SCHEDULE 14A
(RULE 14a)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY RULE
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
AUTOLIV INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on
which the filing fee is calculated and state how it was
determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or
Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
Our date March 12, 1999
Our ref Gunnar Bark
Department Chairman
Telephone +46 (8) 587 20 600
Dear Stockholder,
It is my pleasure to invite you to the 1999 Annual Meeting of Stockholders
of Autoliv, Inc. which will be held on Thursday, May 6, 1999 at
Ingenjorshuset, Polhemssalen, Malmskillnadsgatan 46, Stockholm, Sweden,
commencing at 4:00 p.m. local time.
Information regarding the matters to be voted upon at the meeting is
contained in the formal notice of the meeting and proxy statement on the
following pages.
It is important that your shares be represented at this meeting. Therefore,
please mark, sign, date and return your proxy promptly in the enclosed
envelope.
A public news release covering voting results will be available after the
meeting.
The Autoliv, Inc. Annual Report for the fiscal year ended December 31,
1998, is being distributed to stockholders with this proxy statement.
Sincerely,
Gunnar Bark
Chairman of the Board
Autoliv, Inc.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
The Annual Meeting of Stockholders of Autoliv, Inc. (the "Company") will
be held on Thursday, May 6, 1999, at Ingenjorshuset, Polhemssalen,
Malmskillnadsgatan 46, Stockholm, Sweden, at 4:00 p.m. local time to
consider and vote upon:
1. Election of three directors for a term of office expiring on the Annual
Meeting of Stockholders in 2002 (see page 2)
2. Approval of an Amendment to the Company's 1997 Stock Incentive
Plan (see page 9)
3. Ratification of the appointment of Ernst & Young AB as the Company's
independent auditing firm for the fiscal year ending December 31, 1999 (see
page 13)
4. Any other business that may properly come before the meeting and/or
any adjournment thereof.
The close of business of March 8, 1999 has been fixed as the record date for
the meeting. All stockholders of record at the close of business on that date
are entitled to be present and vote at the meeting and/or any adjournment
thereof.
Attendance at the annual meeting will be limited to stockholders of record,
beneficial owners of Company common stock entitled to vote at the meeting
having evidence of ownership, the authorized representative (one only) 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 meeting.
By order of the Board of Directors
March 12, 1999
Jorgen I. Svensson
Vice President for Legal Affairs,
General Counsel and Secretary
AUTOLIV, INC.
Box 70381, SE-107 24 Stockholm, Sweden
PROXY STATEMENT
March 12, 1999
SOLICITATION OF PROXIES
This Proxy Statement is furnished in connection with the solicitation by the
Company's Board of Directors (the "Board") of proxies for use at its Annual
Meeting of Stockholders, to be held on Thursday, May 6, 1999, and at any
adjournment thereof (the "1999 Annual Meeting" or the "meeting").
The shares represented by all properly executed and unrevoked proxies
received in proper form in time for the meeting will be voted. Shares will be
voted in accordance with stockholders' instructions in the accompanying
proxy. If no instructions are given, the shares will be voted in accordance
with the Board's recommendations, which are noted herein. Any proxy
given may be revoked at any time before it is voted at the meeting.
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. Votes
withheld as to one or more nominees will not be counted as votes cast for
such individuals. Any other proposal brought before the meeting will be
decided by a majority of votes represented at the meeting and entitled to
vote thereat. Consequently, abstentions and broker non-votes (votes
withheld by brokers in the absence of instructions from beneficial holders)
are not counted for purposes of determining whether a proposal has been
approved, but they are counted for purposes of establishing a quorum at the
meeting.
The Company will bear the cost of the solicitation. In addition to solicitation
by mail, the Company will request banks, brokers and other custodian
nominees and fiduciaries to supply proxy material to the beneficial owners
of the Company's common stock of whom they have knowledge, and will
reimburse them for their expenses in so doing; and certain directors, officers
and other employees of the Company, not specially employed for the
purpose, may solicit proxies, without additional remuneration therefor, by
personal interview, mail, telephone or facsimile.
In addition, the Company has retained Shareholder Communications
Corporation to assist in the solicitation for a fee of $10,000 plus expenses,
and WM-data AB for a fee of $47 per hour plus expenses.
1. 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. To the extent practicable, one-
half of the directors are to be citizens of the United States and one-half of
the directors are to be nationals of Sweden or member states of the
European Union. The Board presently consists of eight members, divided
into three classes. Directors in each class are elected on a rotating basis at
the annual stockholders meeting at which the term for such class expires, for
terms expiring at the third subsequent annual meeting of stockholders.
Listed below as nominees for election at the 1999 Annual Meeting for three-
year terms are Wilhelm Kull, S. Jay Stewart and Roger W. Stone, whose
present terms will expire at that time. Messrs. Kull, Stewart and Stone are
presently serving as directors, and the Company has not been advised by
either of them that they will not serve if elected.
THE BOARD RECOMMENDS A VOTE "FOR" THE NOMINEES FOR
DIRECTORS.
BOARD MEETING ATTENDANCE AND COMPENSATION OF
DIRECTORS
The Board met six times during the year ended December 31, 1998. All but
one of the incumbent directors were present at all meetings of the Board and
Board committees of which they were members.
