Glass Lewis
Ericsson’s Board is pleased to note Glass Lewis’s thorough analysis, in agreement with the Ericsson Board, supporting the owners’ proposed slate of directors and the vote in favor of discharging the Board from liability in relation to 2022.
In its report, Glass Lewis noted:
“In light of the Company's response to the shareholders dissent, the proposed board refreshment, the actions the Company has taken to improve its oversight measures and the fact that the DOJ investigation has reached a conclusion, we don't see a cause for shareholder concern regarding the ratification of board and CEO acts at this time and believe shareholders can be reasonably satisfied with the board's response and performance in the past fiscal year”.
ISS
Ericsson’s Board welcomes ISS’ support for the owners' proposed Board nominees and support for other Board recommended matters. However, the Board does not consider the ISS recommendation against the Discharge of Liability vote to reflect the significant oversight measures and actions the Board has taken, including over the course of 2022 and Q1 2023 to resolve with the DOJ and to continue strengthening the organizations risk management, overall governance, compliance, and culture.
ISS notes in its report specific statements made by the DOJ in March 2023, including that: “[Ericsson] has significantly enhanced its compliance program and internal accounting controls through structural and leadership changes, including but not limited to the hiring of a new Chief Legal Officer and new Head of Corporate and Government Investigations and the establishment of a multi-disciplinary Business Risk Committee comprised of Group-level senior executives … and has committed to continuing to implement and test further enhancements.”
In addition, the ISS recommendation against the Discharge of Liability fails to recognize that there have been no charges of criminal or illegal conduct since the Company entered into its DPA in 2019; and importantly that the recent resolution with the DOJ involves a “retroactive” guilty plea wholly related to historical conduct that occurred in the years prior to 2017. Ronnie Leten, the Board Chairman stated: “Our CEO and current management team are positive agents of change and have made significant strides to address the historic conduct that led to the 2019 DPA. The Company’s significant progress was acknowledged by the DOJ and should be considered in making a recommendation to shareholders on Discharge of Liability for 2022.”
The ISS Report also does not reflect the Company’s most recent statements on Iraq which were made on March 2, 2023; specifically: “With respect to the historical conduct in Iraq, the Company continues to thoroughly investigate the facts in full cooperation with the DOJ and the U.S. Securities and Exchange Commission. As previously disclosed, the Company’s 2019 investigation did not conclude that Ericsson made or was responsible for any payments to any terrorist organization; and the Company’s significant further investigation over the course of 2022 has not altered this conclusion.” We also note that the press release disclosing this update was reviewed by the DOJ in advance of release (as per the requirements under the Plea Agreement).
As noted by our Chairman in our 2022 Annual Report, and as referred to by Glass Lewis in its report: "The Board of Directors acknowledges the vote against discharge from liability at the 2022 Annual General Meeting, and emphasizes that best-in-class governance and building a culture of compliance, ethics and integrity have been, and continue to be, a top priority for the Board. In 2022, the Board oversaw the reinforcement of the Ethics and Compliance program and the execution of the Company’s ambition to become a global industry player underpinned by ethical leadership. The Board worked closely with the management in the Company’s acceleration of its cultural transformation program, the revamping of our global risk management approach, and the strengthening of our governance. We also continue to embed a sustainable program of compliance and controls. In 2022, the Board witnessed with satisfaction Ericsson’s strong commitment and progress in streamlining and clarifying internal processes, oversight and controls, as well as setting even higher expectations of performance and adherence to its integrity mandate for all employees."
We look forward to discussing these matters with shareholders at the AGM on March 29, 2023.