BANG & OLUFSEN A/S BANG & 0LUFSEN A/5
18 AUGUST 2015
ANNOUNCEMENT NO. 15.03
TRANSLAT/ON
Annual Generai Meeting in Bang & Olufsen a/sBang & Olufsen a/s' Annual Generai Meeting will be held on Thursday 10 Sep
tember 2015 at 2:00pm CEST at Struer Statsgymnasium, Jyllandsgade 2, DK-
7600 Struer, Denmark.
Agenda
1. The Board of Directors' report on the company's activities in the past year.
2. Presentation and adoption of the company's audited annual re port for the financial year 2014/15, including resolution concern ing discharge to the Management Board and the Board of Direc tors.
3. Resolution as to the distribution of profit or the covering of loss in accordance with the approved annual report.
3.1 The Board of Directors proposes that no dividend shall be paid.
4. Proposals from the Board of Directors.
The Board of Directors proposes the following:
4.1 That the proposed remuneration to the Board of Di rectors for the current financial year is approved. The proposed remuneration, which remains unchanged since the last financial year, is as follows:
(i) The annual base remuneration paid to the mem bers of the Board of Directors remains at DKK 275,000 for each member with respect to board members elected by the Generai Meeting or the employees, re spectively, with 3 times the base remuneration and 2 times the base remuneration paid to the Chairman
and Deputy Chairman, respectively.
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BANG & OLUFSEN Als ANNOUNCEMENTNO. 15.03
(ii) The remuneration paid to the members of the Board of Directors serving on the company's Audit Committee is DKK 50,000 for each member, with 2 times the remuneration paid to the Chairman of the Audit Committee.
(iii) The remuneration paid to the members of the Board of Directors serving on the company's Remu neration Committee or Nomination Committee is DKK 50,000 for each member.
Reference is made to page 62 of the company's an
nual report (note 2.2).
4.2 That, in the period until 30 September 2016, the Board of Directors is authorised to let the company acquire own shares up to a nominai value corre sponding to 1O per cent of the company's share capi tal, provided that the share price does not deviate by more than 10 per cent from the most recently quot ed market price for the shares on NASDAQ OMX Co penhagen A/S at the time of the purchase.
4.3 That the company's "Generai guidelines concerning incentive-based remuneration" are amended to the effect that the members of the Management Board may, at the discretion of the Board of Directors, be offered to participate in additional Matching Shares Programs.
The full text of the revised "Generai guidelines con
cerning incentive-based remuneration" is set out in
Appendix 1.
5. Election of members to the Board of Directors.
Pursuant to Article 8, section 2, of the Articles of Association, the members of the Board of Directors elected by the Generai Meet ing stand for election each year at the Annual Generai Meeting.
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BANG & OLUFSEN Als ANNOUNCEMENTNO. 15.03
The Board of Directors proposes the re-election of Ole Andersen, Jesper Jarlbéek, Jim Hagemann Snabe,Majken Schultz, Albert Bensoussan and Mads Nipper.
The composition of the Board of Directors reflects the skills and experience required to manage a public listed company. The com pany aims at composing the Board of Directors of persons who possess the professional skills and international experience re quired to serve as a board member.
With respect to the existing board members' qualifications, in cluding management positions in other businesses, reference is made to pages 34-35 of the annual report. Ali existing board members are considered as independent.
6. Appointment of auditors.
The Board of Directors proposes re-election of Ernst & Young P/S
as auditors of the company.
7. Any other business.
The agenda together with the complete proposals, as well as the annual re port, are available for the shareholders' inspection at the company's offices at Peter Bangs Vej 15, DK-7600 Struer, Denmark, from Tuesday 18 August 2015. The above documents and the notice convening the Annual Generai Meeting, information about the total number of shares and voting rights as at the date of distribution of the notice convening the Annual Generai Meeting and the forms to be used for voting by proxy and postal voting are also available at
the company's website www.bang-olufsen.com/investor. Ali proposals require a simple majority of votes.
At the date of distribution of the notice convening the Annual Generai Meet ing, the company's nominai share capitai totals DKK 431,974,780, divided into shares of a nominai value of DKK 10 each or multiples thereof. Each share of a nominai value of DKK 10 carries one vote.
The notice convening the Annual Generai Meeting will be published and dis tributed in accordance with artide 6 of the Articies of Association. The Annua l Generai Meeting will be convened by notice in the newspapers "Dagbladet
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BANG & OLUFSEN Als ANNOUNCEMENTNO. 15.03
Holstebro-Struer" and "Jyllands-Posten", on the company's website and by written notice by post to ali shareholders registered by name in the register of shareholders, who have so requested. Additionally, the notice will be pub lished via NASDAQ Copenhagen. lf you wish for the notice and/or the com plete proposals to be sent to you by post, please contact VP lnvestor Services AIS on tel. +45 43 58 88 91.
