Corporate Governance Report 2011 TELE2 IN BRIEF Tele2 AB (“the Company”) has 34 million customers in 11 countries and offers mobile services, fixed broadband and telephony, data network services, cable TV and content services. In 2011, the Company had net sales of SEK 40,750 (40,164) million and reported an operating profit (EBITDA) of SEK 10.852 (10,284) million. Tele2 AB (publ.) is a Swedish joint-stock company with shares listed on the Nasdaq OMX Stockholm Large Cap list and thus applies the Swedish Code of Corporate Governance (“the Code”) as amended on February 1, 2010. This Corporate Governance Report is prepared in accordance with the provisions of the Code. Prior years’ corporate governance reports and other corporate governance documents are available on the corporate website, www.tele2.com. The Code is based on the principle of comply or explain, which means that companies can deviate from single rules in the Code, given that they provide an explanation for the deviation. This report contains information regarding the following deviations from the Code: Reference from the Code Deviation and Explanation 2.4 A member of the Board shall not chair Cristina Stenbeck, who is the Chairman of the Nomination Committee, is also a member of the Company´s the Nomination Committee Board. The other members of the Nomination Committee have explained their decision regarding the election of the Chairman of the Nomination Committee as being in the Company’s and shareholders’ best interest – and a natural consequence of Cristina Stenbeck leading the Nomination Committee’s work in recent years as well as her representing the Company’s largest shareholder. 9.2 The members of the Remuneration Committee, Mia Brunell Livfors, member of the Remuneration Committee, is not considered independent with respect apart from the Chairman, must be independent to the Company and its management. The Board, however, considers that her experience will benefit the of the Company and the corporate executives. Company and make her a suitable committee member. The Code notwithstanding, the Board believes that she will be as free of conflict as if she were independent. OVERVIEW OF CORPORATE GOVERNANCE AT TELE2 Sound corporate governance at Tele2 involves ensuring that the right framework for decision making has been determined, responsibility has been assigned and that there is transparent reporting that supports the understanding and monitoring of the development of the Company. Tele2’s overall framework of corporate governance can be visualised as follows: TELE2’S GovERNANCE StructurE Proposals Elections for Board External Steering Docu- External Auditors Shareholders AGM Nomination Committee ments, such as Swed- ish Companies Act, the Evaluation Annual Accounts Act, the Election Swedish Code of Corpo- Information rate Governance, industry Charters regulations etc. Audit Committee & Board of Directors Reports Remuneration Committee Strategies & Plans Reporting Reporting Leadership Team President & CEO Central Functions Internal Stering Documents Reporting Reporting Business Units Processes & People Controls in alignment IT infrastructure with rules Tele2 – Corporate Governance Report 2011 1 SHarEHOLDER INFormatION ANNuaL GENEraL MEETING Tele2’s A and B shares were first listed on the O-List of the Stock- The 2011 Annual General Meeting (“AGM”) was held on May 16, holm Stock Exchange in May 1996. Tele2 has been listed on the 2011. At the meeting, 712 shareholders were in attendance, person- Nasdaq OMX Stockholm Large Cap list since October 2006. Per 31 ally or by proxy, representing 69.9 percent of the votes. Wilhelm December 2011, Tele2 had 51,762 shareholders and the market Lüning was elected Chairman of the meeting. All Board members value of the Company was SEK 59,867 billion. In addition to share- elected by the AGM were present. holder meetings, Tele2 provides information to shareholders by publishing financial reports (interim reports, full year reports and attendance, % of votes annual reports) and press releases. The Company also arranges regular analyst meetings. 73% 75% 72% 71% 70% The Tele2 share Par Total % of total Votes per % of total value issued shares count share votes A-Share 1.25 20,990,050 5 10 33 B-Share 1.25 423,744,289 94 1 66 C-Share 1.25 4,049,000 1 1 1 Graphs showing ownership structure 2007 2008 2009 2010 2011 NUmber of SHareHolders 51,762 The following significant resolutions were adopted by the AGM: • It was resolved to adopt the income statements and balance 42,156 43,153 sheets for the Company and the Group in respect of 2010. 