The Board of Directors has established three Committees: the Audit Committee, the Finance Committee and the Remuneration Committee.
Members of each Committee are appointed for one year from amongst the Board members.
The task of the Committees is mainly to pre-pare matters for resolution by the Board. How-ever, the Board has authorized each Committee to determine and handle certain issues in limited areas. It may also on occasion provide extended authorization for the Committees to determine specific matters.
If deemed appropriate, the Board of Directors and each Committee have the right to engage independent external expertise, either in general or with respect to specific matters.
Prior to the Board meetings, each Committee submits the minutes from Committee meetings to the Board and the Chairman of the Commit-tee reports on the work of the CommitCommit-tee at each Board meeting.
Audit Committee
On behalf of the Board, the Audit Committee monitors the following:
> The scope and accuracy of the financial statements
> Compliance with legal and regulatory requirements
> Internal control over financial reporting
> Risk management
> The effectiveness and appropriateness of the Group’s anti-corruption program.
The Audit Committee also reviews the annual and interim financial reports and oversees the external audit process, including audit fees.
The Audit Committee itself does not perform audit work. Ericsson’s internal audit function reports directly to the Audit Committee.
Ericsson’s external auditor is elected by the AGM. The Committee is involved in the prepa-ratory work for the Nomination Committee to propose external auditor for election by the AGM. It also monitors Group transactions and the
Members of the Committees of the Board of Directors
Audit Committee Ulf J. Johansson (Chairman) Alexander Izosimov Mikael Lännqvist Kristin Skogen Lund
Remuneration Committee Leif Johansson (Chairman) Börje Ekholm
Roxanne S. Austin Karin Åberg Finance Committee
Leif Johansson (Chairman) Pehr Claesson
Anders Nyrén Jacob Wallenberg
Members of the Committees
ongoing performance and independence of the auditor with the aim to avoid conflicts of interest.
In order to ensure the auditor’s independence, the Audit Committee has established pre-appro-val policies and procedures for non-audit related services to be performed by the external auditor.
Pre-approval authority may not be delegated to management.
The Audit Committee also oversees Ericsson’s process for reviewing transactions with related parties and Ericsson’s whistleblower procedures.
Whistleblower procedures
Ericsson’s whistleblower tool, Ericsson Compli-ance Line, managed by an external service pro-vider, can be used for reporting of alleged viola-tions of laws or the Code of Business Ethics that:
> are conducted by Group or local manage-ment, and
> relate to corruption, questionable accounting or auditing matters or otherwise seriously affect vital interests of the Group or personal health and safety.
Violations reported through the whistleblower tool are handled by Ericsson’s Group Compli-ance Forum, consisting of representatives from Ericsson’s internal audit function, Group Func-tion Legal Affairs, Group Security, and Group Function Human Resources. Information regard-ing any incident is reported to the Audit Commit-tee. Reports include measures taken, details of the responsible Group function and the status of any investigation.
Members of the Audit Committee
The Audit Committee consists of four Board members appointed by the Board. The mem-bers appointed by the Board in connection with the AGM 2015 are: Ulf J. Johansson (Chairman), Kristina Davidsson, Alexander Izosimov and Kristin Skogen Lund. In October 2015, Mikael Lännqvist (employee representative) was appointed as a new member of the Audit Com-mittee replacing Kristina Davidsson. The Board has appointed shareholder elected Board mem-bers with CEO experience to the Committee.
The composition of the Audit Committee meets all applicable independence require-ments. The Board of Directors has determined that each of Ulf J. Johansson, Alexander Izosimov and Kristin Skogen Lund is an audit committee financial expert, as defined under the SEC rules.
Each of them is considered independent under applicable US securities laws, SEC rules and NASDAQ Stock Market Rules and each of them is financially literate and familiar with the accounting practices of an international com-pany, such as Ericsson.
Work of the Audit Committee in 2015 The Audit Committee held nine meetings in 2015. Directors’ attendance is reflected in the table on page 143. During the year, the Audit Committee reviewed the scope and results of external financial audits and the independence of the external auditor. It also monitored the external audit fees and approved non-audit services performed by the external auditor in accordance with the Committee’s pre-approval policies and procedures.
The Committee approved the annual risk assessment and audit plan for the internal audit function and reviewed its reports. Prior to pub-lishing it, the Committee also reviewed and discussed each interim report and the annual report with the external auditor.
The Committee monitored the continued compliance with the Sarbanes-Oxley Act as well as the internal control and risk management process.
Finance Committee
The Finance Committee’s responsibilities include:
> Handling matters related to acquisitions and divestments
> Handling capital contributions to Group and affiliated companies
> Raising loans, issuing guarantees and similar undertakings, and approving financial support to customers and suppliers
> Continuously monitoring the Group’s financial risk exposure.
The Finance Committee is authorized to determine matters such as:
> Direct or indirect financing
> Provision of credits
> Granting of guarantees and similar undertakings
> Certain investments, divestments and financial commitments.
Members of the Finance Committee
The Finance Committee consists of four Board members appointed by the Board. The mem-bers appointed by the Board in connection with the AGM 2015 are: Leif Johansson (Chairman), Pehr Claesson, Anders Nyrén and Jacob Wal-lenberg. The Board has appointed shareholder elected Board members with extensive industrial and financial experience to the Committee.