Directors who are employees of the Company or any subsidiary thereof do
not receive any compensation for service on the Board or Board committees.
Non-employee directors receive for their services a retainer of $35,000 per
year, plus a fee of $1,200 for each Board meeting attended.
In addition, non-employee directors who are chairmen of the Audit and
Compensation Committees each receive additional annual retainers of
$3,000; and all committee chairmen and members receive $800 for
attendance at each meeting of their particular committees.
Non-employee directors who are elected or continuing as such at annual
stockholders meetings also receive annual grants of shares of Company
common stock with a market value of $15,000 at the time of grant.
NOMINEES FOR DIRECTORS AT THE MAY 1999 ANNUAL
MEETING
Wilhelm Kull, age 62, has been a director since May 1997 and until March
31, 1999, Chief Financial Officer of Autoliv, Inc. He has been Vice
President and Chief Financial Officer of Autoliv AB since 1975, when the
company under the name Granges Weda was a subsidiary of Granges AB, a
publicly listed company. Mr. Kull served as the Deputy Chief Financial
Officer of Granges AB from 1969 to 1974. Prior to that Mr. Kull worked
for five years at a certified public accounting firm in Sweden. He holds a
B.S. degree in business and an M.B.A. from the University of Colorado in
the United States.
S. Jay Stewart, age 60, has been a director of Autoliv, Inc. since May 1997.
He has served as Chairman and Chief Executive Officer of Morton since
April 1994 and has been a director of Morton since 1989. Mr. Stewart was
President and Chief Operating Officer of Morton from 1989 through March
1994. In addition, he is a director of Household International, Inc. Mr.
Stewart holds a B.S. degree in Chemical Engineering from the University of
Cincinnati and an M.B.A. degree from West Virginia University.
Roger W. Stone, age 64, has been a director of Autoliv, Inc. since May
1997. He served until 1998 as Chairman of the Board (since 1983),
President (since 1975), and Chief Executive Officer (since 1979) of Stone
Container Corporation, a multinational producer and marketer of pulp, paper
and packaging products. Mr. Stone is now President and Chief Executive
Officer of Smurfit Stone Container Corporation. He has been a director of
Morton since 1989 and has also been a director of McDonald's Corporation
and Option Care, Inc. He is a graduate of the University of Pennsylvania
Wharton School of Finance.
INCUMBENT DIRECTORS - TERMS EXPIRING AT THE 2000
ANNUAL MEETING
Gunnar, Bark, age 59, Chairman and until January 31, 1999, CEO of the
Company, was elected a director of Autoliv AB and appointed Chairman of
the Autoliv AB Board in March 1997. Mr. Bark had previously served as
President and Chief Executive Officer of Autoliv AB and as a member of
the Autoliv AB Board from 1982 until he retired from his position as
President of Autoliv AB and member of the Autoliv AB Board in April
1996 and as Chief Executive Officer of Autoliv AB in August 1996. Mr.
Bark serves as Chairman of Allgon AB and of Spectra-Physics AB. Mr.
Bark has a Master of Science in Engineering Physics from the Royal
Institute of Technology (KTH) in Stockholm. The Chalmers Institute of
Technology in Gothenburg has awarded him the title of Honorary Doctor of
Engineering.
Per Welin, age 62, has been a director of Autoliv, Inc. since May 1997 and
of Autoliv AB since 1995. Mr. Welin has served as Executive Vice
President and director of the investment company L-E Lundberg-foretagen
AB since 1991 and until 1998 and as Chairman of Board of L-E Lundberg-
foretagen AB since 1998. He also holds the position of director of Allgon
AB, MoDo AB, Ostgota Enskilda Bank and NCC AB. Mr. Welin has a
Master of Science in Engineering Physics from the Chalmers Institute of
Technology in Gothenburg, from which he also holds a licentiate of
engineering degree in applied thermo- and fluid dynamics. He also holds
an M.B.A. from the Gothenburg School of Economics.
INCUMBENT DIRECTORS - TERMS EXPIRING AT THE 2001
ANNUAL MEETING
Per-Olof Aronson, age 68, has been a director of Autoliv, Inc. since May
1997. He was a director of Autoliv AB from Autoliv's initial public offering
in 1994. Mr. Aronson has worked in the aluminum company Granges AB
since 1956, where he has held various senior executive positions, including
three years as Technical Director and 11 years as President and Chief
Executive Officer. Mr. Aronson is now Vice Chairman of Granges. Mr.
Aronson holds a graduate degree in Chemical Engineering from the Royal
Institute of Technology (KTH) in Stockholm.
Lars Westerberg, age 50, has been a director of Autoliv, Inc. since February
10, 1999, and President and Chief Executive Officer of Autoliv, Inc. since
February 1, 1999. From 1994 until he assumed his positions with Autoliv,
he was President and Chief Executive Officer of Granges AB, a Swedish-
based aluminum and plastics company listed on the Stockholm Stock
Exchange. From 1991 until 1994 he held the same positions at the publicly-
traded welding machine company Esab AB. He started his employment at
Esab in 1984 and held several executive positions, including President of
Esab's North American subsidiary. Mr. Westerberg holds a Masters Degree
in Electrical Engineering from the Royal Institute of Technology (KTH) in
Stockholm and a M.B.A from the University of Stockholm.
