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NOTIFICATION ETC.
Shareholders who wish to attend the Annual General Meeting shall
The notification shall state name, personal identification number or company registration number, address, telephone number and advisors, if applicable. Shareholders whose shares are registered in the names of nominees must temporarily re-register the shares in their own name in order to be entitled to attend the Annual General Meeting. In order for such re-registration to be completed on Wednesday 7 May 2014 the shareholder must inform their nominees well before this date. Shareholders attending by a proxy or a representative should send documents of authorisation to MTG at the address above well before the Annual General Meeting. A template proxy form is available on the Company's website www.mtg.se. Shareholders cannot vote or, in other way, attend the Annual General Meeting by remote access.
PROPOSED AGENDA
1. Opening of the Annual General Meeting.
2. Election of Chairman of the Annual General Meeting.
3. Preparation and approval of the voting list.
4. Approval of the agenda.
5. Election of one or two persons to check and verify the minutes.
6. Determination of whether the Annual General Meeting has been duly convened.
7. Remarks by the Chairman of the Board.
8. Presentation by the Chief Executive Officer.
9. Presentation of the Annual Report, the Auditors' Report and the consolidated financial statements and the Auditors' Report on the consolidated financial statements.
10. Resolution on the adoption of the income statement and the Balance Sheet and of the consolidated income statement and the consolidated Balance Sheet.
11. Resolution on the treatment of the Company's earnings as stated in the adopted Balance Sheet.
12. Resolution on the discharge of liability of the members of the Board and the Chief Executive Officer.
13. Determination of the number of members of the Board.
14. Determination of the remuneration to the members of the Board and the auditor.
15. Election of the members of the Board and the Chairman of the Board.
16. Election of auditor.
17. Approval of the procedure of the Nomination Committee.
18. Resolution regarding guidelines for remuneration to the senior executives.
19. Resolution regarding a long-term incentive plan 2014, including the following resolutions:
(a) adoption of a long-term incentive plan 2014; and
(b) transfer of Class B shares to the participants.
20. Resolution to authorise the Board to resolve on repurchase of own shares.
21. Closing of the Annual General Meeting.
RESOLUTIONS PROPOSED BY THE NOMINATION COMMITTEE
Election of Chairman of the Annual General Meeting (item 2)
The Nomination Committee proposes that Wilhelm Lüning, member of the Swedish Bar Association, is elected to be the Chairman of the Annual General Meeting.
Determination of the number of members of the Board and election of the members of the Board and the Chairman of the Board (items 13 and 15)
The Nomination Committee proposes that the Board shall consist of seven members.
The Nomination Committee proposes that the Annual General Meeting shall re-elect all current members of the Board, being David Chance, Blake Chandlee, Simon Duffy, Lorenzo Grabau, Michelle Guthrie, Alexander Izosimov and Mia Brunell Livfors, as members of the Board for the period until the close of the next Annual General Meeting.
The Nomination Committee proposes that the Annual General Meeting shall re-elect David Chance as Chairman of the Board.
The Nomination Committee's motivated statement explaining its proposals regarding the Board and information on the proposed members of the Board are available on the Company's website at www.mtg.se.
Determination of the remuneration to the members of the Board and the auditor (item 14)
The Nomination Committee proposes that SEK 1,260,000 is to be allocated to the Chairman of the Board, SEK 475,000 to each of the other directors of the Board and a total of SEK 800,000 (2013: 651,000) for the work in the committees of the Board. The Nomination Committee proposes that for work within the Audit Committee SEK 225,000 (2013: 200,000) shall be allocated to the Chairman and SEK 125,000 (2013: 100,000) to each of the other three members. For work within the Remuneration Committee SEK 100,000 (2013: 75,000) shall be allocated to the Chairman and SEK 50,000 (38,000) to each of the other two members. The increased remuneration for the work in the committees of the Board will result in an increase of the total remuneration to the Board for the period until the close of the next Annual General Meeting from SEK 4,761,000 to SEK 4,910,000.
The Nomination Committee proposes that the Annual General Meeting resolves that remuneration to the auditor shall be paid in accordance with approved invoices.
