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ANNUAL GENERAL MEETING 2008

The Annual General Meeting of KONE was held Monday February 25, 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:

    • the stipulations on the minimum and maximum amount of the company’s capital and number of shares and on the nominal value of the shares will be abolished, and the wording otherwise specified without amending the content (3 and 4 §)
    • the stipulations concerning the record date will be abolished (5 §)
    • the terminology concerning the representation of the company will be specified (8 §)
    • references to the delivery dates for summons to General Meetings will be amended to correspond to the new Companies Act (11 §)
    • the agenda of the Annual General Meeting of Shareholders will be amended to correspond to the new Companies Act (13 §)
    • Articles 3, 4 and 5 as well as 8 and 9 of the Articles of Association will be combined so that the amended Articles of Association will consist of 12 Articles in total, and the numbering of the entire Articles of Association will be amended correspondingly.

    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

  • At the General Meeting, the following matters will be considered:

    1. Opening of the meeting

    2. Election of Chair and Secretary for the meeting

    3. List of votes

    4. Election of person to check the minutes and persons to control the counting of the votes

    5. Legitimacy and quorum of the meeting

    6. Review of CEO & President and presentation of Financial Statements 2007 of both group and parent company including the Board Report as well as the Auditor’s report.

    7. Approval of the Financial Statements, Income Statement, the Balance Sheet, the Consolidated Income Statement and Consolidated Balance Sheet

    8. Decision of dividends in accordance with the approved Balance Sheet

    The Board of Directors proposes that a dividend of EUR 1.29 be paid on the class A shares and EUR 1.30 on the class B shares. The record date for dividend distribution will be 28 February 2008 and dividends will be paid on 6 March 2008.

    9. Granting of discharge from liability for the Board Members, the deputy Member and the CEO & President

    10. Deciding on the number of the Members and deputy Members of the Board of Directors

    The Nomination and Compensation Committee of the Board of Directors proposes that seven (7) ordinary members be elected and one (1) deputy member be elected.

    11. Deciding on the remuneration payable to the Members and deputy Members of the Board

    The Nomination and Compensation Committee proposes annual compensation of EUR 54,000 for the Chair of the Board, EUR 42,000 for the Vice Chair, EUR 30,000 for Board Members and EUR 15,000 for Deputy Board Member. In addition, compensation of EUR 500 is proposed for attendance at Board and Committee meetings.

    12. Election of the Board Members and deputy Members

    The Nomination and Compensation Committee proposes that Antti Herlin, Sirkka Hämäläinen-Lindfors, Matti Alahuhta, Reino Hanhinen, Sirpa Pietikäinen, Masayuki Shimono and Iiro Viinanen be re-elected to the Board and that Jussi Herlin is re-elected as a deputy member to the Board.

    13. Deciding on the number of the Auditors

    The Audit Committee of the Board of Directors proposes that two (2) Auditors be elected.

    14. Deciding on the Auditor remuneration

    The Audit Committee proposes that the Auditors be reimbursed according to their invoice based on the performed Audit Proposal process.

    15. Election of the Auditors

    The Audit Committee proposes that authorized public accountants PricewaterhouseCoopers Oy and Heikki Lassila are elected as Auditors.

    16. Amendment of the Articles of Association

    Board proposal enclosed.

    17. Increasing the number of shares through a share issue without payment

    Board proposal enclosed.

    18. 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

    Board proposal enclosed.

    19. Authorization of the Board of Directors to decide to repurchase KONE’s own shares

    Board proposal enclosed.

    20. Authorization of the Board of Directors to decide to distribute repurchased own shares

    Board proposal enclosed.

    21. Closing of the Meeting

  • 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 stipulations on the minimum and maximum amount of the company’s capital and number of shares and on the nominal value of the shares will be abolished, and the wording otherwise specified without amending the content (3 and 4 §)
    • the stipulations concerning the record date will be abolished (5 §)
    • the terminology concerning the representation of the company will be specified (8 §)
    • references to the delivery dates for summons to General Meetings will be amended to correspond to the new Companies Act (11 §)
    • the agenda of the Annual General Meeting of Shareholders will be amended to correspond to the new Companies Act (13 §)
    • Articles 3, 4 and 5 as well as 8 and 9 of the Articles of Association will be combined so that the amended Articles of Association will consist of 12 Articles in total, and the numbering of the entire Articles of Association will be amended correspondingly.

    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.

  • 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.