This section describes important business relationships between ABB and its Board and Executive Committee members, or companies and organizations represented by them. This determination has been made based on ABB Ltd’s Related Party Transaction Policy. This policy is contained in the ABB Ltd Board Regulations and Corporate Governance Guidelines, a copy of which can be found in the section “Corporate governance” at www.abb.com/investorcenter
Vale S.A. and its subsidiaries (Vale) and ABB have entered into a framework agreement establishing general terms and conditions for the supply of products, systems and services among their respective group subsidiaries. ABB supplies Vale primarily with process automation products for mineral systems. The total revenues recorded by ABB in 2012 relating to its contracts with Vale were approximately $140 million. Roger Agnelli was previously president and CEO of Vale.
Atlas Copco AB (Atlas Copco) is an important customer of ABB. ABB supplies Atlas Copco primarily with drives and motors through its Discrete Automation and Motion division. The total revenues recorded by ABB relating to business with Atlas Copco were approximately $60 million in 2012. Jacob Wallenberg was vice chairman of Atlas Copco until April 2012.
ABB has an unsecured syndicated $2-billion, revolving credit facility. As of December 31, 2012, SEB Skandinaviska Enskilda Banken AB (publ) (SEB) and UBS AG (UBS) had each committed to $71 million out of the $2-billion total. In addition, in February 2012, ABB entered into a $4-billion term credit agreement to provide bridge financing for the acquisition of Thomas & Betts Corporation. SEB and UBS had each committed to lend ABB $250 million as of the completion of the primary syndication. The term credit agreement was never drawn and was cancelled in May 2012. In addition, ABB has regular banking business with UBS and SEB. Jacob Wallenberg is the vice chairman of SEB and Michel Demaré is the vice chairman of UBS.
ABB has also retained Ortec Finance B.V. (Ortec) to provide pension modeling services. Michel Demaré’s spouse is an employee and the chairman of the board of directors of Ortec’s Swiss subsidiary.
After comparing the share of revenues generated from ABB’s business with Vale and Atlas Copco, after reviewing the banking commitments of UBS and SEB, and after considering Ortec’s business relationship with ABB, the Board has determined that ABB’s business relationships with those companies are not unusual in their nature or conditions and do not constitute material business relationships. As a result, the Board concluded that all members of the Board are considered to be independent directors. This determination was made in accordance with ABB Ltd’s Related Party Transaction Policy which was prepared based on the Swiss Code of Best Practice for Corporate Governance and the independence criteria set forth in the corporate governance rules of the New York Stock Exchange.