Notice of ITAB Shop Concept AB (publ) Annual General Meeting
ITAB Shop Concept AB (publ) hereby gives notice of its Annual General Meeting to be held at 5 pm on Wednesday 11 May 2016, at Kulturhuset Spira, Kulturgatan 3, Jönköping.
Shareholders wishing to participate in the Annual General Meeting must be registered in the shareholders register maintained by the securities register centre Euroclear Sweden AB on Wednesday 4 May 2016, and must notify their intention to participate in the Meeting not later than 4 pm on Wednesday 4 May 2016 to ITAB SHOP CONCEPT AB, C/O Euroclear Sweden AB, "Årsstämma", Box 191, 101 23 Stockholm. It is also possible to submit the information by phone on +46 (0)8-402 92 16 or via the form at www.itab.se. The notification must have been received by the company not later than 4 pm on Wednesday 4 May 2016. Shareholders whose shares are registered in the names of trustees must have their shares re-registered temporarily in their own names before Wednesday 4 May 2016 to be eligible to participate in the Meeting.
When signing up, shareholders must give their name, national ID or corporation number, address, telephone number, the number of shares held and the names of any accompanying assistants (maximum two). Shareholders represented by proxy should issue a proxy form for the proxy. The proxy form should be lodged together with the notice of attendance. A certificate of registration must be attached if the proxy form is being completed by a legal person.
Opening addressElection of chairman of the AGMAdoption of agendaCreation and adoption of voters' listElection of members to certify the minutesEstablish that the Meeting has been duly convenedPresentation of the annual financial statements and auditor's report along with consolidated financial statements and consolidated auditor's report for 2015Decision on the adoption of income statement and balance sheet along with consolidated income statement and consolidated balance sheetDecision on allocation of the company's profit in accordance with the adopted balance sheet and decision on closing dayDecision on discharge from liability of the Board of Directors and CEODetermination of the number of Board members and deputies Determination of remuneration of the Board of Directors and auditors Election of Board members, chairman and auditorsElection of Nomination CommitteeDecision on granting the Board of Directors authority to make decision on new share issueDecision on the company's right to acquire and transfer own shares Decision on guidelines for remuneration of senior executivesDecision on the repurchase of convertible bondsDecision on amendment to the Articles of AssociationDecision on share split Decision on issuing convertible bonds to employeesConclusion of meeting
Chairman of the Annual General Meeting (Item 2)
The Nominations Committee, comprising Anders Rudgård (chair), Fredrik Rapp and Johan Storm, proposes that Fredrik Rapp be appointed chair of the Annual General Meeting.
Dividends (Item 9)
The Board of Directors proposes a dividend of SEK 5.00 per share for the 2015 financial year. The record date will be Friday 13 May 2016. Subject to the Meeting's approval of the proposal, it is expected that dividends will be remitted by Euroclear Sweden AB on Wednesday 18 May 2016.
Board of Directors and remuneration (Items 11–13)
The Nominations Committee proposes:
a) that the number of elected Board members be seven and that no deputies be elected.
b) that remuneration of Board members shall total SEK 1,200,000, with SEK 300,000 allocated to the Chairman of the Board and SEK 150,000 to each of the other members of the Board.
c) that remuneration for work in the Nominations Committee shall be SEK 30,000 for the Committee Chairman and SEK 15,000 for each committee member and that remuneration for work in the Audit Committee and Remuneration Committee shall amount to a total of SEK 100,000 per committee, with SEK 40,000 allocated to the Committee Chairman and SEK 30,000 to each of the other members of the Committee.
d) that remuneration of the auditors be paid on a current account basis in return for invoices reviewed and approved by the Board.
e) re-election of the ordinary Board members Fredrik Rapp, Anna Benjamin, Sune Lantz, Anders Moberg, Stig-Olof Simonsson and Lottie Svedenstedt, as well as election of Petter Fägersten for the first time.
f) election of Fredrik Rapp as Chairman of the Board.
g) that the registered auditing company Ernst & Young be selected as auditors for a period of one year, with authorised public accountant Stefan Engdahl as auditor with overall responsibility.
Information about the nominated Board members along with an account of the Nominations Committee's work can be found at www.itab.se.
Nominations committee (Item 14)
The meeting shall elect a Nomination Committee whose duty it is to nominate a Chairman of the Board and other Board members, as well as a Meeting chairman for the Annual General Meeting in 2017, or when necessary, and to propose remuneration of the Board, committees and auditors. The Nomination Committee shall also nominate auditors as and when necessary. It is proposed that the term of office shall last until the Annual General Meeting in 2017. If a Board member were to step down from the Nomination Committee before its work has been completed, it is proposed that the remaining members of the Committee be asked to appoint a new member.