Walter Kunerth, age 57, has been a director of Autoliv, Inc. since August
25, 1998. Professor Kunerth is a Senior Advisor to the investment banking
group Lazard Freres, Vice President of DIN (the German Institute for
Standardization) and a member of the senate of the Fraunhofer Society for
Applied Research. He is also a member of the Supervisory Board of
Gildemeister AG and Chairman of the Supervisory Boards of Gotz AG and
Basler AG. For more than 20 years, professor Kunerth held various top
executive positions at Siemens AG in Germany, including member of
Siemen's Corporate Executive Board (1993-97), President of Siemen's
Automotive Systems Group (1988-93) and head of Siemen's Automotive
Electronics Division. He holds a graduate degree in Engineering from the
University of Stuttgart and has been named Honorary Professor by the
university.
COMMITTEES OF THE BOARD
There are three standing committees of the Board: the Audit Committee,
Compensation Committee and Nominating Committee.
The Audit Committee recommends to the Board the independent auditors to
be selected to audit the Company's annual financial statements and reviews
the fees charged for such audits and for any special assignments given such
auditors. The committee also reviews the annual audit and its scope,
including the independent auditors' letter of comments and management's
responses thereto; possible violations of the Company's business ethics and
conflicts of interest policies; any major accounting changes made or
contemplated; and the effectiveness and efficiency of the Company's
internal audit staff. In addition, the committee confirms that no restrictions
have been imposed by Company personnel on the scope of the independent
auditors' examinations. Members of this committee are Messrs. Welin
(Chairman), Aronson, Kunerth and Stewart. The committee met three times
in 1998.
The Compensation Committee advises the Board of the Company with
respect to the compensation to be paid to the directors of the Company and
approves and advises the Board with respect to the terms of contracts to be
entered into with the senior executives of the Company. The Committee
also administers the Company's stock incentive plan. Members of this
committee are Messrs. Stewart (Chairman), Aronson, Stone and Welin. The
committee met three times in 1998.
The Nominating Committee nominates new members of the Board of the
Company and also of the subsidiaries of the Company. This committee
consists of all the members of the Board of the Company. The committee
met once in 1998.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
On March 8, 1999, the record date for the 1999 Annual Meeting, there were
102,313,365 shares of common stock outstanding, each entitled to one vote.
Only stockholders of record on that date will be entitled to vote at the
meeting. The Company has no other class of equity securities outstanding.
As of the date of this proxy statement, no stockholder was known to the
Company to beneficially own more than 5% of the Company's common
stock.
The following table shows the Company's common stock beneficially
owned as of March 8, 1999 by each present director and each executive
officer named in the Summary Compensation Table on page 7; and by all
present directors and executive officers of the Company as a group. Each
named person has sole voting and investment power with respect to the
shares shown.
<TABLE>
<CAPTION>
<S> <C>
Shares beneficially owned 1
Per-Olof Aronson 4,398
Gunnar Bark 25,000
Claes Humbla 0
Wilhelm Kull 0
Walter Kunerth 0
Benoit Marsaud 0
S. Jay Stewart 68,885
Roger W. Stone 1,932
Jorgen I. Svensson 0
Per Welin 398
Lars Westerberg 19,000
All directors, nominees and
executive officers as a group 120,213
</TABLE>
1 All amounts shown represent less than 1% of the outstanding shares of
the Company.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER
PARTICIPATION
The Compensation Committee is comprised exclusively of directors who are
not and have never been Company employees. No Company executive
officer serves on the compensation committee of another company for
which any member of the Company's Compensation Committee serves as an
executive officer.
EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board (the "Committee") advises the
Board regarding senior officers' compensation and administers the
Company's cash and stock incentive compensation strategy. The purpose of
this plan and the objectives of the Committee are to:
- - provide competitive compensation programs so as to be able to attract,
retain and motivate top management talent,
- - pay for performance, motivating both long- and short-term performance
on behalf of Company stockholders,
- - place greater emphasis on at-risk incentive compensation than on fixed
salaries, particularly for senior executives,
- - base the incentive compensation of business unit or subsidiary
executives on the performance of their operations, while including a component
which recognizes overall Company performance, and
- - join shareholder and management interests.
To further these objectives, the compensation of senior executive officers
includes three components: (1) base salaries, (2) annual bonus programs,
and (3) a stock incentive program.
The Committee has consulted with an independent compensation consulting
firm for advice in regard to the total compensation of the Company's senior
executive officers.
BASE SALARIES
The Committee recommends salaries for senior executive officers based on
data on competitive salaries received from independent compensation
consultants, position and individual performance.
ANNUAL BONUS PROGRAMS
The Committee determined annual bonus payments for 1998 based on
performance during 1998. Under the annual bonus program applicable to
senior executive officers, award levels may range from zero to 56% of their
base salaries as of the beginning of the performance periods depending on
salary grade and attainment of Company and applicable business unit and
subsidiary profit targets as approved by the Committee. Based on these
factors and the terms of such annual bonus programs, the Committee
approved bonus payments to senior executive officers varying from 0 % to
56% of their base salaries.
