March 7, 2000 DEAR STOCKHOLDER, It is my pleasure to invite you to the 2000 Annual Meeting of Stockholders of Autoliv, Inc. which will be held on Thursday, May 4, 2000, at Bank One, One Bank One Plaza, 57th floor, Chicago, Illinois 60602, USA, commencing at 9.a.m local time. Information regarding the matters to be voted upon at the meeting is contained in the formal notice of the meeting and proxy statement on the following pages. It is important that your shares be represented at this meeting. Therefore, please mark, sign, date and return your proxy promptly in the enclosed envelope. A public news release covering voting results will be available after the meeting. The Autoliv, Inc. Annual Report for the fiscal year ended December 31, 1999 is being distributed to stockholders with this proxy statement. Sincerely, Gunnar Bark Chairman of the Board Autoliv, Inc. NOTICE OF ANNUAL MEETING OF STOCKHOLDERS The Annual Meeting of Stockholders of Autoliv, Inc. (the "Company") will be held on Thursday, May 4, 2000, at Bank One, One Bank One Plaza, 57th floor, Chicago, Illinois 60602, USA, at 9.a.m local time to consider and vote upon: 1. Reelection of two directors for a term of office expiring on the Annual Meeting of Stockholders in 2003 (see page 2). 2. Ratification of the appointment of Ernst & Young AB as the Company's independent auditing firm for the fiscal year ending December 31, 2000 (see page 10). 3. Any other business that may properly come before the meeting and/or any adjournment thereof. The close of business of March 6, 2000 has been fixed as the record date for the meeting. All stockholders of record at the close of business on that date are entitled to be present and vote at the meeting and/or any adjournment thereof. Attendance at the annual meeting will be limited to stockholders of record, beneficial owners of Company common stock entitled to vote at the meeting having evidence of ownership, a maximum of one authorized representative of an absent stockholder, and invited guests of management. Any person claiming to be an authorized representative of a stockholder must, upon request, produce written evidence of such authorization. The meeting will be conducted pursuant to the Company's by-laws and rules of order prescribed by the Chairman of the meeting. By order of the Board of Directors March 7, 2000 Jorgen I. Svensson Vice President for Legal Affairs, General Counsel and Secretary AUTOLIV, INC. Box 70381, SE-107 24 Stockholm, Sweden PROXY STATEMENT March 7, 2000 SOLICITATION OF PROXIES This Proxy Statement is furnished in connection with the solicitation by the Company's Board of Directors (the "Board") of proxies for use at its Annual Meeting of Stockholders, to be held on Thursday, May 4, 2000, and at any adjournment thereof (the "2000 Annual Meeting" or the "meeting"). The shares represented by all properly executed and unrevoked proxies received in proper form in time for the meeting will be voted. Shares will be voted in accordance with stockholders' instructions in the accompanying proxy. If no instructions are given, the shares will be voted in accordance with the Board's recommendations, which are noted herein. Any proxy given may be revoked at any time before it is voted at the meeting. Directors will be elected by a plurality of the votes of the shares present at the meeting in person or by proxy and entitled to vote thereon. Votes withheld as to one or more nominees will not be counted as votes cast for such individuals. Any other proposal brought before the meeting will be decided by a majority of votes represented at the meeting and entitled to vote thereat. Consequently, abstentions and broker non-votes (i.e., votes withheld by brokers in the absence of instructions from beneficial holders) will not be counted for purposes of determining whether a proposal has been approved, but they will be counted for purposes of establishing a quorum at the meeting. The Company will bear the cost of the solicitation. In addition to solicitation by mail, the Company will request banks, brokers and other custodian nominees and fiduciaries to supply proxy material to the beneficial owners of the Company's common stock of whom they have knowledge, and will reimburse them for their expenses in so doing; and certain directors, officers and other employees of the Company, not specially employed for the purpose, may solicit proxies, without additional remuneration therefor, by personal interview, mail, telephone or facsimile. In addition, the Company has retained Georgeson Shareholder Communication, Inc. to assist in the solicitation for a fee of $12,500 plus expenses, and WM-data AB for a fee of $50 per hour plus expenses. 