Ericsson shareholder Cevian to vote against board members at AGM (updated)

Investor AB

28/03/2022 10:07

(Adds detail, comments, background)
    STOCKHOLM, March 28 (Reuters) - Cevian Capital, one of
Ericsson's  ERICb.ST  biggest investors, said on Monday it would
vote against a motion this week that would clear some board
members of responsibility over the possible payment of bribes to
militant organisations in Iraq.
    Norway's sovereign wealth fund, another major shareholder,
also said it would vote against the motion at the annual
shareholders' meeting on Tuesday.
    Ericsson has been under fire from the U.S. Justice
Department and its shareholders for not properly disclosing that
its investigation in 2019 had showed the company may have paid
militant organisations in Iraq.
    "We still lack the information necessary to make an informed
judgment of what went wrong, why, and who should be held
responsible," Cevian said in a statement. "Given the lack of
information and the magnitude of the damage, we have no choice
but to hold the entire board accountable." 
    Cevian owns just under 5% shares in Ericsson. Investor AB
 INVEb.ST  is the largest shareholder, with Primecap Management,
BlackRock, Swedbank Robur Fonder and AB Industrivärden
 INDUa.ST  making the list of major investors in the company.
    Norway's $1.3 trillion sovereign wealth fund, will vote
against granting discharge to five company board members,
including its president.
    "When voting on a proposal to discharge the board of
responsibilities, we will consider whether any information
raises reasonable doubt about the board's actions," it said in a
statement. The fund has a 1.45% stake in Ericsson worth $532
million at the end of 2021, according to fund data.
    Other investors did not respond to requests for comment.
    Under Swedish Companies Act, the company or shareholders can
bring action against board members or the CEO if a group
representing at least 10% shares of the company votes against
ratifying acts of the CEO in the past year.
    It is rare for shareholders of a top Swedish company to not
grant discharge of liability, and any such move would likely
raise pressure on the company's board to overhaul its
management. 
    In telecoms, a scandal over TeliaSonera's business dealings
in Uzbekistan pushed shareholders to vote against https://www.reuters.com/article/teliasonera-eurasia-idINL5N0MU3SN20140402
 discharging former CEO Lars Nyberg from personal liability in
2014. 
    Borje Ekholm, who had served as CEO of the Wallenberg-backed
investment firm Investor AB, took over as CEO of Ericsson in
2016 after pressure from shareholders to change its management. 
    Ekholm turned around the company and in 2019 settled a U.S.
government probe for paying bribes from at least 2000 to 2016 in
countries including China, Vietnam and Djibouti.
    In the same year, Ericsson investigated allegation of bribes
in Iraq but chose to not disclose the findings to shareholders.
It released details only in February this year after media
enquiries, sparking the current tension.
    While Cevian is holding the board accountable, the
investment firm said it has confidence in the board and Ekholm,
and would vote for their re-election. 
    The Ericsson board, including Chairman Ronnie Leten, has
also been backing Ekholm, after proxy firms including Glass
Lewis had recommended shareholders vote to remove him following
the disclosure and a sharp fall in the company's share price.   
    
    

 (Reporting by Supantha Mukherjee and Helena Soderpalm in
Stockholm; additional reporting by Terje Solsvik and Gwladys
Fouche in Oslo, editing by Niklas Pollard; editing by David
Evans)
 ((supantha.mukherjee@thomsonreuters.com; +46 70 721 1004;
Reuters Messaging:
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