STOCK INCENTIVE PLAN
In 1998, the Committee authorized stock option grants to selected officers
of the Company and its subsidiaries and stock appreciation rights ("SARs")
payable in cash to the senior executive officers of the Company located in
Sweden with the exception of the Chairman and Chief Executive Officer.
All SARs ever granted under the Autoliv, Inc. 1997 Stock Incentive Plan
(the "Plan") have been converted into stock options with identical exercise
price and terms and conditions as a result of certain changes which occurred
in the Swedish tax legislation in 1998. All options and rights granted in
1998 are for 10 year terms with an exercise price equal to the market price
on the date of grant, and become exercisable after one year of continued
employment following the grant date. Executive officers received option or
right grants in February, April and July 1998 ranging from 4,000 shares to
100,000 shares (see "Option/SAR Grants in Last Fiscal Year").
CHIEF EXECUTIVE OFFICER
The compensation for the period May 1, 1998 to May 1, 1999 of the
Company's Chairman and Chief Executive Officer, Mr. Gunnar Bark, was
determined based on information on competitive compensation levels
received from an independent compensation consultant.
In July 1998, the Committee approved a stock option grant of 100,000
shares of common stock of the Company to Mr. Bark, and cash
compensation at an annual rate of SEK 6,500,000 (USD 817,713). The cash
compensation ceased being payable upon Mr. Bark's resignation as Chief
Executive Officer of the Company in February 1999.
LIMITATION ON DEDUCTIBILITY OF CERTAIN COMPENSATION
Section 162 (m) of the Internal Revenue Code (the "Code") generally
disallows a tax deduction to public companies for annual compensation over
$1 million paid to their chief executive officers and the four other most
highly compensated executive officers that is not "performance-based" (as
defined in the Code). It is the Committee's general policy to avoid the loss
of tax deductibility whenever compliance with Section 162 (m) would be
consistent with the Company's incentive compensation objectives.
Consequently, the employee incentive compensation programs in which the
Company's most highly compensated officers participate have been
structured to comply with the Code's definition of performance-based
compensation. To qualify as performance-based under the Code,
compensation payments must be made pursuant to a plan that is
administered by a committee of outside directors and must be based on
achieving objective performance goals. In addition, the material terms of the
plan must be disclosed to and approved by stockholders, and the Committee
must certify that the performance goals were achieved before payments can
be awarded.
Notwithstanding its general policy, however, the Committee retains the
discretion to authorize incentive payments that may not be deductible if it
believes that doing so would be in the best interest of the Company and its
stockholders.
S. Jay Stewart, Chairman
Per-Olof Aronson
Roger W. Stone
Per Welin
STOCK PERFORMANCE GRAPH (1) (2)
The following graph compares the cumulative stockholder returns on the
Company's common stock with Standard & Poors 500 Index and Standard
& Poors Automobiles Index.
GRAPH
EDGAR representation of data used in printed graphic.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
1997: May 1 July 1 Oct 1 Dec 31
Autoliv, Inc. $35.5 $39.5 $43.2 $32.8
S&P 500 Index $35.5 $39.6 $42.5 $43.1
S&P Automobiles Index $35.5 $37.4 $44.2 $44.2
1998: March 27 June 26 Sep 25 Dec 31
Autoliv, Inc. $32.1 $32.1 $30.1 $37.2
S&P 500 Index $46.3 $47.9 $44.2 $52.1
S&P Automobiles Index $53.1 $64.5 $55.2 $64.4
</TABLE>
1) Public trading of the Company stock began on May 1, 1997 on the New
York Stock Exchange and on May 2, 1997 on the Stockholm Stock
Exchange in the form of Swedish Depositary Receipts. Consequently, the
period covered on the graph is limited to the Company's returns from May
1, 1997 through December 31, 1998.
2) Dividends at a rate of $0.66 per share of common stock were paid
during the period and are included in the cumulative return on the
Company's common stock
SUMMARY COMPENSATION TABLE
(USD) (1)
<TABLE>
<CAPTION>
Annual Compensation Long-Term All Other
Compensation Compensation
Name and Principal Fiscal year Salary Bonus (2) Other Annual Securities Underlying (3)
Function Compensation Options
<S> <C> <C> <C> <C> <C> <C>
Gunnar Bark 1998 733,845 0 0 100,000 374,260
Chairman and 1997 388,149 0 0 0 3,031,052
Chief Executive 1996 450,110 146,520 0 0 182,344
Officer
Wilhelm Kull 1998 339,665 190,659 0 15,170
Chief Financial 1997 284,642 315,940 0 20,000
Officer 1996 163,516 21,832 0 0
Benoit Marsaud 1998 229,241 136,839 0 4,000
Vice President 1997 217,501 111,305 0 0
Manufacturing, 1996 235,125 107,895 0 0
President Autoliv
France
Claes Humbla 1998 154,107 48,748 0 7,670
Vice President 1997 153,099 181,408 0 5,500
Human Resources 1996 144,762 21,832 0 0
Jorgen Svensson 1998 138,382 45,496 0 7,670
Vice President 1997 130,250 151,650 0 5,200
Legal Affairs, 1996 82,637 21,832 0 0
General Counsel
and Secretary
</TABLE>
(1) The amounts contained in the table below were paid either in Swedish
Krona or French Francs.