Shareholders representing more than 80 per cent of the votes in ITAB have submitted a proposal for the 2017 Annual General Meeting regarding a Nomination Committee comprising Anders Rudgård as Chairman, with Fredrik Rapp and Johan Storm as members.
Authorisation for new share issue (Item 15)
The Board proposes that the meeting authorise the Board to make one or more decisions in the period up until the next Annual General Meeting to issue new shares to a maximum of one tenth of the company's issued shares and/or convertible bonds, convertible for a maximum of one tenth of the company's issued shares – in the form of a full conversion using the conversion price applicable at the time of the conversion. An issue may be undertaken with or without pre-emption rights for shareholders. Pre-emption rights for shareholders may not be offered if a private placement would be more beneficial to the company due to timing, business reasons or other reasons. Decisions on new share issues may also stipulate that subscription be subject to payment in kind or payment by cash in lieu. The reasons for granting authorisation to make decisions on new issues are to increase the company's financial flexibility and to allow the company to make business acquisitions. The terms and conditions of an issue, including the issue price, will be based on a market evaluation in which the issue price in each case is set as close to the market value as possible, less any discount that may be required to generate interest in the offering.
Purchase and transfer of own shares (Item 16)
The Board proposes that the Annual General Meeting authorise the Board of Directors to decide on the purchase and transfer of own Class B shares. The authorisation is intended to give the Board more room for manoeuvre in dealing with the company's capital structure and, if deemed appropriate, to facilitate incentive programmes for the Group's employees or the acquisition of businesses paid for with company shares. The Board may, on one or more occasions, make such decisions to be implemented before the Annual General Meeting in 2017. The purchase of own shares shall amount to no more than one tenth of the total number of shares issued by the company and shall take place on the stock exchange or by offerings to all shareholders. The purchase of own shares may only take place within the price range recorded at the Stockholm stock exchange at any given time, i.e. the interval between the highest purchase price and the lowest selling price. The number of own shares transferred may not exceed the number of shares acquired at the time of transfer according to the above, and the shares should be transferred on the stock exchange or by disregarding the shareholders' pre-emption rights in connection with the fulfilment of commitments under the incentive programme for employees or the acquisition of business, whereby payment may be made by means other than cash. Own shares may not be transferred at less than the quoted price at the time of the transfer. A decision on the above requires the vote of shareholders representing at least two thirds of both votes cast and the number of shares represented at the Annual General Meeting.
Principles for remuneration of senior executives (Item 17)
The Board proposes that the meeting adopt principles for remuneration and other terms of employment for senior executives. Senior executives are the Group Management team, currently comprising the CEO, Deputy CEO and CFO.
The Board's proposal is in line with remuneration principles adopted in previous years. The Board's proposal implies that remuneration and other terms of employment for senior executives shall be in line with market standards. In addition to a basic salary, senior executives may receive a limited variable remuneration that is result-based and pegged to set targets. The variable part of the remuneration may not exceed four months' pay. Senior executives shall be granted market-rate, premium-based pension terms and conditions. The reciprocal period of notice between the company and senior executives shall be six months. A severance package equivalent to 18 months' pay for the CEO and six months' pay for other senior executives shall be payable if the company were to terminate their employment. Severance pay is offset against other income. No severance pay will be paid in the event of notice being given by the executive. The Board has the right to deviate from the guidelines should mitigating circumstances so require.
The Board of Directors' proposal on the repurchase of convertible bonds (Item 18)
The Board proposes that the meeting decides on the repurchase of ITAB Shop Concept convertible bonds 2012/2016 by means of the company making a repurchase offer to all owners of ITAB Shop Concept convertible bonds 2012/2016 as described below.
ITAB Shop Concept convertible bonds 2012/2016 were issued through a resolution at the 2012 AGM, and employees at ITAB Shop Concept and its subsidiaries were entitled to subscribe. The total issued nominal amount stands at SEK 39,999,969 which, at a conversion rate of SEK 61.50, can be converted into a total of 650,406 new Class B shares.
It is proposed that the repurchase of convertible bonds should take place at the applicable market value based on the quoted volume-weighted average closing price for class B shares on Nasdaq Stockholm's official stock exchange list during the period from 16 May 2016 to the end of 23 May 2016. The Board has commissioned Elleme AB to carry out this valuation, partly of the debt part of the convertible bonds, partly of the value of the conversion rights using the so-called Black & Scholes method.
Example: Assuming a share price of SEK 252, the total market value for the convertible bonds is estimated to amount to approximately SEK 165 million, equivalent to approximately SEK 253 per bond (adjusted for the 2:1 split of the shares that was carried out in 2014).
The application period for accepting the repurchase offer is proposed to run from 24 May 2016 to the end of 31 May 2016.
The purpose of the repurchase is to limit the dilution of the Company's shares, at the same time as offering the convertible bond holders an opportunity to receive the value of the convertible bonds. Repurchased convertible bonds must be registered for cancellation at the Swedish Companies Registration Office.