Election of auditor (item 16)
The Nomination Committee proposes that the company shall have one (1) registered accounting firm as auditor and that the registered accounting firm KPMG AB shall be re-elected as auditor for the period until the close of the Annual General Meeting 2018. KPMG AB has informed that they will appoint the authorised public accountant Joakim Thilstedt as auditor-in-charge, if KPMG AB is re-elected as auditor.
Approval of the procedure of the Nomination Committee (item 17)
The Nomination Committee proposes that the work of preparing proposals to the 2015 Annual General Meeting regarding the Board and auditor and their remuneration, Chairman of the Annual General Meeting and the procedure for the Nomination Committee shall be performed by a Nomination Committee.
The Nomination Committee will be formed during October 2014 in consultation with the largest shareholders of the Company as at 30 September 2014. The Nomination Committee will consist of at least three members appointed by the largest shareholders of the Company. Cristina Stenbeck will be a member of the Committee and will also act as its convenor. The members of the Committee will appoint the Committee Chairman at their first meeting.
The Nomination Committee is appointed for a term of office commencing at the time of the announcement of the interim report for the period January – September 2014 and ending when a new Nomination Committee is formed. If a member resigns during the Committee term, the Nomination Committee can choose to appoint a new member. The shareholder that appointed the resigning member shall be asked to appoint a new member, provided that the shareholder is still one of the largest shareholders in the Company. If that shareholder declines participation in the Nomination Committee, the Committee can choose to ask the next largest qualified shareholder to participate. If a large qualified shareholder reduces its ownership, the Committee can choose to appoint the next largest shareholder to join. In all cases, the Nomination Committee reserves the right to reduce its membership as long as the number of members remains at least three.
The Nomination Committee shall have the right to request and receive personnel resources such as secretarial services from the Company, and to charge the Company any costs for recruitment consultants and related travel if deemed necessary.
RESOLUTIONS PROPOSED BY THE BOARD
Dividend (item 11)
The Board proposes that the Annual General Meeting resolves on a dividend of SEK 10.50 per share and that the record date shall be on Friday 16 May 2014. If the Annual General Meeting resolves in accordance with the proposal, the dividend is estimated to be paid out to the shareholders on Wednesday 21 May 2014.
A reasoned statement from the Board, pursuant to Ch 18 Sec 4 of the Swedish Companies Act, with respect to the proposed dividend is available on the Company's website at www.mtg.se, at the Company's premises at Skeppsbron 18 in Stockholm and will be sent to those shareholders who so request and state their postal address or email address.
Guidelines for remuneration to senior executives (item 18)
The Annual General Meeting is asked to decide on the following guidelines, proposed by the Board, for determining remuneration for MTG's senior executives (below the "Executives"), as well as members of the Board to the extent they are remunerated outside their directorship.
Remuneration guidelines
The objective of the guidelines is to ensure that MTG can attract, motivate and retain senior executives, within the context of MTG's international peer group, which consists of Northern and Eastern European media companies. The remuneration shall be based on conditions that are market competitive and at the same time aligned with shareholders' interests. Remuneration to the Executives shall consist of a fixed and variable salary in cash, as well as the possibility of participation in equity based long-term incentive programmes and pension schemes. These components shall create a well-balanced remuneration reflecting individual performance and responsibility, both short-term and long-term, as well as MTG's overall performance.
Fixed salary
The Executives' fixed salary shall be competitive and based on the individual Executive's responsibilities and performance.
Variable salary
The Executives may receive variable remuneration in addition to fixed salaries. The contracted variable remuneration will generally not exceed a maximum of 75 per cent of the fixed annual salary. The variable remuneration shall be based on the performance of the Executives in relation to established goals and targets.
Other benefits
MTG provides other benefits to the Executives in accordance with local practice. Other benefits can include, for example, a company car and company health care. Occasionally, housing allowance could be granted for a defined period.
Pension
The Executives shall be entitled to pension commitments based on those that are customary, competitive and in line with market conditions in the country in which they are employed. Pension commitments will be secured through premiums paid to insurance companies.