All amounts have been converted to dollars using the following exchange rates:
1998 - 1 USD = 7.949 SEK, 1 USD = 5.889 FRF; 1997 - 1 USD = 7.729 SEK,
1 USD = 5.931 FRF; 1996 - 1 USD = 6.705 SEK, and 1 FRF = 1.31 SEK
(2) The bonuses for 1997 included a one-time stay and performance bonus.
(3) The amount for 1998 consists of pension from Autoliv AB. The amount for
1997 consists of the value of 25,000 shares of common stock of the Company
when granted in August 1997, a lump sum cash amount to partially offset the tax
payable in connection with the stock grant and a pension payment from Autoliv
AB and a consultancy fee of $1,293,828 paid by Autoliv AB to Kanoe AB, a
company controlled by Mr. Bark, for services when Mr. Bark was not employed
by Autoliv AB or the Company. The amount for 1996 consists of board fees
received from Autoliv AB subsidiaries in the US and France.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Individual Grants (1) (2) Expiration Potential Realizable Value
Number of % of Total Exercise Date at assumed Annual Rates
Name and Securities Options /SAR or Base of Stock Price Appreciation
Principal Underlying Granted Price for Option Term (3)
Function Options/SAR to Employees (per share) 5% 10%
Granted in Fiscal year
<S> <C> <C> <C> <C> <C> <C>
Gunnar Bark 100,000 29.02 $32.05 July 1, 08 $2,015,000 $4,723,000
Chairman and
Chief Executive
Officer
Wilhelm Kull 15,170 4.41 $33.59 April 21, 08 $320,390 $840,956
Chief Financial
Officer
Benoit Marsaud 4,000 1.17 $31.07 Feb 4, 08 $78,160 $198,080
Vice President
Manufacturing
Claes Humbla 7,670 2.23 $31.07 Feb 4, 08 $149,872 $379,818
Vice President
Human Resources
Jorgen Svensson 7,670 2.23 $31.07 Feb 4, 08 $149,872 $379,818
Vice President
Legal Affairs,
General Counsel
and Secretary
</TABLE>
(1) The options and SAR's granted will become exercisable in February,
April and July 1999.
(2) In 1998 all executive officers of the Company as a group received
156,180 options, and all employees of the Company (other than executive
officers) as a group received 188,470 options.
(3) The amounts shown in these two columns represent potential realizable
values using the converted options and exercise prices. The assumed rates of
stock price appreciation are set by SEC rules and are not intended to forecast
the future appreciation of the Company's common stock.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR
VALUES*
<TABLE>
<CAPTION>
Name Number Of Securities Underlying Value Of Unexercised In-The-Money
Unexercised Options/SARs Options/SARs At Fiscal Year-End ($)
At fiscal Year-End Exercisable/Unexercisable
Excercisable/Unexercisable
<S> <C> <C>
Gunnar Bark 0/100,000 0/514,000
Chairman and
Chief Executive Officer
Wilhelm Kull 20,000/15,170 28,800/54,612
Chief Financial Officer
Benoit Marsaud 0/4,000 0/24,480
Vice President Manufacturing
Claes Humbla 5,500/7,670 7,920/46,940
Vice President Human Resources
Jorgen Svensson 5,200/7,670 7,488/46,940
Vice President Legal Affairs,
General Counsel and Secretary
</TABLE>
CHANGE OF CONTROL SEVERANCE AGREEMENTS
Messrs. Humbla and Svensson named in the Summary Compensation Table
have change of control severance agreements with the Company
("agreements") which were originally effective until December 31, 1998
and are automatically extended annually for additional 1-year periods unless
notice to the contrary is given. The agreements are otherwise terminable
during their periods of effectiveness only by termination of the executives'
employment. Such termination in connection with a change in control of the
Company (as defined in the agreements) will entitle an executive to benefits
under the agreements. In the event that during the two-year period following
a change of control, the executive terminates the executive's employment
for Good Reason (as defined in the agreements) or, during the 30-day period
commencing one year after the change of control, for any reason, or the
Company terminates the executive's employment without cause (as defined
in the agreements), the executive would be entitled to receive an immediate
lump sum payment in an amount equal to between two and half and three
times the sum of (i) such executive's then current annual salary, (ii) the
average of the bonuses received for the two most recent fiscal years and (iii)
the taxable value of the benefit of a company car.
PENSION PLANS
The Company has paid pension benefit premiums for Messrs. Kull, Humbla
and Svensson in accordance with customary Swedish practice. Normal
retirement age is the age of 65. Mr. Kull has an agreement allowing
retirement at the age of 63 and Mr Humbla at the age of 62. Pursuant to such
agreements, in 1995 Autoliv AB paid pension insurance premiums to ensure
pension benefits would be paid to Messrs. Kull and Humbla for the period
from the date of the executive's retirement until the normal retirement age
of 65.
Senior Executive Officers of the Company have the right to retire at the age
of 62 with pension benefits amounting to 60 percent of the base salary at
retirement. This benefit will start to accrue at the age of 50.
