NOTICE TO CONVENE AGM 2011

NOTICE TO CONVENE AGM 2011

THE SHAREHOLDERS OF MODERN TIMES GROUP MTG AB (publ) are hereby invited
to the Annual General Meeting on Wednesday 18 May 2011 at 9:30 a.m. CET
at the Hotel Rival, Mariatorget 3 in Stockholm

NOTIFICATION

Shareholders who wish to participate at the Annual General Meeting shall

-                  have their names entered in the register of
shareholders maintained by Euroclear Sweden AB on Thursday 12 May 2011,
and

-                  notify the Company of their intention to participate
by no later than 1:00 p.m. CET on Thursday 12 May 2011. The notification
can be made on the Company's website, www.mtg.se, by telephone +46
(0)771-246 400 or in writing to the Company at:

Modern Times Group MTG AB
c/o Computershare AB
P.O. Box 610
SE-182 16 Danderyd, Sweden

When giving notice of participation, the shareholders should state their
name, personal identification number (or company registration number),
address, telephone number, shareholdings and any advisors attending. If
participation is by way of proxy, such document should be submitted in
connection with the notice of participation of the Annual General
Meeting. If the proxy is issued by a legal entity, a certified copy of
the registration certificate or an equivalent certificate of authority,
shall be attached to the proxy. Written notifications made by post
should be marked “AGM”.

Proxy forms are available at the Company's website www.mtg.se. For
ordering the proxy forms the same address and telephone number can be
used as for the notification, see above. Distance participation and
voting is not available.

Shareholders whose shares are registered in the names of nominees must
temporarily re-register the shares in their own name in order to be
entitled to participate at the Annual General Meeting. Shareholders
wishing to re-register must inform the nominee well in advance of
Thursday 12 May 2011.

 

PROPOSED AGENDA

 1. Opening of the Meeting.
 2. Election of Chairman of the Annual General Meeting.
 3. Preparation and approval of the voting list.
 4. Approval of the agenda.
 5. Election of one or two persons to check and verify the minutes.
 6. Determination of whether the Annual General Meeting has been duly
convened.
 7. Statement by the Chairman of the Board on the work of the Board of
Directors.
 8. Presentation by the Chief Executive Officer.
 9. Presentation of the Annual Report, the Auditors' Report and the
consolidated financial statements and the Auditors' Report on the
consolidated financial statements.
10. Resolution on the adoption of the income statement and Balance Sheet
and of the consolidated income statement and the consolidated Balance
Sheet.
11. Resolution on the proposed treatment of the Company's unappropriated
earnings or accumulated loss as stated in the adopted Balance Sheet.
12. Resolution on the discharge of liability of the directors of the
Board and the Chief Executive Officer.
13. Determination of the number of directors of the Board.
14. Determination of the remuneration to the directors of the Board and
the auditors.
15. Election of the directors of the Board and the Chairman of the
Board.
16. Determination of the number of auditors.
17. Approval of the procedure of the Nomination Committee.
18. Resolution regarding Guidelines for remuneration to the senior
executives.
19. Resolution regarding incentive programme comprising the following
resolutions:
(a)              adoption of an incentive programme;
(b)              authorisation to resolve to issue Class C shares;
(c)              authorisation to resolve to repurchase own Class C
shares;
(d)              transfer of own Class B shares.
20. Resolution to authorise the Board of Directors to resolve on
repurchase of own shares.
21. Resolution on amendment of the Articles of Association.
22. Closing of the Meeting.

NOMINATION COMMITTEE PROPOSALS (Items 2 and 13-17)

Election of Chairman of the Annual General Meeting (Item 2)

The Nomination Committee proposes that the lawyer Wilhelm Lüning is
appointed to be the Chairman of the Annual General Meeting.

