Kitron ASA (KIT) Earnings Call Transcript & Summary

Dear shareholders, I would like to welcome all of you and other participant to this General Meeting of Kitron ASA. My name is Nils Kristian Einstabland. I'm with law firm Selmer and has been requested by the Board of Directors of Kitron ASA to open this meeting. For the sake of good order, I'd like to mention that this is a change compared to the agenda that was published for the notice of this general meeting. Together with me are Kitron's Chairman of the Board of Directors, Tuomo Lahdesmaki; and President and CEO, Peter Nilsson. And this meeting will be held by the -- in accordance with the previous practice and regulations on digital general meetings. And then we have recorded total registered attendees of 6, total votes represented of 113,103,255 shares. Total voting capital is 188, 217,134 shares and equal 57.06% of the total voting capital. And then we turn to item 1, election of Chairman of the General Meeting, and this is in accordance with the Norwegian Limited Liability Act -- Companies Act that we have to vote, propose and share the meeting. And Kitron, the Board of Directors have requested me to lead the meeting. This is also a change [indiscernible] of the notice for the general meeting. So then I think we can go for voting on that. [Voting]

Okay. Yes. And that is approved without any reservations, and I will share in this meeting. Item 2 is approval of notice and the agenda. And the notice of the general meeting with the agenda has been communicated to all shareholders with known addresses. And it was published for April 2024, which is 24 days before the meeting to be held, which is according with the law. And it's also been published at Oslo Stock Exchange and available at the company's website in both Norwegian and English. The general meeting is set for convenient in accordance with the rules applicable, and I assume there are no objections to notice or the agenda. So then we're just waiting for the vote approved of the agenda and notice. [Voting]

Okay. And that was approved with no objections. Item 3 is election of one person to co-sign the minutes, and it be proposed that Cathrin Nylander, CFO of Kitron ASA, is cosigning the minutes together with me. This is also a change to the -- compared to the suggestion in the notice of the general meeting. I assume there will be no order proposals, so I think that we go for voting on this topic. [Voting]

And then Cathrin is approved to co-sign the minutes together with me without reservations. Item 4 is approval of the annual financial statements and the Board of Directors report, discussions of the corporate governance review and the real sustainability report of Kitron ASA and the Kitron Group for 2023. The 2023 full year figures was published in connection with the presentation of the 4th quarter results back in February, and there have been no changes. And those figures and annual reports and other reports have been available since then at the company's website. On this background, we have not planned any presentation of the 2023 annual report -- annual accounts or the other reports in this meeting. So unless there are any questions to these documents or the figures, I suggest we start -- go for the vote. [Voting]

And I just read the formal resolution. The Board of Directors' proposal for the annual financial statements and the Board of Directors' report for the financial year 2023, including the Board of Directors' report on corporate governance, pursuant to the Norwegian Accounting Act Section 3-3B are approved. And they are approved without reservation. Item 4 (sic) [ Item 5 ] is approval of dividend. The Board of Directors proposes to the general meeting to pay a dividend of NOK 0.75 per share for the financial year 2023. The dividend will be payable to shareholders registered in Kitron shareholder register with Norwegian Central Security Depository as of expiry of April 29, 2024. Provided that the general meeting approves the proposal, the dividend is expected to be paid on or about 16th of May 2024. [Voting]

So while waiting for voting to be closed, I will read the formal decision. The general meeting approves a dividend of NOK 0.75 per share for shareholders registered in Kitron shareholders registered with the Norwegian Central Securities Depository as of expiry of April 29, 2024. The dividend was also approved without reservations. Now we move to Item 6, guidelines for remuneration to the senior executives. The Board of Directors of Kitron has prepared a proposal for updated guidance for remuneration to senior executives in the company and the group companies in accordance with the Norwegian Public Limited Liability Companies Act Section 6-16A. The Norwegian Public Limited Liability Companies Act stipulates the guidelines shall be considered and approved by the general meeting in the other end of any significant changes at least every 4 years. The guidelines proposed by the Board was distributed along with notice and have been made available to the company's websites. On that deep background, we will not elaborate on the proposal. And if there are no questions, we will go to the voting of this proposal. [Voting]

And while waiting, I can read the formal proposed resolution. The Board of Directors proposed for guidelines for remuneration to senior executives is approved. And the proposal has been approved with a clear majority. Item 7 is remuneration to the Board of Directors. And the proposal is -- for the remuneration is based on the proposal from the Nomination Committee. And the committee is represented in the general meeting by its member Atle Hauge. So he will present the summary of Nomination Committee proposal. The Nomination Committee proposal in its entirety is presented at the company's website. So I will just give a brief summary. So Atle, please, the word is yours.

Yes. Thank you. Can you hear me well?

