Annual General Meeting of Swedish Match AB (publ)

The shareholders of Swedish Match AB (STO:SWMA) are hereby notified of the Annual General Meeting of Shareholders to be held on Tuesday April 22, 2008 at 16:30 (CET) at Hotel Rival, Mariatorget 3, Stockholm, Sweden. The Board of Directors proposes an increased dividend to 3.50 SEK per share. The proposed record date for entitlement to receive a cash dividend is April 25, 2008. The Board also proposes that the current mandate to repurchase up to 10 percent of all shares in the Company for a maximum amount of 3,000 MSEK be prolonged. In addition the Board will also propose cancellation of 12,000,000 previously repurchased shares, with a simultaneous capitalization issue in an amount corresponding to the number of cancelled shares or 17,506,310.89 SEK. Furthermore, the Board will propose that the reduction be allocated to a fund for use in repurchasing the Company’s own shares. The Nominating Committee of Swedish Match AB proposes re-election of Charles A. Blixt, Andrew Cripps, Arne Jurbrant, Conny Karlsson, Kersti Strandqvist and Meg Tivéus. New election is proposed of Karen Guerra. Conny Karlsson is proposed as Chairman of the Board and Andrew Cripps is proposed as deputy Chairman of the Board. Sven Hindrikes and John P. Bridendall will not stand for another term. The Nominating Committee consists of Michael Allison (Morgan Stanley Investment Management), William N. Booth (Wellington Management Company), Andy Brown (Cedar Rock Capital), Mads Gensmann (Parvus Asset Management), chairman, and Conny Karlsson. The complete notice of the Annual General Meeting can be found on the corporate web site: www.swedishmatch.com, and is also enclosed. ____________ Swedish Match is a global Group of companies with a broad assortment of market-leading brands in smokeless tobacco products, cigars, pipe tobacco and lights products. The Group’s global operations generated sales of 12,551 MSEK for the twelve month period ending December 31, 2007. Swedish Match shares are listed on OMX Nordic Exchange in Stockholm (SWMA). ____________ Swedish Match AB (publ), SE-118 85 Stockholm Visiting address: Rosenlundsgatan 36, Telephone: +46 8 658 02 00 Corporate Identity Number: 556015-0756 www.swedishmatch.com ____________ Annual General Meeting of Swedish Match AB (publ) The shareholders of Swedish Match AB are hereby notified of the Annual General Meeting of Shareholders to be held on Tuesday April 22, 2008 at 16:30 (CET) at Hotel Rival, Mariatorget 3, Stockholm, Sweden. Agenda 1. Opening of the Meeting and election of the Chairman of the Meeting. 2. Preparation and approval of the voting list. 3. Election of one or two persons, who shall verify the Minutes. 4. Determination of whether the Meeting has been duly convened. 5. Approval of the Agenda. 6. Presentation of the Annual Report and the Auditors’ Report, the Consolidated Financial Statements and the Auditors’ Report on the Consolidated Financial Statements for 2007, the Auditors’ Statement regarding compliance with the principles for the compensation of senior executives as well as the Board of Directors’ motion regarding the allocation of profit and explanatory statements. In connection therewith, the President’s address and the Board of Directors’ report regarding its work and the work and function of the Compensation Committee and the Audit Committee. 7. Adoption of the Income Statement and Balance Sheet and of the Consolidated Income Statement and Consolidated Balance Sheet. 8. Resolution in respect of allocation of the Company’s profit in accordance with the adopted Balance Sheet and resolution on record day for dividend. 9. Resolution regarding discharge from liability for the Board members and the President. 10. a) Resolution regarding the reduction of the share capital by way of a recall of repurchased shares, and the transfer of the reduced amount to a fund for use in repurchasing the Company’s own shares; and b) Resolution regarding a bonus issue. 11. Resolution regarding the authorization of the Board of Directors to decide on the acquisition of shares in the Company. 12. Adoption of principles for determination of remuneration payable to senior executives. 13. Resolution regarding adoption of the 2008 stock option program. 14. Resolution regarding the issue by the Company of call options on treasury shares in the Company for the 2007 option program, as well as the right of the Company to transfer shares in the Company in conjunction with any exercise of the call options. 15. Determination of the number of Board members to be elected by the Meeting. 16. Determination of the remuneration to be paid to the Board of Directors. 17. Election of members of the Board, the Chairman of the Board and the deputy Chairman of the Board. 18. Determination of the number of auditors. 19. Determination of the remuneration to be paid to the auditors. 20. Election of auditors. 