PRESENTATION OF THE RESOLUTIONS SUBMITTED BY THE BOARD OF DIRECTORS AT THE ORDINARY AND EXTRAORDINARY GENERAL MEETING ON JUNE 30, 2011

Transcription

1 PRESENTATION OF THE RESOLUTIONS SUBMITTED BY THE BOARD OF DIRECTORS AT THE ORDINARY AND EXTRAORDINARY GENERAL MEETING ON JUNE 30, 2011 The purpose of this document is to present the key points of the draft resolutions submitted by the Board of Directors for approval at the Ordinary and Extraordinary General Meeting on June 30, It is not intended to substitute a full reading of the draft resolutions. APPROVAL OF THE COMPANY FINANCIAL STATEMENTS AND THE CONSOLIDATED FINANCIAL STATEMENTS ALLOCATION OF EARNINGS - First to third resolutions - The Management Report, to which shareholders are invited to refer, provides a presentation of the financial and consolidated statements, financial position, and results of the Group and the Company for the 2010/2011 fiscal year as well as a business review and the various disclosures required under the applicable laws and regulations. The purpose of the first, second and third resolutions is to approve the financial statements of the Company and the Group for the fiscal year ended March 31, 2011, and to allocate the Company s loss for the year as follows: ALLOCATION OF RESULT Loss for 2010/2011 (152,116,716.98) Retained Earnings (119,523,617.38) BALANCE OF THE RETAINED EARNINGS ACCOUNT (271,640,334.36) SETTLEMENT OF THE RETAINED EARNINGS ACCOUNT Premiums Account 455,898, BALANCE OF THE PREMIUMS ACCOUNT 184,258, BALANCE OF THE RETAINED EARNINGS ACCOUNT 0 In accordance with the disclosure requirement of Article 243 bis of the French Tax Code, it is hereby stated that no dividends were paid for the last three fiscal years. APPROVAL OF RELATED-PARTY AGREEMENTS AND COMMITMENTS - Fourth resolution - In the fourth resolution shareholders are invited to approve the related-party agreements and commitments governed by Article L et seq. of the French Commercial Code that are described in the Statutory Auditors special report. 1

2 APPOINTMENT OF AN ALTERNATE AUDITOR - Fifth resolution - The purpose of the fifth resolution is to appoint Sébastien Legeai as Alternate Auditor of the Company to replace Roland Travers who is resigning for the remainder of his predecessor s term of office. RENEWAL OF THE SHARE BUYBACK PROGRAM - Sixth and eighth resolutions - In the sixth and eighth resolutions, the Board of Directors is asking shareholders to renew the authorizations to trade in the Company s shares in compliance with the applicable laws. The sixth resolution is the same as the seventh resolution approved at the General Meeting of July 2, 2010 in which shareholders granted the Board of Directors an eighteen-month authorization to implement a share buyback program subject to the conditions and objectives provided for in the applicable laws. A description of the share buyback program is provided in Section of the Management Report on the financial statements for the fiscal year ended March 31, If this authorization is approved, the maximum per-share purchase price would be set at 30. The Board of Directors would not be able to use this authorization while a public offer for the Company's shares is in progress. The authorization sought in the eighth resolution is required in order to enable the Board of Directors to cancel any shares bought back in accordance with the sixth resolution. FINANCIAL AUTHORIZATIONS - Ninth, tenth, eleventh and twelfth resolutions - The purpose of the ninth, tenth, eleventh and twelfth resolutions is to enable the Board of Directors to react quickly and flexibly to opportunities arising in rapidly changing and diverse financial markets in France and abroad, by carrying out issues that can be placed with investors interested in certain types of financial instruments at the most appropriate time for the Group s business strategy. The Board is asking to be authorized to carry out such issues without preferential subscription rights for existing shareholders in order to speed up the placement of the issues and ensure they are successful. Any use of these authorizations would take into account the impact on the Company's existing shareholders and, when required by the applicable laws and regulations, an information memorandum approved by the AMF (French securities regulator) would be issued setting out the purpose and conditions of the operation concerned. The Board of Directors is inviting shareholders to renew the authorizations previously granted to issue securities (i) with rights (ninth resolution) and (ii) without rights as part of a public offer (tenth resolution) and/or private placement (eleventh resolution). The terms, conditions and ceilings would be the same as in the previous authorizations, as follows: The aggregate amount of any capital increases resulting from issues of ordinary shares and securities carrying rights to shares carried out pursuant to the tenth and eleventh resolutions would be capped at 1,450,000 (representing 19.75% of the Company s current capital). This amount would be included in the 4,000,000 blanket ceiling set in the seventeenth resolution. The maximum nominal amount of debt securities that could be issued would be set at 400,000,000. The purpose of the twelfth resolution is to authorize the Board of Directors to set the issue price for issues of securities without rights carried out under the tenth and eleventh resolutions presented above, up to a limit of 10% of the Company s share capital per year. The price set by the Board would have to be at least equal to the weighted average price of Ubisoft shares 2

