UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Schedule 14A Information
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
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Autoliv, Inc. | ||||
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March 26, 201225, 2013
DEAR STOCKHOLDER,Dear Stockholder,
It is my pleasure to invite you to the 20122013 Annual Meeting of Stockholders of Autoliv, Inc. to be held on Tuesday, May 8, 20127, 2013 at The Ritz-Carlton Hotel, 160 East Pearson Street, Chicago, Illinois, 60611-2308, USA commencing at 9:00 a.m. local time.
Information regarding the matters to be voted upon at this year’s Annual Meeting is contained in the Notice of Meeting and Proxy Statement on the following pages.
It is important that your shares are represented at the Annual Meeting. Therefore, please provide your proxy by following the instructions provided on the formal Notice of Meeting and Notice of Internet Availability of Proxy Materials previously sent to you. This way, your shares will be voted as you direct even if you cannot attend the Annual Meeting.
A public news release covering voting results will be published after the meeting.
The Autoliv, Inc. Annual Report for the fiscal year ended December 31, 20112012 is being made available to stockholders simultaneously with this Proxy Statement. These documents are available at www.autoliv.com.
Sincerely, |
Lars Nyberg |
Chairman of the Board of Directors |
AUTOLIV, INC.
Box 70381 SE-107 24
Stockholm, Sweden
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 8, 20127, 2013
TO THE STOCKHOLDERS OF AUTOLIV, INC.,
NOTICE IS HEREBY GIVEN that the 20122013 Annual Meeting of Stockholders of Autoliv, Inc. (“Autoliv” or the “Company”) will be held on Tuesday, May 8, 20127, 2013 commencing at 9:00 a.m. local time at The Ritz-Carlton Hotel, 160 East Pearson Street, Chicago, Illinois, 60611-2308, USA, to consider and vote upon:
1. | Re-election of |
2. | An advisory resolution to approve the compensation of the Company’s named executive officers (see page |
3. |
Ratification of the appointment of Ernst & Young AB as the Company’s independent auditors for the fiscal year ending December 31, |
Any other business that may properly come before the Annual Meeting or any continuation, postponement or adjournment thereof. |
The Board of Directors has fixed the close of business on March 12, 201211, 2013 as the record date for the Annual Meeting. All stockholders of record at the close of business on that date are entitled to notice of, and to be present and vote at, the Annual Meeting and at any continuation thereof.
Attendance at the Annual Meeting will be limited to stockholders of record, beneficial owners of Company common stock entitled to vote at the Annual 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 |
Lars Sjöbring Vice President for Legal Affairs,General Counsel and Secretary |
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ITEM 2 - ADVISORY VOTE TO APPROVE NAMED EXECUTIVE OFFICER COMPENSATION | 53 | |||
ITEM 3 - RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS | 54 | |||
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AUTOLIV, INC.
Box 70381 SE-107 24
Stockholm, Sweden
PROXY STATEMENT
INFORMATION CONCERNING VOTING AND SOLICITATION
Availability of Proxy Materials on the Internet
Our Board of Directors (the “Board”) has made this Proxy Statement and the Company’s Annual Report for the year ended December 31, 20112012 available to you on the Internet or, upon your request, has delivered printed versions of these materials to you by mail, in connection with the Board’s solicitation of proxies for use at our Annual Meeting of Stockholders, to be held on Tuesday, May 8, 20127, 2013 commencing at 9:00 a.m. local time at The Ritz-Carlton Hotel, 160 East Pearson Street, Chicago, Illinois, 60611-2308, USA, and at any adjournment thereof (the “2012“2013 Annual Meeting” or the “Annual Meeting”).
The date of this Proxy Statement is March 26, 2012,25, 2013, the approximate date on which this Proxy Statement and Proxy Card are first being made available on the Internet to stockholders entitled to vote at the Annual Meeting. The Annual Report for the fiscal year ended December 31, 20112012 was first made available on February 23, 2012.22, 2013.
You are entitled to vote if you were a stockholder of record of our common stock as of the close of business on March 12, 201211, 2013 (the “Record Date”). Your shares may be voted at the Annual Meeting only if you are present in person or represented by a valid proxy.
At the close of business on the Record Date, 89,506,70595,609,008 shares of our common stock were outstanding and entitled to vote. A majority of the shares of our common stock outstanding on the Record Date, present in person or represented by proxy, will constitute a quorum at the Annual Meeting.
If you are a stockholder of record, you may vote by proxy on the Internet or by telephone by following the instructions provided in the Notice of Internet Availability of Proxy Materials sent previously to you. If you requested printed copies of the proxy materials by mail, or have a printed proxy card, you may also vote by completing and mailing a printed proxy card. You may also vote in person at the Annual Meeting.
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If you are a beneficial owner of shares held in a “street name,” please refer to the instructions provided by your bank, broker or other nominee for voting your shares. If you wish to vote in person at the Annual Meeting, you must obtain a valid proxy from the organization that holds your shares and have proof of ownership of our common stock as of the Record Date.
The shares represented by all properly executed and unrevoked proxies received in proper form in time for the Annual Meeting will be voted. Each stockholder is entitled to one vote for each share of common stock
held on the Record Date. If you properly complete your proxy form and send it to the Company in time to vote, or submit your proxy electronically by internet or telephone before voting closes, your proxy (one of the individuals named in the proxy form) will vote your shares as you have directed. If you sign the proxy form but do not make specific choices, your proxy will vote your shares as recommended by the Board to elect the director nominees listed in “Election of Directors,” to approve the compensation of the Company’s named executive officers to approve the amendment to the Autoliv, Inc. 1997 Stock Incentive Plan, as amended and restated (the “1997 Plan”) and for the ratification of the appointment of Ernst & Young AB as the Company’s independent auditors.
If any other matter is presented, your proxy will vote in accordance with his best judgment, which will allow for your proxy to address unforeseen matters that may arise as well as matters incident to the conduct of the meeting, to the extent permitted by applicable law and the listing rules of the New York Stock Exchange (the “NYSE”). Note, however, that the proxy’s ability to exercise discretionary voting authority under the SEC’sSecurity and Exchange Commission (“SEC”) proxy rules is limited. Rule 14a-4(c) of the Exchange Act, allows proxies solicited in connection with annual meetingslimited to grant discretionary authority to the proxy only for certain enumerated matters, which are: (i) approval of the minutes of the meeting, (ii) election of a person to an office if a bona fide nominee is unwilling or unable to serve, (iii) matters pertaining to the conduct of the meeting, (iv) stockholder proposals that may be brought before the meeting, but were excluded from the Company’s proxy statement under the SEC’s rules and (v) other matters, if the Company did not have notice of the matter at least 45 days before the first anniversary of the date the Company sent its proxy materials for the prior year’s annual meeting of stockholders (or date specified by an advance notice provision), and a specific statement to that effect is made in the proxy statement or form of proxy. In addition, the SEC’s proxy rules limit the authority that may be granted by proxies. Specifically, Rule 14a-4(d) does not permit a proxy to grant authority for the proxy holder to (i) vote for the election of any person to any office for which a bona fide nominee is not named in the proxy statement, (ii) to vote at any annual meeting other than the next annual meeting after the proxy card and proxy statement are first sent to stockholders, (iii) to vote with respect to more than one meeting and (iv) to vote on any matter not included in the proxy statement or included in the discretionary authority under Rule 14a-4(c), described above.matters. Because of the Company’s advance notice requirements in its By-laws, discretionary authority would likely only be used for ministerial matters at the Annual Meeting.
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As of the date of this Proxy Statement, the Company is not aware of other matters to be acted on at the Annual Meeting other than those matters described in this Proxy Statement. Any proxy given may be revoked at any time before it is voted at the Annual Meeting.
Holders of Autoliv’s Swedish Depository Receipts (“SDRs”) are entitled to vote the shares of common stock underlying the SDRs at the 20122013 Annual Meeting as if they held the common stock of the Company directly. However, under the General Terms and Conditions of the SDRs in Autoliv Inc.,SDRs, if holders of SDRs do not attend and represent their shares at the Annual Meeting or give instructions as to the exercise of their voting rights to the custodian, Skandinaviska Enskilda Banken AB (publ) (“SEB”), they are deemed to have instructed SEB to give a proxy to a person designated by the Company to vote their shares in the same proportion as all other shares in the Company that are being voted at the meeting. However, no such instruction from the holders of SDRs to SEB shall be deemed given to any merger, consolidation or any other matter which may affect substantially the rights or privileges of the holders of SDRs or with respect to any matter where giving such instructions and/or discretionary proxy would not be legally permitted.
Shares held by persons attending the Annual Meeting but not voting, shares represented by proxies that reflect abstentions as to a particular proposal and broker “non-votes” will be counted as present for purposes of determining a quorum. A broker “non-vote” occurs when a nominee holding shares for a beneficial owner has not received voting instructions from the beneficial owner and does not have discretionary authority to vote the shares. Brokers do not have discretionary authority to vote on Items 1 2 and 3.2. Brokers generally have discretionary authority to vote on Item 4.3.
Item 1: | 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. However, pursuant to the Autoliv, Inc. Corporate Governance Guidelines, if a director nominee in an uncontested election fails to receive the approval of a majority of the votes cast on his or her election by the Company stockholders, the nominee shall promptly offer his or her resignation to the Board. A committee consisting of the Board’s independent directors (which will specifically exclude any director who is required to offer his or her own resignation) shall consider all relevant factors and decide on behalf of the Board the action to be taken with respect to such offered resignation and will determine whether to accept the resignation or take other action. The Company will publicly disclose the Board’s decision with regard to any resignation offered under these circumstances with an explanation of how the decision was reached, including, if applicable, the reasons for rejecting the offered resignation. Votes withheld as to one or more nominee will not be counted as votes cast for such individuals but will be counted for the purposes of establishing a quorum. |
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Item 2: | The non-binding resolution to approve the compensation of the Company’s named executive officers as disclosed in this Proxy Statement requires the |
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affirmative vote of a majority of the votes present or represented by proxy at the Annual Meeting and entitled to vote thereat. Abstentions will count as votes against the proposal. Broker non-votes will have no effect in determining whether the proposal has been approved. |
Item 3: |
The ratification of the selection of Ernst & Young AB requires the affirmative vote of a majority of the shares present or represented by proxy at the Annual Meeting and entitled to vote thereat. Abstentions will have the same effect as votes against the ratification. Although brokers have discretionary authority to vote on the ratification, if a broker submits a non-vote, it will not be counted for purposes of the ratification but will be counted for the purposes of establishing a quorum. |
Any other proposal brought before the Annual Meeting (if any) will be decided by a majority of votes represented at the meeting and entitled to vote on the matter. Consequently, abstentions will have the same effect as votes against the matter, and broker non-votes will not be counted for purposes of determining whether a proposal has been approved.
The principal executive offices of the Company are located at Vasagatan 11, 7th Floor, Stockholm, Sweden, SE-111 20. The Company’s telephone number is +46 8 587 20 600.
The Company will bear the cost of the solicitation of proxies. In addition to solicitation over the Internet and by mail, the Company will request banks, brokers and other custodian nominees and fiduciaries to supply proxy materials to the beneficial owners of our 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, by personal interview, mail, telephone, facsimile or electronic mail.
In addition, the Company has retained Georgeson Inc. to assist in the solicitation for a fee of $13,500 plus expenses and Euroclear Sweden AB for a fee of SEK 155,000, or approximately $23,000,$23,400, plus expenses.
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- 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. The Board presently consists of tennine members, divided into three classes (one(each class of four members and two classesconsisting of three members), serving staggered three-year terms. Directors in each class are elected on a rotating basis at the annual meeting of stockholders at which the term for such class expires.
Listed below as nominees for re-election at the 2012 Annual Meeting are Mr. George A. Lorch,Robert W. Alspaugh, Mr. Kazuhiko Sakamoto,Bo I. Andersson and Dr. Wolfgang Ziebart, and Dr. Xiaozhi Liu, whose present terms will expire at the time of the meeting.meeting, are nominees for re-election at the 2013 Annual Meeting. If re-elected, at the Annual Meeting, each would serve until the 20152016 annual meeting of stockholders and until his or her successor is elected and qualified, or until his or her earlier retirement, resignation, disqualification, removal or death.
If any nominee should become unavailable for election prior to the Annual Meeting, an event that currently is not anticipated by the Board, the proxies will be voted in favor of the election of a substitute nominee or nominees proposed by the Board or the number of directors may be reduced accordingly. Each nominee has agreed to serve if re-elected, and the Board has no reason to believe that any nominee will be unable to serve.