Determination of the number of directors of the Board and election of
the directors of the Board and the Chairman of the Board (Item 13 and
15)

The Nomination Committee proposes that the Board of Directors shall
consist of eight directors and no deputy directors. The Nomination
Committee proposes, for the period until the close of the next Annual
General Meeting, the re-election of David Chance, Simon Duffy, Alexander
Izosimov, Mia Brunell Livfors, Michael Lynton, David Marcus and Cristina
Stenbeck as directors of the Board. Furthermore the Nomination Committee
proposes the election of Lorenzo Grabau as a new director of the Board.
The Nomination Committee proposes that the Annual General Meeting shall
re-elect David Chance as Chairman of the Board of Directors. Finally, it
is proposed that the Board of Directors at the Constituent Board Meeting
appoints an Audit Committee and a Remuneration Committee within the
Board of Directors. The Nomination Committee's motivated opinion
regarding proposal of the Board of Directors is available at the
Company's website, www.mtg.se.

Determination of the number of auditors (Item 16)

At the Annual General Meeting 2007 the shareholders appointed accounting
firm Ernst & Young AB, with Erik Åström as auditor-in-charge, until the
end of the Annual General Meeting 2011 and at the Annual General Meeting
2010 the shareholders appointed accounting firm KPMG AB, with George
Pettersson as auditor-in-charge, until the end of the Annual General
Meeting 2014. The Nomination Committee now proposes that the Company
shall have one (1) accounting firm as auditor. Pursuant to the
Nomination Committees proposal that the Company shall have one (1)
accounting firm as auditor the task of appointing an auditor is not
scheduled to occur until 2014, and will therefore not occur at this 2011
Annual General Meeting.

Determination of the remuneration to the directors of the Board and the
auditor (Item 14)

The Nomination Committee proposes that the Annual General Meeting
resolve to increase the total Board remuneration from SEK 3,950,000 to
SEK 4,875,000 for the period until the close of the next Annual General
Meeting in 2012. The proposal includes SEK 1,200,000 to be allocated to
the Chairman of the Board, SEK 450,000 to each of the directors of the
Board and total SEK 525,000 for the work in the committees of the Board
of Directors. The increase for committee work is driven by an increase
in number of Audit Committee members from three to four members and not
due to an individual increase in committee remuneration. The Nomination
Committee proposes that for work within the Audit Committee SEK 200,000
shall be allocated to the Chairman and SEK 75,000 to each of the other
three members. For work within the Remuneration Committee SEK 50,000
shall be allocated to the Chairman and SEK 25,000 to each of the other
two members. Furthermore, remuneration to the auditor shall be paid in
accordance with approved invoices.

Approval of the procedure of the Nomination Committee (Item 17)

The Nomination Committee proposes that the Annual General Meeting
approves the following procedure for preparation of the election of the
Board of Directors and auditor. The work of preparing a proposal on the
directors of the Board and auditor, in the case that an auditor should
be elected, and their remuneration as well as the proposal on the
Chairman of the Annual General Meeting of 2012 shall be performed by a
Nomination Committee. The Nomination Committee will be formed during
October 2011 in consultation with the largest shareholders of the
Company as per 30 September 2011. The Nomination Committee will consist
of at least three members representing the largest shareholders of the
Company. The Nomination Committee is appointed for a term of office
commencing at the time of the announcement of the third quarter report
in 2011 and ending when a new Nomination Committee is formed. The
majority of the members of the Committee may not be directors of the
Board of Directors or employed by the Company. If a member of the
Committee resigns before the work is concluded, a replacement member may
be appointed after consultation with the largest shareholders of the
Company. However, unless there are special circumstances, there shall
not be changes in the composition of the Nomination Committee if there
are only marginal changes in the number of votes, or if a change occurs
less than three months prior to the Annual General Meeting. Cristina
Stenbeck will be a member of the Committee and will also act as its
convenor. The members of the Committee will appoint the Committee
Chairman at their first meeting. The Nomination Committee shall have the
right to upon request receive personnel resources such as secretarial
services from the Company, and to charge the Company with costs for
recruitment consultants if deemed necessary.

DIVIDENDS (Item 11)

The Board of Directors proposes a dividend of SEK 7.50 per share. The
record date is proposed to be on 23 May 2011. The dividend is estimated
to be paid out by Euroclear Sweden on 26 May 2011.

GUIDELINES FOR REMUNERATION TO THE SENIOR EXECUTIVES (Item 18)

The Annual General Meeting 2011 is asked to decide on the following
guidelines, proposed by the Board of Directors, for determining
remuneration for MTG's senior executives (below the “Executives”).

