A Corporate Governance Report On

Ericsson, Hewlett Packard Enterprise, and Toshiba

Submitted In Partial Fulfilment of The Requirements for The

Financial Management Course At

The Indian Institute of Management, Udaipur

Instructed by Professor N. Vishwanathan

During Term I, 2021

By

Akash S K (Roll No. 2113003)

Govinda Advani (Roll No. 2113015)
Himanshi Kathuria (Roll No. 2113018)
Kandarp Pande (Roll No. 2113043)
Shouradip Singha (Roll No. 2113036)

Submitted on
Monday, 25 August 2021
 Ericsson (ERIC, ERIC-A.ST, ERIC-A.ST) 

Shareholding Pattern:  The company has a total of 3.3bn shares outstanding divided into 3

classes A, B & American Depositary Receipts (ADR) with Class A having higher voting power.

Investor AB, a conglomerate controlled by Wallenberg family in Sweden owns 116mn shares

representing 22.81% voting rights. AB Industrivärden is the 2nd largest shareholder with 15.14%

ownership. Less than 1/10th of 1% of shares are owned by the management, most of them being

class B shares. 

Controlling Shareholders: Most of top shareholders belongs to groups based out of Nordic

region. This puts them in a position to unduly influence on the management of the

company. The CEO and the president of Ericsson are appointed by the board of directors (elected

annually) who are elected by the shareholders.

Other Shareholders: 34% of the shares of Ericsson is owned by individual shareholders. 

Composition of the Board of Directors: All members executives, part of either core (science,

technology), Finance, Remuneration, Audit or Employee Rep Committees. 3:7 sex

ratio with most directors having served for over 5 years already. Most of them are

from Nordic, Europe, and North American countries. 

Composition of the Senior Management Team: The CEO Borje Ekholm, also on the

board, was elected in 2017 before which Hans Vestberg, was holding his responsibility from

2009 to 2016. 

Does the company protect the interests of its major Stakeholders: The Board of Directors

oversee the Company’s Sustainability and Corporate Responsibility through the dedicated

sustainability & corporate responsibility unit. Company has commitments towards their own

1.5°C aligned climate targets. The Code of Business Ethics is applicable to all individuals

performing work for Ericsson. 

Hewlett Packard Enterprise (HPE - NYSE)

Shareholding Pattern: A diverse shareholding pattern with over 1000+ institutional

shareholders representing over 85% of the voting rights. A total of 6.73 million shares are owned

by 23 executives of the company representing less than 0.5% of voting rights, and Insiders hold

less than 1% of the shares in the company.

Controlling Shareholders and Other Shareholders: There are 4 institutional shareholders who

represent over 5% ownership interest each, in the company. They include Blackrock, Dodge &

Cox, Primecap, State Street Corporation and the Vanguard group who represent ~ 42% of voting

shares. Due to high ownership, this combination of 5 institutional shareholders can exert control

and influence over management of the company. 15% of the company is owned by retail

shareholders who are in the minority.

Composition of the Board of Directors and the Senior Management Team: 92% of the board

of director nominees are independent and 50% of director nominees are women and/or

ethnically diverse with 9 out of 13 directors have been on the board for over 5 years. The

company has a policy of appointing no more than 3 non-independent directors meaning 10/13

directors on the board are always independent. All directors are annually elected. Antonio F

Neri is the President of the Board of Directors and the Chief Executive Officer. Besides him, no

other senior management is represented on the Board.

Interests of its major Stakeholders: Company has a stated objective of reducing carbon

footprint by employing IT Efficiency projects. It has set science-based targets to reduce

greenhouse gas emissions across their supply chain. They also have a stated goal of increasing

the representation of both women and ethnically diverse talent by at least 1 percentage point

year-over-year.

Toshiba (6502.T JPX)

Shareholding Pattern: Over 242 institutional shareholders own 60% of the total shares

outstanding and insiders hold only 6% of the shares. Overseas investors hold 50%, financial

institutes in Japan hold ~ 24% and about 21% of the company is owned by individual

shareholders.

Controlling Shareholders and Other Shareholders: The top 4 shareholders namely MSIP

Client Securities, The Master Trust Bank of Japan, Ltd., Suntera (Cayman) Limited, and

Chinhook Holdings Ltd. together represent 20% voting interests in the company (Appendix

C). Earlier this year, controlling shareholders exerted influence on the management of by

removing the top management when they found that they colluded with the government.

Composition of Board of Directors and the Senior Management Team: The board of director

consist of 8 members out of which 2 are female and 6 out of 8 are independent. The current

average director tenure is just 2.1 years, and the longest serving directors have a tenure of less

than 5 years.

Interests of its major Stakeholders: In the last financial year, Toshiba achieved its target of

total GHG emissions at 1.61 mn t-CO2 through investment in high-efficiency equipment.

Toshiba aims to decarbonize society through promotion of use of renewable energy. In FY2019,

Toshiba achieved over 1000 social contribution programs by providing donations to help with

COVID-19.
Comparison:

 Almost 38% of voting rights of Ericsson is nestled with 2 large family shareholders,

which is cause for concern; as compared to HPE where 42% of shareholding is owned by

professional investors; Toshiba recently faced the wrath of powerful shareholders when

its CEO was ousted due to alleged collusion with government authorities;

 From this comparison, HPE would rate highest in corporate governance overall,

followed by Ericsson and then Toshiba.

Appendices

Appendix A:
Top 15 Controlling Shareholders

Appendix B:
MSIP CLIENT SECURITIES 7.5%
The Master Trust Bank of Japan, Ltd. (Trust
4.9%
Account)
SUNTERA (CAYMAN) LIMITED AS 4.4%
TRUSTEE OF ECM MASTER FUND
CHINOOK HOLDINGS LTD 3.4%
GOLDMAN SACHS & CO. REG 3.1%
The Dai-ichi Life Insurance Company,
2.5%
Limited
Custody Bank of Japan, Ltd. (Trust Account) 2.5%
Nippon Life Insurance Company 2.4%
Toshiba Employees Shareholding Association 2.2%
NIHK A/C CLIENT 2.0%