Below is a summary presentation of each director nominated for re-election or continuing in office until the 20132014 or 20142015 annual general meeting of stockholders, respectively, including their education and professional experience. Based on the individual education, attributes, skills and the contributions of each director described below, the Board and the Nominating and Corporate Governance Committee have determined that each director is well qualified to serve as a director. As a collective, our Board has a broad set of competencies and experiences making it well suited to further the interests of the Company, its stockholders and other stakeholders.stockholders.
Nominees for Directors at the 20122013 Annual Meeting
Robert W. Alspaugh, age 66, has been a director of Autoliv since June 2006 and is a member of the Compliance Committee and Chairman of the Audit Committee of the Board. Prior to becoming a director of Autoliv, Mr. Alspaugh had a 36-year career with KPMG, including serving as the senior auditor for a diverse array of companies across a broad range of industries. He has worked with global companies both in Europe and Japan, as well as with those headquartered in the United States. Between 2002 and 2005, when he served as Chief Executive Officer of KPMG International, he was responsible for implementing the strategy of this global organization, which includes member firms in nearly 150 countries with more than 100,000 employees. Prior to this position, he served as Deputy Chairman and Chief Operating Officer of KPMG’s U.S. practice. Mr. Alspaugh also serves on the boards of Ball Corporation and Verifone Systems, Inc., both public companies, and DSGI Technologies, Inc., and Triton Containers, both private companies. He graduated summa cum laude from Baylor University, Texas, in 1970.
The Board of Directors believes Mr. Alspaugh’s years of experience, technical skills and record of achievement working within the global business community are reasons that support his re-election to the Board.
Bo I. Andersson, age 57, has been a director of Autoliv since February 2012 and a member of the Audit Committee since December 2012. Mr. Andersson is currently President and Chief Executive Officer of GAZ Group, the leading manufacturer of commercial vehicles in Russia. In addition, he serves on the board of directors of GAZ OJSC. After a military career in Sweden, Mr. Andersson’s automotive career began at Saab in 1987 where he was appointed Vice President of Purchasing in 1990. He transitioned from Saab to General Motors Company in 1993, as Executive Director of Global Purchasing for the Electrical Component Group. He served on the GM corporate management team from 2001 to 2009, during which time he was appointed Vice President of Global Purchasing and Supply Chain. Mr. Andersson holds a bachelor’s degree in Business Administration from Stockholm University and graduated from the Advanced Management Program at Harvard Business School in 1999.
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The Board of Directors believes that Mr. Andersson’s extensive experience in executive management in the automotive industry in a variety of global regions support his re-election to the Board.
Wolfgang Ziebart, age 63, has been a director of Autoliv since December 2008 and is a member of the Audit Committee and Chairman of the Compliance and Nominating and Corporate Governance Committees of the Board. Dr. Ziebart had a distinguished career within BMW beginning in 1977 which took him to the Board of Management, where he was responsible for R&D and Purchasing. In 2000, he became a Member of the Management Board of Continental AG, a major automotive supplier listed on the Frankfurt Stock Exchange. Between 2004 and 2008, he was President and CEO of Infineon Technologies AG, a global semiconductor and system solutions provider listed on the Frankfurt Stock Exchange. Dr. Ziebart also serves on the Board of Directors of ASML and is the Chairman of the Supervisory Boards of Nordex and Novaled AG. Dr. Ziebart holds a doctorate degree in mechanical engineering from the Technical University of Munich.
The Board of Directors believes that Dr. Ziebart’s extensive experience in the automotive industry and other industries support his re-election to the Board.
Dr. Ziebart had previously been elected to serve as director until the 2015 annual meeting of stockholders. However, following the resignation of Dr. Walter Kunerth as a director on December 18, 2012, the Board of Directors resolved, and Dr. Ziebart agreed, that in order to balance the number of directors in each class, as required under NYSE rules, Dr. Ziebart would instead belong to the class of directors standing for election at the 2013 annual meeting of stockholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” EACH OF THE THREE NAMED NOMINEES FOR DIRECTORS
Directors Continuing in Office With Terms Expiring at the 2014 Annual Meeting
Jan Carlson, age 52, was appointed a director of Autoliv in May 2007 after becoming President and Chief Executive Officer of Autoliv on April 1, 2007. Mr. Carlson joined Autoliv in 1999 as President of Autoliv Electronics and held that position until April 2005, when he became Vice President for Engineering of Autoliv and a member of the Company’s Executive Committee. As of July 2010, Mr. Carlson also serves on the Board and Compensation Committee of BorgWarner Inc., a product leader in highly engineered components and systems for vehicle powertrain applications worldwide. Since 2010, Mr. Carlson has also served on the board of Teknikföretagen, the Association of Swedish Engineering Industries. Prior to joining Autoliv, Mr. Carlson was President of Saab Combitech, a division within the Saab aircraft group specializing in commercializing military technologies. Mr. Carlson has a Master of Science degree in Physical Engineering from the University of Linköping, Sweden.
The Board of Directors believes that Mr. Carlson’s years of experience with Autoliv, including his current role as President and Chief Executive Officer, his past assignments with Autoliv, his automotive industry experience and his academic credentials are attributes that support his membership on the Board.
Lars Nyberg, age 61, has been a director of Autoliv since October 2004 and Chairman of the Board since December 2011. Mr. Nyberg was a member of the Compensation Committee of the Board until December 2012. Mr. Nyberg was President and Chief Executive Officer of TeliaSonera, the leading Nordic and Baltic telecommunications company listed on the OMX Nordic Exchange, from 2007 until early 2013, has been Chairman of DataCard Corporation, a company dealing in secure ID and card personalization, since 2006, and a member of the board of OJSC Megafon since May 2012. Mr. Nyberg served as the Chairman and Chief Executive Officer of NCR Corporation from 1995 to 2003 and as non-executive Chairman of NCR Corporation between 2003 and 2005. He is a graduate in Business Administration from the University of Stockholm.
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The Board of Directors believes that Mr. Nyberg’s executive experience and record of achievement working within the global business community are competencies that support his membership on Autoliv’s Board of Directors.
James M. Ringler, age 67, has been a director of Autoliv since January 2002 and is the Chairman of the Compensation Committee of the Board. He was, prior to his retirement, Vice Chairman of Illinois Tool Works Inc. between 1999 and 2004. Prior to joining Illinois Tool Works, Mr. Ringler was Chairman, President and Chief Executive Officer of Premark International, Inc., which merged with Illinois Tool Works in 1999. Mr. Ringler joined Premark in 1990 and served as Executive Vice President and Chief Operating Officer prior to becoming the Chief Executive Officer in 1996. He serves on the Boards of Directors of Dow Chemical Company, FMC Technologies, Inc., Corn Products International, John Bean Technologies and he is the Chairman of the Board of Teradata Corporation. Mr. Ringler holds a Bachelor of Science degree in business administration and an M.B.A. degree in finance from the State University of New York.
The Board of Directors believes that Mr. Ringler’s achievements as an executive of Premark International and Illinois Tool Works and his extensive service on the board of directors of public companies in a wide variety of industries support Mr. Ringler’s membership on the Board of Directors.
Directors Continuing in Office With Terms Expiring at the 2015 Annual Meeting
Xiaozhi Liu, age 57, has been a director of Autoliv since November 2011 and has been a member of the Compensation Committee since December 2012. Dr. Liu began her career in the automotive industry in GM’s Delphi operations and has since worked in various executive positions in Germany, China and the U.S., where she rose to the position of Director of Electronics, Controls & Software for GM in Detroit, Chief Engineer & Chief Technology Officer of GM in China and Chairman & CEO for General Motors Taiwan. Between 2005 and 2006, she was CEO and Vice Chairman of Fuyao Glass Industry Group Co. Ltd., a public company listed in Shanghai. In 2007, she became the President and CEO of NeoTek China, a supplier of automotive chassis and transmission parts, and served as Chairman of the company’s board of directors from 2008 through 2011. In 2009, she founded, and is CEO of, her own company, ASL Automobile Science & Technology (Shanghai) Co., Ltd., which introduces and implements globally advanced technologies to Chinese companies. She has a Ph.D. and master’s degree in Chemical Engineering and Electrical Engineering from the German Friedrich-Alexander Universität in Erlangen, Nurembourg and a bachelor’s degree in Electrical Engineering from the Chinese Jiaotong University in Xian.
The Board of Directors believes that Dr. Liu’s global experience in engineering and technology in Asia, North America and Europe and her extensive management experience in the automotive industry support her membership on the Board.
George A. Lorch, age 70,71, has been a director of Autoliv since June 2003 and is a member of the Compensation and Nominating and Corporate Governance Committees of the Board. Mr. Lorch has been Chairman Emeritus of Armstrong Holdings, Inc., a global company that manufactures flooring and ceiling materials, since 2000. From May 2000 to August 2000, he was Chairman and Chief Executive Officer of Armstrong Holdings, Inc. He was Chairman of Armstrong World Industries, Inc. from 1994 to 2000, its President and Chief Executive from 1993 to 2000 and a director from 1988 to 2000. Mr. Lorch serves on the Board of Directors of Pfizer, Inc., where he has been Lead Director since December 2011, and served as Chairman from December 2010 to December 2011. Mr. Lorch also serves on the Boards of Directors of WPX Energy, Inc., HSBC North America Holding Company and HSBC Finance Co. (the non-public, wholly-owned subsidiaries of HSBC LLP) and Masonite, a privately held company. Mr. Lorch holds a Bachelor of Science degree in business administration from the Virginia Polytechnic Institute.
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The Board of Directors believes that Mr. Lorch’s breadth of executive and global business experience over many years in operations, sales and marketing and his service as a director of nine different companies support his re-election tomembership on the Board.
Kazuhiko Sakamoto, age 66,67, was appointed a director of Autoliv in August 2007 and is a member of the Compliance and Nominating and Corporate Governance Committees of the Board. Mr. Sakamoto is an advisor at Pasona Inc., a leading human resources provider in Japan, listed in the Tokyo Stock Exchange. Mr. Sakamoto was previously a Counselor of Marubeni Construction Material Lease Co. Ltd., a company affiliated with Marubeni Corporation, which is one of Japan’s leading general trading houses, operating import, export, offshore trading and investment activities in various business fields. Mr. Sakamoto also serves the Marubeni Corporation as a corporate advisor. He was Senior Executive Vice President of Marubeni Corp. from 2006 through 2008. During his nearly 40-year career with Marubeni, Mr. Sakamoto has held several key positions such as President and Chief Executive Officer of Marubeni America Cooperation. Mr. Sakamoto previously served on the Boards of Directors of Marubeni-Itochu Steel Inc. and Helena Chemical Company. He graduated from the Keio University in 1968 and attended the Harvard University Research Institute for International Affairs in 1991-92.
The Board of Directors believes that Mr. Sakamoto’s extensive business experience in both Asia and North America are experiences that support Mr. Sakamoto’s re-election to the Board.
Wolfgang Ziebart, age 62, has been a director of Autoliv since December 2008 and is a member of the Audit Committee and Chairman of the Compliance and Nominating and Corporate Governance Committees of the Board. Dr. Ziebart had a distinguished career within BMW beginning in 1997 which took him to the Board of Management, where he was responsible for R&D and Purchasing. In 2000, he became a Member of the Management Board of Continental AG, a major automotive supplier listed on the Frankfurt Stock Exchange. Between 2004 and 2008, he was President and CEO of Infineon Technologies AG, a global semiconductor and system solutions provider listed on the Frankfurt Stock Exchange. Dr. Ziebart also serves on the Boards of Directors of ASML and Nordex. Previously, Dr. Ziebart served on the Board of Directors of Artega. Dr. Ziebart holds a doctorate degree in mechanical engineering from the Technical University of Munich.
The Board of Directors believes that Dr. Ziebart’s extensive education, as well as his many years of experience in the automotive industry and other industries, support his re-election to the Board.
Xiaozhi Liu,age 56, has been a director of Autoliv since November 2011. Dr. Liu began her career in the automotive industry in GM’s Delphi operations and has since worked in various executive positions in Germany, China and the U.S., where she rose to the position of Director of Electronics, Controls & Software for GM in Detroit, Chief Engineer & Chief Technology Officer of GM in China and Chairman & CEO for General Motors Taiwan. Between 2005 and 2006, she was CEO and Vice Chairman of Fuyao Glass Industry Group Co. Ltd., a public company listed in Shanghai. In 2007, she became the President and CEO of NeoTek China, a supplier of automotive chassis and transmission parts, and served as Chairman of the company’s board of directors from 2008 through 2011. In 2009, she founded
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her own company, ASL Automobile Science & Technology (Shanghai) Co., Ltd., which introduces and implements globally advanced technologies to Chinese companies. She has a Ph.D. and master’s degree in Chemical Engineering and Electrical Engineering from the German Friedrich-Alexander Universität in Erlangen, Nurembourg, and a bachelor’s degree in Electrical Engineering from the Chinese Jiaotong University in Xian.