1. ELECTION OF DIRECTORS The Company's by-laws provide that the size of the Board shall be fixed from time to time exclusively by the Board. To the extent practicable, one-half of the directors are to be citizens of the United States and one-half of the directors are to be nationals of Sweden or other member states of the European Union. The Board presently consists of eight members, divided into three classes. Directors in each class are elected on a rotating basis at the annual stockholders meeting at which the term for such class expires, for terms expiring at the third subsequent annual meeting of stockholders. Listed below as nominees for reelection at the 2000 Annual Meeting for three-year terms are Gunnar Bark and Per Welin, whose present terms will expire at that time. Messrs. Bark and Welin are presently serving as directors, and the Company has not been advised by either of them that they will not serve if elected. THE BOARD RECOMMENDS A VOTE "FOR" THE NOMINEES FOR DIRECTORS. BOARD MEETING ATTENDANCE AND COMPENSATION OF DIRECTORS The Board met five times during the year ended December 31, 1999. All of the incumbent directors were present at all meetings of the Board and Board committees of which they were members. Directors who are employees of the Company or any subsidiary thereof do not receive any compensation for service on the Board or Board committees. Non- employee directors receive for their services a retainer of $35,000 per year, plus a fee of $1,200 for each Board meeting attended. In addition, non-employee directors who are chairmen of the Audit and Compensation Committees each receive additional annual retainers of $3,000; and all committee chairmen and members receive $800 for attendance at each meeting of their particular committees. Non-employee directors who are elected or continuing as such at annual stockholders meetings also receive annual grants of shares of Company common stock with a market value of $15,000 at the time of grant. NOMINEES FOR DIRECTORS AT THE MAY 2000 ANNUAL MEETING Gunnar Bark, age 60, Chairman and until January 31, 1999, CEO of the Company, was elected a director of Autoliv AB and appointed Chairman of the Autoliv AB Board in March 1997. Mr. Bark had previously served as President and Chief Executive Officer of Autoliv AB and as a member of the Autoliv AB Board from 1982 until he retired from his position as President of Autoliv AB and member of the Autoliv AB Board in April 1996 and as Chief Executive Officer of Autoliv AB in August 1996. Mr. Bark serves as Chairman of Allgon AB, Springboard Venture Capital AB, and Calix AB, a privately held automotive supplier. Mr. Bark has a Master of Science in Engineering Physics from the Royal Institute of Technology (KTH) in Stockholm. The Chalmers Institute of Technology in Gothenburg has awarded him the title of Honorary Doctor of Engineering. Per Welin, age 63, has been a director of Autoliv, Inc. since May 1997 and of Autoliv AB since 1995. Mr. Welin has served as Executive Vice President and director of the investment company L-E Lundberg-foretagen AB since 1991 and until 1998 and as Chairman of the Board of L-E Lundberg-foretagen AB since 1998. He also holds the position of director of Allgon AB, Holmen AB, and NCC AB. Mr. Welin has a Master of Science in Engineering Physics from the Chalmers Institute of Technology in Gothenburg, from which he also holds a licentiate of engineering degree in applied thermo- and fluid dynamics. He also holds an M.B.A. from the Gothenburg School of Economics. INCUMBENT DIRECTORS - TERMS EXPIRING AT THE 2001 ANNUAL MEETING Per-Olof Aronson, age 69, has been a director of Autoliv, Inc. since May 1997. He was a director of Autoliv AB from Autoliv's initial public offering in 1994. Mr. Aronson has worked in the aluminum company Granges AB since 1956, where he has held various senior executive positions, including three years as Technical Director and 11 years as President and Chief Executive Officer. Mr. Aronson is now Vice Chairman of SAPA AB (former Granges). Mr. Aronson holds a graduate degree in Chemical Engineering from the Royal Institute of Technology (KTH) in Stockholm. Lars Westerberg, age 51, has been a director of Autoliv, Inc. since February 10, 1999, and President and Chief Executive Officer of Autoliv, Inc. since February 1, 1999. From 1994 until he assumed his positions with Autoliv, he was President and Chief Executive Officer of Granges AB, a Swedish-based aluminum and plastics company listed on the Stockholm Stock Exchange. From 1991 and until 1994 he held the same positions at the publicly-traded welding machine company Esab AB. He started his employment at Esab in 1984 and held several executive positions, including President of Esab's North American subsidiary. He is a director of SAPA AB (former Granges) and Angpanneforeningen AB, an engineering consultancy company. Mr. Westerberg holds a Masters Degree in Electrical Engineering from the Royal Institute of Technology (KTH) in Stockholm and a M.B.A from the University of Stockholm. Walter Kunerth, age 58, has been a director of Autoliv, Inc. since August 25, 1998. Professor Kunerth is a Senior Advisor to the investment banking group Lazard Freres, Vice President of DIN (the German Institute for Standardization) and a member