Work of the Finance Committee in 2015 The Finance Committee held nine meetings in 2015. Directors’ attendance is reflected in the table on page 143. During the year, the Finance Committee approved numerous customer finance credit arrangements and reviewed
a number of potential mergers and acquisitions and real estate investments. The Finance Com-mittee spent significant time discussing and securing an adequate capital structure, as well as examining cash flow and working capital performance. International developments and their impact on Ericsson are continuously moni-tored, as well as Ericsson’s financial position, foreign exchange and credit exposures.
Remuneration Committee
The Remuneration Committee’s responsibilities include:
> Reviewing and preparing for resolution by the Board proposals on salary and other remu-neration, including retirement compensation, for the President and CEO.
> Reviewing and preparing for resolution by the Board proposals to the AGM on guidelines for remuneration to the ELT.
> Approving proposals on salary and other remuneration, including retirement compen-sation, for the members of the ELT.
> Reviewing and preparing for resolution by the Board proposals to the AGM on the Long-Term Variable Compensation Program and similar equity arrangements.
In its work, the Remuneration Committee considers trends in remuneration, legislative changes, disclosure rules and the general global executive remuneration environment. It reviews salary survey data before approving any salary adjustments for the members of the ELT and before preparing salary adjustment recommen-dations for the President and CEO for resolution by the Board.
Members of the Remuneration Committee The Remuneration Committee consists of four Board members, appointed by the Board. The members appointed by the Board in connection
with the AGM 2015 are: Leif Johansson (Chair-man), Börje Ekholm, Roxanne S. Austin and Karin Åberg. The Board has appointed share-holder elected Board members to the Commit-tee with experiences from different markets of relevance to the Group, including the Swedish and US markets.
An independent expert advisor, Piia Pilv, has been appointed by the Remuneration Commit-tee to advise and assist the CommitCommit-tee.
Work of the Remuneration Committee in 2015 The Remuneration Committee held four meet-ings in 2015. Director’s attendance is reflected in the table on page 143.
The Remuneration Committee reviewed and prepared a proposal for the Long-Term Variable Compensation program (LTV) 2015 for resolu-tion by the Board and further approval by the AGM 2015. It further resolved on salaries and Short-Term Variable remuneration for 2015 for the members of the ELT and prepared proposals regarding remuneration to the President and CEO for resolution by the Board. It also prepared guidelines for remuneration to the ELT for resolu-tion by the Board and subsequent referral to the AGM for approval.
The Remuneration Committee concluded its analysis of the current LTV structure and execu-tive remuneration. The resulting proposals on LTV and guidelines for remuneration to the ELT will be referred to the AGM 2016 for resolution.
For further information on fixed and variable remuneration, please see Notes to the consoli-dated financial statements – Note C28 “Informa-tion regarding members of the Board of Direc-tors, the Group management and employees”
and the “Remuneration Report” included in the Annual Report.
Directors’ attendance and fees 2015
Fees resolved by the AGM 2015 Number of Board/Committee meetings attended in 2015
Board member Board fees,
SEK1) Committee fees,
SEK Board Audit
Committee Finance
Committee Remuneration Committee
Leif Johansson 4,000,000 400,000 11 9 4
Sverker Martin-Löf 2) – – 3 2
Anders Nyrén 3) 4) 975,000 175,000 8 7
Jacob Wallenberg 975,000 175,000 11 9
Roxanne S. Austin 975,000 175,000 11 4
Sir Peter L. Bonfield 5) – – 2 2
Nora Denzel 975,000 – 11
Börje Ekholm 975,000 175,000 11 4
Alexander Izosimov 6) 975,000 250,000 11 6
Ulf J. Johansson 975,000 350,000 11 9
Sukhinder Singh Cassidy 3) 975,000 – 7
Kristin Skogen Lund 6) 975,000 250,000 11 6
Hans Vestberg – – 11
Pär Östberg 5) – – 3 3
Pehr Claesson 27,00011) – 11 9
Kristina Davidsson 7) 15,00011) – 7 6
Mikael Lännqvist 8) 10,50011) – 4 3
Karin Åberg 21,00011) – 11 4
Rickard Fredriksson 9) 10,50011) – 7
Zlatko Hadzic 10) 4,50011) – 3
Karin Lennartsson 16,50011) – 11
Roger Svensson 13,50011) – 10
Total number of meetings 11 9 9 4
1) Non-employee Directors can choose to receive part of their Board fee (exclusive of Committee fees) in the form of synthetic shares.
2) Resigned from the Board and from the Finance Committee as of April 14, 2015.
3) Elected member of the Board at the AGM held on April 14, 2015.
4) Appointed member of the Finance Committee as of April 14, 2015.
5) Resigned from the Board and from the Audit Committee as of April 14, 2015.
6) Appointed member of the Audit Committee as of April 14, 2015.
7) Resigned from the Board and from the Audit Committee as of August 26, 2015.
8) Appointed employee representative as of August 26, 2015 and member of the Audit Committee as of October 2015.
9) Resigned from the Board as of August 26, 2015.
10) Appointed deputy employee representative as of August 26, 2015.
11) Employee representative Board members and their deputies are not entitled to a Board fee, but instead get paid compensation in the amount of SEK 1,500 per attended Board meeting, and since the AGM 2015 per attended Committee meeting.