Any shareholder is entitled to attend the Annual Generai Meeting if, by presentation of relevant identification, he/she has requested an admission card no later than on Friday 4 September 2015 at 11:59 pm CEST.
The registration date is Thursday 3 September 2015. A shareholder's right to vote at the Annual Generai Meeting is determined on the basis of the shares registered in the shareholders name in the register of shareholders at the expi ry of the registration date, or the shares for which the shareholder at that
time has notified and documented his/her acquisition to the company.
Admission cards to the Annual Generai Meeting may be obtained at the com pany's website www.bang-olufsen.com/investor where you will find a registra tion form. You may also request admission cards electronically at the compa ny's website by using your CPR/CVR number and postal code or your VP refer ence number. Further, admission cards may be obtained by contacting VP ln vestor Services AIS on tel. +45 43 58 88 91. Admission cards and voting ballots will be sent to the address to which your custody account is registered.
To receive your admission card, you must submit a duly completed registration form to be received by VP lnvestor Services A/S no later than on Friday 4 Sep tember 2015 at 11:59 pm CEST either by post to VP lnvestor Services A/S, Wei dekampsgade 14, P.O. Box 4040, DK-2300 Copenhagen S, Denmark, by fax to
+45 43 58 88 67 or by email to vpinvestor@vp.dk.
lf you are unable to attend the Annual Generai Meeting, you may issue a proxy or submit a postal vote. You may either issue a proxy or submit a postal vote, but you cannot do both. The proxy and postal voting form can be found at www.bang-olufsen.com/investoror may be obtained by contacting VP ln vestor Services AIS by phone on +45 43 58 88 91.
lf you want to issue a proxy, the proxy voting form must reach VP lnvestor Ser vices AIS no later than on Friday 4 September 2015 at 11:59 pm CEST by post to VP lnvestor Services AIS to Weidekampsgade 14, P.O. Box 4040, DK-2300 Co-
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BANG & OLUFSEN Als ANNOUNCEMENTNO. 15.03
penhagen S, Denmark, by fax to +45 43 58 88 67 or by email to vpinves
tor@vp.dk.
lf you want to submit a postal vote, the postal voting form must reach VP ln vestor Services A/S no later than on Wednesday 9 September 2015 at 4:00pm CEST by post to VP lnvestor Services A/Sto Weidekampsgade 14, P.O. Box 4040, DK-2300 Copenhagen S, Denmark, by fax to +45 43 58 88 67 or by email to vpinvestor@vp.dk.
You may also appoint a proxy or submit a postal vote at VP lnvestor Services A/S' website www.uk.vp.dk/agmor at the company's website www.bang olufsen.com/investor.
At the Annual Generai Meeting, the Board of Directors and the Management Board will answer questions from the shareholders on matters of relevance to the assessment of the annual report, the company's position and any other questions to be addressed at the Annua l Generai Meeting. Questions can be submitted until the day before the Annual Generai Meeting by post to Bang & Olufsen a/s, Peter Bangs Vej 15, DK-7600 Struer, Denmark,addressed for the attention of Global Generai Counsel Line K0hler Ljungdahl, or by email to llj@ba ng-olufsen.dk.
Prior to the Annual Generai Meeting, we would like to offer shareholders who are not employees a demonstration of Bang & Olufsen's products. The event begins at 11:30 am in Bang & Olufsen's main building "Garden". Please an nounce your participation by calling tel. +45 96 84 11 22 if you wish to attend.
Yours sincerely Bang & Olufsen a/s Ole Andersen Chairman
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BANG & OLUFSEN Als ANNOUNCEMENTNO. 15.03
APPENDIX 1 Generai guidelines concerning incentive-based remunerationThese guidelines apply to incentive schemes for the Board of Directors and the Management Board in Bang & Olufsen a/s. The incentive-based remuneration will be dependent on individuai or company performance.
1. The Board of DiredorsThe Board of Directors receives a fixed cash remuneration which is approved annually by the Annual Generai Meeting. The Board of Directors does thus not receive incentive-based remuneration.
2. The Management Board
lt is the view of the Board of Directors that a combination of fixed and per formance-based remuneration for the Management Board contributes to the company's ability to attract and retain competent key employees while, at the same time, the Management Board has an incentive to create added value for the benefit of the company's shareholders through partial incentive-based remuneration.