of the senate of the Fraunhofer Society for Applied Research. He is also a member of the Supervisory Board of Gildemeister AG and Chairman of the Supervisory Boards of Basler AG, Gotz AG and Suspa Compact GmbH. For more than 20 years, professor Kunerth held various top executive positions at Siemens AG in Germany, including member of Siemens' Corporate Executive Board (1993-97), President of Siemens' Automotive Systems Group (1988-93) and head of Siemens' Automotive Electronics Division. He holds a doctorate degree in Engineering from the University of Stuttgart and has been named Honorary Professor by the university. INCUMBENT DIRECTORS - TERMS EXPIRING AT THE 2002 ANNUAL MEETING Wilhelm Kull, age 63, has been a director since May 1997 and until March 31, 1999, Chief Financial Officer of Autoliv, Inc. He has been Vice President and Chief Financial Officer of Autoliv AB from 1975, when the company under the name Granges Weda was a subsidiary of Granges AB, a publicly listed company. Mr. Kull served as the Deputy Chief Financial Officer of Granges AB from 1969 to 1974. Prior to such time Mr. Kull worked for five years at a certified public accounting firm in Sweden. He holds a B.S. degree in business and an M.B.A. from the University of Colorado in the United States. S. Jay Stewart, age 61, has been a director of Autoliv, Inc. since May 1997. He was Chairman and Chief Executive Officer of Morton from April 1994 through October 1999, and was a director of Morton since 1989. Mr. Stewart was President and Chief Operating Officer of Morton from 1989 through March 1994. In addition, he is a director of Household International, Inc. Mr Stewart holds a B.S. degree in Chemical Engineering from the University of Cincinnati and an M.B.A. from West Virginia University. Roger W. Stone, age 65, has been a director of Autoliv, Inc. since May 1997. He served until 1998 as Chairman of the Board (since 1983), President (since 1975), and Chief Executive Officer (since 1979) of Stone Container Corporation, a multinational producer and marketer of pulp, paper and packaging products. Mr. Stone was President and Chief Executive Officer of Smurfit Stone Container Corporation from 1998 to 1999. He was a director of Morton from 1989 through 1999 and has also been a director of McDonald's Corporation and Option Care, Inc. He is a graduate of the University of Pennsylvania's Wharton School of Finance. COMMITTEES OF THE BOARD There are three standing committees of the Board: the Audit Committee, Compensation Committee and Nominating Committee. The Audit Committee recommends to the Board the independent auditors to be selected to audit the Company's annual financial statements and reviews the fees charged for such audits and for any special assignments given such auditors. The committee also reviews the annual audit and its scope, including the independent auditor's letter of comments and management's responses thereto; possible violations of the Company's business ethics and conflicts of interest policies; any major accounting changes made or contemplated; and the effectiveness and efficiency of the Company's internal audit staff. In addition, the committee confirms that no restrictions have been imposed by Company personnel on the scope of the independent auditors' examinations. Members of this committee are Messrs. Welin (Chairman), Aronson, Kunerth and Stewart. The committee met three times in 1999. The Compensation Committee advises the Board of the Company with respect to the compensation to be paid to the directors of the Company and approves and advises the Board with respect to the terms of the contract to be entered into with the senior executives of the Company. The Committee also administers the Company's stock incentive plan. Members of this committee are Messrs. Stewart (Chairman), Aronson, Stone and Welin. The committee met three times in 1999. The Nominating Committee nominates new members of the board of the Company and also of the subsidiaries of the Company. This committee consists of all the members of the Board of the Company. The committee met twice in 1999. VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF On March 6, 2000, the record date for the 2000 Annual Meeting, there were 102,333,288 shares of common stock outstanding, each entitled to one vote. Only stockholders of record on that date will be entitled to vote at the meeting. The Company has no other class of equity securities outstanding. As of the date of this proxy statement, one stockholder (Robur Kapitalforvaltning AB) was known to the Company to beneficially own more than 5% of the Company's common stock. The following table shows the Company's common stock beneficially owned as of March 6, 2000 by each present director and each executive officer named in the Summary Compensation Table on page 7; and by all present directors and executive officers of the Company as a group. Each named person has sole voting and investment power with respect to the shares shown.