Remuneration guidelines

The objective of the guidelines is to ensure that MTG can attract,
motivate and retain senior executives, within the context of MTG's
international peer group, which consists of Northern and Eastern
European media companies. The remuneration shall be based on conditions
that are market competitive and at the same time aligned with
shareholders' interests. Remuneration to the Executives shall consist of
a fixed and variable salary in cash, as well as the possibility of
participation in an equity based long-term incentive programme and
pension schemes. These components shall create a well balanced
remuneration reflecting individual performance and responsibility, both
short-term and long-term, as well as MTG's overall performance.

Fixed salary

The Executives' fixed salary shall be competitive and based on the
individual Executive's responsibilities and performance.

Variable salary

The Executives may receive variable remuneration in addition to fixed
salaries. The contracted variable remuneration will generally not exceed
a maximum of 75 per cent of the fixed annual salary. The variable
remuneration shall be based on the performance of Executives in relation
to established goals and targets.

Other benefits

MTG provides other benefits to the Executives in accordance with local
practice. Other benefits can include, for example, a company car and
company health care. Occasionally, housing allowance could be granted
for a defined period.

Pension

The Executives shall be entitled to pension commitments based on those
that are customary in the country in which they are employed. Pension
commitments will be secured through premiums paid to insurance
companies.

Notice of termination and severance pay

The maximum notice period in any Executive's contract is twelve months
during which time salary payment will continue. The Company does not
generally allow any additional contractual severance payments to be
agreed although there can be occasional cases where this takes place and
it should be noted that the Chief Executive Officer is entitled to
receive a severance payment equivalent to one month's basic salary per
year of service in the Group if he complies with certain conditions.

Deviations from the guidelines

In special circumstances, the Board of Directors may deviate from the
above guidelines, for example additional variable remuneration in the
case of exceptional performance. In such a case the Board of Directors
is obliged to explain the reason for the deviation at the following
Annual General Meeting. 

PROPOSAL TO IMPLEMENT AN INCENTIVE PROGRAMME (Item 19)

The Board of Directors proposes that the Annual General Meeting resolves
to adopt a performance-based incentive programme for senior executives
and other key employees within the Group in accordance with items 19(a)
- 19(d) below. All resolutions are proposed to be conditional upon each
other and therefore proposed to be adopted in connection with each
other. 

PROPOSAL TO ADOPT AN INCENTIVE PROGRAMME (Item 19(a))

The Board of Directors proposes that the Annual General Meeting resolves
to adopt a performance-based incentive programme (the “Plan”). The Plan
is proposed to in total include approximately 100 senior executives and
other key employees within the Group. The participants of the Plan are
required to own shares in MTG. These investment shares can either be
shares already held or shares purchased on the market in connection with
the notification to participate in the Plan. The proposed Plan has the
same structure as the plan that was adopted at the 2010 Annual General
Meeting.

For each share invested under the Plan, the participants will be granted
retention rights, and in certain cases, performance rights and stock
options by the Company. Subject to fulfillment of certain retention and
performance based conditions during the period 1 April 2011 - 31 March
2014 (the “Measurement Period”), the participant maintaining employment
within the Group at the release of MTG's interim report for the period
January - March 2014, and subject to the participant maintaining the
invested shares during the vesting period ending at the release of the
interim report for the period January - March 2014, each retention right
and performance right will entitle the participant to receive one Class
B share free of charge and each performance option will entitle the
participant to purchase one Class B share at a price corresponding to
120 per cent of the share price at grant. Dividends paid on the
underlying share will increase the number of shares that each retention
right and performance right entitles to in order to treat the
shareholders and the participants equally.

The retention rights, the performance rights and the options are divided
into Series A; retention rights and Series B and C; performance rights
and options. The number of MTG shares the participant will receive at
vesting of retention rights and performance rights and exercise of
vested options depends on which category the participant belongs to and
on the fulfilment of the following defined retention and performance
based conditions:

Series A          MTG's total shareholder return on the share (TSR)
during the Measurement Period exceeding 0 per cent as entry level.

Series B          MTG's average normalised return of capital employed
(ROCE) during the Measurement Period being at least 18 per cent as entry
level and at least 28 per cent as the stretch target.

