Share Sale to Fund Tax Liabilities
The authorization granted by shareholders permits Ericsson to retain and sell up to 60% of the vested LTV 2022 Class B shares before the 2026 annual general meeting. Ericsson has confirmed its decision to utilize this authorization specifically for the purpose of covering the costs related to withholding and paying income tax and social security contributions on behalf of the participating employees. These funds will then be remitted to the relevant revenue authorities.
This practice is a common mechanism employed by companies with share-based compensation programs. By selling a portion of the vested shares, Ericsson ensures that the tax obligations arising from the employees receiving these shares are met without directly impacting the company's cash reserves or requiring the employees to liquidate their newly vested shares immediately to cover these liabilities.
Execution of Share Transfers on Nasdaq Stockholm
Ericsson plans to execute the transfer of these shares on Nasdaq Stockholm, the primary stock exchange for Swedish companies. The sales will occur gradually over a period commencing on May 19, 2025, and extending up to the date of the company's annual general meeting in 2026. This timeframe allows Ericsson flexibility in managing the share sales and potentially optimizing the transaction price based on market conditions.
The pricing of the shares sold will be within the prevailing price interval registered on Nasdaq Stockholm at the time of each transaction. This ensures that the sales are conducted at the current market value, protecting the interests of both the company and its shareholders.
Limited Impact on Outstanding Shares
As of the announcement, Ericsson holds a total of 38,390,417 Class B shares in treasury. The maximum number of Class B shares that may be transferred under the authorized plan is capped at 368,692. This represents a relatively small fraction of Ericsson's total outstanding shares and its current treasury holdings. Therefore, the planned share sales are not expected to have a significant dilutive effect on the company's overall share structure or its stock price.
In conclusion, Ericsson's decision to sell a limited number of its Class B shares is a pragmatic approach to managing the tax obligations associated with its employee compensation program. This move ensures compliance with regulatory requirements and simplifies the process for employees receiving vested shares, while having a minimal impact on the company's overall shareholding. The execution of these transactions on Nasdaq Stockholm over an extended period allows for orderly and market-reflective sales.