March 5, 2001
It is my pleasure to invite you to the 2001 Annual Meeting of Stockholders of Autoliv, Inc. which will be held on Tuesday, April 24, 2001, at Bank One, 1 Bank One Plaza, 57th floor, Chicago, Illinois 60602, USA, commencing at 9:00 a.m. local time. Information regarding the matters to be voted upon at the meeting is contained in the formal notice of the meeting and proxy statement on the following pages. It is important that your shares be represented at this meeting. Please mark, sign, date and return your proxy promptly in the enclosed envelope. A public news release covering voting results will be available after the meeting. The Autoliv, Inc. Annual Report for the fiscal year ended December 31, 2000 is being distributed to stockholders with this proxy statement. Sincerely, Gunnar Bark
1. Reelection of three directors for a term of office expiring on the Annual Meeting of 2. Ratification of the appointment of Ernst & Young AB as the Company's 3. Any other business that may properly come before the meeting and/or any The close of business of February 26, 2001 has been fixed as the record date for the annual meeting. All stockholders of record at the close of business on that date are entitled to be present and vote at the meeting and/or any adjournment thereof. Attendance at the annual meeting will be limited to stockholders of record, beneficial owners of Company common stock entitled to vote at the meeting having evidence of ownership, a maximum of one authorized representative of an absent stockholder, and invited guests of management. Any person claiming to be an authorized representative of a stockholder must, upon request, produce written evidence of such authorization. The meeting will be conducted pursuant to the Company's by-laws and rules of order prescribed by the Chairman of the annual meeting. By order of the Board of Directors March 5, 2001
AUTOLIV, INC. PROXY STATEMENT March 5, 2001 SOLICITATION OF PROXIES The shares represented by all properly executed and unrevoked proxies received in proper form in time for the meeting will be voted. Each stockholder is entitled to one vote for each share of Common Stock held on the Record Date. Shares will be voted in accordance with stockholders' instructions in the accompanying proxy. If no instructions are given, the shares will be voted in accordance with the Board's recommendations, which are noted herein. Any proxy given may be revoked at any time before it is voted at the meeting. Directors will be elected by a plurality of the votes of the shares present at the meeting in person or by proxy and entitled to vote thereon. Votes withheld as to one or more nominees will not be counted as votes cast for such individuals. Any other proposal brought before the meeting will be decided by a majority of votes represented at the meeting and entitled to vote thereat. Consequently, abstentions and broker non-votes (i.e., votes withheld by brokers in the absence of instructions from beneficial holders) will not be counted for purposes of determining whether a proposal has been approved, but they will be counted for purposes of establishing a quorum at the meeting. The Company will bear the cost of the solicitation. In addition to solicitation by mail, the Company will request banks, brokers and other custodian nominees and fiduciaries to supply proxy materials to the beneficial owners of the Company's common stock of whom they have knowledge, and will reimburse them for their expenses in so doing. Certain directors, officers and other employees of the Company, not specially employed for the purpose, may solicit proxies, without additional remuneration therefor, by personal interview, mail, telephone or facsimile. In addition, the Company has retained Georgeson Shareholder Communication, Inc. to assist in the solicitation for a fee of $12,500 plus expenses, and WM-data AB for a fee of $50 per hour plus expenses. 1. ELECTION OF DIRECTORS Listed below as nominees for reelection at the 2001 Annual Meeting for three-year terms are, Per-Olof Aronson, Walter Kunerth and Lars Westerberg whose present terms will expire at that time. Messrs. Aronson, Kunerth and Westerberg are presently serving as directors, and the Company has not been advised by either of them that they will not serve if elected. THE BOARD RECOMMENDS A VOTE "FOR" THE NOMINEES FOR DIRECTORS.