3 quoted on Euronext Paris for the three trading days preceding the issue pricing date, with a maximum discount of 10%. This authorization forms part of the standard set of financial authorizations. In accordance with the law, if approved, these authorizations would be granted for a period of twenty-six from the date of this Meeting and would supersede the previous authorizations granted for the same purposes at the General Meeting of July 2, A table is appended to this presentation setting out a list of the financial authorizations currently in force and their use during 2010/2011. EMPLOYEE SHARE OWNERSHIP - Thirteenth, fourteenth, fifteenth and sixteenth resolutions - Shareholders are being invited to approve four resolutions concerning employee share ownership in order to enable Ubisoft to continue to offer packages that compete with those offered by other players in its industry. The Board of Directors remains convinced that offering the Group s employees a portion of their total compensation in Company shares helps to align the interests of employees with those of shareholders. It also enables the Group to foster a long-term commitment by employees to the Company and its performance. This is particularly important today given that the Group is expanding its production force in a highly competitive environment in which there is strong demand for qualified industry professionals, and is necessary in view of the Group s growth opportunities. These long-term incentives form an integral part of a strategy designed to attract, retain and motivate employees. However, in the interests of shareholders the Board of Directors is also committed to minimizing the dilutive impact of the incentives proposed to employees to levels that are reasonable and in line with market standards. Authorization to increase the Company s share capital by issuing shares reserved for members of a Group savings plan The purpose of the thirteenth resolution is to comply with the legal requirements set out in Article L of the French Commercial Code which state that whenever a resolution relating to capital increases paid up in cash is submitted to shareholders for approval, the Board of Directors must also propose a resolution for the issuance of shares to employees who are members of a Group savings plan. At March 31st, 2011, employee share ownership represented 0.790% of the share capital of Ubisoft Entertainment S.A.. Consequently, in the thirteenth resolution shareholders are invited to renew with the same terms and conditions the authorization granted in the sixteenth resolution of the General Meeting of July 2, 2010 to issue shares to members of a Group savings plan. The maximum aggregate par value of the shares issued under this authorization would represent 0.2% of the Company s capital on the date of the Board of Directors' decision to carry out the issue (unchanged from the previous authorization). In accordance with the law, if approved this authorization would be granted for a period of twenty-six from the date of this Meeting and would supersede the unused portion of the authorization granted for the same purpose at the General Meeting of July 2, Authorization to grant stock options In the fourteenth resolution shareholders are invited to renew the authorization for the Board of Directors to grant stock options. The terms and conditions would be unchanged from those set in the eleventh resolution of the General Meeting of July 2, 2010, as follows: - The options granted would be exercisable for a number of shares representing a maximum of 3.4% of the shares outstanding at the time the options are granted by the Board (unchanged from the previous authorization). 3