Notice of termination and severance pay
The maximum notice period in any Executive's contract is twelve months during which time salary payment will continue. The Company does not generally allow any additional contractual severance payments to be agreed although there can be occasional cases where this takes place.
Compensation to Board members
Board members, elected at General Meetings, may in certain cases receive a fee for services performed within their respective areas of expertise, outside of their Board duties. Compensation for these services shall be paid at market terms and be approved by the Board.
Deviations from the guidelines
In special circumstances, the Board may deviate from the above guidelines, for example additional variable remuneration in the case of exceptional performance. In such a case the Board is obliged to explain the reason for the deviation at the following Annual General Meeting.
Evaluation of the guidelines and auditor's statement with respect to the compliance with the guidelines
In accordance with the Swedish Corporate Governance Code Rule 10.3 and 9.1 the Remuneration Committee within the Board monitors and evaluates the application of the guidelines for remuneration to the Executives established by the Annual General Meeting. Also, the Company's auditor has, pursuant to Ch 8 Sec 54 of the Swedish Companies Act, provided a statement with respect to whether there has been compliance with the guidelines for remuneration to the Executives which have applied during 2013. The evaluation and auditor's review have resulted in the conclusion that the guidelines adopted by the Annual General Meetings 2012 and 2013 have been followed by MTG during 2013.
The Board's report of the results of the evaluation according to the Swedish Code of Corporate Governance and the auditor's statement are available on the Company's website at www.mtg.se, at the Company's premises at Skeppsbron 18 in Stockholm and will be sent to those shareholders who so request and state their postal address or email address.
Long-term incentive plan 2014 (item 19)
The Board proposes that the Annual General Meeting resolves to adopt a performance based long-term incentive plan (the "Plan") for senior executives (not referring to members of the Board) and other key employees within the MTG Group in accordance with items 19(a) and 19(b) below.
Adoption of the Plan (item 19(a))
The Plan in brief
The main objectives for adopting the Plan are to create conditions to recruit, motivate and retain high performing key employees, to align their interests with the shareholders by linking the participants' remuneration to MTG's profit, use of capital and value creation in order to facilitate maximum long-term value growth in MTG.
The Plan is proposed to include approximately 140 senior executives and other key employees within the MTG Group. In order to participate in the Plan, the CEO and the senior executives are required to make a personal investment in MTG Class B shares (the "Investment Shares"). Other key employees are not required to make a personal investment in MTG Class B shares to participate in the Plan. Based on the participant's annual base salary, gross before taxes, (the "Gross Salary"), the share price, and for the CEO and the senior executives the number of Investment Shares, the participants will be granted rights to receive MTG Class B shares free of charge (the "Share Award"), subject to the terms and conditions of the Plan.
In brief, the Share Awards are granted after the Annual General Meeting and will vest after a three year period, ending after the release of MTG's interim financial report for the period January – March 2017 (the "Vesting Period"). The number of shares that vest depends on to the extent to which, on a linear basis between the minimum and maximum level, the performance condition based on MTG's average normalised return on capital employed (ROCE) during 1 January 2014 – 31 December 2016 (the "Performance Period"), has been fulfilled. In addition, vesting requires that the participant is still employed by the MTG Group, and applicable to the CEO and senior executives that they continuously maintain the Investment Shares throughout the Vesting Period.
The maximum numbers of MTG Class B shares which may vest under the Plan are in principle limited to 345,000 (subject to possible recalculation, please refer to the section "Scope"), representing approximately 0.52 per cent of the outstanding shares and 0.31 per cent of the outstanding votes.
The personal investment in Investment Shares and grant of Share Awards
The participants in the Plan are divided into three categories.
The selection of employees into the different categories has been made taking into account, among other things, that the CEO and the senior executives in Category 1 are required to own Investment Shares in order to participate. These shares can either be MTG Class B shares already held, which are not used as personal investment in the 2012 or 2013 incentive plans, or shares acquired on the market in connection with the notification to participate in the Plan. If a participant has insider information which prevents him/her from purchasing MTG shares in connection with the notification to participate in the Plan, the Investment Shares shall be purchased as soon as possible, but prior to the next Annual General Meeting.