Directors who are employees of the Company or any subsidiary thereof do not receive any compensation for service on the Board or Board committees. Non-employee directors receive for their services a retainer of $35,000 per year, plus a fee of $1,200 for each Board meeting attended. In addition, non-employee directors who are chairmen of the Audit and Compensation Committees each receive additional annual retainers of $3,000; and all committee chairmen and members receive $800 for attendance at each meeting of their particular committees. Non-employee directors who are elected or continuing as such at annual stockholders meetings also receive annual grants of shares of Company common stock with a market value of $15,000 at the time of grant. Lars Westerberg, age 52, has been a director of Autoliv, Inc. since February 10, 1999, and President and Chief Executive Officer of Autoliv, Inc. since February 1, 1999. From 1994 until he assumed his positions with Autoliv, he was President and Chief Executive Officer of Granges AB, a Swedish-based aluminum and plastics company listed on the Stockholm Stock Exchange. From 1991 and until 1994 he held the same positions at the publicly-traded welding company Esab AB. He started his employment at Esab in 1984 and held several executive positions, including President of Esab´s North American subsidiary. He is a director of SAPA AB and Angpanneforeningen AB, an engineering consultancy company. Mr. Westerberg holds a Master in Electrical Engineering from the Royal Institute of Technology (KTH) in Stockholm and a Master of Business Administration ("M.B.A") from the University of Stockholm. Walter Kunerth, age 60, has been a director of Autoliv, Inc. since August 25, 1998. Professor Kunerth is a Senior Advisor to the investment banking group Lazard Freres. He is also a member of the Supervisory Board of Gildemeister AG and Chairman of the Supervisory Boards of Basler AG, Paragon AG, Götz AG and Suspa GmbH. For more than 20 years, professor Kunerth held various top executive positions at Siemens AG in Germany, including member of Siemens' Corporate Executive Board (1993-97), President of Siemens' Automotive Systems Group (1988-93) and head of Siemens' Automotive Electronics Division. He holds a doctorate degree in Engineering from the University of Stuttgart and has been named Honorary Professor by the university.
S. Jay Stewart, age 62, has been a director of Autoliv, Inc. since May 1997. Mr. Stewart was elected by the Board to serve as the Chairman of the Board, effective April 24, 2001. He was Chairman and Chief Executive Officer of Morton International, Inc. from April 1994 through October 1999, and has been a director of Morton since 1989. Mr. Stewart was President and Chief Operating Officer of Morton International, Inc. from 1989 through March 1994. In addition, he is a director of Household International, Inc. and of Box USA Corp. Mr. Stewart holds a Bachelor of Science degree in Chemical Engineering from the University of Cincinnati and an M.B.A. from West Virginia University. Roger W. Stone, age 65, has been a director of Autoliv, Inc. since May 1997 and is Chairman and CEO of Box USA Corp. He served until 1998 as Chairman of the Board (since 1983), President (since 1975), and Chief Executive Officer (since 1979) of Stone Container Corporation, a multinational producer and marketer of pulp, paper and packaging products. Mr. Stone was President and Chief Executive Officer of Smurfit Stone Container Corporation from 1998 to 1999. He was a director of Morton International Inc. from 1989 through 1999 and is a director of McDonald's Corporation and Option Care, Inc. He is a graduate of the University of Pennsylvania's Wharton School of Finance. INCUMBENT DIRECTORS - TERMS EXPIRING AT THE 2003 ANNUAL MEETING Per Welin, age 64, has been a director of Autoliv, Inc. since May 1997 and of Autoliv AB since 1995. Mr. Welin served as Executive Vice President and director of the investment company L-E Lundberg-foretagen AB from 1991 until 1998 and as Chairman of the Board of L-E Lundberg-foretagen AB since 1998. He also holds the position of director of Allgon AB, Holmen AB and NCC AB. Mr. Welin has a Master of Science in Engineering Physics from the Chalmers Institute of Technology in Gothenburg, from which he also holds a licentiate of engineering degree in applied thermo- and fluid dynamics. He also holds an M.B.A. from the