21. Resolution regarding the procedure for appointing members to the Nominating Committee and the matter of remuneration for the Nominating Committee, if any. 22. Adoption of Instructions for Swedish Match AB’s Nominating Committee. The proposals of the Nominating Committee appointed after the Annual General Meeting of Shareholders in 2007 Item 1: Sven Unger, attorney at law, is proposed as the Chairman of the Meeting. Item 15: The Board of Directors shall comprise 7 members elected by the Annual General Meeting. Item 16: It is proposed that the fees to the Board of Directors be paid as follows for the period until the close of the next Annual General Meeting: the Chairman shall receive 1.575 MSEK and the other Board members elected by the Meeting shall each receive 630,000 SEK. It is furthermore proposed that the Board, as remuneration for committee work carried out, be allotted 230,000 SEK to the Chairmen of the Compensation Committee and the Audit Committee respectively and 115,000 SEK respectively to the other members of these committees, although totaling no more than 920,000 SEK. It is proposed that members of the Board employed by the Swedish Match Group not receive any remuneration. Item 17: The following Board members are proposed for re-election: Charles A. Blixt, Andrew Cripps, Arne Jurbrant, Conny Karlsson, Kersti Strandqvist and Meg Tivéus. New election is proposed of Karen Guerra. Conny Karlsson is proposed as Chairman of the Board and Andrew Cripps is proposed as deputy Chairman of the Board. Item 18-20: The Nominating Committee proposes the re-election of KPMG Bohlins AB as auditor for four years and no deputy auditors. Remuneration to the auditor is proposed to be paid on approved account. Item 21: The Nominating Committee proposes that the Chairman of the Board shall be given a mandate to contact the Company’s four largest shareholders and ask them each to appoint one representative to form the Nominating Committee, together with the Chairman of the Board, for the period until a new Nominating Committee has been appointed in accordance with a mandate from the next Annual General Meeting. If any of these shareholders waives his or her right to appoint a representative, the next largest shareholder in terms of the number of votes shall be asked to appoint a representative. The names of the members of the Nominating Committee shall be published no later than six months prior to the 2009 Annual General Meeting. The four largest shareholders are identified on the basis of the known numbers of votes immediately prior to publication. No remuneration shall be payable to the members of the Nominating Committee. Any expenses incurred in the course of the Nominating Committee’s work shall be borne by the Company. Item 22: The Nominating Committee proposes that the Meeting should adopt the Instructions for Swedish Match AB’s Nominating Committee which are identical to those adopted by the 2007 Annual General Meeting. The Board of Directors’ motions Item 8: The Board of Directors proposes that a dividend be paid to the shareholders in the amount of 3.50 SEK per share. The Board of Directors proposes that the remaining profits be carried forward, minus the funds that may be utilized for a bonus issue, provided that the 2008 Annual General Meeting passes a resolution in accordance with the Board of Directors’ motion concerning a reduction of the share capital pursuant to item 10 a) below, as well as a resolution concerning a bonus issue in accordance with the Board of Directors’ motion pursuant to item 10 b) below. The proposed record date for entitlement to receive a cash dividend is April 25, 2008. The dividend is expected to be paid through VPC AB (the Swedish Securities Register Center) on April 30, 2008. Item 10 a): The Board of Directors proposes a reduction in the Company’s share capital of 17,506,310.89 SEK by means of the withdrawal of 12 000 000 shares in the Company. The shares in the Company proposed for withdrawal have been repurchased by the Company in accordance with the authorization granted by the General Meeting of the Company. The Board of Directors further proposes that the reduced amount be allocated to a fund for use in repurchasing the Company’s own shares. Item 10 b): Provided that the Meeting passes a resolution in accordance with the Board’s motions under item 10 a) above, the Board of Directors proposes an increase in the Company’s share capital of 17,506,310.89 SEK through a transfer from non-restricted shareholders’ equity to the share capital (bonus issue). The share capital shall be increased without issuing new shares. The reason for the bonus issue is that if the Company transfers an amount corresponding to the amount by which the share capital is reduced in accordance with the Board’s motions under item 10 a) above, the decision to reduce the share capital can be taken without obtaining the permission of the Swedish Companies Registration Office (Bolagsverket), or, in disputed cases, the permission of the court. The effect of the Board of Directors’ motion under item 10 a) entails a reduction in the Company’s share capital of 17,506,310.89 SEK. The effect of the Board of Directors’ motion under item 10 b) is a corresponding increase in the Company’s share capital through a bonus issue, thereby restoring it to its balance prior to the reduction. The resolution of the General Meeting in accordance with the Board’s motion under item 10 a) is contingent upon it being supported by shareholders representing at least two-thirds of both the votes cast and the shares represented at the Meeting. Item 11: The Board of Directors proposes that it be authorized to decide on the acquisition, on one or more occasions prior to the next Annual General Meeting, of a maximum of as many shares as may be acquired without the Company’s holding at any time exceeding more than 10 percent of all shares in the Company, for a maximum amount of 3,000 MSEK. The shares shall be acquired on the OMX Nordic Exchange in Stockholm at a price within the price interval registered at any given time, i.e. the interval between the highest bid price and the lowest offer price. The purpose of the repurchase is primarily to enable the