The chairman of Telefonaktiebolaget LM Ericsson (NASDAQ:ERIC) has expressed his willingness to step down. His decision follows the great pressure that has been there recently from one of Europe’s largest activist investors.
According to some top trusted sources, Leif Johansson started serving the company since 2011 to date. The company usually has a yearly meeting which has it elect its leaders. Leif has disclosed that in the 2018 annual meeting he won’t be presenting himself for re-election.
In May, an issue came up. There were claims that Cevian Capital had channeled about $1bn on a 5.6 per cent stake in the top company. According to Ft, the activist shareholder directed much criticism on Ericsson’s board, a matter that lowered the spirits of the chairman a great deal.
The co-founder of Cevian, Christer Gardell outlined that he hadn’t liked the showcased performance terming it as a rather poor one.
It was indeed clear that Mr Johansson wasn’t at all hoping to get help from the new shareholder. He must have dropped a hint as he spoke about Ericsson’s new ownership.
A number of top journalists went after the top company executive seeking to squeeze more information from him regarding the matter. He said, “The Company now enters a new phase, with focus on execution, and we also have a new ownership constellation. It is natural to let the owners jointly propose a chairman and well ahead of this I want to announce that I will not be available for a next term.”
Most of the top companies do not tolerate a vacuum. Ericsson knows the departure of the official would most probably interfere with operations. It is for that reason that the top provider has started making replacement plans in advance so that no part of its operations will stagnate after the official leaves the company.
From the very start, Mr Gardell has been in great opposition to the group’s share structure. He thinks of it as a strategy that provides quite minimal incentive for most Ericsson investors. A close follower of the performance of Ericsson must have noticed that the company has for over sometime now been underperforming. It competitors are at its neck and it is understandable why the recent criticism has come forward.