The Board of Directors believes that Dr. Liu’s global experience in engineering and technology in Asia, North America and Europe and her extensive management experience in the automotive industry support her election to the Board.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” EACH OF THE FOUR NAMED NOMINEES FOR DIRECTORS
Directors Continuing in Office With Terms Expiring at the 2013 Annual Meeting
Bo I. Andersson, age 55, has been a director of Autoliv since February 2012. Mr. Andersson is currently President and Chief Executive Officer of GAZ Group, the leading manufacturer of commercial vehicles in Russia. In addition, he serves on the board of directors of GAZ OJSC. Mr. Andersson’s career began in 1987 at Saab, where he was appointed Vice President of Purchasing in 1990. He then transitioned from Saab to General Motors Company in 1993, as Executive Director of Global Purchasing for the Electrical Component Group. He was on the GM corporate management team from 2001 to 2009, during which time he was appointed Vice President of Global Purchasing and Supply Chain. Mr. Andersson holds a bachelor’s degree in Business Administration from Stockholm University and graduated from the Advanced Management Program at Harvard Business School in 1999.
The Board of Directors believes that Mr. Andersson’s experience in executive management within the automotive industry in a variety of global regions support his membership on the Board.
Robert W. AlspaughCORPORATE GOVERNANCE, age 65, has been a director of Autoliv since June 2006 and is a member of the Compliance Committee and Chairman of the Audit Committee of the Board. Prior to becoming a director of Autoliv, Mr. Alspaugh had a 36-year career with KPMG, including serving as the senior auditor for a diverse array of companies across a broad range of industries. He has worked with global companies both in Europe and Japan, as well as with those headquartered in the United States. Between 2002 and 2005, when he served as Chief Executive Officer of KPMG International, he was responsible for implementing the strategy of this global organization, which includes member firms in nearly 150 countries with more than 100,000 employees. Prior to this position, he served as Deputy Chairman and Chief Operating Officer of KPMG’s U.S. practice. Mr. Alspaugh also serves on the
Classified Board of Directors of DSGI Technologies, Inc., a private company, and Ball Corporation and Verifone Systems, Inc., both public companies. He graduated summa cum laude from Baylor University, Texas, in 1970.Structure
The Board of Directors believes Mr. Alspaugh’s years of experience, technical skills and record of achievement working within the global business community are reasons that support his membership on the Board.
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Walter Kunerth, age 71, has been a director of Autoliv since August 1998 and is a member of the Audit Committee of the Board. Dr. Kunerth is also a member of the Supervisory Board of Gildemeister AG. For more than 20 years, Dr. Kunerth held various senior executive positions at Siemens AG in Germany, including as a 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.
The Board of Directors believes that Dr. Kunerth’s years of experience, academic achievements and automotive industry experience are accomplishments that support his membership on the Board.
Directors Continuing in Office With Terms Expiring at the 2014 Annual Meeting
Jan Carlson, age 51, was appointed a director of Autoliv on May 2, 2007 after becoming President and Chief Executive Officer of Autoliv on April 1, 2007. Mr. Carlson joined Autoliv in 1999 as President of Autoliv Electronics and held that position until April 2005, when he became Vice President for Engineering of Autoliv and a member of the Company’s Executive Committee. As of July 2010, Mr. Carlson also serves on the Board and Compensation Committee of BorgWarner Inc., a product leader in highly engineered components and systems for vehicle powertrain applications worldwide. Since 2010 Mr. Carlson has also served on the board of Teknikföretagen, the Association of Swedish Engineering Industries. Prior to joining Autoliv, Mr. Carlson was President of Saab Combitech, a division within the Saab aircraft group specializing in commercializing military technologies. Mr. CarlsonCompany has a Master of Science degree in Physical Engineering from the University of Linköping, Sweden.
The Board of Directors believes that Mr. Carlson’s years of experience with Autoliv, including his current role as President and Chief Executive Officer, his past assignments with Autoliv, his automotive industry experience and his academic credentials are attributes that support his membership on the Board.
Lars Nyberg, age 60, has been a director of Autoliv since October 2004 and Chairmanclassified board structure whereby one-third of the Board is elected for a three-year term on a rolling basis every three years. This structure has been in place since December 2011. Mr. Nybergthe Company’s inception and the Board believes that this structure is a memberin the best interest of the Compensation CommitteeCompany and its stockholders because it has promoted stability and continuity, facilitated long-term strategic planning, enhanced the independence of our directors and their knowledge of the Board. Mr. Nyberg has been PresidentCompany and Chief Executive Officerprotected the Company against abusive takeover tactics. Further, the Board is comprised of TeliaSonera,all but one independent director, which is an essential factor when considering the leading NordicBoard’s accountability to the Company and Baltic telecommunications company listed onits stockholders, and which mitigates the OMX Nordic Exchange since 2007, and Chairmanrisk of DataCard Corporation, a company dealingmanagerial entrenchment.
A proposal will be presented for the consideration of stockholders at the Company’s 2014 annual meeting of stockholders to amend the Company’s Restated Certificate of Incorporation to provide for the annual election of all directors. If the amendments are approved by stockholders then the annual election of directors would begin in secure ID and card personalization, since 2006. Mr. Nyberg served as the Chairman and Chief Executive Officer of NCR Corporation from 1995 to 2003 and as non-executive Chairman of NCR Corporation between 2003 and 2005. He is a graduate in Business Administration from the University of Stockholm.
The Board of Directors believes that Mr. Nyberg’s executive experience and record of achievement working within the global business community are competencies that support his membership on Autoliv’s Board of Directors.
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James M. Ringler, age 66, has been a director of Autoliv since January 2002 and is a member of the Compensation Committee of the Board. He was, prior to his retirement, Vice Chairman of Illinois Tool Works Inc. between 1999 and 2004. Prior to joining Illinois Tool Works, Mr. Ringler was Chairman, President and Chief Executive Officer of Premark International, Inc., which merged with Illinois Tool Works in 1999. Mr. Ringler joined Premark in 1990 and served as Executive Vice President and Chief Operating Officer prior to becoming the Chief Executive Officer in 1996. He serves on the Boards of Directors of Dow Chemical Company, FMC Technologies, Inc., Corn Products International, John Bean Technologies and he is the Chairman2015. Declassification of the Board would be implemented in phases so that all directors would be elected for terms that would end at the following year’s annual meeting, provided that the unexpired term of Teradata Corporation. Mr. Ringler holds a Bachelor of Science degree in business administration and an M.B.A. degree in finance fromany Director shall not be affected. If approved, declassification would be fully implemented for all directors beginning at the State University of New York.
The Board of Directors believes that Mr. Ringler’s achievements as an executive of Premark International and Illinois Tool Works and his extensive service on the board of directors of public companies in a wide variety of industries support Mr. Ringler’s membership on the Board of Directors.2017 annual meeting.
CORPORATE GOVERNANCE
The Board of the Company currently consists of tennine members, and the Board has determined that all of the directors except Mr. Carlson are independent directors under the applicable rules of the NYSE, the Sarbanes-Oxley Act of 2002, as amended, and the rules and regulations promulgated by the Securities and Exchange Commission (the “SEC”).SEC. In making its independence determinations, the Board reviewed information regarding transactions and relationships provided by the director, Company records and publicly available information. None of the independent directors have a relationship with the Company other than as a director and/or a stockholder.
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Board Leadership Structure and Risk Oversight
The Company has a long history of separating the positions of Chief Executive Officer (“CEO”) and the Chairman of the Board, as it believes that a separate CEO and Chairman is an important part of its overall commitment to the highest standards of corporate governance. The separate positions allow the Board to effectively develop and oversee its business strategy, monitor risk and freely perform its management oversight function. The Company believes that there will be times when the Board will need to meetmeets in executive sessions of independent directors to discuss certain issues without the CEO present. Mr. Nyberg chairs the executive sessions of the independent directors.
The Board is responsible for the oversight of risk management of the Company, with the Audit Committee monitoring financial risk and discussing risk oversight and management as part of its obligations under the NYSE’s listing standards and the Compliance Committee monitoring ethical and other compliance risks. In each of its meetings, the Board receives
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reports from management, including the CEO and Chief Financial Officer (“CFO”), regarding the main strategic, operational and financial risks the Company is facing and the steps that management is taking to address and mitigate such risks.
The Compensation Committee has reviewed with management the design and operation of our incentive compensation arrangements for senior management, including executive officers, for the purpose of determining whether such programs might encourage inappropriate risk-taking that could have a material adverse effect on the Company. The Compensation Committee considered, among other things, the features of the Company’s compensation program that are designed to mitigate compensation-related risk, such as the performance objectives and target levels for incentive awards (which are based on overall Company performance), and its compensation recoupment policy. The Compensation Committee concluded that any risks arising from the Company’s compensation plans, policies and practices are not reasonably likely to have a material adverse effect on the Company.
The Board met sevenfive times during the year ended December 31, 2011.2012. All directors participated in more than 75% of the total number of meetings of the Board and committees on which they served, except Mr. Ringler, who participated in 57% of the total number of meetings of the Board and more than 75% of the total number of meetings of committees on which he served.
Following the meetings of the full Board, the independent directors met without management directors (i.e., without Mr. Jan Carlson) participating, for a total of five times in 2011. Mr. Nyberg chairs the executive sessions of the independent directors.2012.
Directors who are employees of the Company or any of its subsidiaries do not receive separate compensation for service on the Board or Board committees. Non-employee directors are paid a retainer of $170,000 per year, which we refer to as the “annual retainer,” while the Chairman of the Board is paid an annual retainer of $340,000 per year. In addition, the Chairman of the Compensation Committee is paid a supplemental annual retainer of $20,000; the Chairman of the Nominating and Corporate Governance Committee is paid a supplemental annual retainer of $10,000; and the Chairman of the Audit Committee is paid a supplemental annual retainer of $20,000. In recognition of the time-consuming demands of the antitrust investigations in 2011,2012, the Compensation Committee decided to award a special one-time $25,000$5,000 fee to each member of the Compliance Committee.
Non-employee directors can elect to defer payment of a pre-determined percentage of their compensation under the Autoliv, Inc. 2004 Non-Employee Director Stock-Related Compensation Plan. In 2011,2012, none of the directors elected to defer any of their compensation.
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In 2012, the BoardCompany adopted a non-employee director stock ownership policy, as well as certain related changes to its compensation program for non-employee directors. EffectiveFor service rendered as of January 1, 2012, provided that our stockholders approve the
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proposal to amend the 1997 Plan, one-third of the annual retainer for our non-employee directors will now be paid in fully-vested shares of our common stock. In addition, each non-employee memberstock in the beginning of the Board will be subject to a newyear following the year of service. The non-employee director stock ownership policy which requires each non-employee director to acquire and hold shares of our common stock in an amount equivalent to one year’s annual retainer. The non-employee directors have three years to reach the new ownership requirements. Any newly-appointed or elected non-employee director will have until January 1 of the fourth year after the date such non-employee director is appointed or elected, as applicable, to reach the minimum ownership requirements.
The following table sets forth the compensation that our non-employee directors earned during the year ended December 31, 20112012 for services rendered as members of our Board:
Name | Fees Earned Or Paid in Cash ($) | Total ($) | Cash ($)(1) | Stock Awards ($)(1)(4) | Total ($)(1) | |||||||||||||
Bo I. Andersson(2) | 94,444 | 51,944 | (751 Shares) | 146,388 | ||||||||||||||
Robert W. Alspaugh | 215,000 | 215,000 | 138,333 | 56,667 | (819 Shares) | 195,000 | ||||||||||||
Sune Carlsson(1) | 61,050 | 61,050 | ||||||||||||||||
Walter Kunerth | 170,000 | 170,000 | ||||||||||||||||
Walter Kunerth(3) | 155,833 | - | 155,833 | |||||||||||||||
Xiaozhi Liu | 113,333 | 56,667 | (819 Shares) | 170,000 | ||||||||||||||
George A. Lorch | 170,000 | 170,000 | 113,333 | 56,667 | (819 Shares) | 170,000 | ||||||||||||
Xiaozhi Liu | 27,718 | 27,718 | ||||||||||||||||
Lars Nyberg (3) | 181,087 | 181,087 | ||||||||||||||||
Lars Nyberg | 226,667 | 113,333 | (1,638 Shares) | 340,000 | ||||||||||||||
James M. Ringler | 190,000 | 190,000 | 133,333 | 56,667 | (819 Shares) | 190,000 | ||||||||||||
Kazuhiko Sakamoto | 195,000 | 195,000 | 118,333 | 56,667 | (819 Shares) | 175,000 | ||||||||||||
S. Jay Stewart(1) | 73,650 | 73,650 | ||||||||||||||||
Lars Westerberg(4) | 329,837 | 329,837 | ||||||||||||||||
Wolfgang Ziebart(5) | 201,450 | 201,450 | ||||||||||||||||
Wolfgang Ziebart | 128,333 | 56,667 | (819 Shares) | 185,000 |
(1) |
(2) |
(3) |
This amount reflects |
Corporate Governance Guidelines and Codes of Conduct and Ethics
The Board has adopted Corporate Governance Guidelines to assist the Board in the exercise of its responsibilities. In December 2011, the Board amended the Corporate Governance Guidelines to provide that a director should tender his/her resignation from the Board upon having attained the age of 72. The Board also amended the Corporate Governance
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Guidelines to state that the Company expects that the Board of Directors will represent the global nature of the Company’s operations. A corresponding change regarding Board membership was made in the By-laws and the Nominating and Corporate Governance Committee charter.
