Summons to the Annual General Meeting 2008
The shareholders of KONE Corporation are hereby summoned to the Annual General Meeting to be held at Finlandia Hall, Mannerheimintie 13, Helsinki, on Monday February 25, 2008 at 11:00 am. Shareholder registration will begin at 10:00 am. The meeting shall decide on the following matters: 1. Matters pertaining to the Annual General Meeting as stated in Article 13 of KONE’s Articles of Association and in Chapter 5 of the Companies Act: The company’s financial statements for the 2007 financial period as well as the Board of Directors’ proposal for distribution of profits was published on January 25, 2008. The company’s Board of Directors proposes that a dividend of EUR 1.29 be paid for each of the 19,052,178 class A shares and EUR 1.30 for each of the outstanding 106,955,663 class B shares. If the General Meeting approves the Board of Directors’ proposal for dividends, the date of record for dividend distribution will be February 28, 2008 and dividends will be paid on March 6, 2008. The Board of Directors’ Nomination and Compensation Committee proposes that the number of board members and the composition of the Board of Directors be kept unchanged. Therefore, Antti Herlin, Sirkka Hämäläinen-Lindfors, Matti Alahuhta, Reino Hanhinen, Sirpa Pietikäinen, Masayuki Shimono, and Iiro Viinanen would be elected, subject to their consent, as board members, and Jussi Herlin would be elected as a deputy member. In addition, the Nomination and Compensation Committee proposes that the board members be compensated as follows: Chair of the Board of Directors EUR 54,000, Vice Chair EUR 42,000, board members EUR 30,000, and deputy members EUR 15,000 per year, as well as an EUR 500 fee per meeting for Board and Committee meetings. The Board of Directors’ Audit Committee proposes that authorized public accountants PricewaterhouseCoopers Oy and Heikki Lassila be re-elected, subject to their consent, as auditors.
2. Amendment of the Articles of Association The company’s Board of Directors proposes that the General Meeting decide to amend the Articles of Association due to the new Companies Act, which entered into force on September 1, 2006, as follows:
3. Share split, i.e. increasing the number of shares through a share issue without payment The company’s Board of Directors proposes that the number of shares in the company be increased by issuing new shares to the shareholders without payment in proportion to their holdings so that one class A share will be given for each class A share and one class B share will be given for each class B share. A total of 19,052,178 class A shares and 109,300,416 class B shares will be issued, so that after the share issue, there will be a total of 38,104,356 class A shares and a total of 218,600,832 class B shares. The share issue will be implemented in the book-entry system and does not require measures by the shareholders. The shareholders who are registered in the company’s shareholder register on the record date, February 28, 2008, are entitled to shares. New shares will produce shareholder rights as of the registration of the share issue, however, the new shares will not entitle their holders to the dividends to be decided in the General Meeting to be held on February 25, 2008. The New Shares are to be admitted to public trading and entered into the book-entry system on February 29, 2008. 4. Confirmation of the fulfillment of the share subscription criteria for the 2005C option rights and crediting the subscription price for the shares issued based on the 2005A, 2005B, 2005C, and 2007 option rights in part to the paid-up unrestricted equity reserve The General Meeting of November 21, 2005 decided on issuing a maximum of 2,000,000 2005C option rights conditionally so that the share subscription period will only begin if the average net sales growth of the KONE Group for the 2006 and 2007 financial periods exceeds market growth and the Earnings Before Interest and Taxes (EBIT) of the KONE Group for the 2006 financial period exceeds the EBIT for the 2005 financial period and the EBIT for the 2007 financial period exceeds the EBIT for the 2006 financial period. The company’s Board of Directors proposes that the share subscription period for the 2005C option rights be confirmed to begin on April 1, 2008. In addition, the company’s Board of Directors proposes that EUR 0.5 of the subscription price to be paid for the new shares issued based on the 2005A, 2005B, 2005C, and 2007 option rights (EUR 0.25 if the General Meeting approves the increase to the number of shares described above under section 3) be credited to the share capital, and that the remaining part be credited to the paid-up unrestricted equity reserve. Should the number of shares be increased, the number of shares to be subscribed for based on the 2005A, 2005B, 2005C and 2007 option rights will increase, and the share subscription price will decrease in the same proportion. 