Series C          MTG's total shareholder return on the shares (TSR)
during the Measurement Period being equal to the average TSR for a peer
group including CME, ITV, M6, Mediaset, ProSieben, RTL Group, Sky, TF1
and TVN as entry level, and exceeding the average TSR for the peer group
with 10 percentage points as the stretch target. When calculating the
TSR, March 2011 shall be compared to March 2014. Furthermore, the
companies in the peer group which have the highest respectively the
lowest TSR, shall be excluded from the calculation.

In total, the Plan is estimated to comprise up to 19,850 shares held by
the employees entitling to allotment of up to 215,650 rights and
options, whereof 19,850 retention rights, 97,900 performance rights and
97,900 options. The participants are divided into different groups,
decided by the Remuneration Committee. In accordance with the above
principles and assumptions, the Plan will permit between 100 - 1,900
invested shares by the different categories of participants.

The participant's maximum profit per right and option in the Plan is SEK
1,294 which corresponds to three times the average closing share price
of the MTG Class B shares during February 2011. If the value of the MTG
Class B share at vesting or the profit at exercise of the option exceeds
SEK 1,294, the number of shares each right entitles the employee to
receive at vesting or the number of shares received at exercise of the
options will be reduced accordingly. The maximum dilution is 0.4 per
cent in terms of shares outstanding, 0.2 per cent in terms of votes and
0.07 per cent in terms of the estimated Plan cost as defined in IFRS 2
divided by the Company's market capitalisation.

The Board of Directors, or a committee established by the Board for
these purposes, shall be responsible for preparing the detailed terms
and conditions of the Plan, in accordance with the mentioned terms and
guidelines. To this end, the Board of Directors shall be entitled to
make adjustments to the Plan to meet foreign regulations or market
conditions.

The objective of the proposed Plan is to create conditions to recruit
and retain high performing employees in the Group. The Plan has been
designed based on the view that it is desirable that senior executives
and other key employees within the Group are shareholders in the
Company. Participation in the Plan requires a personal investment in MTG
shares by each participant. By linking the employee's reward with the
development of the Company's profits and increase in value, employee
loyalty is rewarded and long-term value growth of the Company is
facilitated. Against this background, the Board of Directors is of the
opinion that the adoption of the Plan as set out above will have a
positive effect on the Group's future development and thus be beneficial
for both the Company and its shareholders.

To ensure the delivery of Class B shares under the Plan, the Board of
Directors proposes that the Annual General Meeting resolves to authorise
the Board of Directors to resolve on a directed issue of Class C shares
to Nordea Bank AB (publ) in accordance with item 19(b), and further to
authorise the Board of Directors to subsequently resolve to repurchase
the Class C shares from Nordea Bank AB (publ) in accordance with item
19(c). The Class C shares will then be held by the Company during the
vesting period, where after the appropriate number of Class C shares
will be reclassified into Class B shares and subsequently be delivered
to the participants under the Plan.

The above proposal is supported by the Company's major shareholders.

AUTHORISATION TO RESOLVE TO ISSUE CLASS C SHARES (Item 19(b))

The Board of Directors proposes that the Annual General Meeting resolves
to authorise the Board of Directors, during the period until the next
Annual General Meeting, to increase the Company's share capital by not
more than SEK 1,200,000 by the issue of not more than 240,000 Class C
shares, each with a ratio value of SEK 5.00. With disapplication of the
shareholders' preferential rights, Nordea Bank AB (publ) shall be
entitled to subscribe for the new Class C shares at a subscription price
corresponding to the ratio value of the shares. The purpose of the
authorisation and the reason for the disapplication of the shareholders'
preferential rights in connection with the issue of shares is to ensure
delivery of Class B shares to participants under the Plan.

AUTHORISATION TO RESOLVE TO REPURCHASE OWN CLASS C SHARES (Item 19(c))

The Board of Directors proposes that the Annual General Meeting resolves
to authorise the Board of Directors, during the period until the next
Annual General Meeting, to repurchase its own Class C shares. The
repurchase may only be effected through a public offer directed to all
holders of Class C shares and shall comprise all outstanding Class C
shares. The purchase may be effected at a purchase price corresponding
to not less than SEK 5.00 and not more than SEK 5.10. The total price
will not exceed SEK 1,224,000. Payment for the Class C shares shall be
made in cash. The purpose of the repurchase is to ensure the delivery of
Class B shares under the Plan.