The Board has further adopted a Code of Conduct and Ethics for Directors to assist the individual directors in fulfilling their duties as members of the Board. Since 1998, the Company has also had a Standards of Business Conduct and Ethics that apply to all employees of the Company and the Company has had a Code of Conduct and Ethics for Senior Officers (the StandardsCode of Business Conduct and Ethics for Directors, Code of Conduct and Ethics for Senior Officers and CodeStandards of Business Conduct and Ethics that applies to all Company employees are collectively referred to as the “Codes”). As previously disclosed by theThe Company the Board adopted amendments to the Codes that were effective as of January 1, 2011. In the future, the Companyhas posted, and will disclose any amendments to, or waivers of, itsto, the Codes on its website: www.autoliv.com.
The Company has also adopted a written policy regarding related person transactions (the “Related Persons Transactions Policy”), which is part of the Standards of Business Conduct and Ethics. The Corporate Governance Guidelines, the Codes and the Related Persons Transactions
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Policy are posted on the Company’s website at www.autoliv.com — Who We Are —– About Us – Governance – Ethics and Policies, and can also be obtained from the Company in print by request from the Company using the contact details below.
Policy on Attending the Annual Meeting
Under the Corporate Governance Guidelines, the Company’s policy is for directors to attend the Annual Meeting of Stockholders. All current directors participated in the 20112012 Annual Meeting of Stockholders, with the exception of Dr. Liu and Mr. Andersson, who were not directors at the time.Stockholders.
The Company recognizes that related person transactions (as defined below) can present potential or actual conflicts of interest and create the appearance that Company decisions are based on considerations other than the best interest of the Company and its stockholders. Accordingly, asAs a general matter, the Company prefers to avoid related person transactions.transactions (as defined below). The Company recognizes, however, that certain situations may arise whereby related person transactions may not necessarily be deemed inconsistent with the best interestinterests of the Company or its stockholders.
The Company’s policy is that all related person transactions must be reviewed and approved or ratified by the Audit Committee. For the purposes of the Related Persons Policy, a Related Person Transaction is a transaction, arrangement or relationship (or any series of similar transactions, arrangements or relationships) in which the Company (including any of its subsidiaries) was, is or will be a participant and in which any Related Person (as defined in the Related Persons Policy) had, has or will have a direct or indirect interest. During 2011, no transactions took place that the Company deemed to require disclosure under Section 404(a)
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of Regulation S-K. Mr. Bo Andersson who was elected to fill a vacancy on the Board on February 24, 2011, is the Chief Executive Officer of the GAZ Group, the leading manufacturer of commercial vehicles in Russia, with sales of $4.4 billion in 2011. The GAZ Group is a customer of Autoliv. Autoliv had approximately $3.3 million inwhose business comprises less than 0.1% of each of Autoliv’s and GAZ’s total sales, to GAZ in 2011, which was 0.04% of the Autoliv’s sales and 0.08% of GAZ’s sales.respectively. Autoliv’s Board has determined Mr. Andersson is “independent” according to the New York Stock Exchange’s rules and regulations.
Any stockholder or other interested party who desires to communicate with the Board or the independent directors regarding the Company can do so by writing to such person(s) at the following address:
Board/Independent Directors/ Directors
c/o Vice President Legal Affairs
Autoliv, Inc., Box 70381
SE-107 24 Stockholm, Sweden
Phone: +46 8 587 20600
Fax: +46 8 587 20633
E-mail: legalaffairs@autoliv.com
Communications with the Board or the independent directors may be sent anonymously and are not screened. Such communications will be distributed to the specific director(s) requested by the stockholder or interested party to the Board or to sessions of independent directors as a group, after it has been determined that the content represents a message to the intended recipient(s).
There are three standing committees of the Board: the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee. In June 2011, the Board also formed a Compliance Committee. The Board has determined that all Audit, Compensation, Nominating and Corporate Governance and Compliance committee members qualify as independent directors under the applicable rules of the NYSE, the Sarbanes-Oxley Act of 2002, as amended, and the rules and regulations promulgated by the SEC. The CEO and Chairman of the Board are invited to attend each committee meeting but are excused when matters relating to them are discussed.
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The Audit Committee appoints, subject to stockholder ratification, the Company’s independent auditors and is responsible for the compensation, retention and oversight of the work of the independent auditors and for any special assignments given to such auditors. The Audit Committee also reviews the annual audit and its scope, including the independent auditors’ letter of comments and management’s responses thereto; approves any non-audit services provided to the Company by its independent auditors; reviews possible violations of the Company’s business ethics and conflicts of interest policies; reviews any major accounting
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changes made or contemplated; and reviews the effectiveness and efficiency of the Company’s internal audit staff. In addition, the Audit Committee confirms that no restrictions have been imposed by Company personnel on the scope of the independent auditors’ examinations. The Audit Committee is also responsible for the review and approval of Related Person Transactions. Since May 2011, membersMembers of this committee are Mr.Messrs. Alspaugh (Chairman) and Drs. Kunerth and Ziebart. Prior to May 2011, members of this committee were Messrs. Alspaugh (Chairman), Sune Carlsson and NybergAndersson and Dr. Ziebart. Dr. Kunerth served on the Audit Committee until his retirement on December 18, 2012, at which time Mr. Andersson replaced him. The Audit Committee met sevennine times in 2011.2012.
The Compensation Committee advises the Board with respect to the compensation to be paid to the directors and executive officers of the Company and is responsible for both advising the Board with respect to the terms of contracts to be entered into with the senior executives of the Company and approving such contracts. The committee also administers the Company’s cash and stock incentive plans and reviews and discusses with management the Company’s Compensation Discussion and Analysis (“CD&A”) included herein. Since May 2011, membersMembers of this committee are Messrs. Ringler (Chairman), and Lorch and Nyberg. Prior to May 2011, members of this committee were Messrs. Ringler (Chairman), Lorch,Dr. Liu. Mr. Nyberg andserved on the Audit Committee until December 18, 2012, at which time he was replaced by Dr. Ziebart.Liu. The Compensation Committee met five times in 2011.2012.
The Nominating and Corporate Governance Committee identifies and recommends individuals qualified to serve as members of the Board and assists the Board by reviewing the composition of the Board and its committees, monitoring a process to assess Board effectiveness, and developing and implementing the Company’s Corporate Governance Guidelines. The Nominating and Corporate Governance Committee will consider stockholder nominees for election to the Board if timely advance written notice of such nominees is received by the Secretary of the Company at its principal executive offices in accordance with the Company’s By-Laws, a copy of which may be obtained by written request to the Company’s Secretary or on the Company’s website at www.autoliv.com – InvestorsAbout Us – Governance – Articles of Association. Since May 2011, membersCertificate and Bylaws. Members of this committee are Dr. Ziebart (Chairman) and Messrs. Lorch and Sakamoto. Prior to May 2011, members of this committee were Messrs. S. Jay Stewart (Chairman), Alspaugh and Sakamoto and Dr. Kunerth. The Nominating and Corporate Governance Committee met fivefour times in 2011.2012.
The Compliance Committee was formed as a special committee of the Board in June 2011 to assist the Board in overseeing the Company’s compliance program with respect to: (i) compliance with the laws and regulations applicable to the Company’s business and (ii) compliance with Company’s Standards of Business Conduct and Ethics and related policies by employees, officers, directors and other agents and associates of the Company that are designed to support lawful and ethical business conduct by the Company and its employees and promote a culture of compliance. The Compliance Committee also oversees the investigation of any alleged noncompliance with law or the Company’s compliance programs policies or procedures that areis reported to the Compliance Committee (except those relating to financial compliance, which are overseen by the Audit Committee). Members of this committee are Dr. Ziebart (Chairman) and Messrs. Alspaugh and Sakamoto. The Compliance Committee works closely with the other committees of the Board, and has two members that also serve on the Audit Committee, and two members that also serve on the Nominating and Corporate Governance Committee. The Compliance Committee met ten times in 2011.2012.
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The following table shows the composition of the Board’s Committees before and after the May 2011 annual meeting:
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The Audit Committee of the Board is responsible for providing independent, objective oversight of the Company’s accounting functions and internal controls.
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The Audit Committee acts pursuant to a written charter first adopted and approved by the Board in 2000 and subsequently amended, with the most recentlyrecent amendment being adopted in February 2008.December 2012. The committee’s current charter is posted on the Company’s website, www.autoliv.com — Who We Are —– About Us – Governance – Board of Directors – Committees, and can also be obtained free of charge in print by request from the Company using the contact information below. Each member of the Audit Committee is “independent” as defined in, and is qualified to serve on the committee pursuant to, the rules of the NYSE, the Sarbanes-Oxley Act of 2002, as amended, and the rules and regulations as promulgated by the SEC. Each member is financially literate and possesses accounting or related financial management expertise, and Mr. Alspaugh has been determined by the Board to qualify as an “audit committee financial expert” as defined by the SEC.
The Audit Committee reviews the Company’s financial reporting process on behalf of the Board. In fulfilling its responsibilities, the Audit Committee has reviewed and discussed the audited financial statements contained in the 20112012 Annual Report on Form 10-K with the
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Company’s management and independent auditors. Management is responsible for the financial statements and the reporting process, including the system of internal controls. The independent auditors 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 auditors matters required to be discussed by Statement on Auditing Standards No. 61, “Communication with Audit Committees,” as amended, as adopted by the Public Company Accounting Oversight Board in Rule 3200T. In addition, the Company’s independent auditors provided to the Audit Committee the written disclosures required by the Public Company Accounting Oversight Board’s applicable requirements regarding the independent auditors’ communications with the Audit Committee concerning independence. The Audit Committee has discussed with the independent auditors the independent auditors’ independence. The Audit Committee reviews and oversees the independence of the independent auditors and has concluded that the independent auditors’ provision of non-audit services to the Company is compatible with the independent auditors’ independence. In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board (and the Board approved) that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2011,2012, for filing with the SEC.
The Audit Committee can be contacted regarding accounting, internal accounting controls, or auditing matters as follows:
The Audit Committee
c/o Vice President Legal Affairs
Autoliv, Inc., Box 70381
SE-107 24 Stockholm, Sweden
Phone: +46 8 587 20 600
Fax: +46 8 587 20 633
E-mail: legalaffairs@autoliv.com
Communications with the committee are not screened and can be made anonymously. The Chairman of the committee will receive all such communications after it has been determined that the contents represent a message to the committee.
Robert W. Alspaugh, Chairman
Dr. Walter KunerthBo I. Andersson
Dr. Wolfgang Ziebart
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Nominating and Corporate Governance Committee Report
The Nominating and Corporate Governance Committee of the Board is responsible for identifying and recommending to the Board individuals that are qualified to serve as directors of the Company and on committees of the Board. The Nominating and Corporate Governance Committee further advises the Board on composition and procedures of committees, and it is
16
responsible for the development of the Company’s Corporate Governance Guidelines and the oversight of the evaluation of the Board, its committees and members of the Company’s management.
The Nominating and Corporate Governance Committee acts pursuant to a written charter first adopted and approved by the Board in 2002 and subsequently amended, with the most recent amendment being adopted in December 2003.2011. A copy of the Charter is available on the Company’s website at www.autoliv.com — Who We Are —– About Us – Governance – Board of Directors – Committees and can also be obtained free of charge in print by request from the Company using the contact information below. Each of the members of the committee is “independent” as defined in, and is qualified to serve on the committee pursuant to, the applicable rules of the NYSE, the Sarbanes-Oxley Act of 2002, as amended, and the rules and regulations promulgated by the SEC.
The committee has also considered and recommended that Mr. George A. Lorch,Robert W. Alspaugh, Mr. Kazuhiko Sakamoto,Bo I. Andersson and Dr. Wolfgang Ziebart and Dr. Xiaozhi Liu be nominated for re-election by the stockholders at the Annual Meeting. Each director nominated for re-election is “independent” as defined in the applicable rules of the NYSE, the Sarbanes-Oxley Act of 2002, as amended, and rules and regulations promulgated by the SEC.