Yes.

Good. So I've been asked to present the, first of all, the remuneration to the Board of Directors. The Nomination Committee consists of -- has consisted of 3 people throughout this year. We have had good and long discussions amongst ourselves. And we've also discussed and met with Board members, both the incumbent, but also incoming, and also with large shareholders as well. Our aim is always to have the best possible Board of Directors possible for a company that is in everybody's interest. And we have also, of course, made our proposal in line with all rules and regulation, that goes without saying. But we also tried to keep the proposal close to what is a, call it, market practice in Norway. So that would be an average or a median or the various roles within the Board. And that means that for this year, there's been some changes to various roles, which we have dissected in detail. The actual numbers under the cash and shares alternative as well as the cash alternative is shown in the notice to the AGM. So I won't go through that in detail. But I will say that we have increased in -- more or less with inflation. We have considered that specifically, and that comes actually in the next -- or coming up is that some of the committee work, especially the Audit Committee, is now in a trend where it becomes more complicated. It requires more resource. It requires more competence. So we have increased that to a level that makes sense, we think, as the requirements have increased. We have reduced the employee-elected Board Members somewhat, and that is to align with market practice as well. On the Remuneration Committee, that's also more in line with market practice. It is based on a price or a fee level per meeting, which is the only fee which is variable in that sense. The difference between the cash and shares and the cash alternative has simply been the same ratio as last year. So it's just been changed with the overall change in remuneration. So with that, I hand the word back if there are any questions or comments.

Thank you, Atle Hauge. I will just, for the sake of good order, summary your -- the Nomination Committee proposal, and that is the following remuneration to the Board members for the coming year from and including April 2024 and to and including April 2025. Chairman of the Board, NOK 650,000 or cash plus shares per year or NOK 488,000, the only cash alternative per year. The other shareholders elected Board members, NOK 330,000 for the cash and share alternatives or NOK 275,000 for the only cash alternative. Employees elected Board members, NOK 190,000 for the cash plus shares alternative or NOK 160,000 for the cash only alternative. Chairman of the Audit Committee, NOK 120,000 per year; other Audit Committee members, NOK 60,000 per year; Remuneration Committee members, NOK 5,200 per meeting, subject to attendance. The proceed will be as -- we have received an alternative proposal for the remuneration to the Board members, excluding the Chairman, which from shareholder [indiscernible], and I will read that proposal now. And the proposal is that the Nomination Committee's proposal is approved with the amendment that all ordinary Board members get the same remuneration, NOK 330,000, with the cash and share alternatives or NOK 275,000 within -- with a cash-only alternative. And there are some bullets for the reasoning, which I take -- which I just try to elaborate. And there are things, as I understand it, is that both shareholders-elected Board members and those elected by and among the employees has equal responsibility and should have equal remuneration, and also that Kitron has a long-lasting principle of equal remuneration for all ordinary Board members with 8 of the 10 largest companies with employee-elected members at the Oslo Stock Exchange also [ due ]. And it also argued that the report from the Norwegian Institute of Directors for 2023 only reports average remuneration from employee-elected Board members among companies, but there is a difference in 2023, that was 39 companies on Oslo Stock Exchange, of which only 2 of the 10 largest companies by market cap. The average remuneration for all employee-elected Board members of all companies are not in the report. There was one closing remark, yes, and the closing remark from [indiscernible] is that all Board members have the same responsibilities are obliged to prepare well and spend the necessary time to perform their Board duties and should get the same remuneration. And we now go for voting, and we will first vote for the Nomination Committee's proposal. And after that, we will vote over the alternative proposal. So now we're waiting for the votes for the Nomination Committee's proposal for remuneration to the Board members, et cetera. [Voting]

Yes. And Nomination Committee's proposal was approved with 97.93% majority. And then we start voting for the alternative proposal. [Voting]

Okay. Then the voting for the alternative proposal is closed. And there were 21,854 votes in favor of the alternative proposal and 13,737,892 votes against. This alternative proposal has not passed. And then the Nomination Committee's proposal applies. Then we go to remuneration -- Item 8, remuneration to the Nomination Committee. Atle Hauge, I don't know if you want to comment on that as well or whether we shall run directly to...

I can just comment very, very quickly. The remuneration to the Nomination Committee has also been posed to be reduced. That is based on the principle that we want to kind of move close to market practice, but unless there are specific and extraordinary reasons to deviate from that. In the sense of the Nomination Committee, the fee level, even though it's reduced, it is still above market practice. But our experience has been that it is quite difficult to get [ standing ] and competent people to the Nomination Committees that applies not specifically to keep Kitron, but to pretty much any company listed on the stock exchange. So we feel that the level is appropriate and as suggested in the proposal.