The Management Board is defined as the managers registered with the Danish
Business Authority.
The Management Board's terms of employment and remuneration are agreed between the individuai manager and the Board of Directors, and the incen tive-based remuneration may consist of the elements stated in this section 2.
The Board of Directors has set up a remuneration committee which assesses the Management Board's remuneration conditions on an ongoing basis.
The Management Board may be entitled to participate in the following incen
tive schemes:
• Cash bonus
• Matching Shares Programs (introduced as from 10 September 2014)
• Long-term lncentive Share Option Scheme (no further grants after 1O September 2014)
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BANG & OLUFSEN Als ANNOUNCEMENTNO. 15.03
• Special Share Option Scheme (no further grants after 10 September
2014)
Individuai members of the Management Board may receive an annual bonus which cannot exceed 35% of that member's gross salary for the relevant year. However, the CEO may receive an annual bonus which cannot exceed 100% of the CEO's gross salary for the relevant year.
This cash bonus is intended to ensure achievement of the company's short term objectives. The payment of the bonus and the size thereof will therefore depend on the achievement of the objectives agreed from year to year. These objectives will primarily relate to the achievement of the company's budgeted results or the achievement of the financial ratios or other measurable personal results of a financial or non-financial nature.
The annual bonus which may be granted to the CEO must be divided so that
75% of the bonus may be paid if certain ordinary bonus objectives determined at the discretion of the Board of Directors in accordance with the criteria de scribed above have been fulfilled, whereas the remaining 25% of the bonus may be paid if certain extraordinary bonus objectives determined at the dis cretion of the Board of Directors in accordance with the criteria described above have been fulfilled.
Members of the Management Board may at the discretion of the Board of Di
rectors be offered to participate in Matching Shares Programs.
Under the company's Matching Shares Programs, the participating members are offered the opportunity to acquire shares in Bang & Olufsen a/s at their own cost ("lnvestment Shares") which after three years of ownership will pro vide the participating members with the right to receive 1-4 shares ("Match ing Shares") in the company per lnvestment Share, subject to certain condi tions having been fulfilled. The number of Matching Shares which the partici pating member will be entitled to receive (if any) is determined on the basis of the number of lnvestment Shares acquired, the performance of the company and the participant's continued employment in the company. The perfor mance criteria will be determined by the Board of Directors and will primarily relate to the achievement of agreed targets with respect to the company's EBITDA, turnover and Customer Satisfaction lndex.
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BANG & OLUFSEN Als ANNOUNCEMENTNO. 15.03
Participation in the Matching Shares Programs is regarded as variable salary and is offered to the members of the Management Board as an element of remuneration and in arder to ensure that the Management Board stays fo cused on value creation and achievement of the company's long-term objec tives.
Participation in one or more Matching Shares Programs may be offered at the discretion of the Board of Directors.
For the Management Board's participation in the Matching Shares Programs, the following guidelines apply:
Participation in the Matching Shares Programs is subject to the individuai Management Board member acquiring lnvestment Shares in the company at a value that as a minimum corresponds to a percentage of the relevant mem ber's annual base salary determined by the Board of Directors ("lnvestment Requirement"). In arder to observe the lnvestment Requirement, the member may either purchase shares at market price on the Nasdaq Copenhagen during an open trading window or transfer shares already owned by such member to the Matching Shares Program.
A. The maximum number of lnvestment Shares which the participating members of the Management Board may transfer to each Matching Shares Program will be determined at the discretion of the Board of Di rectors, but may in no event exceed 20% of the CEO's and 15% of the additional members' annual base salary.
B. Three years after the participating members' acquisition of the lnvest ment Shares, the company will free of charge previde such members with Matching Shares in the company. The number of Matching Shares granted to the participating members will depend on the number of lnvestment Shares acquired, the performance of the company during the three-year vesting period and the participant's continued employ ment in the company. However, Matching Shares will only be granted to the participating member if the following conditions have been ful filled:
i. The member has acquired a sufficient amount of lnvestment
Shares to satisfy the lnvestment Requirement and has satisfied this requirement during the entire vesting period.
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BANG & OLUFSEN Als ANNOUNCEMENTNO. 15.03
ii. The member has not for any reason lost his/her right to partici
pate in the program.
111. The member is stili employed with the company or has left the company as a good leaver (i.e. the member's employment has been terminated by the company without such termination being due to the member's breach, due to the maximum retirement age or due to death, or the member's employment has been termi nated by the member due to an applicable public or private pen sion scheme entering into force or due to the company's materia! breach of the employment relationship).