Company’s capital structure to be adjusted and to cover the allocation of options as part of the Company’s option program. The resolution of the General Meeting with regard to the Board motions under item 11 is contingent upon it being supported by shareholders representing at least two-thirds of both the votes cast and the shares represented at the Meeting. Item 12: The Board of Directors proposes that the 2008 Annual General Meeting adopt the following principles for determining remuneration and other terms of employment for the President and other members of the Group Management Team ("Principles”). The Board of Directors proposes that the Annual General Meeting adopt the following Principles for the determination of remuneration and other terms of employment for the President and other members of the Group Management Team, i.e. the President, the Divisional Managers and Senior Vice Presidents in charge of Group functions, who report directly to the President (hereinafter "Group Management Team”). The objective of these Principles is to ensure that the Company is able to recruit and retain employees with optimum skills and qualifications for their respective duties. The remuneration structures shall encourage employees to do their utmost to safeguard shareholders’ interests. Swedish Match takes into account both global remuneration practice and the practice of the home country of each member of the Group Management Team. The Principles shall apply to remuneration and other terms of employment for the Group Management Team and apply to employment agreements entered into after the approval of the Principles by the Annual General Meeting 2008 and for changes made to existing employment agreements thereafter. The Annual Report for 2007 sets out details of the total remuneration and benefits awarded to the Group Management Team during 2007. The total remuneration paid to Group Management Team consists of fixed salary, annual variable salary, pension benefits, other benefits, terms related to termination of employment and, subject to approval by the Annual General Meeting for each year, a long-term share-related incentive program. 1. The principles for fixed salary The fixed salary for the Group Management Team shall correspond to market rates and shall be based on each member’s competence, responsibility and performance. 2. The relative importance of fixed and variable components of the remuneration and the linkage between performance and remuneration The members of the Group Management Team may be entitled to a variable salary in addition to the fixed salary. The variable salary for the President and the Senior Vice Presidents in charge of Group functions shall be based on the result of two mutually independent criteria, with one target based on the Group’s earnings per share and one target based on the return on adjusted operating capital. Part of the total variable salary for the Divisional Managers shall be based on the same criteria and targets as for the rest of the Group Management Team, with the other part based on the outcome in relation to targets approved by the Compensation Committee for the Division in question. The maximum annual variable salary shall be capped at 50 per cent of the fixed salary for the President and 40 per cent of the fixed salary for members of the Group Management Team other than the President. Members of the Group Management Team residing outside Sweden may be offered additional variable salary to ensure the compensation´s competitiveness in each country. Such additional variable salary shall also be capped in relation to the Group Management Team member´s fixed salary. The Group Management Team may, subject to decision by the Annual General Meeting, be covered by a long term share related incentive program. 3. Profit Sharing System All employees in Sweden are also participating in Swedish Match’s profit sharing system ("PSS"). For 2007 the individual result amounted to 29,355 SEK. Results under the PSS are primarily placed in Swedish Match shares and can be disposed of on the individual level after three years at the earliest. 4. Pension Members of the Group Management Team residing in Sweden shall be covered by the ITP plan (supplementary pensions for salaried employees) for portions of their salary up to 30 times the income base amount and by defined-contribution pensions for portions of their salary in excess thereof. Pensions for members of the Group Management Team residing outside Sweden shall preferably be through defined-contribution pensions with a premium based on the fixed salary. 5. Severance pay, etc A mutual period of notice of six months shall apply. Severance pay shall total a maximum of eighteen months’ fixed salary if notice of termination is given by the Company. The severance pay shall be reduced by income from other employment or commissions, but by no more than 50 per cent thereof and no more than half of the severance pay. 6. Other benefits Other benefits shall be payable in accordance with local custom. The combined value of these benefits shall constitute a limited value in relation to the total remuneration package and shall correspond to the market norm. 7. The Board’s right to deviate from the Principles The Board of Directors shall be entitled to deviate from the Principles approved by the Annual General Meeting if specific reasons for doing so exist in any individual case. 8. Committee work and decisions Swedish Match’s Board of Directors shall have a Compensation Committee. The Committee has the authority to approve salary and