ABB Annual Report 2012 PDF - ABB Group Annual Report 2012

7. Business relationshipsThis section describes important business relationshipsbetween ABB and its Board and Executive Committee members,or companies and organizations represented by them.This determination has been made based on ABB Ltd’sRelated Party Transaction Policy. This policy is contained inthe ABB Ltd Board Regulations and Corporate GovernanceGuidelines, a copy of which can be found in the section“Corporate governance” at www.abb.com/investorcenterVale S.A. and its subsidiaries (Vale) and ABB haveentered into a framework agreement establishing generalterms and conditions for the supply of products, systemsand services among their respective group subsidiaries. ABBsupplies Vale primarily with process automation productsfor mineral systems. The total revenues recorded by ABB in2012 relating to its contracts with Vale were approximately$140 million. Roger Agnelli was previously president and CEOof Vale.Atlas Copco AB (Atlas Copco) is an important customerof ABB. ABB supplies Atlas Copco primarily with drives andmotors through its Discrete Automation and Motion division.The total revenues recorded by ABB relating to business withAtlas Copco were approximately $60 million in 2012. JacobWallenberg was vice chairman of Atlas Copco until April 2012.ABB has an unsecured syndicated $2-billion, revolvingcredit facility. As of December 31, 2012, SEB SkandinaviskaEnskilda Banken AB (publ) (SEB) and UBS AG (UBS) hadeach committed to $71 million out of the $2-billion total. Inaddition, in February 2012, ABB entered into a $4-billion termcredit agreement to provide bridge financing for the acquisitionof Thomas & Betts Corporation. SEB and UBS had eachcommitted to lend ABB $250 million as of the completionof the primary syndication. The term credit agreement wasnever drawn and was cancelled in May 2012. In addition,ABB has regular banking business with UBS and SEB. JacobWallenberg is the vice chairman of SEB and Michel Demaréis the vice chairman of UBS.ABB has also retained Ortec Finance B.V. (Ortec) toprovide pension modeling services. Michel Demaré’s spouseis an employee and the chairman of the board of directorsof Ortec’s Swiss subsidiary.After comparing the share of revenues generated fromABB’s business with Vale and Atlas Copco, after reviewingthe banking commitments of UBS and SEB, and after consideringOrtec’s business relationship with ABB, the Boardhas determined that ABB’s business relationships with thosecompanies are not unusual in their nature or conditionsand do not constitute material business relationships. As aresult, the Board concluded that all members of the Boardare considered to be independent directors. This determinationwas made in accordance with ABB Ltd’s Related PartyTransaction Policy which was prepared based on the SwissCode of Best Practice for Corporate Governance and theindependence criteria set forth in the corporate governancerules of the New York Stock Exchange.8. Employee participationprogramsIn order to align its employees’ interests with the businessgoals and financial results of the company, ABB operatesa number of incentive plans, linked to ABB’s shares, such asthe Employee Share Acquisition Plan, the ManagementIncentive Plan and the Long-Term Incentive Plan. For a moredetailed description of these incentive plans, please refer tonote 18 to ABB’s consolidated financial statements containedin the Financial review section of this Annual Report.9. Duty to make a publictender offerABB’s Articles of Incorporation do not contain any provisionsraising the threshold (opting-up) or waiving the duty (optingout) to make a public tender offer pursuant to article 32of the Swiss Stock Exchange and Securities Trading Act.ABB Annual Report 2012 | Corporate governance report 25