4 - Performance conditions set by the Board of Directors would be attached to options granted to the Company's corporate officers, and the number of options granted to such officers would not exceed 5% of the total number of options granted by the Board during the period covered by the authorization. In accordance with current industry practices, the Board of Directors recommends that Ubisoft should continue to grant stock options to its top talent under one or more discretionary plans. This type of plan plays a crucial role in strategies aimed at attracting and retaining highly qualified technical and creative personnel at a time when competition for these professionals has become increasingly fierce due to our chief competitors setting up in areas where Ubisoft is already established, particularly in Canada. The allocation of stock options is also primordial for retaining key personnel when we carry out acquisitions. The Board of Directors recommends restricting these types of plans exclusively to top talent and the highly qualified professionals the Group wishes to attract. The performance conditions currently set for stock options granted to corporate officers are based on an aggregate revenue and profitability target. In accordance with the requirements of article L of the French Commercial Code, the percentage of shares to be held under registered form by the corporate officers until the end of their mandates is presently set at 5% (see Section of the Management Report). The number of stock options granted in 2010/2011 to corporate officers and to the ten employees who received the largest number of options represented 3.70% and 13.79% respectively of the total number of options granted (3.88% and 14.81% in 2009/2010, 4.22% and 18.30% in 2008/2009, and 4.72% and 18.56% in 2007/2008). At March 31, 2011, based on stock options that were "in the money" (see Sections and of the Management Report), the dilutive impact would have been 4.15%. The Board once again recommends that no discount should be offered on the options granted. If approved, this authorization would be granted for a period of thirty-eight from the date of this Meeting and would supersede, with immediate effect, the unused portion of the authorization granted in the seventeenth resolution of the General Meeting of July 2, Authorization to grant ordinary shares free of charges In the fifteenth resolution shareholders are invited to renew the authorization granted to the Board of Directors in the twelfth resolution of the September 22, 2008 General Meeting to award Ubisoft shares free of consideration ( share grants ). The use of the previous authorization is described in Section of the Management Report. No corporate officers were granted any free shares under this previous authorization and renewal of the authorization is being sought solely for Group employees who are not corporate officers. Shares awarded under the twelfth resolution of the September 2, 2008 General Meeting were subject to performance conditions (individual performance targets set in relation to the beneficiary s post) and to presence conditions, except for the share grant plan of June 30, 2010 covering 12,520 shares which was carried out in accordance with the provisions of Article L of the French Commercial Code. At March 31, 2011, a total of 1,117,620 shares had been awarded under share grant plans, representing a potential dilutive impact of 1.17%. 4

5 The award of shares free of consideration is a mechanism inspired by practices in English-speaking countries and forms part of the Group s employee share ownership policy, particularly for non- French employees. Such grants allow for a sure means of compensation and in some cases, as stated above, are subject to the employees concerned achieving pre-defined performance criteria. In addition, these plans are easier than other mechanisms to transpose abroad from a tax and legal perspective. By awarding share grants we can: - First and foremost, reward outstanding performance that has had a significant impact on the Group - Improve the competitiveness of our compensation packages - Develop our incentive policy in countries where there are no, or very few, employee share ownership plans - Further align the interests of employees with those of shareholders - Strengthen the involvement of our teams in the Company s performance (we plan to make the vesting of share grants contingent on the achievement of performance criteria). As one of the Group s priorities is to develop employee share ownership outside France, the shareholders are invited to renew the authorization previously granted for the Board of Directors to set up share grant plans. The shares granted under any such plans may not represent more than 1% of the Company's issued capital on the date the Board decides to carry out the grants. The Board of Directors would be responsible for setting the terms and eligibility criteria for the plans, and corporate officers would not be entitled to be beneficiaries of such plans. If approved, this authorization would be granted for a period of thirty-eight from the date of this Meeting and would supersede, with immediate effect, the unused portion of the authorization granted in the twelfth resolution of the General Meeting of September 22, Share capital increase reserved for employees and/or officers of the Company's subsidiaries located outside France The purpose of the sixteenth resolution is to renew the authorization granted in the twelfth resolution of the July 10, 2009 General Meeting to issue shares reserved for a certain category of beneficiaries (employees and/or officers of foreign subsidiaries), notably in countries where it is complicated to set up employee share ownership plans or where the tax laws are unfavorable to such plans. Through these rights issues, the Group can foster a sense of commitment to its core values. Under the previous authorization a rights issue was set up for employees of the Company s Canadian, American and UK subsidiaries. A total of 105,162 new shares were issued for a purchase price of per share (opening price for the Ubisoft share on Euronext Paris on the date when the Board of Directors decided to carry out the issue, less a 15% discount). The Board of Directors is seeking a renewal of this authorization in order to extend this type of issue to employees and/or officers in other countries. Any issues carried out under this authorization would not exceed 0.2% of the Company s capital on the date the Board decides to carry out the issue (versus 0.4% under the previous authorization). By extending its employee rights issues, the Group will also be able to further align the interests of employees abroad with those of Ubisoft s shareholders. If approved, this authorization would be granted for a period of eighteen from the date of this Meeting and would supersede the unused portion of the authorization granted in the twelfth resolution of the July 10, 2009 General Meeting. In conclusion, the thirteenth, fourteenth, fifteenth and sixteenth resolutions concerning employee share ownership are being proposed in order to enable Ubisoft to compete with the packages proposed by the other players in its industry. In addition, encouraging employee share ownership is now an essential component of our policy to attract and retain employees with a view to ensuring the long-term success of our business strategy. 5