The key employees in Category 2 are not required to make a personal investment in MTG shares in order to participate in the Plan.
The number of Share Awards granted to the participant is based on a percentage of the participant's Gross Salary and a share price of SEK 284.70 (calculated as the average volume weighted price on the MTG Class B share the last four (4) trading days in March 2014, with a deduction of SEK 10.50 (the proposed dividend per share)).
For the CEO and the senior executives the number of Share Awards granted is also based pro rata in relation to the number of Investment Shares. The maximum numbers of Investment Shares the CEO and the senior executives can invest in are based on their respective annual base salary, net after taxes, (the "Net Salary") and a share price of SEK 284.70 (calculated as the average volume weighted price on the MTG Class B share the last four (4) trading days in March 2014, with a deduction of SEK 10.50 (the proposed dividend per share)).
In accordance with these principles, grant of Share Awards under the Plan will be the following for the different categories:
Terms and performance conditions of the Share Awards
The Share Awards shall be governed by the following terms and conditions:
The number of MTG Class B shares that will vest depends on the level of fulfilment of the performance condition which is based on MTG's average normalised return on capital employed (ROCE) during the Performance Period being: 22 per cent as a minimum entry level; 25 per cent as a target level; and 28 per cent as a maximum stretch level.
In order for every Share Award to entitle the participant to one (1) MTG Class B share, the maximum stretch level must have been fulfilled. If the minimum entry level is reached, 20 per cent of the participant's Share Awards will vest and if the target level is reached 70 per cent of the Share Awards will vest. Where the level of fulfilment is between the minimum and maximum levels, vesting will occur on a linear basis in stages. If the minimum entry level is not reached, all Share Awards will lapse.
Depending on the level of fulfilment of the performance condition during the Performance Period and on the condition that the participant is (with certain exceptions) still employed by the MTG Group, after the Vesting Period each Share Award vests as one MTG Class B share. For the CEO and participants in Category 1 vesting requires that the Investment Shares have been continuously maintained throughout the Vesting Period.
MTG intends to present the outcome of the Plan in the 2017 annual report.
Scope
Based on a share price of the MTG Class B share of SEK 284.70 (calculated as the average volume weighted price on the MTG Class B share the last four (4) trading days in March 2014, with a deduction of SEK 10.50 (the proposed dividend per share)), the total number of Investment Shares that the CEO and senior executives in Category 1 can own, to a maximum, within the Plan are 10,147.
The maximum numbers of MTG Class B shares which may be delivered to the participants on vesting of the Share Awards are limited to 345,000, representing approximately 0.52 per cent of the outstanding shares and 0.31 per cent of the outstanding votes. The number of MTG Class B shares that according to the Plan may be delivered to the participants shall, under conditions that the Board stipulates, be subject to recalculation where MTG implements a bonus issue, a share split or a reverse share split, a rights issue or similar measures.
Costs of the Plan and effect on certain key ratios
The Plan will be accounted for in accordance with IFRS 2 which stipulates that the Share Awards should be recorded as a personnel expense. Based on a share price of the MTG Class B share of SEK 284.70 (calculated as the average volume weighted price on the MTG Class B share the last four (4) trading days in March 2014, with a deduction of SEK 10.50 (the proposed dividend per share)); the CEO and the participants in Category 1 make the maximum personal investment; the annual employee turnover is 10 per cent; and that 50 per cent of the granted Share Awards will vest, the total cost, exclusive of social security costs, for the Plan is estimated to be approximately SEK 37 million. The cost will be allocated over the years 2014-2017.
Social security costs will also be recorded as a personnel expense in the income statement by current reservations. The social security costs are estimated to be approximately SEK 12 million with the assumptions above and an average social security tax rate of 23 per cent and an annual share price increase of 10 per cent during the Vesting Period.
