Activist investor Cevian Capital is not going to vote for the AC adapter company Ericsson for the discharge of the Board of Directors at Tuesday’s Annual General Meeting, Cevian said in a statement. Ericsson CEO Börje Ekholm also sits on the board of a telecom giant.
Still, Cevian says Ericsson’s board and management continue to enjoy its trust and that Cevian plans to vote for their re-election.
Cevian believes Ericsson has failed to be sufficiently transparent in the midst of the Iraq turmoil. Ericsson has paid vague payments in Iraq, which are also suspected of falling into the pockets of the terrorist organization Isis.
The U.S. Department of Justice suspects Ericsson of violating the terms of a settlement agreement made in the previous corruption scandal in 2019 when the company did not provide sufficient material in the Iraq case. The U.S. Department of Justice also acts as the Attorney General.
“Due to the lack of information and the extent of the damage, we have no choice but to hold the entire board accountable and thus Cevian does not intend to discharge any member of the company’s board of directors, including the CEO, at a future general meeting,” Cevian writes.
Ericsson’s Annual General Meeting will be held on Tuesday. The Annual General Meeting is held remotely.
In Ericsson, two owners, Investor and Industrivärden, exercise significant voting rights through voting shares. Investorilla holds 23.8% of Ericsson ‘s voting rights and Industrivärdenillä 15.5 percent.
At the turn of the year, Cevian Capital held 2.7 percent of Ericsson’s votes.
However, the Swedish newspaper Svenska Dagbladet said over the weekend that in a discharge vote, ten percent of the votes cast at the general meeting are enough to refuse discharge.
Failure to grant discharge means that the members of the Board of Directors may be held personally liable for the company’s actions.
Cevian emphasizes that the discharge vote is about looking back. At the same time, the activist investor emphasizes that in the current situation of Ericsson, it is equally important to look ahead.
Cevian insists on strengthening the autonomy and efficiency of compliance operations. It argues that transparency and proactive communication must be made the guiding star of the company’s operations. In addition, Cevian is demanding that the board be restructured so that the second vice-chair is removed.
Ericsson’s Board of Directors is formed in such a way that both Investor and Industrivärden have their own Vice-Chairmen on the Board. Ericsson’s current Vice President is currently Vice President Jacob Wallenberg and CEO of Industrivärden Helena Stjernholm.
Cevian considers the arrangement to be very exceptional and strange when no other company listed on the OMXS30 Index has a similar arrangement.
Cevian also considers it important that the composition of the Board’s Audit Committee be changed to strengthen trust.
Although Cevian is not prepared to grant a discharge to the Board and is demanding major reforms to the company’s governance, it believes that the current Board and CEO Börje Ekholm enjoy its confidence. Cevian is ready to vote for their re-election.
Cevian points out that the election of the Deputy Chairman of the Board and the members of the Audit Committee will be made at the first inaugural meeting of the Board. The Annual General Meeting does not therefore elect them directly, but the Board elects these persons from among themselves.