5. Authorization of the Board of Directors to decide on the repurchase of treasury shares and on the distribution of the repurchased treasury shares The company’s Board of Directors proposes that the General Meeting authorize the Board of Directors to decide on the repurchase of no more than 12,785,000 treasury shares with assets from the company’s unrestricted equity so that a maximum of 1,905,000 class A shares and a maximum of 10,880,000 class B shares may be repurchased. The consideration to be paid for the repurchased shares with respect to both class A and class B shares will be determined based on the trading price determined for class B shares on the NASDAQ OMX Helsinki Ltd on the date of repurchase. Treasury shares may be repurchased in order to develop the company’s capital structure, to finance or carry out acquisitions or other transactions, to implement the company’s share-based incentive plans, to be transferred for other purposes, or to be cancelled. As a result of the share repurchase, the company’s distributable unrestricted equity will decrease. Class A shares will be repurchased in proportion to holdings of class A shareholders at a price equivalent to the average price paid for the company’s class B shares on the OMX Nordic Exchange Helsinki on the date of repurchase. Any holder wishing to offer his or her class A shares for repurchase by the company must state his or her intention to the company’s Board of Directors in writing. The company may deviate from the obligation to repurchase shares in proportion to the shareholders' holdings if all the holders of class A shares give their consent. Class B shares will be purchased in public trading on the NASDAQ OMX Helsinki Ltd at the market price as per the time of purchase. Class B shares will not be repurchased in proportion to the holdings of the shareholders as they will be repurchased in public trading. The Board of Directors proposes that the General Meeting authorize the Board of Directors to decide on the distribution of treasury shares in the possession of the company so that the authorization is limited to 1,905,000 class A shares and 10,880,000 class B shares. The Board of Directors is authorized to decide to whom the shares will be given, i.e. distribute shares in directed manner in deviation from the shareholders’ pre-emptive rights. The repurchased shares may be distributed as consideration in possible acquisitions and other transactions as well as be used to implement the company’s share-based incentive plans in the manner and to the extent decided by the Board of Directors. The Board of Directors also has the right to decide on selling the treasury shares in public trading on the NASDAQ OMX Helsinki Ltd for the purpose of financing possible acquisitions. The shares will be distributed at least at the market price at the moment of their distribution, such price to be determined on the basis of the trading price for class B shares determined in public trading on the NASDAQ OMX Helsinki Ltd Should the General Meeting approve the increase to the number of shares described above under section 3, the number of shares subject to the authorization will increase correspondingly. The Board of Directors proposes that the authorizations will replace the authorizations granted by the Annual General Meeting of February 26, 2007 and that they will remain in effect for a period of one year following the date of decision of the General Meeting. Availability of Documents The company’s financial statements and the proposals by the Board of Directors are available for inspection by the shareholders one week prior to the General Meeting at the company’s main office at Kartanontie 1, Helsinki, and on the company’s internet pages at www.kone.com/agm. Copies of the documents will be sent to the shareholders upon request, and they will also be available at the General Meeting. Right to Participate In order to participate in the General Meeting, shareholders must be registered in the company’s shareholder register maintained by the Finnish Central Securities Depository at the latest on February 15, 2008. In order to participate in the General Meeting, nominee-registered shareholders must contact their account operator in order for the shareholder to be temporarily entered into the shareholder register at the latest on February 15, 2008. Declaration of Intention to Attend A shareholder who wishes to attend the General Meeting must declare his or her intention to attend to the company no later than 4:00 pm on February 20, 2008. The declaration can be made: via KONE’s Internet pages at www.kone.com/agm, by letter to KONE Corporation, Share Register, PL 7, 02151 Espoo, Finland, by telefax to +358 20 475 4523, or by phone to +358 20 475 4548. Shareholders are