other remuneration and employment terms for members of the Group Management Team, except those regarding the President. The Committee shall also prepare and present proposals for the Board’s decisions on issues relating to share related incentive schemes and for salary and other remuneration and employment terms for the President. In addition hereto, the Committee is authorized to decide (and in relation to the President to propose to the Board of Directors) the further details of how to set the criteria and targets on which the variable salary is based for the Group Management Team. 9. Previous undertakings not yet due The Company has no previous undertaking not yet due besides what is evident from the Annual Report 2007. Item 13: The Board of Directors proposes that the Meeting approve the call option program for 2008. The call option program proposed by the Board for 2008 comprises a maximum of 75 employees (the President and other members of the Group Management Team included). Allotment of options in accordance with the program is based on the result of two mutually independent criteria: firstly, the average annual improvement in the Group’s earnings per share during the period from 2006 to 2008 (i.e. 2006 in comparison with 2005, 2007 in comparison with 2006 and 2008 in comparison with 2007). Maximum allotment in accordance with this criterion shall occur if the average improvement during the three-year period is 20 percent or more. No allotment will be made if the average improvement is less than 5 percent; secondly, the result of the average return after tax on operating capital, adjusted for accumulated amortization of intangible assets, during the years from 2006 to 2008 in comparison with the average return after tax on operating capital, adjusted for accumulated amortization of intangible assets, during the years from 2005 to 2007. Of the maximum allotment in accordance with this criterion, 75 percent shall accrue if the return has remained unchanged and maximum allotment in accordance with this criterion shall accrue if the latest three-year average has increased by two percentage points or more in relation to the preceding three-year average. No allotment will be made in accordance with this criterion if the latest three-year average for the return is two percentage points lower than for the preceding period. Both of these criteria (improvement of earnings per share and improvement in the return after tax on operating capital, adjusted for amortization of intangible assets) are equally weighted when determining allotment in accordance with the option program. When only one of the criteria set forth above is met, allotment will thus comprise a maximum of 50 percent of the maximum allotment. When calculating the earnings per share and the average return on adjusted operating capital after tax, the calculations may, at the discretion of the Board of Directors, be adjusted to take into account the distortive effect of larger one-time items. The market value of the options shall be determined by an independent valuation institute in accordance with a generally accepted valuation model (Black-Scholes). Employees domiciled in countries where the allotment of options constitutes a taxable benefit at the time of grant shall receive a cash payment from the Company equal to the maximum value of allotment and shall at a minimum purchase allotted options from the Company for an amount equal to such payment net after tax. For other employees the options shall be received without payment from the employees. The combined maximum value of the options allotted in accordance with the proposed option program for 2008 shall not exceed 51.7 MSEK. The options are freely transferable and are not conditioned on employment. The options can be exercised to acquire shares in the Company during the period March, 2012 up to and including February, 2014 and shall carry an exercise price corresponding to 120 percent of the average share price during a ten-day period after the published year-end report for 2008. Commitments under the option program may be hedged by repurchasing shares in the Company and transferring such shares in conjunction with any demand for the redemption of the call options. Any resolution regarding the repurchase and transfer of shares in the Company and the issue of call options for the 2008 option program shall be taken by the 2009 Annual General Meeting. Ultimate allotment, based on the result for 2008, will be determined by the Compensation Committee at the time of the publication of the full-year report for 2008. The Group Management Team (i.e. the President, Divisional Managers and Senior Vice Presidents in charge of Group functions reporting directly to the President) may be allotted call options with a value that corresponds to a maximum of 65 percent of the respective Group Management Team member’s fixed salary. This corresponds to a maximum allotment to the Group Management Team of call options with a value of approximately 19.2 MSEK, of which the President can be allotted options to a value corresponding to a maximum of approximately 4.2 MSEK. The other participants may collectively be allotted options with a maximum value of 32.5 MSEK. It is estimated that maximum allotment of options, at a total value of 51.7 MSEK, will give rise to social security contributions of approximately 9.5 MSEK for the Swedish participants in the program. Taken as a whole, this may mean a charge of 61.2 MSEK against operating profit during the year the options are vested, provided that the options