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Swedish Match April 09th, 2019

In general, Swedish Match is in compliance with the Swedish regulations relating to the organisation and procedures of the AGM.

Under ITEM 11, the nomination committee proposes to increase the remuneration of the board of directors by almost 9%. In ECGS' view the current fees are already at the upper level of Swedish market practice for a company with the size and complexity of Swedish Match and it therefore does not approve of any increases without adequate justification. Since the proposal is not adequately justified, ECGS recommends to vote OPPOSE.

Under ITEM 16, the board of directors seeks approval of the Company's remuneration guidelines. The proposed remuneration structure is not in line with ECGS' guidelines. ECGS therefore recommends to vote OPPOSE.

Under ITEMS 18 and 19, the board of directors seeks authorisation to repurchase and transfer own shares. Although the authority requested would meet its guidelines, ECGS notes that the Company has negative shareholders equity and a substantial amount of net debt. Based on the above, ECGS does not agree with the requested share repurchase and share transfer authorities. In ECGS' view, the Company can better use (potential) excess cash to reduce the amount of (net) debt first and thereby strengthen its balance sheet instead of repurchasing own shares. Accordingly, ECGS recommends to vote OPPOSE.

Under ITEM 20, the board of directors seeks authority to issue shares. Although the authorisation requested as such would meet its guidelines, ECGS is not in favour of the combination of authorities under ITEMS 19 and 20, together corresponding to 20.0% of the Company's share capital, for unspecified beneficiaries. ECGS therefore recommends to vote OPPOSE.

Finally, under ITEM 21, approval is sought to establish an 'external' nomination committee. Like several  institutional investors, ECGS has concerns over the bundled form under which the election of directors is put to shareholders' vote in Sweden. ECGS therefore has decided to take such concerns (if applicable) into account and express these at the resolution on the nomination committee, as in Sweden said committee is responsible for nominating candidates to the board of directors (either in bundled or unbundled form). Since the election of the board of directors is proposed as a slate (bundled) at this year's AGM, ECGS recommends opposing the establishment of the nomination committe.

Swedish Match AB

Swedish Match develops, manufactures, markets, and sells snus and snuff, other tobacco products (cigars and chewing tobacco), and lights (matches and lighters). Snus and snuff are smokeless tobacco products that are produced and sold primarily in Sweden, Norway and the U.S. Other tobacco products represent cigars and chewing tobacco manufactured and sold on the U.S. market. Lights include manufacturing and distribution of matches and lighters. Other operations are primarily the distribution of tobacco products on the Swedish market. Primary brands include General snus, Longhorn moist snuff, White Owl cigars, Red Man chewing tobacco, Fiat Lux matches, and Cricket lighters.


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