requested to notify the company of any proxies for the General Meeting so that the proxies are in the company’s possession by the end of the registration period on February 20, 2008. Helsinki, January 25, 2008 BOARD OF DIRECTORS Sender: KONE Corporation Jukka Ala-Mello Secretary to the Board Minna Mars Senior Vice President, Corporate Communications & IR For further information please contact: Jukka Ala-Mello, Secretary to the Board, tel. +358 (0)204 75 4226 About KONE KONE is one of the world’s leading elevator and escalator companies. It provides customers with industry-leading elevators, escalators and innovative solutions for maintenance and modernization. KONE also provides maintenance services for automatic building doors. In 2007, KONE had annual net sales of EUR 4.1 billion and approximately 32,500 employees. KONE class B shares are listed on the OMX Nordic Exchange Helsinki in Finland. www.kone.com
Proposal by the Board of Directors to amendment of the Articles of Association The company’s Board of Directors proposes that the General Meeting decide to amend the Articles of Association due to the new Companies Act, which entered into force on 1 September 2006, as follows:
The new proposed Articles of Association is enclosed wholly in Enclosure 1. Proposal by the Board of Directors to share split, i.e. increasing the number of shares through a share issue without payment The company’s Board of Directors proposes that the number of shares in the company be increased by issuing new shares to the shareholders without payment in proportion to their holdings so that one class A share will be given for each class A share and one class B share will be given for each class B share. A total of 19 052 178 class A shares and 109 300 416 class B shares will be issued, so that after the share issue, there will be a total of 38 104 356 class A shares and a total of 218 600 832 class B shares. The share issue will be implemented in the book-entry system and does not require measures by the shareholders. The shareholders who are registered in the company’s shareholder register on the record date, 28 February 2008, are entitled to shares. New shares will produce shareholder rights as of the registration of the share issue, however, the new shares will not entitle their holders to the dividends to be decided in the General Meeting to be held on 25 February 2008. The New Shares are to be admitted to public trading and entered into the book-entry system on 29 February 2008. Confirmation of the fulfillment of the share subscription criteria for the 2005C option rights and crediting the subscription price for the shares issued based on the 2005A, 2005B, 2005C, and 2007 option rights in part to the paid-up unrestricted equity reserve The General Meeting of 21 November 2005 decided on issuing a maximum of 2,000,000 2005C option rights conditionally so that the share subscription period will only begin if the average net sales growth of the KONE Group for the 2006 and 2007 financial periods exceeds market growth and the Earnings Before Interest and Taxes (EBIT) of the KONE Group for the 2006 financial period exceeds the EBIT for the 2005 financial period and the EBIT for the 2007 financial period exceeds the EBIT for the 2006 financial period. The company’s Board of Directors proposes that the share subscription period for the 2005C option rights be confirmed to begin on 1 April 2008. In addition, the company’s Board of Directors proposes that EUR 0.5 of the subscription price to be paid for the new shares issued based on the 2005A, 2005B, 2005C, and 2007 option rights (EUR 0.25 if the General Meeting approves the increase to the number of shares described above under section 3) be credited to the share capital, and that the remaining part be credited to the paid-up unrestricted equity reserve. Should the number of shares be increased, the number of shares to be subscribed for based on the 2005A, 2005B, 2005C and 2007 option rights will increase, and the share subscription price will decrease in the same proportion. The amendments related to the number of shares to be subscribed for and the share subscription price will take effect at the same time the increase to the number of shares is registered. Proposal by the Board of Directors to authorize the Board of Directors to decide on the repurchase of treasury shares The company’s Board of Directors proposes that the General Meeting authorize the Board of Directors to decide on the repurchase of no more than 12,785,000 treasury shares with assets from the company’s unrestricted equity so that a maximum of 1,905,000 class A shares and a maximum of 10,880,000 class B shares may be repurchased. The consideration to be paid for the repurchased shares with respect to both class A and class B shares will be determined based on the trading price determined for class B shares