The Nominating and Corporate Governance Committee will consider a director candidate nominated by a stockholder provided that such nomination is submitted to the committee within the period set forth in Article II, Section 6 of the By-Laws of the Company. In considering candidates submitted by stockholders, the Nominating and Corporate Governance Committee will take into consideration the needs of the Board and the qualifications of the candidate. Qualifications of director candidates that are considered by the Nominating and Corporate Governance Committee include an attained position of leadership in the candidate’s area of expertise, business and financial experience relevant to the Company, possession of demonstrated sound business judgment, expertise relevant to the Company’s lines of business, independence from management, the ability to serve on standing committees and the ability to serve the interests of all stockholders. The Nominating and Governance Committee routinely considers board candidates with a broad range of educational and professional experience from a variety of countries. While the Board has no separate formal policy, the Company’s By-laws and Corporate Governance Guidelines provide that the backgrounds and experiences of the director nominees shall reflect the global operations of the Company. The current Board consists of directors who are citizens of or reside in multiple countries including the United States, Sweden, Japan, China and Germany and directors with a wide range of management, operating, finance and engineering skills. The Nominating and Corporate Governance Committee, the Board and the Company place a high priority on diversity, placing a particular emphasis on individuals with a wide variety of management, operating, engineering and finance experience and skills as well as individuals from the Company’s different operating regions. The Nominating and Corporate Governance Committee continues to look for opportunities to progress its diversity initiatives further.
The Nominating and Corporate Governance Committee identifies potential director nominees by asking current directors and executive officers to notify the committee if they become aware of persons meeting the criteria described above. The Nominating and Corporate
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Governance Committee also, from time to time, engages firms that specialize in identifying director candidates. As described above, the Nominating and Corporate Governance Committee will also consider candidates recommended by stockholders. Once a person has been identified by the Nominating and Corporate
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Governance Committee as a potential candidate, the committee collects and reviews publicly available information regarding the person to determine whether further consideration should be given to the person’s candidacy. If the Nominating and Corporate Governance Committee determines that the candidate warrants further consideration, the Chairman or another member of the committee will contact such person. Generally, if the person expresses a willingness to be considered and serve on the Board, the Nominating and Corporate Governance Committee requests information from the candidate, reviews the person’s accomplishments and qualifications, including in light of the qualifications of any other candidates the committee might be considering, and conducts one or more interviews with the candidate. In certain instances, committee members may contact one or more references provided by the candidate or may contact other members of the business community or other persons that may have first-hand knowledge of the candidate’s accomplishments. The Nominating and Corporate Governance Committee’s evaluation process does not vary based on whether a candidate is recommended by a stockholder.
The Nominating and Corporate Governance Committee can be contacted as follows:
The Nominating and Corporate Governance Committee
c/o Vice President Legal Affairs
Autoliv, Inc., Box 70381
SE-107 24 Stockholm, Sweden
Phone: +46 8 587 20 600
Fax: +46 8 587 20 633
E-mail: legalaffairs@autoliv.com
Communications with the committee are not screened and can be made anonymously. The Chairman of the committee receives all such communication after it has been determined that the content represents a message to the committee.
Dr. Wolfgang Ziebart, Chairman
George Lorch
Kazuhiko Sakamoto
Compensation Committee Duties, Procedures and Policies
The Compensation Committee acts pursuant to a written charter first adopted and approved by the Board in 2002, and subsequently amended, andwith the most recent amendment being adopted in December 2006.2012. The charter is posted on the Company’s website at www.autoliv.com — Who We Are —– About Us – Governance – Board of Directors – Committees, and can also be obtained free of charge in print by request from the Company using the contact information below. Each member of the Compensation Committee has been determined by the Board to be “independent” as defined in, and is qualified to serve on the committee pursuant to, the rules of the NYSE, the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated by the SEC.
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The Compensation Committee is responsible for an annual reviewfor: reviewing annually of the Company’s executive compensation plans in light of the Company’s goals and objectives of such plans; to evaluateevaluating annually the performance of the Chief Executive Officer in light of the goals and objectives of the Company’s executive compensation plans and together with the other independent directors, determine and approve the Chief Executive Officer’s compensation level based on this evaluation; to evaluateevaluating annually the performance of the other executive officers of the Company in light of the goals and objectives of the Company’s executive compensation plans, and set the compensation of such other executive officers based on this evaluation; to evaluateevaluating annually the appropriate level of compensation for Board and committee service by non-employee directors; to reviewreviewing and approve approving
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any severance or termination arrangements to be made with any executive officer of the Company; to reviewreviewing perquisites or other personal benefits to the Company’s executive officers and directors and recommendrecommending any changes to the Board; to reviewreviewing and discussdiscussing with management the CD&A, includedbeginning on page 3023 of this Proxy Statement, and based on that review and discussion, to recommendrecommending to the Board that the CD&A be included in the Company’s annual proxy statement or annual report on Form 10-K; to preparepreparing the Compensation Committee Report for inclusion in the annual proxy statement or annual report on Form 10-K; and to reviewreviewing the description of the Compensation Committee’s process and procedures for the consideration and determination of executive officer and director compensation to be included in the Company’s annual proxy statement.
The Compensation Committee from time to time uses independent compensation consultants to provide advice and ongoing recommendations regarding executive compensation. In 2012, the Company retained Towers Watson as a compensation consultant. The Compensation Committee also retained an independent advisor, Mr. Gerrit Aronson, who reported directly to the Compensation Committee. For additional information regarding the role of each of these compensation consultants and the scope of their engagement with the Compensation Committee, see page 33 of this Proxy Statement. In addition to providing advice on the amount and form of executive compensation, Towers Watson conducted an employee engagement/quality assurance survey for the Company. The Company paid Towers Watson a total of approximately $350,000 in fiscal 2012 for services provided. Of this amount, approximately $75,000 was paid as a result of the executive compensation consulting work and approximately $275,000 was paid in connection with the aforementioned survey. The decision to use Towers Watson for the employee engagement/quality assurance survey was made by the Vice President of Quality and Manufacturing and the Vice President of Human Resources and was not presented for the approval of the Compensation Committee or full Board. Mr. Aronson did not provide any services in 2012 beyond the scope of his engagement with the Compensation Committee. The Compensation Committee considered the independence of Towers Watson and Mr. Aronson in light of new SEC rules and proposed NYSE listing standards. The Compensation Committee received a letter from each of Towers Watson and Mr. Aronson addressing their independence, including the following factors: (i) other services provided to the Company by each of Towers Watson and Mr. Aronson; (ii) fees paid by the Company as a percentage of Towers Watson’s and Mr. Aronson’s total revenue; (iii) policies or procedures maintained by Towers Watson and Mr. Aronson that are designed to prevent a conflict of interest; (iv) any business or personal relationships between the individual consultants involved in the engagement and any member of the Compensation Committee; (v) any Company stock owned by the individual consultants involved in the engagement; and (vi) any business or personal relationships between the Company’s executive officers and Mr. Aronson or Towers Watson or the individual consultants involved in the engagement. The Compensation Committee discussed these considerations and concluded that the work of Towers Watson and Mr. Aronson did not raise any conflict of interest.
The Compensation Committee may form subcommittees for any purpose it deems appropriate and may delegate to any subcommittee such power and authority as it deems appropriate provided that no subcommittee shall consist of fewer than two members and that the Compensation Committee shall not delegate any power or authority required by any law, regulation or listing standard to be exercised by the Compensation Committee as a whole. Under the 1997 Plan, the Compensation Committee may, to the extent that any such action will not prevent the 1997 Plan from complying with rules and regulations, delegate any of its authority thereunder to such persons as it deems appropriate.
The Vice President for Human Resources of the Company generally acts as Secretary of the Compensation Committee.
For information regarding the role of compensation consultants, see page 45 of this Proxy Statement.
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The Compensation Committee can be contacted as follows:
The Compensation Committee
c/o Vice President Legal Affairs
Autoliv, Inc., Box 70381
SE-107 24 Stockholm, Sweden
Phone: +46 8 587 20 600
Fax: +46 8 587 20 633
E-mail: legalaffairs@autoliv.com
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Communications with the committee are not screened and can be made anonymously. The Chairman of the committee receives all such communications after it has been determined that the content represents a message to the committee.
Compensation Committee Interlocks and Insider Participation
The Compensation Committee is comprised exclusively of directors who have never been employed by the Company and who are “independent” as defined in the applicable rules of the NYSE, the Sarbanes-Oxley Act of 2002, as amended, and the rules and regulations promulgated by the SEC. No executive officer of the Company served as a member of the Compensation Committee of another entity, one of whose executive officers served on the Company’s Compensation Committee. No executive officer of the Company served as a director of another entity, one of whose executive officers either served on the Compensation Committee of such entity or served as a director of the Company.
Compensation Committee Report1
The Compensation Committee has reviewed and discussed with management the Company’s Compensation Discussion and Analysis, and based on such review and discussions, has recommended to the Board that the Compensation Discussion and Analysis be included in the Company’s 20122013 Annual Meeting Proxy Statement and incorporated by reference into the Company’s amended 20112012 Annual Report on Form 10-K.
James M. Ringler, Chairman
Xiaozhi Liu
George A. Lorch
Lars Nyberg
The Swedish Corporate Governance Code
Swedish companies with shares admitted to trading on a regulated market in Sweden, including the NASDAQ OMX Stockholm Exchange (the “OMX”), are subject to the Swedish Corporate Governance Code (the “Code”). This is a codification of “best practices” for Swedish listed companies based on Swedish practices and circumstances. The Code follows a “comply or disclose” approach; its recommendations are not binding on companies but if its recommendations are not complied with, the deviation must be explained. A non-Swedish company listed in Sweden can either elect to apply the Code or instead apply the Codecorresponding local rules and codes where the company’s shares have their primary listing or where the company is headquartered. If a company elects not to apply the Code, the company must issue an annual statement that it has chosen to comply with a different regulatory regime. As a Delaware company with its primary listing on the NYSE, the Company has elected to apply U.S. corporate governance rules and
20 standards. These U.S. rules and standards are described in the “Corporate Governance” section beginning on page 7 of the Company’s 2012 Annual Report. In addition, this Proxy Statement provides detailed information on various subjects covered by the Code.
1 | The material in this report is not soliciting material, is not deemed filed with the SEC and is not incorporated by reference in any filing of the Company under the Securities Act of 1933, as amended, whether made on, before, or after the date of this Proxy Statement and irrespective of any general incorporation language in such filing. |
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standards. These U.S. rules and standards are described in the “Corporate Governance” section beginning on page 9 of the Company’s 2011 Annual Report. In addition, this proxy statement provides detailed information on various subjects covered by the Code.
This Proxy Statement contains statements that are not historical facts but rather forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements areinclude those that address activities, events or developments that the CompanyAutoliv or its management believes or anticipates may occur in the future, includingfuture. For example, forward-looking statements include, without limitation, statements relating to industry trends, business opportunities, sales contracts, sales backlog, and on-going commercial arrangements and discussions, as well as any statements about future operating performance or financial results.
In some cases, you can identify these statements by forward-looking words such as “estimates,” “expects,” “anticipates,” “projects,” “plans,” “intends,” “believes,” “may,” “might,” “will,” “should,” or the negative of these terms and other comparable terminology, although not all forward-looking statements are so identified.contain such words.
All such forward-looking statements, including without limitation, management’s examination of historical operating trends and data, are based upon our current expectations, various assumptions and data available from third parties and apply only as of the date of this report.parties. Our expectations and assumptions are expressed in good faith and we believe there is a reasonable basis for them. However, there can be no assurance that such forward-looking statements will materialize or prove to be correct as these assumptionsforward-looking statements are inherently subject to known and unknown risks, and uncertainties and contingenciesother factors which are difficultmay cause actual future results, performance or impossibleachievements to predict and are beyond our control.differ materially from the future results, performance or achievements expressed in or implied by such forward-looking statements.
