Notice is hereby given that the Annual General Meeting of Aktiebolaget SKF,reg. no. 556007-3495,will be held at SKF Kristinedal, Byfogdegatan 4, Gothenburg, Sweden, at 13.00 on Thursday, 28 March 2019. The doors are open from 11.00. Refreshments will be served prior to the Annual General Meeting between 11.00 and 12.30.

Annual General Meeting

For the right to participate at the Annual General Meeting, shareholders must be recorded in the shareholders' register kept by Euroclear Sweden AB by Friday, 22 March 2019 and must notify the company at the latest on the same day by letter to Computershare AB, “AGM 2019 of AB SKF”, Box 610, SE-182 16 Danderyd, Sweden, or via the company's website www.skf.com, or by phone +46 31 337 25 50 (weekdays between 09.00 and 16.00). When notifying the company, preferably in writing, this should include details of name, address, telephone number, registered shareholding and number of advisors, if any. Where representation is being made by proxy, the original of the proxy form shall be sent to the company to the above address before the Annual General Meeting. Shareholders whose shares are registered in the name of a trustee must have the shares registered temporarily in their own name in order to take part in the Annual General Meeting. Any such re-registration for the purpose of establishing voting rights shall take place so that the shareholder is recorded in the shareholders’ register by Friday, 22 March 2019. This means that the shareholder should give notice of his/her wish to be included in the shareholders' register to the trustee well in advance before that date.

Agenda

1. 
   Opening of the Annual General Meeting
   


2. 
   Election of a Chairman for the Annual General Meeting
   


3. 
   Drawing up and approval of the voting list
   


4. 
   Approval of agenda
   


5. 
   Election of persons to verify the minutes
   


6. 
   Consideration of whether the Annual General Meeting has been duly convened
   


7. 
   Presentation of annual report and audit report as well as consolidated accounts and audit report for the Group
   


8. 
   Address by the President
   


9. 
   Matter of adoption of the income statement and balance sheet and consolidated income statement and consolidated balance sheet for the Group
   


10. 
    Resolution regarding distribution of profits
    


11. 
    Matter of discharge of the Board members and the President from liability
    


12. 
    Determination of number of Board members and deputy members
    


13. 
    Determination of fee for the Board members
    


14. 
    Election of Board members and deputy Board members 
    
    14.1 Hans Stråberg 
    
    14.2 Lars Wedenborn 
    
    14.3 Hock Goh 
    
    14.4 Alrik Danielson  
    
    14.5 Nancy Gougarty 
    
    14.6 Ronnie Leten 
    
    14.7 Barb Samardzich 
    
    14.8 Colleen Repplier 
    
    14.9 Geert Follens 
    


15. 
    Election of Chairman of the Board of Directors
    


16. 
    The Board of Directors' proposal for a resolution on principles of remuneration for Group Management
    


17. 
    The Board of Directors' proposal for a resolution on SKF’s Performance Share Programme 2019
    


18. 
    Resolution regarding Nomination Committee
    

Proposal under item 10

The Board of Directors proposes a dividend of SEK 6.00 per share. It is proposed that shareholders with holdings recorded on Monday, 1 April 2019 be entitled to receive the proposed dividend. Subject to resolution by the Annual General Meeting in accordance with this proposal, it is expected that Euroclear will distribute the dividend on Thursday, 4 April 2019.

Proposals under items 2, 12, 13, 14 and 15

The Nomination Committee formed according to a resolution of the Annual General Meeting 2018 to represent all shareholders of the company consists of, besides the Chairman of the Board of Directors, representatives of FAM, Alecta, Skandia and AFA Försäkring, shareholders who together represent close to 40% of the votes of the total number of company shares. The Nomination Committee has informed the company about the following proposal:

• 
   that Sven Unger is elected Chairman of the Annual General Meeting;
  

• 
   that the Board of Directors shall consist of nine members and no deputy members;
  

• 
   that the Board members elected by the Annual General Meeting and not employed by the company, for the period up to the end of the next Annual General Meeting, receive a fee according to the following:
  

a)     a firm allotment of SEK 7,257,000 to be distributed with SEK 2,133,000 to the Chairman of the Board of Directors and SEK 732,000 to each of the other Board members; and

b)     an allotment for committee work to be distributed with SEK 248,000 to the Chairman of the Audit Committee, with SEK 176,000 to each of the other members of the Audit Committee, with SEK 145,000 to the Chairman of the Remuneration Committee and with SEK 114,000 to each of the other members of the Remuneration Committee; and 

• 
   re-election of the Board members Hans Stråberg, Lars Wedenborn, Hock Goh, Alrik Danielson, Nancy Gougarty, Ronnie Leten, Barb Samardzich and Colleen Repplier. It is proposed that Geert Follens is to be newly elected. Hans Stråberg is proposed to be the Chairman of the Board of Directors. 
  
