Report
Expert Corporate Governance Service (ECGS)
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SKF, March 28, 2019

In general, SKF is in compliance with the Swedish regulations relating to the organisation and procedures of the Annual General Meeting.

Under ITEMS 14.1-14.9, the (re-)election of the board of directors is proposed. In light of insufficient independent representation on the board as well as concerns over aggregate time commitments, ECGS recommends to vote OPPOSE to the (re-)election  of: Mr. Hans Straberg (ITEM 14.1), Mr. Lars Wedenborn (ITEM 14.2), Ms. Nancy Gougarty (ITEM 14.5), Mr. Ronnie Leten (ITEM 14.6), Ms. Colleen Repplier (ITEM 14.8) and proposed new nominee Mr. Geert Follens (ITEM 14.9).

Under ITEM 15, the nomination committee proposes to re-appoint Mr. Hans Straberg as Chairman of the board of directors. As already mentioned above, ECGS has various concerns over his re-appointment and therefore does not support his re-election as board Chairman either. Accordingly, ECGS recommends to vote OPPOSE.

Under ITEM 16, the board of directors seeks approval of the Company's remuneration guidelines. The proposed remuneration structure is not in line with ECGS' guidelines. ECGS therefore recommends to vote OPPOSE.

Under ITEM 17, the board of directors seeks approval of a LT incentive plan. In view of concerns over: (i) the applicable performance criterion; (ii) a strange twist attached to the performance measurement period; and (iii) non-disclosure of the outcome of the performance criterion, ECGS recommends to vote OPPOSE.

Finally, under ITEM 18, it is proposed to establish an 'external' nomination committee. As a matter of principle, ECGS is not in favour of external nomination committee that concentrate the nomination powers in the hands of the largest shareholders. On the other hand, ECGS also notes that external nomination committees are standard practice in the Swedish market. One of the fundamental core tasks of a nomination committee is providing a suitable composition of the board of directors. With respect to the latter, ECGS notes that there are currently only three women serving on the board, which is below its threshold regarding gender diversity. Accordingly, ECGS recommends to vote OPPOSE.

Underlying
SKF AB B

AB SKF is the parent company of the SKF Group, which supplies products, solutions and services within rolling bearings, seals, mechatronics, services and lubrication systems. Services include technical support, maintenance services, condition monitoring, asset optimization, engineering consultancy and training. Co.'s business areas are: SKF Industrial Market - Strategic Industries, which includes bearings and bearing accessories and lubrication systems; SKF Industrial Market - Regional Sales and Service, which develops SKF Solution Factory facilities providing engineering capability; and SKF Automotive, which develops and manufactures bearings, seals and related products and services.

Provider
Proxinvest
Proxinvest

Founded in 1995, Proxinvest is an independent proxy firm supporting the engagement and proxy analysis processes of investors. Proxinvest mission is to analyse corporate governance practices and resolutions proposed at general meetings of listed firms.

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Analysts
Expert Corporate Governance Service (ECGS)

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