TRANSFER OF OWN CLASS B SHARES (Item 19(d))

The Board of Directors proposes that the Annual General Meeting resolves
that Class C shares that the Company purchases by virtue of the
authorisation to repurchase its own shares in accordance with item 19(c)
above, following reclassification into Class B shares, may be
transferred to participants in accordance with the terms of the Plan.

AUTHORISATION FOR THE BOARD OF DIRECTORS TO RESOLVE ON REPURCHASE OF OWN
SHARES (Item 20)

The Board of Directors proposes that the Annual General Meeting
authorises the Board of Directors to pass a resolution on one or more
occasions for the period up until the next Annual General Meeting on
repurchasing so many Class A and/or Class B shares that the Company's
holding does not at any time exceed 10 per cent of the total number of
shares in the Company. The repurchase of shares shall take place on the
Nasdaq OMX Stockholm and may only occur at a price within the share
price interval registered at that time, where share price interval means
the difference between the highest buying price and lowest selling
price.

The purpose of the authorisation is to give the Board of Directors
flexibility to continuously decide on changes to the capital structure
during the year and thereby contribute to increased shareholder value.

AMENDMENT OF THE ARTICLES OF ASSOCIATION (Item 21)

Due to amendments to the Swedish Companies Act the Board of Directors
proposes that the Annual General Meeting resolves on additions and
alterations of Sections 7 and 9 of the Articles of Association.

The Board of Directors proposes an addition to Section 7 involving that
the term of office of the auditor shall last until the end of the Annual
General Meeting which is held during the fourth financial year after the
election. The Board of Directors proposes that Section 7 shall have the
following wording.

“The Company shall have no more than three auditors with up to three
deputy auditors. The auditors term of office shall last until the end of
the Annual General Meeting which is held during the fourth financial
year after the auditor was elected.”

Regarding Section 9 the Board of Directors proposes that the rules
regarding the timetable for the notice convening General Meetings, in
Section 9 first paragraph, be deleted from the Articles of Association.

SHARES AND VOTES

There are a total number of 67,407,124 shares in the Company, whereof
6,410,852 Class A shares, 60,371,272 Class B shares and 625,000 Class C
shares, corresponding to a total of 125,104,792 votes. The Company
currently holds 440,000 of its own Class B shares and 625,000 of its own
Class C shares corresponding to 1,065,000 votes, which cannot be
represented at the Annual General Meeting.

OTHER INFORMATION

Valid resolutions under items 19(b) and 19(c), 20 and 21 above require
approval of shareholders representing at least two-thirds of the shares
and number of votes represented at the Annual General Meeting. Valid
resolutions under items 19(a) and 19(d) above require approval of
shareholders representing at least nine-tenth of the shares and the
numbers of votes represented at the Annual General Meeting. Items 19(a)
- 19(d) are conditional upon each other. From Wednesday 27 April 2011 at
the latest, the accounting documents, the Auditor's Report, the
statements of the Board of Directors, the auditor's statement pursuant
to Chapter 8 Section 54 of the Swedish Companies Act and the complete
text of the proposals of the Board of Directors will be made available
at the Company's website at www.mtg.se and at the Company's premises at
Skeppsbron 18 in Stockholm. Shareholders who wish to receive these
documents may notify the Company, whereupon the documents will be sent
by post or by e-mail.

The Board of Directors and the CEO shall, if any shareholder so requests
and the Board of Directors believes that it can be done without material
harm to the company, provide information regarding circumstances that
may affect the assessment of an item on the agenda, circumstances that
can affect the assessment of the company's or its subsidiaries'
financial situation and the company's relation to other companies within
the group and the consolidated accounts.

The Annual General Meeting will mainly be held in Swedish. As a service
to the shareholders, simultaneous interpretation from Swedish to English
as well as from English to Swedish will be provided.

 

Schedule for the Meeting

8:30 a.m. The doors open for shareholders.
9:30 a.m. The Annual General Meeting commences.

_______________________

Stockholm, April 2011

Modern Times Group MTG AB (publ)

The Board of Directors