The Ericsson Board proposes a Long-Term Variable Remuneration Program and a directed issue and buy-back of C-shares

The Ericsson Board proposes a Long-Term Variable Remuneration Program and a directed issue and buy-back of C-shares

Ericsson’s (NASDAQ: ERIC) Board of Directors’ evaluation of the company’s long-term variable remuneration plans leads to the conclusion that the current plans are effective and achieve their objectives with a positive impact on the business. The Board of Directors has therefore decided to propose that the Annual General Meeting on April 9, 2008 resolves on a continued Long-Term Variable Remuneration Program 2008 (LTV 2008) which is in all material respects similar to the previous programs. The program comprises in total 99.5 million B-shares.

The Program is divided into three plans: (1) a Stock Purchase Plan embracing all employees, designed to award employees one Ericsson share for each share invested in under the plan, (2) a plan for up to ten percent of the employees (presently approximately 7,400) selected as key contributors to receive a second matching share, and (3) a plan embracing the CEO and other senior managers, up to 0.5 percent of employees (presently approximately 350, although it is anticipated that the number of participants will be significantly lower) who earn a further four, six or eight matching shares in addition to the ordinary matching share under the Stock Purchase Plan, provided that certain financial goals are met.
Matching under the program presupposes that the employee invests part of the salary (up to 7.5 percent, the CEO: 9 percent, of the gross fixed salary) in Ericsson shares, retain the shares and remains in employment at the time of the matching, three years after the investment.

Financing of the LTV 2008
The proposal gives the shareholders the opportunity to vote for each of the respective plan, including its financing. The Board of Directors has considered different financing methods for transfer of the shares to employees under the LTV 2008, such as transfer of treasury stock and an equity swap agreement with a third party.

The Board of Directors considers the transfer of treasury stock as the most cost efficient and flexible method to transfer shares under the LTV 2008 and has therefore decided to propose that the Annual General Meeting resolve as follows.
Transfer of treasury stock: No more than 82.3 million B-shares shall be transferred to employees covered by the terms of the three plans under the LTV 2008. The company shall also have the right to, before the Annual General Meeting in 2009, transfer no more than 17.2 million B-shares in the Company on an exchange to cover certain expenses, mainly social security payments.

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