2. APPROVAL OF THE AMENDMENT TO THE COMPANY'S 1997
STOCK INCENTIVE PLAN (THE "AMENDMENT")
The Company's 1997 Stock Incentive Plan, which was approved by
stockholders at the 1998 Annual Meeting of Stockholders, provides that an
aggregate of 800,000 shares of the Company's common stock, plus the
number of shares issuable in connection with the exchange of "old" Morton
International, Inc. options for options in the stock of the Company, be
reserved for issuance under the Plan. The Board has determined it necessary
to amend the Plan to reserve an additional two million shares of the
Company's common stock for issuance under the Plan.
The Board has approved and recommends stockholder approval of such
Amendment to the Plan in the belief that grants and awards of cash and
stock thereunder (collectively, "awards") will assist Company Management
to attract, retain and provide appropriate incentives to key personnel. In
addition, approval by stockholders will enable certain awards to qualify as
"performance-based compensation" not subject to the limitations on
deductibility of executive compensation in excess of $1 million contained in
Section 162 (m) of the Internal Revenue Code.
The Plan was approved by the Board on April 30, 1997 subject to approval
by the stockholders of the Company which was received at the 1998 Annual
Meeting of Stockholders. The following summary of the Plan, as amended,
is qualified in its entirety by reference to the complete text of the Plan and
the Amendment, copies of which can be obtained from the Company by any
stockholder upon written request. References herein to the "Plan" shall
mean the Plan as it is proposed to be amended unless the context requires
otherwise.
The Plan is intended to promote the long term financial interests and growth
of the Company by (a) attracting and retaining executive personnel, (b)
motivating executive personnel by means of growth-related incentives, (c)
providing incentive compensation opportunities that are competitive with
those of other major corporations, and (d) furthering the identity of interests
of participants with those of the stockholders of the Company.
The Plan is intended to comply with the requirements of Rule 16b-3 ("Rule
16b-3") promulgated under the Securities Exchange Act of 1934, as
amended. In addition, the Plan is intended to provide performance-based
compensation so as to be eligible for compliance with Section 162(m)
("Section 162(m)") of the Code which, generally, limits the deduction by an
employer for compensation of certain covered officers ("Covered
Employees"). Under Section 162(m), certain compensation, including
compensation based on the attainment of performance goals, may be
disregarded for purposes of this deduction limit if certain requirements are
met. Among the requirements for compensation to qualify for this exception
is that the material terms pursuant to which the compensation is to be paid
disclosed to and approved by the stockholders in separate vote prior to the
payment. Accordingly, if the Plan is approved by stockholders and the other
conditions of Section 162(m) relating to performance-based compensation
are satisfied, compensation paid to Covered Employees pursuant to the Plan
will not fail to be deductible under Section 162(m).
General
The Plan is administered by The Compensation Committee of the Board.
The Plan provides for the granting of awards to such key employees of the
Company and its affiliates as the Compensation Committee may select from
time to time. At present approximately 180 employees are eligible to
participate in the Plan.
Currently, an aggregate of 800,000 shares of the Company's common stock
("Company Stock"), plus the number of shares issuable in connection with
the exchange of "old" Morton International, Inc. options for options in the
stock of the Company, is reserved for issuance under the Plan, subject to
adjustment as described below. If stockholder approval is received for the
Amendment, the Plan, as amended, will provide for the reservation of
2,800,000 shares of Company Stock, plus the number of shares issuable in
connection with the exchange of "old" Morton International, Inc. options for
options in the stock of the Company, subject to adjustment as described
below. Such shares may be authorized but unissued Company Stock or
authorized and issued Company Stock held in the Company's treasury or a
combination thereof. Generally, shares subject to an award that remain
unissued upon expiration or cancellation of the award will be available for
other awards under the Plan. The total number of shares of Company Stock
subject to awards (including awards paid in cash but denominated as shares
of Company Stock) granted to any Participant in the Plan during any
calendar year may not exceed 600,000. In the event that the Compensation
Committee determines that any recapitalization, reorganization, spin off,
stock split, combination or other increase or reduction in the number of
issued shares of Company Stock affects such Company Stock such that an
adjustment is appropriate in order to prevent dilution or enlargement of the
rights of participants in the Plan, then the Compensation Committee may
make such equitable changes or adjustments as it deems necessary to the
number and kind of shares of Company Stock which may thereafter be
issued in connection with awards, the limit on individual awards, the
number and kind of shares of Company Stock subject to each outstanding
award, and the exercise price of each award.
Awards under the Plan may be made in the form of (a) Incentive Stock
Options, (b) Non-Qualified Stock Options (Incentive and Non-Qualified
Stock Options are collectively referred to as "options"), (c) stock
appreciation rights, (d) Restricted Stock, and (e) Other Awards.
Administration
The Plan is administered by the Compensation Committee. The
Compensation Committee will, at all times, consist of two or more persons,
each of whom is an "outside director" within the meaning of Section 162(m)
and a "disinterested person" within the meaning of Rule 16b-3. The
Compensation Committee is authorized, among other things, to interpret and
implement the provisions of the Plan, to select the persons to whom awards
will be granted, to determine the terms and conditions of such awards and to
make all other determinations deemed necessary or advisable for the
administration of the Plan.