It is proposed that the Board be authorised to decide on the administrative measures that may be required to implement this decision.
The Board of Directors' proposal on amendment of the Articles of Association (Item 19)
The Board also proposes that paragraph 1 § 4 in the Articles of Association be amended by removing the current wording and replacing it by the following: "The share capital shall be not less than SEK 30,000,000 and not more than SEK 120,000,000. Shares of two types may be issued, Class A and Class B. A maximum of 93,600,000 Class A shares may be issued. Class B shares may be issued in a quantity corresponding to at most 100 per cent of the share capital. Class A shares grant entitlement to ten votes and Class B shares grant entitlement to one vote. Class A shares will, at the request of owners of such shares, be converted to Class B shares during February, May, August and November each year ("the Conversion periods"). A request for conversion, which must be in writing and must specify the number of Class A shares that are to be converted to Class B shares and, if the request does not encompasses the entire holding, which Class A shares the conversion relates to, must be submitted to the Board of Directors not later than the final day of the relevant conversion period. Following the end of each Conversion period, the Board of Directors will deal with the matter of conversion. After this, the company must immediately notify the conversion to the Swedish Companies Registration Office for registration in the companies registry. The conversion is deemed to have been completed when registration has taken place and has been noted in the electronic VPC register of shares."
The Board also proposes that § 5 in the Articles of Association be amended by removing the current wording and replacing it with the following: "The number of shares shall be not less than 72,000,000 and not more than 288,000,000."
It is proposed that the decision on changes to the Articles of Association be conditional on the Annual General Meeting reaching a decision on the implementation of the share split, in accordance with Item 20 below. A decision on the above requires the vote of shareholders representing at least two thirds of both votes cast and the number of shares represented at the Annual General Meeting.
The Board of Directors' proposal on a share split (Item 20)
The Board of Directors of ITAB Shop Concept AB proposes that the Annual General Meeting on 11 May 2016 decide to increase the number of shares by splitting each share into 3 shares (share split 3:1).
It is proposed that the record date at Euroclear Sweden AB for carrying out the share split should be 27 May 2016. After the share spilt is implemented, the number of shares will rise from 33,906,410 to 101,719,230, of which 23,400,000 class A and 78,319,230 class B. One class A share entitles the holder to 10 votes and one class B share to one vote. The proposed share split means that the share's nominal value (the share capital divided by the number of shares) is changed from SEK 1.25 to approximately SEK 0.417.
The Board of Directors also proposes that the Board, or whoever the Board authorises, shall be entitled to make minor adjustments in the decision, which may be necessary when registering the decision at the Swedish Companies Registration Office or Euroclear Sweden AB.
It is proposed that the decision on the share split be conditional on the Annual General Meeting reaching a decision on the implementation of a change to the Articles of Association, in accordance with Item 19 above.
The Board of Directors' proposal on a decision to issue convertible bonds to employees (Item 21)
The Board's proposal in accordance with this Item is conditional on the Annual General Meeting adopting the share split in accordance with Item 20. All the figures below are based on the Annual General Meeting having adopted the share split in accordance with Item 20.
The Board proposes that the Annual General Meeting decide to issue convertible bonds to a maximum total nominal value of SEK 275,000,000 spread over a maximum of 1,950,000 bonds. It is proposed that the bonds run from 1 July 2016 to the end of 30 June 2020. Disregarding the shareholders' pre-emption rights, only permanent employees of ITAB Shop Concept AB (publ) and its subsidiaries may subscribe to the issue. (For legal reasons, employees in certain jurisdictions are exempted). Permanent employees also include individuals who by the end of the subscription period have signed an agreement on future permanent employment.
The subscription period shall be 26 May 2016 to the end of 8 June 2016. Payment for subscribed and allocated bonds shall be made in cash no later than 1 July 2016.
The bonds shall bear a yield from 1 July 2016. The yield shall be paid annually in arrears and shall be equivalent to STIBOR 90 days (as defined in the complete terms and conditions for ITAB Shop Concept convertible bonds 2016/2020, which means for example that if the interest rate is lower than zero, STIBOR will be deemed to be zero), plus an addition of 2.20 percentage points.
Shares issued on the grounds of Conversion, with the exceptions set out in the complete terms and conditions for ITAB Shop Concept convertible bonds 2016/2020, shall entail the right to the first dividend payment on the closing day for dividends that follows after the Conversion has been implemented.