36,466 36,081 • In accordance with the proposal of the Board of Directors, an ordi- nary dividend of SEK 6 per share and SEK 21 per share as extraor- dinary dividend (in total: SEK 11,968 million) were approved. • The Board of Directors and the CEO were discharged from liability for the 2010 financial year. • The AGM re-elected Lars Berg, Mia Brunell Livfors, Jere Calmes, John Hepburn, Erik Mitteregger, Mike Parton, John Shakeshaft, and Cristina Stenbeck as directors of the Board for the period until 2007 2008 2009 2010 2011 the close of the next AGM. Furthermore, the AGM elected Mike Parton as Chairman of the Board. • The remuneration of the Board of Directors was set for the period until the close of the next AGM. Furthermore, remuneration to the auditor shall be paid in accordance with approved invoices. • A procedure for the preparation of the election of the Board of SHare capital distribUtion, BY nationalitY Directors and auditor, their remuneration and the proposal on the Chairman of the Annual General Meeting of 2012 was adopted. • The proposed guidelines for the remuneration of senior executives ■ Sweden, 62% were approved. ■ USA, 13% • A share based incentive programme for allocation to senior execu- ■ Europe, excl. Sweden, 23% tives and other key employees in the Tele2 Group, in accordance ■ Rest of the world, 2% with the Board’s proposals, was adopted. • The Board of Directors was authorised to pass resolutions, during the forthcoming period until the AGM 2011, to purchase or transfer so many Class A and/or Class B shares that the Company’s holding does not at any time exceed 10 percent of the total number of shares For further shareholder information, including information on share in the Company. Furthermore, the Board of Directors was authorised capital, voting rights, trade, and market value see our corporate to pass a resolution on one or more occasions during the forthcom- website, www.tele2.com. ing period until the next AGM to transfer the Company’s own Class A and/or Class B shares on the Nasdaq OMX Stockholm. This may only occur at a price within the share price interval registered at that time, where share price interval means the difference between the highest buying price and lowest selling price. The purpose of the authorisation is to give the Board of Directors flexibility to con- tinuously decide on changes to the capital structure during the year and thereby contribute to increased shareholder value. The minutes of the AGM are available on our corporate website, www.tele2.com. Tele2 – Corporate Governance Report 2011 2 THE NomINatION CommITTEE The Nomination Committee for the AGM 2012 The principles for appointing members to the Company’s Nomination The Nomination Committee will present the following proposals for Committee were determined at the AGM 2011. In accordance with approval by the 2012 Annual General Meeting: these principles, Cristina Stenbeck convened a Nomination Com- • Proposing the Board of Directors and its Chairman mittee during the autumn 2011 in preparation for the AGM in 2012, • Proposing the remuneration to members of the Board and its com- consisting of the major shareholders of Tele2 AB. The membership of mittees and auditor remuneration the Nomination Committee is shown in the table below. • Nominating a Chairman to lead the AGM, and • Proposing a procedure for appointing members of the Nomination Nomination Committee for the AGM 2012 Committee in advance of the AGM 2013. Share of votes as on • Proposing auditors for the period 2012 – AGM 2016 Name Representing December 31, 2011 Cristina Stenbeck Investment AB Kinnevik 47.50 % The Nomination Committee for the AGM 2012 has held three meetings Åsa Nisell Swedbank Robur Fonder 2.2 % as of March 23, 2012, with additional contact between the meetings. Björn Lind AMF Pension 1.2 % No compensation has been paid by Tele2 to any member of the Nomination Committee for their work. The Board member Cristina Stenbeck has been appointed as Chair- man of the Nomination Committee. The other members of the THE Board Nomination Committee have explained their decision regarding the According to Tele2’s Articles of Association, the Board shall consist election of the Chairman of the Nomination Committee as being in of at least five and a maximum of nine members, to be elected by the the Company’s and shareholders’ best interest and a natural con- AGM. At the AGM 2011, Tele2’s shareholders re-elected Lars Berg, sequence of Cristina Stenbeck leading the Nomination Committee’s Mia Brunell Livfors, Jere Calmes, John Hepburn, Erik Mitteregger, work in recent years, as well as her representing the Company’s Mike Parton, John Shakeshaft and Cristina Stenbeck as Directors of largest shareholder. the Board for the period until the close of the next AGM. Furthermore, Mike Parton was elected as Chairman of the Board. The Articles of The work of the Nomination Committee for the AGM 2011 Association of Tele2 are available on the corporate website, In advance of the AGM 2011, the Nomination Committee has evalu- www.tele2.com. ated the Board’s work. As the basis for the Nomination Committee’s The Company’s President & CEO, CFO and Company Secretary evaluation, the Chairman of the Board has presented the results of attend the Board meetings except for when their work is evaluated.