Awards under the Plan
Stock Options
Options granted pursuant to the Plan will be exercisable at such time or
times as the Compensation Committee determines. The purchase price per
share payable upon the exercise of an option (the "option exercise price")
will be established by the Compensation Committee; provided, however,
that in the case of an Incentive Stock Option, the option exercise price may
be no less than the fair market value of a share of Company Stock on the
date of grant and in the case of a Non-Qualified Stock Option the option
exercise price may be no less than the par value of a share of Company
Stock. The option exercise price is payable by any one of the following
methods or a combination thereof, to the extent permitted by the
Compensation Committee: (a) cash; (b) check, bank draft or money order;
(c) by surrender of shares of Company Stock having a fair market value on
the date of the exercise equal to the option exercise price; or (e) by any
other consideration.
Stock Appreciation Rights
Stock appreciation rights may be granted in connection with all or any part
of, or independently of, any option granted under the Plan. A stock
appreciation right granted independently of any option will be subject to the
same vesting rules as described above for options. A stock appreciation
right granted in tandem with any stock option will be exercisable only when
and to the extent the option to which it relates is exercisable. The grantee
of a stock appreciation right has the right to surrender the stock appreciation
right and receive from the Company, in cash, an amount equal to the excess
of the fair market value of a share of Company Stock in respect of which
such stock appreciation right is being exercised.
Restricted Stock
The Compensation Committee may grant restricted shares of Company
Stock to such persons, in such amounts, and subject to such terms and
conditions (including the attainment of performance goals) as the
Compensation Committee may determine in its discretion except for
restrictions on transfer and such other restrictions as the Compensation
Committee may impose, participants will have all the rights of a stockholder
with respect to the restricted stock. Unless the Compensation Committee
determines otherwise, termination of employment during the restricted
period will result in the forfeiture by the participant of all shares still
subject to restrictions.
Other Awards
Other cash awards and awards valued in whole or in part by reference to, or
otherwise based on, Company Stock may be granted either alone or in
addition to other awards under the Plan. Subject to the provisions of the
Plan, the Compensation Committee has the sole and complete authority to
determine the persons to whom and the time or times at which such Other
Awards will be granted, the number of shares of Company Stock to be
granted pursuant to such Other Awards and all other conditions of such
Other Awards. Participants may elect to defer all or a portion of such Other
Awards in accordance with procedures established by the Compensation
Committee. The Compensation Committee may, in its discretion, make
awards with terms and conditions different from those specified in the Plan
to participants who are employed outside of the United States or who are
foreign nationals.
Other Features of the Plan
In the event of a Change in Control (as defined in the Plan), all outstanding
awards will become fully vested and/or immediately exercisable.
The Board or the Compensation Committee may suspend, revise, terminate
or amend the Plan at any time; provided, however, that no such action may,
without the consent of a participant, reduce the participants' rights under
any outstanding award.
New Plan Benefits
Inasmuch as awards under the Plan will be granted at the sole discretion of
the Compensation Committee, it is not possible to determine the awards that
will be made thereunder for 1999. See "OPTION/SAR GRANTS IN LAST
FISCAL YEAR" for the name, position and grant information for Plan
participants who were granted awards under the Plan for 1998.
Certain Federal Income Tax Consequences
The following discussion is a brief summary of the principal United States
Federal income tax consequences under current Federal income tax laws
relating to awards under the Plan. This summary is not intended to be
exhaustive and, among other things, does not describe state, local or foreign
income and other tax consequences.
Non-Qualified Stock Options
An optionee will not recognize any taxable income upon the grant of a Non-
Qualified Stock Option. The Company will not be entitled to a tax deduction
with respect to the grant of a Non-Qualified Stock Option. Upon exercise of
a Non-Qualified Stock Option, the excess of the fair market value of the
Company Stock on the exercise date over the option exercise price will be
taxable as compensation income to the optionee and will be subject to
applicable withholding taxes. The Company will generally be entitled to a
tax deduction at such time in the amount of such compensation income. The
optionee's tax basis for the Company Stock received pursuant to the
exercise of a Non-Qualified Stock Option will equal the sum of the
compensation income recognized and the exercise price.
In the event of a sale of Company Stock received upon the exercise of a
Non-Qualified Stock Option, any appreciation or depreciation after the
exercise date generally will be taxed as capital gain or loss.
Incentive Stock Options
An optionee will not recognize any taxable income at the time of grant or
timely exercise of an Incentive Stock Option and the Company will not be
entitled to a tax deduction with respect to such grant or exercise. Exercise
of an Incentive Stock Option may, however, give rise to taxable
compensation income subject to applicable withholding taxes, and a tax
deduction to the Company, if the Incentive Stock Option is not exercised on
a timely basis (generally, while the optionee is employed by the Company
or within 90 days after termination of employment) or if the optionee
subsequently engages in a "disqualifying disposition," as described below.