Conversion to Class B shares can take place from 1 June 2020 to the end of 12 June 2020. Each convertible bond may be converted to one (1) new class B share using a conversion rate equivalent to 125 per cent of the quoted volume-weighted average closing price for class B shares on Nasdaq Stockholm's official stock exchange list during the period from 16 May 2016 to the end of 23 May 2016, adjusted for the share split according to Item 19. Example: Assuming that the share price as above (before the share split) amounts to SEK 252, the conversion rate (after the share split) shall be set at SEK 105 (SEK 252 multiplied by 125 per cent and divided by 3, i.e. in accordance with the conditions for the share split). The calculated conversion rate shall be rounded off to the nearest whole Swedish krona with SEK 0.50 increments being rounded down. The conversion rate shall be no lower than SEK 50, however. In the case that the conversion rate as established above would be set at an amount that would result in an increase in the share capital exceeding SEK 812,500 after full conversion at the conversion rate, however, the highest loan amount shall be reduced so the maximum increase in the share capital will be SEK 812,500. A fully subscribed issue will increase the share capital by a maximum of SEK 812,500, which corresponds to a dilution of around 1.9 per cent of the share capital and 0.6 per cent of the number of votes, based on the current number of outstanding shares after the implemented share split according to Item 19.
The convertible bonds will be issued with a nominal value equivalent to the conversion rate. The subscription price shall be equivalent to the nominal value of the convertible bonds.
The allocation of convertible bonds will be determined by the Board of Directors according to the following guidelines:
Category I: Group management, guaranteed allocation of 30,000 and maximum allocation of 90,000 convertible bonds. Category II: CBO, guaranteed allocation of 30,000 and maximum allocation of 90,000 convertible bonds. Category III: senior executives, guaranteed allocation of 4,000 and maximum allocation of 15,000 convertible bonds. Category IV: other employees, guaranteed allocation of 450 and maximum allocation of 6,000 convertible bonds.
In total, the convertible scheme covers approximately 2,000 people, who at this time are divided between the Group management (category I, 3 people), CBO (category II, 6 people), Senior executives (category III, approximately 150 people) and Other employees (category IV, approximately 1,800 people). The minimum subscription and allocation for all categories will be 50 convertibles. The guaranteed number of convertible bonds specified above is based on a total of 1,950,000 bonds. If the final number of convertible bonds is adjusted because the maximum loan amount must not be exceeded, a corresponding adjustment of the specified guaranteed allocation will be performed. In the event of oversubscription, everyone will receive their guaranteed allocation as above in the first instance. In the second instance, outstanding convertible bonds will be allocated proportionally based on each participant's application, although never exceeding the maximum allocation of convertible bonds for each category as set out above.
The reason for disregarding the shareholders' pre-emption rights is that the company's employees are a highly valuable asset. Personal, long-term ownership involvement by employees is expected to encourage increased interest in the business and its performance, thus increasing motivation. It would be an advantage for the company to be able to offer employees an opportunity to contribute to the Group's development in a way that also benefits the shareholders. It is the Board's view that the proposed convertible bond programme is reasonable, taking into account the terms and size of the allocation.
Taking into account that the convertible bonds will be subscribed by employees at an estimated market price, it is deemed that the convertible scheme in respect of the Swedish participants will not result in any costs apart from some minor costs for drawing up and administration. For some foreign participants, additional social security expenses are expected to arise. The size of these expenses depends on how the participation is divided between the countries, as well as how the value of the convertible bonds develops over their term. The expenses are not expected to be significant for ITAB Shop Concept. However, the dilution effect of ITAB Shop Concept convertible bonds 2016/2020 may affect the earnings per share pursuant to accounting standard IAS 33.
Prior to drawing up the proposed terms and conditions for ITAB Shop Concept convertible bonds 2016/2020, the Board has asked Elleme AB to carry out an assessment partly of the debt part of the convertible bonds, partly of the value of the conversion rights using the so-called Black & Scholes method based on factors such as a volatility ratio of 30 per cent for the company's listed class B shares. The issue price of the convertible bonds is determined, on the basis of said assessment, to correspond to the market value at the time of the issue.
The Board of Directors also proposes to the Annual General Meeting that the Chairman of the Board and the Chief Executive Office be authorised to make minor adjustments in the decision, which may be necessary when registering the decision at the Swedish Companies Registration Office or Euroclear Sweden AB.
A decision on the above requires the vote of shareholders representing at least nine tenths of both votes cast and the number of shares represented at the meeting.
The annual financial statements and auditor's report will be available from the company's offices and website www.itab.se, where registration and proxy forms for the Annual General Meeting are also available to download. The annual financial statements and documents will be sent to all shareholders prior to the meeting. Shareholders are reminded of their right to request information pursuant to chapter 7 § 32 of the Swedish Companies Act.
At the time of writing this notice, the company's share capital amounts to SEK 42,383,012.50 spread over 33,906,410 shares, of which 7,800,000 are class A shares and 26,106,410 are class B shares, equivalent to a total of 104,106,410 shares. One class A share entitles the holder to 10 votes and one class B share to one vote.
Jönköping April 2016
ITAB Shop Concept AB (publ)
The Board of Directors