Each Category has a pre-determined maximum vested amount (cap) of approximately 1.5 – 3 times the Gross Salary, depending on the participant's category. If the vested amount exceeds the maximum amount, the number of shares each Share Award entitles the employee to receive at vesting, will be reduced accordingly. Assuming 100 per cent fulfilment of the performance condition and that the respective caps have been reached the maximum cost for the Plan is approximately SEK 84 million in accordance with IFRS 2 and the maximum cost for social charges approximately SEK 87 million.
Based on a share price of the MTG Class B share of SEK 284.70 (calculated as the average volume weighted price on the MTG Class B share the last four (4) trading days in March 2014, with a deduction of SEK 10.50 (the proposed dividend per share)) the maximum dilution is 0.44 per cent in terms of the Plan cost as defined in IFRS 2 divided by the Company's market capitalisation.
The impact on basic earnings per share if the Plan had been introduced in 2013 with the assumptions above would result in a decrease of SEK 0.20 on a yearly pro forma basis. The annual cost of the Plan including social charges is estimated to be approximately SEK 17 million based on the above assumptions. This cost can be related to the Company's total personnel costs, including social charges, of SEK 1,944 million in 2013.
Delivery of shares under the Plan
To ensure the delivery of Class B shares under the Plan, a maximum 345,000 Class C shares held by the company after reclassification into Class B shares may be transferred to the participants under the Plan in accordance with item 19(b).
Preparation and administration of the Plan
MTG's Remuneration Committee has prepared the Plan in consultation with external advisors and major shareholders. The Plan has been dealt with at meetings of the Board during the first months of 2014. The above proposal is supported by MTG's major shareholders.
The Board or the Remuneration Committee shall be responsible for preparing the detailed terms and conditions of the Plan, in accordance with the terms and guidelines resolved on by the Annual General Meeting. The Board and Remuneration Committee are authorised to make necessary adjustments to fulfil local legislation, market prerequisites and restrictions in certain jurisdictions or if participation and/or delivery of shares to persons outside of Sweden cannot be achieved at reasonable costs and with reasonable administrative efforts. Such authorisations may e.g. include resolving that the participating person may participate in the Plan without making a personal investment and/or be offered cash-based settlement. It is further proposed that the Board shall be entitled to make other adjustments, if it so deems appropriate, should changes occur in the MTG Group or its operating environment that entails that the Plan no longer correctly reflects the performance of the MTG Group. Any such adjustments shall only be made in order to fulfil the main objectives of the Plan.
Information regarding other long-term incentive plans in MTG
For senior executives and key employees in MTG there are currently three long-term incentive plans. For further information regarding these plans such as terms and conditions, participation ratio, number of issued and outstanding instruments etc. please refer to the Annual Report 2013, note 27 for the Group, and MTG's website at www.mtg.se.
Transfer of own Class B shares to the participants (item 19(b))
The Board proposes that the Annual General Meeting resolves that a maximum of 345,000 Class C shares held by the company after reclassification into Class B shares may be transferred free of charge to participants in accordance with the terms of the Plan.
The number of the shares that may be transferred to the participants shall be subject to recalculation in the event of an intervening bonus issue, reversed split, split, rights issue and/or other similar events.
Authorisation for the Board to resolve on repurchase of own shares (item 20)
The Board proposes that the Annual General Meeting resolves to authorise the Board to pass a resolution on repurchasing the Company's own shares, if the purpose is to cancel shares through a decrease of the share capital, in accordance with the following conditions:
1. The repurchase of Class A and/or Class B shares shall take place on the Nasdaq OMX Stockholm in accordance with Nasdaq OMX Stockholm's rules regarding purchase and sale of own shares.
2. The repurchase of Class A and/or B shares may take place on one or more occasions for the period up until the next Annual General Meeting.
3. So many Class A and/or Class B shares may, at the most, be repurchased so that the Company's holding does not at any time exceed 10 per cent of the total number of shares in the Company.
4. The repurchase of Class A and/or Class B shares at the Nasdaq OMX Stockholm may occur at a price within the share price interval registered at that time, where share price interval means the difference between the highest buying price and lowest selling price.