A sale or exchange by an optionee of shares acquired upon the exercise of
an Incentive Stock Option more than one year after the transfer of the
shares to such optionee and more than two years after the date of grant of
the Incentive Stock Option will result in any difference between the net
sale proceeds and the exercise price being treated as long-term capital gain
(or loss) to the optionee. If such sale or exchange takes place within two
years after the date of grant of the Incentive Stock Option or within one
year from the date of transfer of the Incentive Stock Option shares to the
optionee, such sale or exchange will generally constitute a "disqualifying
disposition" of such shares that will have the following results: any excess
of (a) the lesser of (i) the fair market value of the shares at the time of
exercise of the Incentive Stock Option and (ii) the amount realized on such
disqualifying disposition of the shares over (b) the option exercise price of
such shares, will be ordinary income to the optionee, subject to applicable
withholding taxes, and the Company will be entitled to a tax deduction in
the amount of such income. Any further gain or loss after the date of
exercise generally will qualify as capital gain or loss and will not result in
any deduction by the Company.
Restricted Stock
A grantee will not recognize any income upon the receipt of Restricted
Stock unless the holder elects under Section 83(b) of the Code, within thirty
days of such receipt, to recognize ordinary income in an amount equal to the
fair market value of the Restricted Stock at the time of receipt, less any
amount paid for the shares. If the election is made, the holder will not be
allowed a deduction for amounts subsequently required to be returned to the
Company. If the election is not made, the holder will generally recognize
ordinary income, on the date that the restrictions to which the Restricted
Stock are subject are removed, in an amount equal to the fair market value
of such shares on such date, less any amount paid for the shares. At the time
the holder recognizes ordinary income, the Company generally will be
entitled to a deduction in the same amount.
Generally, upon a sale or other disposition of Restricted Stock with respect
to which the holder has recognized ordinary income (i.e. a Section 83(b)
election was previously made or the restrictions were previously removed),
the holder will recognize capital gain or loss in an amount equal to the
difference between the amount realized on such sale or other disposition and
the holder's basis in such shares.
Other Types of Awards
The grant of stock appreciation right will not result in income for the
grantee or in a tax deduction for the Company. Upon the settlement of such
a right or award, the grantee will recognize ordinary income equal to the
aggregate value of the payment received, and the Company generally will be
entitled to a tax deduction in the same amount.
THE BOARD RECOMMENDS A VOTE "FOR" THE PROPOSAL TO
APPROVE THE AMENDMENT TO THE PLAN.
3. RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
Upon recommendation by the Audit Committee, the Board has appointed
Ernst & Young AB as the independent auditing firm for the Company's
fiscal year ending December 31, 1999. The Company has been advised
that Ernst & Young AB has no relationship with the Company or its
subsidiaries other than that arising from the firm's employment as auditors.
In accordance with a resolution of the Board, this selection is being
presented to the stockholders for ratification at the 1999 Annual Meeting.
While ratification by stockholders of this appointment is not required by
law or the Company's certificate of incorporation or by-laws, management
believes that such ratification is desirable. In the event this appointment is
not ratified by a majority vote of stockholders, the Board will consider that
fact when it appoints independent auditors for the next year.
Ernst & Young AB has been the independent auditing firm for the
Company since May 1997. Ernst & Young AB has been the independent
auditors for Autoliv AB since 1984. Audit services provided to the
Company by Ernst & Young AB during 1998 consisted of the examination
of the financial statements of the Company and its subsidiaries for that
year and the preparation of various reports based thereon.
Representatives of Ernst & Young AB are expected to be present at the
1999 Annual Meeting with the opportunity to make a statement if they so
desire and to be available to respond to appropriate questions relating to
that firm's examination of the Company's financial statements for 1998.
THE BOARD RECOMMENDS A VOTE "FOR" THE PROPOSAL TO RATIFY THE
APPOINTMENT OF ERNST & YOUNG AB AS THE COMPANY'S INDEPENDENT
AUDITORS.
4. DISCRETIONARY VOTING OF PROXIES ON OTHER MATTERS
Management does not now intend to bring before the 1999 Annual
Meeting any matters other than those disclosed in the notice of the
meeting. Should any matter requiring a vote of the stockholders be
properly brought before the meeting by or at the direction of the Board, the
proxies in the enclosed form confer upon the person or persons entitled to
vote the shares represented by such proxies discretionary authority to vote
such shares in respect of any such matter in accordance with their best
judgment.
For business to be properly brought before an annual stockholders meeting
by a stockholder, timely advance written notice thereof must be 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. No such notices were
received for the 1999 Annual Meeting. For the Company's 2000 Annual
Stockholders Meeting any such notices must be received by the Company
not later than March 7, 2000 and not earlier than February 4, 2000.
STOCKHOLDER PROPOSALS FOR 2000 ANNUAL MEETING
Stockholder proposals intended for inclusion in the proxy statement for the
2000 Annual Stockholders Meeting must be received by the Secretary of the
Company at its principal executive offices no later than November 12, 1999.
By Order of the Board
March 12, 1999
Jorgen I. Svensson
Vice President for Legal Affairs,
General Counsel and Secretary
Stockholm, Sweden
Autoliv Inc, Box 70381, SE-107 24 Stockholm, Sweden
World Trade Center, Klarabergsviadukten 70, Section E
Tel: +46 (8) 587 206 00; Fax +46 (8) 24 44 79; Web Site: www.autoliv.com
Investor relations:
Sweden Tel: +46 (8) 587 206 00; Fax +46 (8) 24 44 79
U.S. Tel: +1 (248) 475 04 09; Fax +1 (248) 475 98 31
