Ericsson board shake-up set to give Cevian a bigger say

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Ronnie Leten, chairman of Swedish kit maker Ericsson, won’t seek re-election at this year’s AGM.

The decision to step down after five years is part of a broader board shake-up that, if approved by shareholders, will give activist investor Cevian Capital more influence over Ericsson’s governance.

“It has been an honour to serve on the Ericsson board since 2018 and I am very proud of what has been achieved. Today Ericsson is a very strong company both strategically and financially. The company has brought 5G to the world and regained its technology leadership,” said Leten in a statement on Wednesday.

“Börje Ekholm, since stepping in as CEO, has turned the company around and this continues with the important governance and cultural transformation which is underway,” he added.

Kurt Jofs and Nora Denzel, who have served on the board since 2018 and 2013 respectively, are also stepping down.

Ericsson has proposed current board member, and former CEO of Swedish automotive safety specialist Veoneer, Jan Carlson as Letens’ replacement.

“We believe that Ericsson has a strong board of directors to continue to drive the strategic agenda and further strengthen the culture of the company. Jan Carlson has a long career both as CEO and chairman, as well as good knowledge of Ericsson after serving many years on the board,” said Johan Forssell, who chairs Ericsson’s nomination committee. “His international experience, technology background and personal qualities make him an excellent successor as chairman of the board, securing a smooth transition from Ronnie Leten.”

So, more of the same then, except that one of the nominees to replace another of the outgoing board members represents one of Ericsson’s more vocal critics.

Jonas Synnergren is a senior partner at Cevian Capital, Ericsson’s second-largest shareholder and an activist investor that last year called for changes to Ericsson’s two-tiered share structure in order to increase its influence. More recently, following Ericsson’s Q3 financial report, Cevian called on the company to ‘drain the swamp’ of losses.

Ericsson has been working hard lately to convince the wider world it can adapt to changes in the marketplace and the wider economy. At last month’s capital markets day it went to some lengths to talk up the potential of its enterprise, cloud, and intellectual property divisions to show strong growth amid the coming slowdown in RAN spending, pitching the idea that Ericsson is evolving into a platforms company.

But the financials tell a different story. Its Q3 results served as a regular reminder that Ericsson is still, first and foremost, a network vendor. Its infrastructure business accounted for more than 70% of revenue in the three months to 30th September. It is also the only profitable division in the company. It is Ericsson’s bread and butter, which is why investors were not thrilled to see the networks business report Q3 margins that were narrower compared to 12 months earlier.

Ericsson is also still grappling with the fallout from the Iraq scandal, agreeing last month to an extra year of compliance monitoring by the US Department of Justice (DoJ).

The result of all this is that Ericsson’s shares are down nearly 40%compared to this time last year.

By nominating Carlson, Ericsson is backing a candidate that will pick up where Leten leaves off. Whether or not this satisfies shareholders – chief among them being Cevian – is an open question. Given that news of the board changes came out yesterday afternoon, and Ericsson’s shares have fallen slightly today while the rest of the market is up slightly, it suggests investors are yet to be entirely convinced.

Ericsson’s AGM is due to take place on 29th March.


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