Because these forward-looking statements involve risks and uncertainties, the outcome could differ materially from those set out in the forward-looking statements for a variety of reasons, including without limitation, changes in and the successful execution of our capacity alignment, restructuring and cost reduction initiatives discussed herein and the market reaction thereto,thereto; changes in general industry and market conditions or regional growth or declines; loss of business from increased competition,competition; higher raw material, fuel and energy costs,costs; changes in consumer and customer preferences for end products,products; customer losses,losses; changes in regulatory conditions; customer bankruptcies,bankruptcies; consolidations or restructuring,restructuring; divestiture of customer brands, fluctuation ofbrands; unfavorable fluctuations in currencies or interest rates and foreign currencies,among the various jurisdictions in which we operate; fluctuation in vehicle production schedules for which the Company is a supplier,supplier; component shortages,shortages; market acceptance of our new products,products; costs or difficulties related to the global operation and integration of any new or acquired businesses and technologies,technologies; continued uncertainty in program awards and performance,performance; the financial results of companies in which Autoliv has made technology investments or joint venture arrangements,joint-venture arrangements; pricing negotiations with customers,customers; our ability to be awarded new business, increased costs, supply issues,business; product liability, warranty and recall claims and other litigation and customer reactions thereto,thereto; higher expenses for our pension and other postretirement benefits including higher funding requirements of our pension plans; work stoppages or other labor issues at our facilities or at the facilities of our customers or suppliers; possible adverse results of pending or future litigation or infringement claims,claims; negative impacts of antitrust investigations or other governmental investigations and associated litigation relating to the conduct of our business,business; tax assessments by governmental authorities dependence on key personnel; legislative or regulatory changes limiting our business; political conditions, key personnel,conditions; dependence on customers and suppliers, as well as thesuppliers; and other risks and uncertainties identified in Item 1A “Risk Factors” and Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Form 10-K for the fiscal year ended December 31, 2011.
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Except for the Company’s ongoing obligation to disclose information under the U.S. federal securities laws, the2012. The Company undertakes no obligation to update publicly or revise any forward-looking statements whether as a resultin light of new information or future events.
For any forward-looking statements contained in this or any other document, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and we assume no obligation to update any such statement.
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EXECUTIVE OFFICERS OF THE COMPANY
Set forth below is information regarding the current executive officers of the Company who are not also directors (information about Mr. Jan Carlson, Director, President and Chief Executive Officer, can be found on page 8)5):
Mats Adamson, age 52,53, Vice President Human Resources, appointed on June 1, 2010. Prior to assuming his current position, Mr. Adamson was Senior Vice President Group Human Resources at Swedish Match, a producer of smoke-free tobacco products, cigars and light products listed on the Stockholm Stock Exchange. He had held this position since 2007. From 1994 to 1997, Mr. Adamson was Human Resource Manager for Swedish Match’s Estonian subsidiary. In 1997, he was promoted Human Resource Director for the Swedish Match North European Sales Region and in 1999 to Vice President Human Resources for the Swedish Match North Europe Division. Prior to joining Swedish Match, he held various human resource positions between 1990 and 1994 at Nordbanken, the predecessor of Nordea, the largest bank in the Nordic region. When Mats Adamson started at Nordbanken he came from a successful career in the Swedish military.
Henrik Arrland, age 44,45, Vice President Purchasing, appointed September 1, 2011. Prior to assuming his current position, Mr. Arrland was Director for Production of Axles worldwide at Scania, the heavy truck maker. He held this position since 2009. From 1990 through 1995 he was Sourcing Manager in Global Purchasing at Scania. He joined Autoliv in 1995 and until 1997 he held the position of Manager for Purchasing Coordination position.Coordination. From 1997 through 1998 he was Purchasing Manager at ITT Flygt, the global submersible pump supplier within ITT Group, after which he returned to Scania as Purchasing Manager for Cabs in Global Purchasing. In 2001, he was promoted to Purchasing Director in Trucks & Buses for Scania Latin America locatedAmericalocated in São Paulo, Brasil and in 2005 to Purchasing Director Powertrain in Scania Global Purchasing. Mr. Arrland has a Polytechnic College Exam and holds a Bachelor’s Degree in Business and Administration from Stockholm University.
Günter Brenner, age 48,49, President of Autoliv Europe Region, started with Autoliv in that position in January 2009. Before joining Autoliv, Mr. Brenner pursued a successful career within TRW, a competitor of the Company, starting in 1990 as a Manufacturing Engineer for seatbelts and airbags in Alfdorf, Germany. In 1997, he was promoted Head of Engineering of European Seatbelt Manufacturing and, in 1998, General Manager for TRW’s Seatbelt plant in Bergheim, Austria. In 2002, he was promoted to Vice President Operations and Lead
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Executive with responsibility for TRW’s pan-European Occupant Safety Business. Before leaving TRW, he was Vice President & General Manager, Global Occupant Safety Systems of TRW. Mr. Brenner holds a Bachelor’s Degree in Industrial Engineering. On January 29, 2013, Mr. Brenner notified the Company that he was resigning from his position as President Autoliv Europe, which, at the time of filing this Proxy Statement, the Company anticipates will be effective in the spring of 2013.
Gunnar DahlénChang Ket Leong (“George Chang”), age 65,48, President of Autoliv Asia, Region, was appointed April 1, 2012. Mr. Chang has worked for Autoliv since 1997 when he started his career as Regional Purchasing Manager for Autoliv Asia Pacific. Prior to assuming his current position, in 2008. Hehe was previously appointed President of Autoliv Asia Pacific Region in 1996. He joined Autoliv in 1989 as Managing Director of Autoliv Australia/New Zealand & South East Asia. Prior to joining Autoliv Mr. Dahlén held positions with Nobel Plast — Sweden from 1985 to 1989 as General Manager; Volvo Car — Sweden Engine Plant from 1978 to 1985 as Manufacturing Manager; PRV — France from 1975 to 1978 as Technical Manager; Volvo Car — Sweden Engine Plant from 1971 to 1975 as Production Engineering Manager. Mr. Dahlén is a graduate of Chalmers University of Technology with a Master of Science degree in Mechanical Engineering. On December 6, 2011, it was announced that Mr. Dahlén will retire as President of Autoliv Asia Region, effective April 1, 2012, and will retire from the Company on June 30, 2012. George Chang, currently President of Autoliv China, will succeed as President Autoliv Asia uponan operation that, under his leadership, grew its sales from $10 million in 2000 to more than $1.1 billion in 2011. Mr. Dahlén’s retirement.Chang holds a Bachelor Degree in Mechanical (Aeronautical) Engineering from the University of Technology in Malaysia and an MBA from the Heriot Watt University in Edinburgh, Scotland.
Steven Fredin, age 50,51, President Autoliv Americas Region, appointed March 2, 2011. Mr. Fredin has worked for Autoliv since 1988 and has been a key technical leader in virtually all of Autoliv’s product areas. Prior to assuming his current position, he was Vice President Engineering of the Company. Mr. Fredin has also served as Director Global System Development of the Company and Vice President of Seatbelt Development for Autoliv North America. Mr. Fredin holds a Bachelor of Science degree in Mechanical Engineering from Michigan Technological University.
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Thomas Jönsson, age 46, joined Autoliv on January 21, 2013 and will assume the position of Vice President of Corporate Communications on May 1, 2013. Prior to joining Autoliv, Mr. Jönsson was Vice President of Brand and External Communications for TeliaSonera, a position he held from June 2010 to December 2012. Before joiningTeliaSonera, Mr. Jönsson led an international career in communications working for Nokia, which he joined in 1999. During his 11 years with Nokia, he held various positions in Sweden, the United Kingdom, Finland, and the People’s Republic of China. Mr. Jönsson started his career in communications with Intel Corporation in 1996. He studied Business Administration from the University of Stockholm.
Johan Löfvenholm, age 42,43, Vice President Engineering, appointed November 1, 2011. Mr. Löfvenholm has worked for Autoliv since 1995 when he started his career as a trainee. Since then he has held several positions within the companyCompany such as Product Development Manager of Autoliv Sweden and Tech Center Director of Autoliv Sweden. In December 2004, Mr. Löfvenholm took on a regional responsibility when appointed Director of Technical & Marketing, Autoliv Asia Pacific. In this role he was also a member of the Asia Pacific Management Team as well as a member of the Autoliv R&D Board. In January 2008, Mr. Löfvenholm was appointed President Autoliv India and was responsible for all Autoliv operations in India and in parallel also engaged in his previous engineering role. In July 2010, Mr. Löfvenholm took on the position as Vice President Electronics Europe, with responsibility for all passive electronic operations in Europe and member of the Autoliv Europe and Electronics Management Board teams. Mr. Löfvenholm holds a Master of Science in Engineering from Chalmers University of Technology in Gothenburg, Sweden.
Svante Mogefors, age 57,58, Vice President Quality and Manufacturing, appointed to the position on April 1, 2005, after having been Director Corporate Quality of Autoliv AB since 2003. OnIn March 7, 2009, Mr. Mogefors was also appointed Vice President Manufacturing. Mr. Mogefors initially joined Autoliv in 1985 and has experience in several functions and positions within Autoliv, including the areas of product development, process implementations and quality control. Between 1990 and 1996, Mr. Mogefors was for a period
23
President of Lesjöfors Herrljunga AB and for another period President of Moelven E-Modul AB. Mr. Mogefors holds a Master of Science degree from the Chalmers University of Technology in Gothenburg, Sweden.
Mats Ödman, age 61,62, Vice President Corporate Communications, appointeduntil his expected retirement from the position on May 1, 2013. Mr. Ödman served in this position since May 1, 1997 after having beenand also served as Director of Investor Relations of Autoliv AB since 1994. Before thatPrior to joining Autoliv, Mr. Ödman was Vice President Corporate Communications in Fermenta AB and Gambro AB. Prior to that, Mr. Ödman was Investor Relations Manager in New York for Pharmacia AB.
Jan Olsson, age 57,58, Vice President Research, appointed April 1, 2005. On March 2, 2011, Mr. Olsson was also appointed acting Vice President Engineering, a temporary position he held during 2011 until Mr. Löfvenholm was appointed to the position. Mr. Olsson joined Autoliv in 1987, and was previously Vice President Engineering from 1997 to 2005, President of Autoliv Sverige AB from 1994 to 1997 and Manager of Engineering of Autoliv Sverige AB from 1989 until August 1994. Mr. Olsson holds a Master of Science degree from the Chalmers Institute of Technology in Gothenburg, Sweden.
Steve Rodé, age 51, President Business Area Active Safety and Business Development Electronics, appointed April 1, 2007 and joined Executive Management Team on March 29, 2012. Mr. Rodé joined Autoliv in 2002, as part of the acquisition of Visteon Restraint Electronics. As Vice President of Autoliv Electronics America, he was responsible for successful integration and growth of the North American electronics team. In 2007, he was given responsibility for global electronics and has been a leader in the growth of our Active Safety business. Between 1985 and 2002, he held positions in manufacturing and product development at Ford Electronics and Visteon. Mr. Rodé holds a Bachelor of Applied Science degree in Mechanical Engineering from the University of Waterloo in Canada.
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Franck Roussel, age 47 will be the interim President of Autoliv Europe Region upon the effectiveness of Mr. Günter Brenner’s departure. Mr. Roussel is currently Vice President Operations of Autoliv Asia. He joined Autoliv in 1994 and has held several leadership positions such as Plant Manager for Autoliv Turkey and Managing Director for Autoliv Steering Wheels and Inflators, both in China. He is an engineering graduate of C.E.S.T.I. (Institut Supérieur de Mécanique de Paris) where he specialized in mechanical and industrial engineering.
Lars Sjöbring, age 44,45, Vice President Legal Affairs, General Counsel and Secretary, appointed September 3, 2007. Prior to joining Autoliv, Mr. Sjöbring held various positions with Telia AB, the predecessor to TeliaSonera AB; Skadden Arps, Slate, Meagher and Flom LLP; and most recently prior to joining Autoliv, was Director Legal, M&A at Nokia Corp. Mr. Sjöbring holds Master of Law degrees from the University of Lund, Sweden; Amsterdam School of International Relations (ASIR), the Netherlands; and Fordham University School of Law, New York, City, New York. Mr. Sjöbring is admitted to practice in the State of New York.
Mats Wallin, age 47,48, Vice President and Chief Financial Officer, appointed July 9, 2009 after having been Corporate Controller of Autoliv, Inc. since 2002. Mr. Wallin was also acting CFO of the Company for four months during 2008. Mr. Wallin joined Autoliv in 2002, and oversaw the initial implementation of compliance procedures relating to the Sarbanes-Oxley Act (SOX). Between 1985 and 2002 Mr. Wallin held various positions in ABB, a global leader in power and automation technologies. He holds a Bachelor of Science in Business Administration and Economics from the Uppsala University, Sweden.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial ownership of our common stock as of December 31, 20112012 for each person known by us to beneficially own more than 5% of our common stock, except where otherwise noted, and as of February 22, 20122013 by: (i) each director and nominee; (ii) our named executive officers (as defined on page 3023 below); and (iii) all of our directors, named executive officers and executive officers as a group.
