum number of
Performance Shares are delivered, are estimated to a maximum of
SEK 319m, which corresponds to approximately 1.7 per cent of total
employment cost for 2015. The costs will be recognized over the years
2016–2018. The costs have been calculated as the sum of salary costs,
including social costs, and administration costs for the program.
Administration costs are estimated to be less than SEK 1m. If no
allotment of shares is made, only administration costs will arise.

The salary costs have been calculated based on the value, at the start
of the program, of the Performance Shares that may be allotted at
maximum performance, with a reduction of the present value of estimated
dividend payments during a three-year period. The estimate on maximum
costs assumes maximum performance and that the number of participants
that will leave the Group during the performance period is the same as
the historical average since the introduction of share programs in 2004.
In the calculation, a maximum share price of SEK 289 per share has been
applied.

If repurchased shares are allocated under the program the number of
outstanding shares is estimated to increase with not more than 1,934,000
B shares.[5] Such maximum increase would have a dilutive effect on
earnings per share of approximately 0.67 per cent. The total maximum
increase in the number of outstanding shares of all outstanding share
programs is estimated to not more than 3,909,510 B shares, corresponding
to a dilutive effect on earnings per share of approximately 1.3 per
cent. In this calculation, maximum allotment of shares has been assumed
for Share Program 2016 and expected allotment has been assumed for the
share programs for 2014 and 2015.

The above calculations assume that Electrolux undertakings under the
Share Program 2016 are secured with own shares.

Hedging measures for the Share Program 2016

The Board of Directors does not currently propose any method for
securing the undertakings under the Share Program 2016. Delivery of
Performance Shares in accordance with the terms of the Share Program
2016 will take place in 2019.

Preparation of the proposal for the Share Program 2016

The proposal regarding the Share Program 2016 has been prepared by the
Remuneration Committee and the Board of Directors.

Previous incentive programs in Electrolux

For a description of the company’s other share related incentive
programs, reference is made to the annual report for 2015, note 27, and
the company’s website, www.electroluxgroup.com.
In addition to the programs described, no other share related incentive
programs have been implemented in Electrolux.

Item 16 – Acquisition and transfer of own shares

Electrolux has previously, on the basis of authorisations by the Annual
General Meetings, acquired own shares for the purpose of using these
shares to finance potential company acquisitions and as a hedge for the
company’s share related incentive programs. As of January 1, 2016,
Electrolux held 21,522,858 own B shares, corresponding to approximately
7.0 per cent of the total number of shares in the company.

The Board of Directors makes the assessment that it continues to be
advantageous for the company to be able to adapt the company’s capital
structure, thereby contributing to increased shareholder value, and to
continue to be able to use repurchased shares on account of potential
company acquisitions and the company’s share related incentive programs.

In view of the above, the Board of Directors proposes as follows.

A. Acquisition of own shares

The Board of Directors proposes the Annual General Meeting to authorize
the Board of Directors, for the period until the next Annual General
Meeting on one or several occasions, to resolve on acquisitions of
shares in the company as follows.

1. The company may acquire as a maximum so many B shares that, following
each acquisition, the company holds at a maximum 10 per cent of all
shares issued by the company.

2. The shares may be acquired on Nasdaq Stockholm.

3. Acquisition of shares may only be made at a price per share at each
time within the prevailing price interval for the share.

4. Payment for the shares shall be made in cash.

The purpose of the proposal is to be able to adapt the company’s capital
structure, thereby contributing to increased shareholder value, and to
be able to use repurchased shares on account of potential company
acquisitions and the company’s share related incentive programs.

The Board of Directors has issued a statement pursuant to Chapter 19,
Section 22 of the Swedish Companies Act.

B. Transfer of own shares on account of company acquisitions

The Board of Directors proposes the Annual General Meeting to authorize
the Board of Directors, for the period until the next Annual General
Meeting on one or several occasions, to resolve on transfers of the
company’s own shares in connection with or as a consequence of company
acquisitions as follows.

1. Own B shares held by the company at the time of the Board of
Director’s decision may be transferred.

2. The shares may be transferred with deviation from the shareholders’
preferential rights.

3. Transfer of shares may be made at a minimum price per share
corresponding to an amount in close connection with the price of the
company’s shares on Nasdaq Stockholm at the time of the decision on the
transfer.

4. Payment for the transferred shares may be made in cash, by
contributions in kind or by a set-off of company debt.

C. Transfer of own shares on account of the share program for 2014

The Board of Directors proposes, on account of the share program for
2014, that the Annual General Meeting resolves that the company shall be
entitled, for the period until the next Annual General Meeting on one or
several occasions, to transfer a maximum of 1,250,000 B shares in the
company for the purpose of covering costs, including social security
charges, that may arise as a result of the aforementioned program. Such
transfers may take place on Nasdaq Stockholm at a price within the
prevailing price interval from time to time.

Majority requirement

In order for the resolutions by the General Meeting in accordance with
the Board of Directors’ proposals in item 16 above to be valid, the
resolutions must be accepted by shareholders holding no less than two
thirds of the votes cast as well as the shares represented at the
General Meeting.

Shares and votes

There are in total 308,920,308 shares in the company of which, as of
February 25, 2015, 8,192,539 are A-shares, each carrying one vote, and
300,727,769 are B-shares, each carrying one-tenth of a vote,
corresponding to in total 38,265,315.

Contacts

Electrolux
Press Hotline, +46 8 657 65 07

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