IV. The criteria for the grant as determined by the Board of Directors are fulfilled.
v. The Matching Shares Program has not been terminated.
C. Matching Shares provided to a member of the Management Board are not subject to any ownership requirements. In lieu of Matching Shares, the company is entitled to provide the member with a cash amount corresponding to the value of the Matching Shares.
D. In the exceptional situation where Matching Shares have been provided to a member of the Management Board on the basis of data or ac counts which subsequently proves to have been misstated, the company may reclaim in full or in part the Matching Shares provided on the basis of such data.
The market value of the participation of the members of the Management Board in the Matching Shares Programs for 2015 is estimated to a maximum amount of DKK 6,880,000 as at the date of grant. The estimate is based on the market value of the company's shares on the date of the notice to convene the annua l generai meeting 2015 and the market value of the participation of the members of the Management Board may increase in case of an increase in the actual market value of the company's shares as at the date of grant.
The members of the Management Board may at the discretion of the Board of Directors be offered to participate in further Matching Shares Programs. The estimated maximum amount may in subsequent years increase in comparison to the 2015 estimated amount in case of salary increase or increase of the market value of the company's shares.
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BANG & OLUFSEN Als ANNOUNCEMENTNO. 15.03
Prior to 10 September 2014 and for purposes of ensuring value creation and the achievement of the company's long-term objectives, Bang & Olufsen a/s has issued a Long-term lncentive Share Option Scheme for members of the Management Board.
No further stock options will be granted under the Long-term lncentive Share
Option Scheme after 10 September 2014.
For further information on the total number of stock options granted to the current members of the Management Board under the Long-term lncentive Share Option Scheme as well as on the market value of such stock options, reference is made to the company's annual report.
The key features of the Long-term lncentive Share Option Scheme are as fol
lows:
• The option scheme is share based.
• Each stock option entitles the holder to buy one share in Bang & Olufsen a/s of a nominai value of DKK 10.
• The exercise price of the stock options was determined at the time of grant (no less than the market value of the company's shares at the date of grant). The exercise price and/or the number of granted options will be adjusted for any dividend paid by Bang & Olufsen a/s and in case of any other corporate actions that dilute the value of the options.
• The stock options will not vest and become exercisable until at least three years after the date of grant and will expire if not exercised within a period of two consecutive weeks starting six trading days after the announcement of the company's annua l report for the relevant financial year.
• Vesting of the stock options may be conditional on achievement of the company's budgeted results or financial key figures.
• The total outstanding stock options cannot exceed 5% of the total share capitai of Bang & Olufsen a/s at the date of grant (however, not including the Special Share Option Scheme which may be granted to the company's CEO, please see section 2.4. below).
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BANG & OLUFSEN Als ANNOUNCEMENTNO. 15.03
At the Annual Generai Meetings held on 10 March 2011 and 19 September
2013, respectively, the shareholders of Bang & Olufsen a/s approved a Special Share Option Scheme for the company's CEO for purposes of retaining the CEO and to ensure that the CEO stayed focused on value creation and the achievement of the company's long-term objectives.
The Special Share Option Scheme was divided into two separate schemes, the key features of each of which are described in further detail below: (i) a Spe cial Share Option Scheme exercisable in the period 2013-2015; and (ii) a Special Share Option scheme exercisable in 2016.
No further grants of share options under the Special Share Option Scheme will be made after 10 September 2014.
For further information on the total number of stock options granted to the CEO under the Special Share Option Scheme as well as on the market value of such stock options, reference is made to the company's annual report.
(i) Special Share Option Scheme exercisable in the period 2013-2015
With effect from 11 March 2011, the company granted to the CEO a Special Share Option Scheme exercisable in the period 2013-2015, as further described in company announcement no. 10.16 of 11 March 2011 (as corrected by a company announcement of 14 March 2011). For this Special Share Option Scheme, the key features are as follows:
• The stock options granted in 2011 may be exercised in three por
tions of equal sizes in 2013, 2014 and 2015, respectively.
• The stock options may only vest and become exercisable if certain agreed targets with respect to the company's EBITDA and share price are met.
• The exercise prices of the stock options are fixed at 69, 77 and 86 for the options exercisable in 2013, 2014 and 2015, respectively. However, the number of shares and/or the exercise price for the stock options will be adjusted for any dividend paid by Bang & Olufsen a/sand in case of any other corporate actions that dilute the value of the options.
• The total number of stock options granted under the Special Share
Option Scheme exercisable in the period 2013-2015 is capped at
1,250,000 stock options. Each option grants a right to buy one share in Bang & Olufsen a/s of a nominai value of DKK 10, equal to 3.45%
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