Thank you. And just to summarize, Nomination Committee proposal is that the Chairman of Nomination Committee is remunerated with NOK 65,000 per year and a member of the Nomination Committee with NOK 50,000 per year. Then I think we can start voting for that as well. [Voting]

Okay. That's resolution proposal from the Nomination Committee was approved with a large majority. Then we move to Item 9, remuneration to the auditor, and the Board of Directors proposes that audit PWC shall be remunerated according to the invoice for the audit for the finance statements accrued -- and accrues fees for this is NOK 3,000,009, of which NOK 2.7 million roughly is related to auditing and the difference to other services. And this shall be -- the fee related to the audit shall be approved by the general meeting. [Voting]

And while we wait for completing the voting, I guess, we read the formal resolution, remuneration to the audit -- the auditor for 2023 of NOK 2,774,000 for statutory audit is approved. And that is approved without any votes against. Then we go to Item 7, the remuneration report for senior executive. The general meeting shall consider the report on the remuneration and other compensation for senior executives for the year 2023 as prepared by the Board of Directors in accordance with laws on public companies. The report has been reviewed by the [indiscernible] and the general meeting shall deal with the report in accordance with Section 5-6 of Norwegian Public Limited Liability Companies Act by the way of an advisory note. And then we just go for voting on that topic as well. [Voting]

Yes. And the advisory -- proposal for advisory review was approved with a large majority. Then Item 11, authorization to the Board of Directors to issue shares. And in accordance with past practice, the Board of Director proposes [indiscernible] with divided purposes in accordance with Norwegian Code of Practice for Corporate Governance. The first authorization is proposed to be used for general strengthening of equity, business opportunities and remuneration and incentive schemes. The second authorization is proposed. A strategic authorization is proposed as a strategic authorization that can be used to carry out acquisitions within Kitron strategy. Authorization will together have a limit of a maximum of 20% of the share capital, so that the use of the authorizations in total cannot include a number of shares that exceed this limit. And authorizations [indiscernible] proposal. Then we go with the voting for Item 1 under this section, authorization to strengthen equity and incentive schemes. And this proposal was approved with the large majority. And then we go to Item 2, the strategic authorization. And this proposal was also approved with a large majority. Then we move to Item 12, authorization to the Board to buy own shares. And in accordance with the past practice, the Board of Director proposes that the general meeting runs the Board of Directors with authorization to acquire -- this proposal gives the Board authorization to acquire shares in the company with a total nominal value corresponding to up to 10% of Kitron's registered share capital. Shares acquired by Kitron can be used in later reduction of the registered share capital. With the general meeting's approval, remuneration to members of the Board of Directors for incentive schemes or as consideration in connection with acquisition of businesses. This proposal has also been presented in connection with the notice of the general meeting and have been available at the company's website. Then we move to voting for this proposal. [Voting]

And this proposal was approved without any -- with a clear majority. And then we move to Item 13, election of Board members. And according with Articles of Association of the company, the Nomination Committee proposed candidates for the election as member of Board of Directors. And 2 Board members have informed the committee that -- sorry, Atle. Maybe do you want to present your proposal for us on behalf of the committee? Okay. I can just do that briefly. As I started with, Espen Gundersen and Gro Brækken has -- have informed the Nomination Committee that they are not available for reelection. And the Nomination Committee has, on that back, considered the composition of the Board and decided to reduce the number of shareholder elected Board members by 1. As a new member, they are proposing Gyrid Skalleberg Ingerø, and her CV have been published together with notice and also have been available at the company's website. So I will not look into that. But in brief, the Nomination Committee considers her as a valuable addition to the Board replacing the 2 resigning members. And the Nomination Committee proposes that other current Board members are elected for a period of 1 year to the Annual General Meeting in 2025. So accordingly, the Nomination Committee proposes the following: Tuomo Lähdesmäki, Chairperson; Maalfrid Brath, Petra Grandinson, Michael Thomsen and Gyrid Skalleberg Ingerø. That is the shareholders elected members. And then we have a number of employee elected Board members, which is not being elected in this meeting. So I suggest with that, we go for voting for the new Board for both Nomination Committee as 1 vote, so we have vote for the whole Board of Directors. Just waiting for closing that resolution. [Voting]

And that was approved with a large majority. Then we are moving to election of Nomination Committee members. And the Nomination Committee has proposed to -- that the 2 current members are being reelected and that, accordingly, Ole Petter Kjerkreit and Atle Hauge will be the members of the Nomination Committee until General -- Annual General Meeting in 2025. We'll also have a vote for the nomination proposal as a totality. [Voting]

Yes. And that proposal was approved with large majority. That was the last item on the agenda, and we are now adjourning the general meeting of Kitron ASA.