HomeMiddle East & AfricaCevian to vote against Ericsson CEO and board members in tomorrow's AGM

    Cevian to vote against Ericsson CEO and board members in tomorrow’s AGM


    Silence over ISIS but board can’t ignore the agitant in the room

    Boardroom agitant Cevian Capital has said it will vote against granting discharge to either Ericsson’s board members or its president Börje Ekholm at the annual general meeting (AGM) tomorrow (Tuesday 29th March), reports Reuters. Ericsson has been criticised by both the US Justice Department and its own shareholders for its furtive system of selective disclosure over an internal investigation in 2019 that probed into the company’s payment to terror groups in Iraq.

    “We still lack the information necessary to make an informed judgment of what went wrong, why and who should be held responsible,” said a statement from Cevian. “Given the lack of information and the magnitude of the damage, we have no choice but to hold the entire board accountable.”

    Under Swedish law, a Companies Act rules that any company or shareholders can bring action against board members or the CEO if a group representing at least 10 per cent of the company shares votes against ratifying acts of the CEO in the past year.

    However, activist investor Cevian cut its stake in Ericsson last year and now owns just under 5 per cent of Ericsson’s shares. If a board member or the CEO is granted discharge from liability at the AGM, the company or its shareholders may not be able claim damages related to the person’s management of the company during the financial year.

    Christer Gardell, Managing Partner at Cevian Capital, has previously complained about the way the company is run, most recently when Ericsson reported that year on year profits were up by 41 per cent. Gardell said that Ericsson’s “very strong” earnings do little to address the firm’s undervalued price and recommended that Ericsson should cut its losses in its Digital Services unit and sell its managed services business.

    Gardell also demanded that Ericsson’s board and management “justify” to the market why it spent 60 billion kronor ($6.4 billion) on Vonage in 2021, its biggest ever acquisition.

    In January the Swedish activist group reprimanded the entire telecoms industry for following the classic evolutionary path of market consolidation.