on the Helsinki Stock Exchange on the date of repurchase. Treasury shares may be repurchased in order to develop the company’s capital structure, to finance or carry out acquisitions or other transactions, to implement the company’s share-based incentive plans, to be transferred for other purposes, or to be cancelled. As a result of the share repurchase, the company’s distributable unrestricted equity will decrease. Class A shares will be repurchased in proportion to holdings of class A shareholders at a price equivalent to the average price paid for the company’s class B shares on the Helsinki Stock Exchange on the date of repurchase. Any holder wishing to offer his or her class A shares for repurchase by the company must state his or her intention to the company’s Board of Directors in writing. The company may deviate from the obligation to repurchase shares in proportion to the shareholders' holdings if all the holders of class A shares give their consent. Class B shares will be purchased in public trading on the Helsinki Stock Exchange at the market price as per the time of purchase. Class B shares will not be repurchased in proportion to the holdings of the shareholders as they will be repurchased in public trading. Should the General Meeting approve the increase to the number of shares proposed earlier, the number of shares subject to the authorization will increase correspondingly. The Board of Directors proposes that the authorization will replace the authorization granted by the Annual General Meeting of 26 February 2007 and that it will remain in effect for a period of one year following the date of decision of the General Meeting. Proposal by the Board of Directors to authorize the Board of Directors to decide on the distribution of the repurchased treasury shares The Board of Directors proposes that the General Meeting authorize the Board of Directors to decide on the distribution of treasury shares in the possession of the company so that the authorization is limited to 1,905,000 class A shares and 10,880,000 class B shares. The Board of Directors is authorized to decide to whom the shares will be given, i.e. distribute shares in directed manner in deviation from the shareholders’ pre-emptive rights. The repurchased shares may be distributed as consideration in possible acquisitions and other transactions as well as be used to implement the company’s share-based incentive plans in the manner and to the extent decided by the Board of Directors. The Board of Directors also has the right to decide on selling the treasury shares in public trading on the Helsinki Stock Exchange for the purpose of financing possible acquisitions. The shares will be distributed at least at the market price at the moment of their distribution, such price to be determined on the basis of the trading price for class B shares determined in public trading on the Helsinki Stock Exchange. Should the General Meeting approve the increase to the number of shares proposed earlier, the number of shares subject to the authorization will increase correspondingly. The Board of Directors proposes that the authorization will replace the authorization granted by the Annual General Meeting of 26 February 2007 and that it will remain in effect for a period of one year following the date of decision of the General Meeting.
AGM 2008 presentation
This document is an unofficial translation from the Finnish original. In the event of any discrepancies between the Finnish and English versions, the Finnish version shall prevail.§ 1 Business Name and DomicileThe business name of the company is KONE Oyj and in English, KONE Corporation. Its domicile is Helsinki. § 2 Field of OperationThe company’s field of operation is the metal industry, primarily the mechanical engineering and electrical engineering industries, trade in the products of the metal industry, and industrial and business activities related to these. In addition, the company may engage in the buying, selling, owning, and administration of property and securities.3 § SharesThe shares of the company are divided into class A and class B shares.Share issue In a share issue against payment, either shares of both classes or only of class B may be issued in accordance with a decision of a General Meeting of Shareholders.In a share issue in which shares of both classes are issued, the shares shall be issued in proportion to both classes of shares and by offering to shareholders shares in both share classes in proportion to their previous holdings of shares in such class.Dividend on class B sharesWhen distributing dividends, the dividend paid on class B shares is higher than that paid on class A shares. The difference between the dividends paid on the different classes of shares can be a minimum of one (1) percent and a maximum two and one-half (2.5) percent, calculated based on the