The Board of Directors is ultimately responsible for the organization of the Company and the management of the Company’s operations. It develops guidelines and instructions for the day-to-day management of the Company, conducted by the President and CEO who ensures the Board of Directors receives regular reports regarding the Group’s business development – its results, financial position and liquidity – and events of importance to the Group.

 

According to the Articles of Association, Ericsson’s Board of Directors shall consist of a minimum of five directors and a maximum of 12 directors, with no more than six deputies. Directors are elected by the shareholders at the Annual General Meeting for the period from the date of the Annual General Meeting until the close of the following Annual General Meeting, but can serve any number of consecutive terms. In addition, under Swedish law, unions have the right to appoint three directors and their deputies to the Ericsson Board of Directors.

 

Ericsson abides by strict rules and regulations regarding conflicts of interest. Directors and the President and CEO cannot participate in any decision regarding agreements between themselves and the Company, or between the Company and any third party or legal entity that the individual has an interest in. Further, the Audit committee has implemented a procedure for the approval of related-party transactions in accordance with NASDAQ's corporate governance rules as well as a pre-approval process for non-audit services carried out by the external auditors, in order to ensure their independence.

Our Board of Directors consists of 10 Directors including the Chariman of the Board elected by the shareholders at the Annual General Meeting for the period until the close of the next Annual General Meeting, and three employee representatives, each with a deputy, appointed by the trade unions. The President and CEO of the Company may be elected as a director, but the Swedish Companies Act prohibits the President of a public company from being elected Chairman of the Board.

Current members of the Board 

Complementary to the provisions in the Swedish Companies Act and the Articles of Association of the Company, the Board of Directors has adopted a work procedure for its activities that outlines rules regarding the distribution of tasks between the Board and its Committees as well as between the Board, its Committees and the President and CEO. The work procedure is reviewed, evaluated and adopted by the Board as required, at least once a year.

The work of the Board follows a yearly cycle, starting with the statutory Board meeting held in connection with the Annual General Meeting. Members of each of the three Committees of the Board are appointed at the statutory meeting, and the Board resolves on matters such as authorization to sign for the Company. At the next ordinary meeting, the Board handles the first interim report for the year along with the press release related to the report. In June, a Board meeting generally takes place away from Company headquarters, giving Directors a chance to visit major Company operations. Towards the end of July, the Board meets to handle the interim report for the second- quarter of the year. Strategy matters are frequently addressed at any appropriate Board meeting, but a two-day Board meeting in August is entirely devoted to the overall strategy of the Group. The August meeting also addresses the overall risk management of the Group. A third-quarter interim report Board meeting is held at the end of October. In order to allow for the Nomination Committee to be able to take into account the results of the Board work in due time, the Board thoroughly evaluates its own work and the results of this evaluation are presented and discussed at the October meeting. The last meeting of the calendar year addresses budget and financial outlook. At the first meeting of the calendar year, generally in the end of January, the Board focuses on the financial result of the entire year and also handles the fourth-quarter report. At the Board meeting in February, which closes the yearly cycle of work, the Board signs the annual report.

As the Board is responsible for financial oversight, financials are presented and evaluated at each Board meeting. Further, each Board meeting generally includes reports by the Chairman of each of the three Committees based on the minutes from the Committee meetings, which are distributed to all Directors prior to the Board meeting. A Board meeting also typically includes the President and CEO’s report on general business and market developments, including the performance of the Company. The Board is regularly informed of recent developments in legal and regulatory matters and addresses, whenever necessary, the adoption and implementation of various corporate governance rules. Material for each Board meeting is distributed by the Board of Directors’ Secretariat according to a pre-established time plan. The time plan is established with due regard for corporate governance requirements, including prompt distribution of the minutes of Board meetings. Unless exceptional circumstances prevent them from doing so, all Directors participate in all Board meetings.

The Board meets with Ericsson’s external auditors at least once a year to receive and consider the auditors’ observations regarding the Annual Report and internal controls. The auditors also annually prepare reports for the management on the accounting and financial reporting practices of the Company and the Group. Moreover, the Audit Committee meets with the auditors to receive and consider the auditors’ observations on the interim reports. The Audit Committee reports its findings to the Board. The auditors have been instructed to reflect in their reports whether the Company and Group are organized so that the accounts, the management of funds and the financial position of the Company and Group in other respects are up to a good standard and controlled in a prudent manner. The Board has reviewed and assessed the Company’s process for financial reporting, as described later in “Internal control over financial reporting for year 2008”. The Board’s own review of interim and annual reports in combination with the Company’s internal controls is deemed to give reasonable assurance regarding the quality of the financial reporting.

The Nomination Committee appointed according to the procedure resolved by the Annual General Meeting of Shareholders 2008, has, in connection with its proposal to the AGM 2009 made the assessment that, for the purposes of the Swedish Code of Corporate Governance, the following Directors are independent of the Company and its senior management, as well as of the Company’s major shareholders: Roxanne Austin, Sir Peter L. Bonfield, Ulf J. Johansson, Nancy McKinstry and Michael Treschow.

The work of the Board of Directors is continuously characterized by a high level of activity and 11 Board meetings were held in 2008. (For attendance at Board meetings see “Directors’ Attendance 2008”). Two meetings were held away from the Company headquarters, one in San José, California, focusing on the acquired operations in Silicon Valley, and one in Lund, Sweden, with a focus on Sony Ericsson and Ericsson Mobile Platform strategies.

Maintaining technology leadership and profitability in an increasingly competitive landscape have been key strategic areas of focus during the year. A leading position and effectiveness in research and development is key in the rapid technology evolution. An important part of the strategic work is to identify and assess various internal and external risk factors, a need that is intensified as a result of the financial turmoil that has characterized the year.

Apart from regular matters addressed in line with the annual Board work cycle, the Board addressed the future of Ericsson’s mobile platform business (EMP), where Ericsson and STMicroelectronics plan to merge EMP and ST-NXP Wireless into a joint venture, and the divestment of the Enterprise business to Aastra Technologies. The Board also addressed other long and short-term strategies with regard to operator and vendor consolidation, increased data traffic in telecom networks, the effects of migration of networks towards IP technology with increased focus on content and multimedia and the changing competitive landscape among telecom operators, cable TV providers and other data-network operators.

The Board of Directors has established three Committees: the Audit, Finance and Remuneration Committees. The Board appoints each of theCommittee members amongst the Board  members. The work of the Committees is principally preparatory, that is they prepare matters for final resolution by the Board. However, the Board has authorized each Committee to determine certain issues in limited areas and may also provide extended authorization to a Committee to determine specific matters. The Board of Directors and each Committee have the right to engage external expertise, either in general or in respect to specific matters, if deemed appropriate.

 

Prior to each Board meeting, each Committee submits a report to the Board on the issues handled, resolved or referred to the Board since the previous ordinary Board meeting. The minutes of each Committee meeting are attached to the minutes of the Board meeting following each Committee meeting.

 

Remuneration Committee 

Finance Committee 

Audit Committee