6 BLANKET CEILING ON AUTHORIZATIONS - Seventeenth resolution - The seventeenth resolution sets an overall ceiling on the nominal amount of any capital increases carried out, immediately or in the future, during all the validity frame of authorizations with or without rights pursuant to the ninth, tenth, eleventh, twelfth, thirteenth, fourteenth, fifteenth and sixteenth resolutions. This ceiling would be set at 4,000,000 and would not include the par value of any additional shares to be issued to uphold the rights of existing holders of securities granting entitlement to the Company s capital. POWERS TO CARRY OUT LEGAL FORMALITIES - Seventh and eighteenth resolutions - The purpose of the seventh and eighteenth resolutions is to grant the necessary powers to carry out all the formalities required in relation to the ordinary and extraordinary resolutions submitted for shareholder approval at this General Meeting. 6

7 CAPITAL INCREASE AUTHORIZATIONS GRANTED TO THE BOARD OF DIRECTORS THAT ARE CURRENTLY IN FORCE Type of authorization Date of General Meeting Resolution Term Expiration date Ceiling Use Shares/ options issued/ granted Share buybacks 7th resolution Capital reduction by canceling shares held in treasury 9th resolution 18 01/01/ /01/12 10% of the share capital Maximum per-share purchase price: 60 10% of the share capital during 2010/2011 See Section of the Management Report Capital increase by capitalizing reserves, profit, premiums or other eligible items 10th resolution 10 million Capital increase, with rights Capital increase, without rights, by way of a public offering Capital increase, without rights, through a private placement To set the issue price for capital increases without rights (through a public offer or private placement) up to a limit of 10% of the Company s share capital per year Capital increase as consideration for contributed assets Capital increase to issue shares to members of a Group savings plan (PEG) Stock option grants Capital increase to issue shares to employees of Ubisoft subsidiaries located outside France 11th resolution (2) (2) (3) 12th resolution (2) (3) 13th resolution (2) (3) 14th resolution 15th resolution (2) 07/10/09 10th resolution 16th resolution (2) (1) (4) 07/10/09 38 (1) (4) 11th resolution 17th resolution (2) 07/10/09 12th resolution (4) Shares: 1,450,000 Debt securities: 400 million Shares: 1,450,000 Debt securities: 400 million Shares: 1,450,000 Debt securities: 400 million 734 thousand 10% of the Company s capital at the date of the Meeting /09//11 0.2% of the Company s capital 03/11/10 0 at the date of utilization See Section of the Management Report 12/15/09 4,500 09/09/12 3.4% of the total number of 04/29/10 119,000 shares outstanding at the option 06/30/10 3,088, grant date 09/01/ /09/11 0.4% of the Company s capital at the date of utilization 12/07/10 105,162 Share grants 09/22/08 12th resolution (5) 38 11/21/11 1% of the Company s capital at the grant date 06/30/10 173,020 11/15/10 215,000 (1) The unused portions of these authorizations were superseded by the authorizations approved for the same purpose at the July 2, 2010 General Meeting. (2) Included in the 4 million blanket ceiling set in the 18th resolution of the July 2, 2010 General Meeting. (3) Included in the ceilings of 1,450,000 for issues of shares and 400 million for issues of debt securities (without rights) set in the 12th, 13th and 14th resolutions of the July 2, 2010 General Meeting. (4) Included in the 4 million blanket ceiling set in the 13th resolution of the July 10, 2009 General Meeting. (5) Included in the 4 million blanket ceiling set in the 16th resolution of the September 22, 2008 General Meeting. 7