amount obtained by dividing the share capital entered into the Trade Register by the number of shares entered into the Trade Register. Right to vote pertaining to sharesIn a General Meeting of Shareholders, each class A share entitles its holder to one vote and each full ten class B shares entitle their holder to one vote, but each shareholder has a minimum of one vote.Conversion of class A shares to class B sharesUpon an offer by the Board of Directors, the holder of class A shares shall have the right to present a claim that the class A shares owned by him or her be converted to class B shares at a ratio of 1:1. The offer by the Board of Directors shall be communicated to the holders of class A shares by a letter sent to their addresses entered in the company’s shareholders’ register. Any claim regarding a conversion shall be presented in writing to the company’s Board of Directors. The claim shall specify the shares for which the conversion is desired. After the period of the offer has expired, the Board of Directors shall forthwith carry out the conversions based on the claims presented. Thereafter, a notification of the conversion shall forthwith be made to the Trade Register for registration. The conversion has been put into effect when the registration has been made.The shares of the company are in the book-entry securities system.§ 4 Board of Directors The Board of Directors of the company shall include a minimum of five (5) and a maximum of eight (8) regular members, as well as a maximum of three (3) deputy members.The Board of Directors shall elect the Chair of the Board and the Deputy Chair from amongst its members.The term of office of the Board of Directors shall expire at the end of the first Annual General Meeting of Shareholders following the election.The Board of Directors is deemed to constitute a quorum when more than a half of its members are present.§ 5 Managing DirectorThe Board of Directors of the company shall appoint the company’s Managing Director.§ 6 Right of RepresentationThe company is represented by the Chair of the Board of Directors and by the Managing Director, either one of them alone, and by the members and deputy members of the Board of Directors, any two of them jointly.The Board of Directors shall decide on the granting of powers of procuration.§ 7 AuditThe company shall have a minimum of one (1) and a maximum of three (3) auditors. The auditors must be authorized public accountants. The auditors are elected annually at the annual general meeting for a term that shall expire at the end of the first Annual General Meeting of Shareholders following the election.§ 8 Summons to a General MeetingThe Summons to a General Meeting of Shareholders shall be published in at least two daily newspapers, which appear in the Helsinki region and which will be selected by the Board of Directors, no earlier than two months before the last date for the declaration of the intention to attend in accordance with Article 9, and no later than one week before the fixed date referred to in Chapter 4, section 2.2 of the Limited Liability Companies Act.§ 9 Declaration of Intention to Attend a General MeetingIn order to be permitted to participate in a General Meeting of Shareholders, a shareholder shall, no later than the date designated by the Board of Directors and mentioned in the summons to the Meeting, which date may be no earlier than ten (10) days before the Meeting, declare to the company her/his intention to attend.§ 10 General Meeting of ShareholdersThe Annual General Meeting of Shareholders shall be held annually within three months after the closing of the financial period, on a day designated by the Board of Directors.At the Meeting, the following shall be:presented1) the financial statements, which shall comprise the consolidated financial statements, the Board of Directors’ Report;2) the Auditors’ Report;
decided3) the adoption of the financial statements;4) the use of the profit shown on the balance sheet;5) granting discharge from liability to the members and deputy members of the Board of Directors and to the Managing Director;6) the number of members and deputy members of the Board of Directors and their remunerations;7) the number of auditors, and their remunerations;
and elected8) the Board of Directors’ regular members and, if needed, deputy members;9) one or several Auditors.§ 11 Financial PeriodThe financial period of the company is the calendar year.§ 12 ArbitrationAny disputes between the company on the one hand, and the Board of Directors, any member of the Board of Directors, the Managing Director, any auditor, or any shareholder on the other hand, regarding the application of the Limited Liability Companies Act or the present Articles of Association, shall be settled by arbitration as prescribed in the Limited Liability Companies Act and the Arbitration Act.