  
  

Geert Follens has a Master of Science in Electromechanical Engineering and a post-graduate degree in Business Economics from the University of Leuven, Belgium. He is Senior Executive Vice President and Business Area President Vacuum Technique at Atlas Copco AB. He has held several leading positions within the Atlas Copco Group in Sweden, Belgium and the UK since 1995, including General Manager of Atlas Copco Compressor Technique customer center, President of the Portable Energy division and President of the Industrial Air division. 

A presentation of the proposed Board can be found at the company’s website www.skf.com. Peter Grafoner have declined re-election.

Proposal under item 16

The Board of Directors has decided to submit the following principles of remuneration for SKF’s Group Management to the Annual General Meeting.

Group Management is defined as the President and the other members of the management team.

The Board of Directors’ proposal is that the remuneration of Group Management members shall be based on market competitive conditions and at the same time support the shareholders' best interests. The total remuneration package for a Group Management member shall primarily consist of fixed salary, variable salary, performance shares, pension benefits, conditions for notice of termination and severance pay, and other benefits such as a company car. The objective of the principles of remuneration is to ensure that the SKF Group can attract and retain the best people in order to support the SKF Group's mission and business strategy.

The fixed salary shall be at a market competitive level. Competence, responsibility, experience and performance shall be taken into account when the fixed salary is established.

The variable salary runs according to a performance-based program and the maximum variable salary is capped at a certain percentage of the fixed annual salary varying between 50 and 70%.

The Board of Directors proposes that a decision be taken at the Annual General Meeting on SKF’s Performance Share Programme 2019. The programme is proposed to cover not more than 225 senior managers and key employees in the SKF Group with an opportunity to be allotted, free of charge, SKF B shares. (See further item 17 below.)

SKF strives to establish pension plans based on defined contribution models.

A Group Management member may terminate his/her employment by giving six months' notice. In the event of termination of employment at the request of the company, employment shall according to the agreement cease immediately. A severance payment related to the number of years’ service shall, however, in this case be paid out, provided that it shall always be maximized to two years' fixed salary.

The Board of Directors also proposes that the Annual General Meeting resolves to authorize the Board of Directors to, in certain cases, deviate from the principles of remuneration decided by the Annual General Meeting.

Proposal under item 17

Background 

At the Annual General Meeting in 2008 the SKF Group introduced a long-term performance share programme for senior managers and key employees (SKF’s Performance Share Programme 2008). Since 2008 the Annual General Meeting has resolved each year upon a performance share programme. The terms and conditions of SKF’s Performance Share Programme 2019 are the same as for SKF’s Performance Share Programme 2018 that was resolved at the Annual General Meeting 2018.

SKF’s Performance Share Programme 2019 

The Board proposes, in order to continue to link the long-term interests of the participants and the shareholders, that a decision be taken at the Annual General Meeting 2019 on SKF’s Performance Share Programme 2019.

The programme is proposed to cover not more than 225 senior managers and key employees in the SKF Group with an opportunity to be allotted, free of charge, SKF B shares in accordance with the following principal terms and guidelines.

Under the programme, not more than in total 1,000,000 SKF B shares may be allotted to not more than 225 senior managers and key employees in the Group. The number of shares that may be allotted must be related to the degree of achievement of the Total Value Added (TVA) target level, as defined by the Board, for the TVA development for the financial years 2019–2021 compared to the financial year 2018. TVA is a simplified, economic value-added model promoting greater operating profit, capital efficiency and profitable growth. TVA is the operating profit, less the pre-tax cost of capital. After the expiry of the financial year 2021 a comparison is made between the average TVA for the financial years 2019–2021 and TVA for the financial year 2018. The TVA change is expressed as a percentage.

The allocation of shares is based on the level of TVA increase. In order for allocation of shares to take place the TVA increase must exceed a certain minimum level (the threshold level). In addition to the threshold level a target level is set. Maximum allotment is awarded if the target level is reached or exceeded.

Provided that the TVA increase reaches the target level, the participants of the programme may be allotted the following maximum number of shares per person within the various key groups:

CEO and President – 30,000 shares 

Other members of Group Management – 13,000 shares