5. It is the from time to time lowest-priced, available, shares that shall be repurchased by the Company.
6. Payment for the shares shall be in cash.
The purpose of the authorisation is to give the Board flexibility to continuously decide on changes to the capital structure during the year and thereby contribute to increased shareholder value.
The Board shall be able to resolve that repurchase of own shares shall be made within a repurchase program in accordance with the Commission's Regulation (EC) no 2273/2003, if the purpose of the authorisation and the repurchase only is to decrease the Company's share capital.
A reasoned statement from the Board, pursuant to Ch 19 Sec 22 of the Swedish Companies Act, with respect to the proposed authorisation for the Board to resolve to repurchase own Class A shares and/or B shares is available on the Company's website at www.mtg.se, at the Company's premises at Skeppsbron 18 in Stockholm and will be sent to those shareholders who so request and state their postal address or email address.
MISCELLANEOUS
Shares and votes
There are a total number of 67,647,124 shares in the Company, whereof 5,007,793 Class A shares, 61,774,331 Class B shares and 865,000 Class C shares, corresponding to a total of 112,717,261 votes. The Company currently holds 159,413 of its own Class B shares and 865,000 of its own Class C shares corresponding to 1,024,413 votes which cannot be represented at the Annual General Meeting.
Special majority requirements with respect to the proposed resolutions in items 19 and 20
The resolution under item 19(b) is valid only if supported by shareholders holding not less than nine-tenths of both the votes cast and the shares represented at the Annual General Meeting. Items 19(a) and 19(b) are conditional upon each other.
The resolution under item 20 is valid only if supported by shareholders holding not less than two-thirds of both the votes cast and the shares represented at the Annual General Meeting.
Documentation
The annual report, the reasoned statement of the Board, pursuant to Ch 18 Sec 4 and Ch 19 Sec 22 of the Swedish Companies Act, the Auditor's statement pursuant to Ch 8 Sec 54 of the Swedish Companies Act, the Boards' report of the results of the evaluation according to the Swedish Code of Corporate Governance, the Nomination Committee's motivated statement explaining its proposals regarding the Board and information on the proposed members of the Board will be made available today at the Company's website www.mtg.se, at the Company's premises at Skeppsbron 18 in Stockholm and will be sent to those shareholders who so request and state their postal address or email address.
The documentation can be ordered by telephone at +46 (0) 771-246 400 or in writing at the address Modern Times Group MTG AB c/o Computershare AB, P.O. Box 610, SE-182 16 Danderyd, Sweden.
Shareholders' right to request information
The Board and the CEO shall, if any shareholder so requests and the Board believes that it can be done without material harm to the Company, provide information regarding circumstances that may affect the assessment of an item on the agenda, circumstances that can affect the assessment of the Company's or its subsidiaries' financial situation and the Company's relation to other companies within the group and the consolidated accounts.
Stockholm, April 2014
MODERN TIMES GROUP MTG AB (PUBL)
THE BOARD
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Other information
Schedule for the Annual General Meeting:
The doors open for shareholders at 1.00 p.m. CET.
The Annual General Meeting commences at 2.00 p.m. CET.
Interpretation
The Annual General Meeting will mainly be held in Swedish. As a service to the shareholders, simultaneous interpretation from Swedish to English as well as from English to Swedish will be provided.
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The information is of such character, which Modern Times Group MTG AB (publ) shall disclose in accordance with the Securities Market Act (2007:528) and/or the law on Trading with Financial Instruments (1991:980). The information was distributed for disclosure at 8.00 a.m. CET on 8 April 2014.
Modern Times Group (MTG) is an international entertainment group with operations that span four continents and include free-TV, pay-TV, radio and content production businesses. MTG’s Viasat Broadcasting operates free-TV and pay-TV channels, which are available on Viasat’s own satellite platforms and third party networks, and also distributes TV content over the internet. MTG is also the largest shareholder in CTC Media, which is Russia’s leading independent television broadcaster.
Modern Times Group is a growth company and generated net sales of SEK 14.1 billion in 2013. MTG’s Class A and B shares are listed on Nasdaq OMX Stockholm’s Large Cap index under the symbols ‘MTGA’ and ‘MTGB’.