Common Stock Beneficially Owned(1)(2) | ||||||||||||||||
Common Stock Beneficially Owned(1)(2) | ||||||||||||||||
Name of Beneficial Owner | Number of Shares | Percent of Total | Number of | Percent of Total | ||||||||||||
5% Stockholders | ||||||||||||||||
Alecta pensionsförsäkring, ömsesidigt(3) | ||||||||||||||||
Regeringsgatan 107, SE-103 73 | ||||||||||||||||
Stockholm, Sweden | 8,350,000 | 9.4 | % | 9,139,000 | 9.6 | % | ||||||||||
FMR LLC(4) | ||||||||||||||||
82 Devonshire Street | ||||||||||||||||
Boston, MA 02109 | 6,070,415 | 6.8 | % | |||||||||||||
AMF Pensionsförssäkring AB (4) | ||||||||||||||||
Klara Södra Kyrkogata 18, SE-113 88 | ||||||||||||||||
Stockholm, Sweden | 6,771,695 | 7.1 | % | |||||||||||||
Directors and Named Executive Officers | ||||||||||||||||
Robert W. Alspaugh | 3,100 | * | 3,919 | * | ||||||||||||
Günter Brenner | 23,008 | * | ||||||||||||||
Bo I. Andersson | 751 | * | ||||||||||||||
Günter Brenner(5) | 8,955 | * | ||||||||||||||
Jan Carlson | 201,131 | * | 144,381 | * | ||||||||||||
Gunnar Dahlén | 30,508 | * | ||||||||||||||
George Chang | 11,254 | * | ||||||||||||||
Steve Fredin | 19,830 | * | 21,039 | * | ||||||||||||
Walter Kunerth | 0 | * | ||||||||||||||
Xiaozhi Liu | 819 | * | ||||||||||||||
George A. Lorch | 303 | * | 1,122 | * | ||||||||||||
Xiaozhi Liu | 0 | * | ||||||||||||||
Lars Nyberg | 3,000 | * | 6,638 | * | ||||||||||||
James M. Ringler | 964 | * | 1,783 | * | ||||||||||||
Kazuhiko Sakamoto | 0 | * | 819 | * | ||||||||||||
Mats Wallin | 24,867 | * | 32,667 | * | ||||||||||||
Wolfgang Ziebart | 0 | * | 819 | * | ||||||||||||
All directors, named executive officers and executive officers as a group (21 individuals)(5) | 531,344 | * | ||||||||||||||
All directors, named executive officers and executive officers as a group (21 individuals)(6) | 474,413 | * |
* Less than 1%
(1) | Based on |
(2) | Includes shares which the following individuals have the right to acquire upon exercise of options exercisable within 60 days and restricted stock units vested as of February 22, |
(3) | The amounts shown and the following information were provided by Alecta pensionsförsäkring, ömsesidigt pursuant to Amendment No. |
25
(4) | The amounts shown and the following information were provided by |
(5) | On January 29, 2013, Mr. Brenner notified the Company that he was resigning from his position as President Autoliv Europe, which the Company anticipates will be effective in the late spring of 2013. |
(6) | Includes |
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RESPONSES TO STOCKHOLDER COMMENTS
We are committed to regularly corresponding with and listening to our stockholders. We also answer and, where appropriate, address stockholder concerns, including those raised by proxy advisors such as Glass-Lewis and ISS, where doing so will be in the best interest of the Company and its stockholders.ISS. In response to current themes in corporate governance, comments received in recent years, and as a reflection of the Company’s commitment to the highest standards of corporate governance, the Company notes the following:
Independent Chairman of the Board
Our Chairman of the Board of Directors, Lars Nyberg, is an independent director under rules of the NYSE and SEC, as well as the director independence standards adopted by the Company. Although our previous Chairman, Mr. Lars Westerberg, was deemed independent under SEC and NYSE regulations as of April 2010,2010. However, because he was a former executive of the Company, he did not qualify as independent under the unofficial standards applied by some proxy advisory firms. Our newcurrent Chairman, Mr.Lars Nyberg, should qualify asis an independent director under rules of the NYSE and SEC and, we believe, under the unofficialrelevant standards applied by somemajor proxy advisory firms.
Stock Ownership Guidelines for Directors and the CEOExecutives
In February 2012 the Board adopted stock ownership guidelines (a) for non-employee directors contingent on stockholders approving the amendment to the 1997 Plan, as provided in Item 3 beginning on page 69 of this proxy statement. More details on these stock ownership requirements are provided on page 59 of this proxy statement. If the stockholders approve such amendment, our non-employee directors, beginning in 2012, will be paid a portion of their annual retainer in the form of Company common stock.
The Board has also evaluated stock ownership guidelines for our executive officers. The Board concluded that Autoliv’s unique combination of (a) relatively modest equity grants to our executive officers (as a percentage of overall compensation) compared to our U.S. peers(effective January 1, 2012) and (b) high Swedish income taxes, weighs against implementing U.S.-style stock ownership requirements (typically requiring executives to accumulate and hold 1-3 years of base pay in equity). Because of the modest equity awards and high Swedish taxes, the Board believes that imposing stock ownership guidelines for our executive officers would necessitate other changes(effective January 1, 2013).
Classification of the Board
We intend to our executive compensation program. The Board currently believes such changes would offsetpresent a proposal to the benefitsstockholders at the 2014 annual meeting to amend the Company’s Restated Certificate of such stock ownership guidelines. However,Incorporation to provide for the Board believes that the equity awards it currently grants to executives properly motivates them to focus on long-term stockholder value.annual election of all directors. See page 7.
Local Market and Modified Single Trigger Change-in-Control Provisions
In connectionWe have traditionally provided our executives with contractual change-in-control transactions,and severance benefits. While we do not intend to modify our existing agreements, over the past several years Autoliv has included updated provisions in its severance agreements typicallyfor newly hired executives that provide one of three types of payments or benefits: single-trigger,benefits more in line with the local market practices where each executive resides. This has generally resulted in less-generous change-in-control provisions for executives. In 2011, the Company adopted a policy that any future severance agreements for newly hired executives will include double-trigger or modified single trigger. A single-trigger payment or benefit is one that is paid orbenefits (which are provided to the individual upon the occurrence of a change in control, regardless of whether he or she incurs a termination of employment. A double-trigger payment or benefit is one that is paid or provided
27
to the individual only if there is both the occurrence of a change in control and the involuntary or constructive termination of the individual within a designated protection period. Finally, aperiod), rather than modified single trigger payment or benefit is one that issingle-trigger arrangements (which are paid or provided to an individual if he or shethe individual voluntarily terminates employment during a specified period following a change in control.
Certaincontrol). Several of our executives, including two of our named executive officers, Steve Fredin and George Chang, currently have severance agreements that provide modified single trigger payments and benefits in the event of a change in control. While we do not intend to amend existing agreements, which were offered to executives when they accepted positions with double-trigger arrangements. In 2012, the Company in 2011 the Compensation Committee adopted a policydetermined that, going forward, anyfor newly-hired executives, change-in-control severance agreementprotection will only be offered to any newly hired executive (including promotions of existing employees) must include double-triggers payments and benefits, rather than modified single-trigger arrangements.if consistent with local market practice.
Recycling of Shares under our Stock Incentive Plan
Prior to December 31, 2010, the Company’s equity incentive plan permitted share “recycling” in connection with net-exercises of stock options. This meant that any shares returned to the Company to satisfy the exercise price of a stock option would have been recycled into the plan and become available for future grants. In fact, the Company never implemented this feature of the plan. Effective December 31, 2010, the Company amended the plan to remove such share recycling feature.
Classified Board and Discretionary Preferred Stock
The Company has a classified board structure whereby approximately one-third of the Board is elected for a three-year term on a rolling basis every three years. The Board is also authorized to issue up to 25,000,000 shares of preferred stock and has authority to determine voting rights, dividends, and conversion privileges for such preferred stock without separate shareholder approval (sometimes referred to as “discretionary preferred stock”).stockholder approval. While some investors and shareholder advisory firms object to such governance structures,criticize the availability of this mechanism, the Board believes that our current classified board structure and discretionarythis “discretionary preferred stock authorization provide adequate toolsstock” is an important tool for the Board to ensure the bestmaximize stockholder value possible for our stockholders in situations whereif one stockholder or group is seekingseeks to exercise influence over the Company’s corporate policies to the possible detriment of other stockholders.
Long-Term Incentives in 2012
Compared to our U.S. peers, our management has a lower percentage of its total compensation composed of “at-risk” pay, which has been questioned by some as not providing a strong enough incentive for long-term growth. This was exaggerated by the flat LTI values over the past five years, while other compensation components increased. In order to address this lack of a proportional increase in LTI value, and to increase the overall “at-risk” pay, the Compensation Committee has increased the 2013 LTI values by approximately 25%.
Performance-Based LTI Programs
The Company believes its LTI programs for executives are useful for aligning their interests directly with stockholders and focuses on long-term stockholder value. The Board also believes the relatively modest equity awards, including the approximately 25% increase in 2013 described above, provide an appropriate level of equity without incentivizing inappropriate risk-taking that the fiduciary obligations of our directors provide a strong deterrent to the abuse of such tools, and that the risk of abuse is outweighed by the protections these tools provide.may result from more highly leveraged performance-based equity awards.
Relation between Long- and Short- Term Incentives in 2010
Our annual non-equity incentive plan (STI) and long-term equity incentive plan (LTI) are described on pages 38-41 below. In 2010, the aggregate STI value awarded to our NEOs was approximately $2.5 million, while the aggregate LTI value was approximately $1.58 million. One proxy advisor expressed concern that this allocation could result in an excessive focus on short-term performance to the detriment of long-term performance. While the exact relationship between LTI and STI remains subject to much discussion, the Company generally
28
agrees that long-term company performance and stockholder value is important. However, as our LTI and STI programs are based on factors that are uncorrelated, the ratio of STI to LTI in each individual year is not necessarily representative of how the Company uses the programs. As is described further below, an analysis made over several years demonstrates that the ratio between LTI and STI in 2010 was not representative of the historical allocation. For example, because of the Company’s strong financial performance in 2010, STI awards were higher than in most years. Notably, no STI was paid to the NEOs in either 2008 or in 2009 while LTI awards were granted. Thus, the Board does not believe our program encourages an undue focus on short-term performance.
Discretion to Adjust Awards
As is described on page 39 below, theThe Compensation Committee has the discretion to adjust STI awards for extraordinary events. No such adjustments have been made since 2007. One proxy advisor suggested that this discretion should be eliminated at least pertaining to upward adjustments.or limited. The Board believes that such discretion providesis a useful tool by which the Compensation Committee can address the impact of extraordinary events. The fact that noNo such adjustments werehave been made since 2007, including during the recent extraordinary financial crisis in 2008-2009 (at which the automotive industry was severely impacted (notime no STIs were awarded in 2008 or 2009)awarded), which demonstrates the caution with which the Compensation Committee usesapplies this authority. The Company also believes that to eliminate discretionary authority completely only to ensure that there is absolutely no risk for abusive adjustments is unwarranted and not appropriate.
Performance-Based LTI programs
The Company believes it is important for executives to have equity in the Company to reinforce their focus on long-term stockholder value and to align their interests directly with stockholders. The Board believes the relatively modest equity awards granted to our executives provide an appropriate level of equity without incentivizing inappropriate risk-taking that that may be associated with more highly leveraged performance-based equity awards. The Company is satisfied with the balance the current system provides and no changes are planned.
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COMPENSATION DISCUSSION AND ANALYSIS
This Compensation Discussion and Analysis (CD&A) describes the material elements of compensation awarded to, earned by, or paid to each of the Company’s “named executive officers” (as explained below) during the last completed fiscal year. It furtheryear, and discusses the principles and decisions underlying our executive compensation policies and decisions and the most important factors relevant to an analysis of these decisions and policies. Finally, it provides qualitative information regarding the manner and context in which compensation is awarded to and earned by our named executive officers and places the data presented in perspective through the tables and narratives that follow.
Below, we will discuss our “named executive officers” or “NEOs”. In accordance with the relevant rules and regulations promulgated by the SEC, this refers toour “named executive officers” are Jan Carlson, our CEO, Mats Wallin, our CFO, and our three other executive officers who had the highest total compensation during 2011:2012: Günter Brenner (President Autoliv Europe)1, Gunnar DahlénGeorge Chang (President Autoliv Asia), and Steven Fredin (President Autoliv Americas).
The following provides a brief overview of our fiscal 20112012 compensation program as detailed later in this CD&A:program:
We did not make any significant changes to |
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The Compensation Committee’s objective is for our named executive officers’ total direct compensation (base salary plus target annual non-equity |
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earned |
The value of the long-term incentive awards granted to our executive officers for each of the past five years has remained unchanged, which has had the effect of reducing the percentage of total direct compensation that is “at-risk.” In |
• | Effective January 1, 2013, the Company adopted |
1 | On January 29, 2013, Mr. Brenner notified the Company that |
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accumulate and hold |
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20112012 Executive Compensation Program
The following section of this CD&A focuses on the compensation paid to the named executive officers during 2011.2012. A discussion of the Company’s compensation philosophy and program as a whole follows this section. In addition,section, and information regarding the market data referred to in this section including the companies comprising the “Swedish peer group” and the “international peer group,” may be found later in this CD&A.