are issued by the Company. The Board of Directors’ motion regarding the 2008 employee stock option program has been prepared by the Compensation Committee. Item 14: According to the call option program for 2007, which was adopted by the Extraordinary General Meeting of December 2006, certain senior executives shall be allotted a minimum of 5,971 options and a maximum of 136 751 options per person. The options may be exercised for the purchase of shares during the period from March 2011 to February 2013 inclusive, at an exercise price of 172.68 SEK. The terms and conditions applying to the options were established on the basis of the average price of the Swedish Match share on the OMX Nordic Exchange in Stockholm during the period from February 20 to March 4, 2008 inclusive, which was 143.90 SEK. The market value of the options, calculated on the basis of conditions prevailing at the time when the terms and conditions applying to the options were established, has been established by an independent valuation institute to be 17.10 SEK per option, corresponding to a total maximum value of 27,237,752 SEK. The Board of Directors proposes that the Meeting resolve that the Company issue 1,592,851 call options to execute the option program for 2007. The Board of Directors further proposes that the Company, in a deviation from the preferential rights of shareholders, be permitted to transfer of 1,592,851 shares in the Company at a selling price of 172.68 SEK per share in conjunction with a potential exercise of the call options. The number of shares and the selling price of the shares covered by the transfer resolution in accordance with this item may be recalculated as a consequence of a bonus issue of shares, a consolidation or split of shares, a new share issue, a reduction in the share capital, or another similar measure. The resolution of the General Meeting in accordance with the Board’s motions under item 14 is contingent upon it being supported by shareholders representing at least nine-tenths of both the votes cast and the shares represented at the Meeting. Documents The Annual Report, the Auditors’ Report, full details of the resolutions proposed under items 8, 10 a), 10 b), 11, 12, 13 and 14 as well as statements by the Board of Directors, pursuant to Chapter 18 Section 4 and Chapter 19 Section 22 of the Swedish Companies Act, and the statement by the auditors, pursuant to Chapter 8 Section 54 and Chapter 20 Section 14 of the Swedish Companies Act, will be made available at Swedish Match AB’s headquarters (Legal Department) at Rosenlundsgatan 36 in Stockholm, Sweden, as of April 8, 2008. They will also be available on the Company’s website, www.swedishmatch.com, on the same date. They can also be ordered from the Company. Number of shares and votes in the Company The total number of shares and votes in Swedish Match AB on the issue date of this notice amounted to 267,000,000. As per March 11, 2008 Swedish Match owns 12,313,000 repurchased shares and these shares can consequently not be represented at the Meeting. Right to participate in the Meeting Participation in the Meeting is limited to shareholders who both are registered in the register of shareholders maintained by VPC AB (the Swedish Securities Register Center) on April 16, 2008, and notify Swedish Match of their intention to participate no later than at 16:00 (CET) on April 16, 2008, at which time notifications to participate must have been received by Swedish Match. Shareholders who wish to be accompanied by one or two assistants at the Meeting shall also advise Swedish Match thereof within the appointed period of time. Proxy form Proxy forms are available upon request and on the Company’s website www.swedishmatch.com. Notice of participation Notice of participation may be submitted in writing to Swedish Match AB, Legal Department, SE-118 85 Stockholm, Sweden, by telephone at +46 (0) 8 658 02 00 (13:30 – 16:30 CET), by fax at +46 (0)8 720 76 56, or via the Internet at www.swedishmatch.com/stamman. When giving notice of participation, the shareholder shall state his or her name, address, telephone number (daytime), civic ID/corporate registration number and assistants, if any. Receipt of notification will be confirmed by Swedish Match, which will issue an attendance card to be presented at the entrance to the venue at which the Meeting is held. Proxy Shareholders who are represented by proxy shall issue a power of attorney for the proxy. If the power of attorney is issued by a legal entity, a copy of the corporate registration certificate for the legal entity shall be enclosed (or if no such document is available, an equivalent authorization document). These documents may not be older than one year. To facilitate entry at the Meeting, the power of attorney in the original as well as the corporate registration certificate and other authorization documents should be received by the Company at the address provided above no later than Friday, April 18, 2008. Share registration Shareholders whose shares are nominee registered and who wish to participate in the Meeting must temporarily re-register the shares in their own name, known as voting right registration. Requests for re-registration should be submitted to the bank or broker who administers the shares in sufficient time to allow re-registration to take place no later than Wednesday, April 16, 2008. The entrance to the venue for the Annual General Meeting will opened at 15:30 (CET). Light refreshments will be served before the Meeting. Stockholm, March 2008 The Board of Directors