Gothenburg School of Economics. COMMITTEES OF THE BOARD The Audit Committee recommends to the Board the independent auditors to be selected to audit the Company's annual financial statements and reviews the fees charged for such audits and for any special assignments given to such auditors. The committee also reviews the annual audit and its scope, including the independent auditor's letter of comments and management's responses thereto; possible violations of the Company's business ethics and conflicts of interest policies; any major accounting changes made or contemplated; and the effectiveness and efficiency of the Company's internal audit staff. In addition, the committee confirms that no restrictions have been imposed by Company personnel on the scope of the independent auditors' examinations. Members of this committee are Messrs. Welin (Chairman), Aronson, Kunerth and Stewart. The committee met five times in 2000. The Compensation Committee advises the Board of the Company with respect to the compensation to be paid to the directors of the Company and approves and advises the Board with respect to the terms of contracts to be entered into with the senior executives of the Company. The Committee also administers the Company's stock incentive plan. Members of this committee are Messrs. Stewart (Chairman), Aronson, Stone and Welin. The committee met once in 2000. The Nominating Committee nominates new members of the Board of the Company and also of the subsidiaries of the Company. This committee which consists of all the members of the Board of the Company does not have any procedures established for the consideration of nominees recommended by stockholders. The committee met once in 2000.
The Audit Committee reviews the Company's financial reporting process on behalf of the Board of Directors. In fulfilling its responsibilities, the Audit Committee has reviewed and discussed the audited financial statements contained in the 2000 Annual Report on Form 10-K with the Company's management and independent accountants. Management is responsible for the financial statements and the reporting process, including the system of internal controls. The independent accountants are responsible for expressing an opinion on the conformity of those audited financial statements with accounting principles generally accepted in the United States. The Audit Committee discussed with the independent accountants matters required to be discussed by Statement on Auditing Standards No. 61, "Communication with Audit Committees," as amended. In addition, the Company's independent accountants provided to the Audit Committee the written disclosures required by the Independence Standards Board Standard No. 1, "Independence Discussions with Audit Committees" and the Audit Committee discussed with the independent accountants their independence. In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board of Directors (and the Board has approved) that the audited financial statements be included in the Company's Annual Report on Form 10-K for the fiscal year ended December 1, 2000, for filing with the SEC. Per Welin, Chairman
As of the date of this proxy statement, one stockholder (Robur Kapitalforvaltning AB) was known to the Company to beneficially own more than 5% of the Company's common stock. As of December 31, 2000, Robur was known to hold 9,758,000 shares of common stock representing almost 10 percent of all outstanding shares of common stock. The following table shows the Company's common stock beneficially owned as of February 26, 2001, by each present director and each executive officer named in the Summary Compensation Table on page 7; and by all present directors and executive officers of the Company as a group. Each named person has sole voting and investment power with respect to the shares shown. Shares beneficially owned All directors, nominees and |
1) All amounts shown represent less than 1% of the outstanding shares of the Company.
2) The number includes for Mr. Bark 46,450 and for Mr. Biorck 14,570 options to acquire shares which are exercisable within 60 days. The options are not in-the-money.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee is comprised exclusively of directors who are not and have never been Company employees. No Company executive officer serves on the board of directors of another company, an executive officer of which is a member of the Board.
EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board (the "Committee") advises the Board regarding senior officers' compensation and administers the Company's cash and stock incentive compensation strategy. The purpose of this plan and the objectives of the Committee are to:
o provide competitive compensation programs so as to be able to attract, retain and motivate top management talent,
o pay for performance, motivating both long- and short-term performance on behalf of Company stockholders,
o place greater emphasis on at-risk incentive compensation than on fixed salaries, particularly for senior executives,
o base the incentive compensation of business unit or subsidiary executives on the performance of their operations, while including a component which recognizes overall Company performance, and
o join shareholder and management interests.
To further these objectives, the compensation of senior executive officers includes three components: (1) base salaries, (2) annual bonus programs, and
(3) a stock incentive program.
The Committee has consulted with an independent compensation consulting firm
for advice in regard to the total compensation of the Company's senior
executive officers.
BASE SALARIES
The Committee recommends salaries for senior executive officers based on data
on competitive salaries received from independent compensation consultants,
position and individual performance.
ANNUAL BONUS PROGRAMS
The Committee determined annual bonus payments for 1999 based on performance
during 1999. Under the annual bonus program applicable to senior executive
officers, award levels may range from zero to 60 % of their base salaries as
of the beginning of the performance periods depending on salary grade and
attainment of Company and applicable business unit and subsidiary profit
targets as approved by the Committee. Based on these factors and the terms
of such annual bonus programs, the Committee approved bonus payments to senior
executive officers varying from 0% to 54% of their base salaries.
STOCK INCENTIVE PLAN
In 1999, the Committee authorized stock option grants to selected officers of
the Company and its subsidiaries. All options granted in 1999 are for 10 year
terms with an exercise price equal to the market price on the date of grant,
and become exercisable after one year of continued employment following the
grant date. Executive officers received option or right grants in 1999 ranging
from 1,025 shares to 22,550 shares (see "Option Grants in Last Fiscal Year").
CHIEF EXECUTIVE OFFICER
The compensation for 1999 of the Company's Chairman and Chief Executive
Officer, Mr. Gunnar Bark, who resigned as Chief Executive Office of the
Company effective January 31, 1999, and of the new Chief Executive Officer,
Mr. Lars Westerberg, who joined the Company in February 1999, was determined
based on information on competitive compensation levels received from an
independent compensation consultant. Mr. Bark's cash compensation as Chairman
and Chief Executive Officer was at an annual rate of SEK 6,500,000
(USD 784,550). In 1999, the Committee approved a stock option grant of 15,000
shares of common stock of the Company to Mr. Westerberg, a cash compensation
at an annual rate of SEK 4,400,000 (USD 531,080), and an annual performance
bonus of SEK 1,500,000 (USD 181,050).
LIMITATION ON DEDUCTIBILITY OF CERTAIN COMPENSATION
Section 162 (m) of the Internal Revenue Code of 1986 as amended (the "Code")
generally disallows a tax deduction to public companies for annual compensation
over $1 million paid to their chief executive officers and the four other most
highly compensated executive officers that is not "performance-based"
(as defined in the Code). It is the Committee's general policy to avoid the
loss of tax deductibility whenever compliance with Section 162 (m) would be
consistent with the Company's incentive compensation objectives.
Consequently, the employee incentive compensation programs in which the
Company's most highly compensated officers participate have been structured to
comply with the Code's definition of performance-based compensation. To qualify
as performance-based under the Code, compensation payments must be made
pursuant to a plan that is administered by a committee of outside directors and
must be based on achieving objective performance goals. In addition, the
material terms of the plan must be disclosed to and approved by stockholders,
and the Committee must certify that the performance goals were achieved before
payments can be awarded.
Notwithstanding its general policy, however, the Committee retains the
discretion to authorize incentive payments that may not be deductible if it
believes that doing so would be in the best interest of the Company and its
stockholders.
S. Jay Stewart, Chairman
Per-Olof Aronson
Roger W. Stone
Per Welin
STOCK PERFORMANCE GRAPH (1) (2) annual bonus programs, and (3) a stock incentive program.
The Committee has consulted with an independent compensation consulting firm for advice in regard to the total compensation of the Company's senior executive officers.
BASE SALARIES
The Committee recommends salaries for senior executive officers based on data on competitive salaries received from independent compensation consultants, position and individual performance.