KONE Annual General Meeting is held in Finlandia Hall, Helsinki, Finland. Overlooking Töölö Bay, the Hall is right in the centre of Helsinki, about one kilometer from downtown railway station.The address of Finlandia Hall is:Mannerheimintie 13 eFIN-00100 HelsinkiFinland
Decisions Taken by KONE Corporation's Annual General Meeting and Board of Directors Matters Relating to the Annual General Meeting KONE Corporation’s Annual General Meeting was held in Helsinki on February 25, 2008. The meeting approved the financial statements and discharged the responsible parties from liability for the financial period January1–December 31, 2007. The Annual General Meeting approved dividends of EUR 1.29 for each of the 19,052,178 class A shares and EUR 1.30 for the 106,955,663 outstanding class B shares. The date of record for dividend distribution is February 28, 2008, and dividends will be payable on March 6, 2008. The number of Members of the Board of Directors was confirmed as seven and it was decided to elect one deputy Member. Re-elected as full Members of the Board were Matti Alahuhta, Reino Hanhinen, Antti Herlin, Sirkka Hämäläinen-Lindfors, Masayuki Shimono, Iiro Viinanen and Sirpa Pietikäinen and as deputy Member Jussi Herlin. The Annual General Meeting confirmed an annual compensation of EUR 54,000 for the Chairman of the Board, EUR 42,000 for the Vice Chairman, EUR 30,000 for Board Members and EUR 15,000 for the deputy Member. In addition, a compensation of EUR 500 was approved for attendance at Board and Committee meetings. Authorized public accountants Heikki Lassila and PricewaterhouseCoopers Oy were nominated as auditors. Amendment of the Articles of Association According to the Board of Directors’ proposal, the Annual General Meeting decided to amend the Articles of Association due to the new Companies Act, which entered into force on September 1, 2006. The new Articles of Association can be found at www.kone.com. Share split, i.e. increasing the number of shares through a share issue without payment The Annual General Meeting approved the Board of Directors’ proposal to increase the number of shares in the company by issuing new shares to the shareholders without payment in proportion to their holdings so that one class A share will be given for each class A share and one class B share will be given for each class B share. After the share issue, there will be a total of 38,104,356 class A shares and a total of 218,600,832 class B shares. The share issue will be implemented in the book-entry system and does not require measures by the shareholders. The shareholders who are registered in the company’s shareholder register on the record date, February 28, 2008, are entitled to shares. New shares will produce shareholder rights as of the registration of the share issue, however, the new shares will not entitle their holders to the dividends to be decided in the General Meeting held on February 25, 2008. The new shares are to be admitted to public trading and entered into the book-entry system on February 29, 2008. Terms and Conditions for 2005A, 2005 B, 2005C and 2007 Option Rights The General Meeting decided that the share subscription period for the 2005C option rights will begin on April 1, 2008. In addition, it was decided that EUR 0.25 of the subscription price to be paid for the new shares issued based on the 2005A, 2005B, 2005C, and 2007 option rights will be credited to the share capital, and that the remaining part will be credited to the paid-up unrestricted equity reserve. Due to the increase in the number of shares, the Annual General Meeting decided that the number of shares to be subscribed for based on the 2005A, 2005B, 2005C and 2007 option rights will increase, and the share subscription price will decrease in the same proportion. The terms and conditions for all option rights can be found at www.kone.com. Authorization to Acquire and Distribute Own Shares The Board of Directors’ proposal that the Annual General Meeting authorize the Board of Directors to repurchase KONE’s own shares with assets distributable as profit was approved. The shares may be repurchased in order to develop the capital structure of the Company, finance or carry out possible acquisitions, implement the Company’s share-based incentive plans, or to be transferred for other purposes or to be cancelled. Altogether no more than 25,570,000 shares may be repurchased, of which no more than 3,810,000 may be class A shares and 21,760,000 class B shares. In addition, the Board of Directors’ proposal that the Annual General Meeting authorize the Board of Directors to decide on the distribution of any shares repurchased by the company was approved. The authorization is limited to a maximum of 3,810,000 class A shares and 21,760,000 class B shares. The Board shall have the right to decide to whom to issue the shares, i.e. to issue shares in deviation of the pre-emptive rights of shareholders. The repurchased shares may be used as compensation in acquisitions and in other arrangements as well as to implement the Company’s share-based incentive plans in the manner and to the extent decided by the Board of Directors. The Board of Directors also has the right to decide on the distribution of the shares in public trading in the NASDAQ OMX Helsinki Ltd for the purpose of financing possible acquisitions. The shares shall be distributed at least at the market price at the moment of their transfer determined on the basis of the trading price for class B shares determined in public trading in the NASDAQ OMX Helsinki Ltd. These authorizations shall remain in effect for a period of one year from the date of decision of the Annual General Meeting. Decisions by the Board of Directors At its meeting held after the Annual General Meeting, the Board of Directors elected from among its members Antti Herlin as its Chair and Sirkka Hämäläinen-Lindfors as Vice Chair. Antti Herlin was elected as Chairman of the Audit Committee. Sirkka Hämäläinen-Lindfors and Iiro Viinanen were elected as independent members of the Committee. Antti Herlin was elected as Chairman of the Nomination and Compensation Committee. Reino Hanhinen and Sirkka Hämäläinen-Lindfors were elected as independent members of the Committee.