2012 Total Direct Compensation
In reviewing and setting each element of compensation for 2012, the Compensation Committee reviewed 2011 total direct compensation levels against the median of the market data described later in this CD&A, with the objective of being within +/-25% of that median. Mr. Carlson’s and Mr. Wallin’s 2011 total direct compensation was within the targeted range of the market median of the Swedish peer group in the same period. Mr. Brenner’s and Mr. Fredin’s 2011 total direct compensation was below the targeted range of the market median of the German and U.S. market data (respectively) in the same period. Mr. Chang’s 2011 total direct compensation was consistent with that of our other Region Presidents — as discussed below, the Compensation Committee did not review market data for Mr. Chang for purposes of setting compensation levels for 2012, and, instead, primarily relied on internal benchmarks among other Company Region Presidents.
31Messrs. Brenner’s and Fredin’s total direct compensation were each below the targeted range primarily due to the target annual non-equity incentive award and the expected value of long term incentives being below the median of the local German or U.S. market data, respectively. The Compensation Committee determined that, despite their total direct compensation being outside the targeted range, no changes were necessary considering the planned increase in long-term incentive awards to be implemented in 2013.
20112012 Base Salaries
In determining base salary levels for 2011,2012, the Compensation Committee reviewed the relevant market data discussed later in this CD&A,(including 2011 total direct compensation levels), the Company’s exceptional financial performance in 2010,2011, the individual performance of each named executive officer (both throughout the course of their tenure with the Company and during 2010)2011), information provided by the Vice President, Human Resources, and the recommendations of the CEO with respect to the base salaries for the named executive officers other than himself. Based on such review, the Compensation Committee approved the following adjustments:
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Committee’s review as described above, the Compensation Committee approved a 10% base salary increase in 2012. Mr. Carlson’s base salary comprised approximately |
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• | Mr. Brenner’s 2011 base salary was approximately 12% higher than the median base salary reflected in the German market data in the same period. Based on such market data and the Compensation Committee’s review as described above, the Compensation Committee approved a 4% base salary increase in 2012. Mr. Brenner’s base salary comprised approximately 57% of his total direct compensation in 2012. |
• | Mr. Chang commenced his new role as President Autoliv Asia in 2012 and, in recognition of such new role and related increase in responsibility, the Compensation Committee approved a 15% base salary increase in 2012. As discussed in greater detail later in this CD&A, the Compensation Committee reviewed internal benchmarks, comparing compensation of other Region Presidents, and did not review Mr. Chang’s base salary against any market data for purposes of setting base salary for 2012. Mr. Chang’s base salary comprised approximately 55% of his total direct compensation in 2012. |
• | Mr. Fredin’s 2011 base salary was approximately 14% lower than the median base salary reflected in the U.S. market data in the same period. Based on such market data and the Compensation Committee’s review as described above, the Compensation Committee approved a 7% base salary increase in 2012, based on the base salary Mr. Fredin would have received in 2011 if he had been President of Autoliv Americas for the |
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20112012 Annual Non-Equity Incentive Award LevelsAwards and Total Target Cash Compensation
As described in greater detail below under “Key Elements of Compensation Program,” ourOur named executive officers have an opportunity to earn an annual non-equity incentive based upon the Company’s Operating Income. Target amounts are reflected as a percentage of each executive’s base salary. The Compensation Committee primarily reviewedIn addition to the market data2011 total direct compensation levels discussed below to determineabove, in determining the target annual non-equity incentive levelsopportunities for 2011. In order to
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more closely align total cash compensation with the median of the relevant market data,named executive officers other than for Mr. Chang, the Compensation Committee increased Mr. Wallin’salso considered (i) the total target cash compensation (base salary plus target annual non-equity incentive level by 5%, and Messrs. Brenner’s and Dahlén’s target annual non-equity incentive levels by 10%. Mr. Carlson did not receive an increase to his target annual non-equity incentive award. The Company’s 2011 Operating Income was approximately 102% of 2010 Operating Income; accordingly, each named executive officer received a slightly above-target level annual non-equity incentive award.
The following summarizes (i) the total cash compensationaward) of each named executive officer compared to the median of the relevant market data in 2011, and (ii) the percentage of total direct compensation comprised of the below target annual non-equity incentive compensation in 2011.2012, each of which is summarized below.
Mr. Carlson’s 2011 total target cash compensation was 3% below the median of the Swedish peer group |
Mr. Wallin’s 2011 total target cash compensation was |
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Mr. Brenner’s 2011 total target cash compensation was |
Mr. |
Mr. Fredin’s |
Based in part on its review of the relevant market data (including 2011 total direct compensation levels), and in part on the individual performance of each named executive officer, information provided by the Vice President, Human Resources, and the recommendations of the CEO with respect to the target amounts for the named executive officers other than himself, the Compensation Committee determined not to make any changes to the target annual non-equity incentive opportunities for any of the named executive officers from 2011. The target annual non-equity incentive opportunity for each of the named executive officers is set forth on page 38 of this Proxy Statement.
The Company’s 2012 Operating Income was approximately 79% of 2011 Operating Income; accordingly, each named executive officer received a below-target level annual non-equity incentive award.
20112012 Equity Incentive Awards
In 2011,Equity incentive awards in the Compensation Committee decided to award eachform of stock options and restricted stock units are an important component of our named executive officers total direct compensation. In addition to reviewing the same2011 total direct compensation levels discussed above, in determining the assumed value of equity incentive awards to grant to each of the named executive officers other than for Mr. Chang in 2012, the Compensation Committee also considered the percentage of total direct compensation comprised of the assumed value of the executive’s equity incentive awards, as they received in 2010.summarized below. The “assumed value” of the equity awarded to the named executive officers is based on the assumed value discussed on page 4131 below, under the heading “How We Value Equity Awards.Awards,” In general, the Compensation Committee determines the value of equity awards after reviewing equity incentive levels in the Swedish peer group and the international peer group for the CEO position. Because the valueamounts are set forth on page 40 of Mr. Carlson’s total direct compensation was
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above the median total direct compensation of both peer groups, the Compensation Committee did not increase Mr. Carlson’s equity incentive awards above the assumed value that was granted in 2010. The equity levels of the other NEOs reflect the same relationship to base salary as the CEO’s base salary-to-equity levels.
The assumed value of the equity awards granted to our named executive officers in 2011 as a percentage of their total direct compensation is as follows: Mr. Carlson, 26%; Mr. Wallin, 29%; Mr. Brenner, 19%; Mr. Dahlén, 25% and Mr. Fredin, 26%.
2011 Total Direct Compensation
In 2011, the Compensation Committee reviewed total direct compensation levels against the median of the market data described later in this CD&A. The following summarizes the total direct compensation of each named executive officer compared to the median of the relevant market data.Proxy Statement.
The assumed value of Mr. Carlson’s |
The assumed value of Mr. Wallin’s |
The assumed value of Mr. Brenner’s |
The assumed value of Mr. |
The assumed value of Mr. Fredin’s |
Based on its review of the relevant market data (including 2011 total direct compensation levels), in 2012, the Compensation Committee decided not to adjust the assumed value of equity incentive awards from 2011 values.
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20112012 Additional Benefits
As discussed later in the CD&A, theThe Company’s executive compensation program also includes pension and other retirement benefits (see page 42)31) and certain other items of compensation, such as a Company car. Based on the advice from Towers Watson, the Compensation Committee believes these benefits are appropriate for each of our named executive officers. However, the Compensation Committee does not include the value of these benefits in the executive’s total direct compensation, and therefore such benefits are excluded from the analysis above.
Compensation Philosophy and Overview
The Company believes that to achieve its strategic and financial objectives, it is necessary to attract, motivate and retain above-average management talent. In addition, total
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compensation offered to our executive management should ideally be based on local markets yet provide a shared responsibility for overall Company results which is aligned with the interests of the Company’s stockholders. Our compensation strategy is therefore based on principles of performance, competitiveness and fairness. In order to further these objectives, the Company sought a balanced distribution of fixed and variable incentive compensation elements over time by using several components of compensation. The Company believes that such a balanced compensation structure focuses our executive officers on long-term value stockholder value while providing fewer incentives for undue risk in the short-term.
We also consider the competitive environment where our significant operations and markets are located in order to provide a compensation package that optimizes value to the participant and cost to the Company. The Compensation Committee and management believe that it is their responsibility to use discretion and make informed judgments as to individual compensation packages or pay levels that may occasionally deviate above or below our target pay strategy based on such factors as:
Individual performance and potential relative to market. |
Long-term succession planning and talent management. |
Business conditions in our industry or the market overall as well as business or regulatory conditions in the executive’s area of responsibility. |
Cases where individuals are asked to step into new roles and responsibilities for specific projects or strategic initiatives. |
To meet our compensation philosophy, the compensation programs we provide have the following objectives:
OBJECTIVES | ||||
Objective A | Offer total compensation and benefits sufficient to attract, motivate and retain the management talent necessary to ensure the Company’s continued success | |||
Objective B | Align the interests of the executives and the stockholders | |||
Objective C | Reward performance in a given year and/or over a sustained period using straightforward programs to communicate our performance expectations | |||
Objective D | Encourage company-wide cooperation among members of the executive, regional and business unit management teams and throughout the Company |
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Key Elements of Executive Compensation Program
With these objectives in mind, our Compensation Committee has built an executive compensation program within a framework that includes three principal compensation components: base salary, annual non-equity incentives, and equity incentives pursuant to our
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long-term stock incentive program. The Company’s compensation program also includes pension benefits and additional contractual arrangements to clarify the Company’s and the executive’s obligations under separation events such as a termination of employment or change ofin control of the Company.
The following tables summarize each of these programs, including how we establish and administer the compensation, benefits and executive programs and agreements. The Company generally sets cash-based compensation (including for all of our named executive officers) in the local currency of the country of service. Accordingly, the Company set compensation in Swedish kronor (“SEK”) for Messrs. Carlson and Wallin, in Euros (“EUR”) for Mr. Brenner, and in U.S. dollars (“USD”) for Mr. Fredin.Fredin and in Chinese Yuan Renminbi (“CNY”) for Mr. Dahlén, though based in Thailand, is paid in EUR.Chang. The exchange rate trend of the U.S. dollar impacts the U.S. dollar amounts of compensation reported in this Proxy Statement. For ease of reference, we use the following exchange rates for 20112012 (1 USD = 0.750.77 EUR = 6.4 SEK)6.63 SEK = 6.23 CNY) throughout this Proxy Statement. For historic numbers, we have converted the compensation paid in prior years by the same exchange rate in order to facilitate comparison. Thus, while the historic amounts paid do not change, due to fluctuations in exchange rates, amounts reflecting historic figures in this Proxy Statement may differ significantly from disclosure in previous years.
We also note that the exchange rate prevailing at the time of the Compensation Committee’s review of compensation levels (generally this occurs in the December prior to the year in which the compensation is paid) may vary, compared to the exchange rates prevailing at the time of this Proxy Statement is filed (generally the proxy statement is prepared afterearly in the year following the year in which the compensation was paid).
Annual Compensation – Base Salary –Objective A
Purpose. Provides a set level of pay that sustained individual performance warrants. We believe a competitive base salary is paid)important to attract and retain an appropriate caliber of talent for the position.
How We Determine Base Salaries. The initial base salary pay levels are primarily a function of the Compensation Committee’s assessment of the market where the executive will be located, the compensation required to induce the executive to accept a position at the Company and the Company’s need to fill the position either internally or externally.
The base salaries of our named executive officers are reviewed every year. The Compensation Committee considers changes in base salary levels after it reviews the base salary levels of the relevant peer group or local market data (per position), as well as the level of base salary annual increases in each of the major markets from where the Company may source executive talent. The Compensation Committee seeks to meet median base salary levels of the relevant peer group or local market data over time (please see the section on “Executive Compensation Process” below). For 2012, this adjustment process applied to all named executive officers.
In addition to market data, the Compensation Committee also reviews Company’s financial performance, the named executive officers’ individual performance, input from the Vice President, Human Resources, and the recommendations of the CEO with respect to the base salaries for the named executive officers other than himself. The Compensation Committee reviews, provides feedback and approves final recommendations for our named executive officers.
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Historically, base salaries for our named executive officers and other senior executive officers have comprised roughly half of the total of the three elements of total direct compensation mentioned earlier in this CD&A. Annual Compensation – Annual Non-Equity Incentives –Objectives A, B, C & D | ||||
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37Purpose. Recognizes short-term performance against established annual financial performance goals of the Company (payable in the year following the year in which it was earned).