ANNUAL BONUS PROGRAMS
The Committee determined annual bonus payments for 2000 based on performance during 2000. Under the annual bonus program applicable to senior executive officers, award levels may range from zero to 60 % of their base salaries as of the beginning of the performance periods depending on salary grade and attainment of Company and applicable business unit and subsidiary profit targets as approved by the Committee. Based on these factors and the terms of such annual bonus programs, the Committee approved bonus payments to senior executive officers varying from 0% to 44% of their base salaries.
STOCK INCENTIVE PLAN
For 2000, the Committee authorized stock option grants to selected officers of the Company and its subsidiaries. All options granted for 2000 are for 10 year terms with an exercise price equal to the market price on the date of grant, and become exercisable after one year of continued employment following the grant date. Executive officers received option grants for 2000 ranging from 1,210 shares to 30,000 shares (see "Option Grants in Last Fiscal Year").
In December, 2000, the Committee concluded that the stock options under the Stock Incentive Plan had become unattractive, and therefore the programme did not accomplish its intended purpose of attracting and retaining executive personnel, motivating executive personnel and providing incentive compensation that is competitive with those of other major corporations. The Committee further concluded that it was of the utmost importance to expediently ensure that executive personnel was retained and motivated. The Committee received advice from an independent compensation consultant, and thereafter offered optionees the opportunity to cancel the options granted 1997, 1998 and 1999 against (i) a grant by the Company to the optionee of a number of restricted stock units relating to the Company's shares ("RSUs") representing 30 percent of the number of options cancelled, and (ii) a commitment by the Company to grant to the optionee, under the terms and conditions of the Stock Incentive Plan, a number of Stock options, corresponding to 20 percent of the number of options cancelled, which will be issued on June 18, 2001, with an exercise date of June 18, 2002. The exercise price will be equal to the market price on June 18, 2001.
The RSU's will vest after three years and are conditional upon the optionee not having given notice of termination of employment prior to such date. The RSU's are otherwise subject to the same terms and conditions applicable under the Stock Incentive Plan as the cancelled options.
The Chairman, Mr. Gunnar Bark, was eligible to participate in the offer with 100,000 options that had been granted to him during his service as Chairman and Chief Executive Officer.
CHIEF EXECUTIVE OFFICER
The compensation for 2000 of the Company's Chief Executive Officer, Mr. Lars Westerberg, was determined based on information on competitive compensation levels received from an independent compensation consultant.
For 2000, the Committee approved a stock option grant of 30,000 shares of common stock of the Company to Mr. Westerberg, a cash compensation at an annual rate of SEK 4,650,000 (USD 509,868), and an annual performance bonus of SEK 1,600,000 (USD 175,438).
LIMITATION ON DEDUCTIBILITY OF CERTAIN COMPENSATION
Section 162(m) of the Internal Revenue Code of 1986 as amended (the "Code") generally disallows a tax deduction to public companies for annual compensation over $1 million paid to their chief executive officers and the four other most highly compensated executive officers that is not "performance-based" (as defined in the Code). It is the Committee's general policy to avoid the loss of tax deductibility whenever compliance with Section 162(m) would be consistent with the Company's incentive compensation objectives.
Consequently, the employee incentive compensation programs in which the Company's most highly compensated officers participate have been structured to comply with the Code's definition of performance-based compensation. To qualify as performance-based under the Code, compensation payments must be made pursuant to a plan that is administered by a committee of outside directors and must be based on achieving objective performance goals. In addition, the material terms of the plan must be disclosed to and approved by stockholders, and the Committee must certify that the performance goals were achieved before payments can be awarded.
Notwithstanding its general policy, however, the Committee retains the discretion to authorize incentive payments that may not be deductible if it believes that doing so would be in the best interest of the Company and its stockholders.
S. Jay Stewart, Chairman
Per-Olof Aronson
Roger W. Stone
Per Welin
STOCK PERFORMANCE GRAPH (1) (2)
The following graph compares the cumulative stockholder returns on the
Company's common stock with Standard & Poors 500 Index and Standard
& Poors Automobiles Index.
GRAPH
EDGAR representation of data used in printed graphic.