The Board of Trustees of the Egmont Foundation has described Egmont’s Corporate Governance policy based on the latest recommendations of the Committee on Corporate Governance, which were prepared in 2011. The description follows below.
1. The role of the shareholders and their interaction with the management of the
company
1.1. Dialogue between the company and its shareholders
1.1.1. The Committee recommends that the central governing body, for example through investor relations activities, ensure an ongoing dialogue between the company and its shareholders in order that the central governing body knows the shareholders’ attitude, interests and views in relation to the company and that investor relations material be made available to all investors on the company’s website.
The Egmont Foundation is the parent entity of the Egmont Group.
The Board of Trustees is the company’s supreme governing body and, together with the Management Board, protects the interests of the Egmont Foundation according to the Foundation’s Charter.
The Egmont Foundation is subject to supervision by the Danish Ministry of Justice (the Civil Affairs Agency). The Foundation engages in dialogue with the Civil Affairs Agency as necessary regarding matters dealt with in the Charter that may require the approval of the supervisory authority.
1.2. Capital and share structures
1.2.1. The Committee recommends that the central governing body every year evaluate whether the company’s capital and share structures continue to be in the interests of the shareholders and the company and account for this evaluation in the management commentary in the annual report and/or on the company’s website.
The Egmont Foundation is the sole shareholder of Egmont International Holding A/S, which carries on the Group’s commercial media activities that are not conducted through the Egmont Foundation. In addition, the Foundation wholly owns a number of property companies.
The Egmont Foundation and Egmont International Holding A/S have the same Board of Trustees/Directors and Management Board.
At least once a year the Board of Trustees and Management Board assess whether the Group’s capital structure and capital resources are sufficient to achieve its long-term strategic goals.
1.3. General meeting
1.3.1. The Committee recommends that the supreme governing body and the executive board promote active ownership, including shareholders’ attendance at general meetings.
1.3.2. The Committee recommends that the central governing body resolve or submit to the general meeting the question whether the general meeting shall be conducted by physical attendance or as a partly or entirely electronic general meeting.
1.3.3 The Committee recommends that proxies given to the supreme governing body allow shareholders to consider each individual item on the agenda.
1.3.4. The Committee recommends that all members of the supreme governing body and the executive board be present at the general meeting.
The Group’s parent entity, the Egmont Foundation has no shareholders, but is subject to supervision by the Civil Affairs Agency.
Egmont International Holding A/S has a single shareholder, the Egmont Foundation, which participates actively in general meetings.
The Egmont Foundation holds annual meetings, cf. the Charter.
1.4. Takeover bids
1.4.1. The Committee recommends that the central governing body, from the moment it obtains knowledge that a takeover bid will be submitted, do not, without the acceptance of the general meeting, attempt to counter the takeover bid by making decisions which in reality prevent the shareholders from deciding on the takeover bid.
1.4.2. The Committee recommends that the central governing body give the shareholders the opportunity to decide whether or not they wish to dispose of their shares in the company under the terms offered.
The recommendations are not relevant for Egmont owing to its structural organisation with the Egmont Foundation as the parent entity, whose objective is to carry on commercial activities.
The Charter stipulates that without the approval of the Danish Ministry of Justice, the Board of Trustees of the Egmont Foundation cannot engage in transactions entailing the surrender or significant reduction of the Foundation’s proportionate share of equity investments or of the controlling interest in a company taking an essential part in the Foundation’s overall commercial activities.
2. The role of stakeholders and their importance to the company and the company’s corporate social responsibility
2.1. The company’s policy in relation to its stakeholders
2.1.1. The Committee recommends that the central governing body identify the company’s key stakeholders and their main interests in relation to the company.
2.1.2. The Committee recommends that the central governing body adopt a policy on the company’s relationship with its stakeholders, including the investors, and ensure that the interests of the stakeholders are respected in accordance with the company’s policy on such issues.
The Egmont Foundation’s primary commercial activities are defined in the Charter. Egmont’s vision is to be the most attractive media group for employees, business partners and consumers.
Ongoing efforts are made to safeguard and develop relations with the Group’s many stakeholders. However, Egmont has not adopted corporate policies for its relationship with stakeholders. As the Group operates in several media fields in 30 countries, Egmont has relations with numerous stakeholders.
2.2. Corporate social responsibility
2.2.1. The Committee recommends that the central governing body adopt a policy on corporate social responsibility.
In his will, Egmont’s founder, Egmont Harald Petersen, declared that a portion of the company’s profits should be spent on improving the life quality of children and young people. Since 1920 Egmont has supported social, cultural and health initiatives.
Egmont’s work is guided by the Group’s Code of Conduct that defines standards in three areas: human rights, working conditions and the environment. Egmont’s Code of Conduct, which is continuously verified through company inspections, can be read in its entirety at www.egmont.com.
Egmont describes its specific CSR initiatives and policies in more detail in the annual report.
3. Openness and transparency
3.1. Disclosure of information to the market
3.1.1. The Committee recommends that the central governing body adopt a communication strategy.
3.1.2. The Committee recommends that information from the company to the market be published in both Danish and English.
3.1.3. The Committee recommends that the company publish quarterly reports.
The Egmont Group has media companies in 30 countries and operates various forms of media activity. Each company publishes a range of media products and independent brands with their own profile. The companies communicate individually with their relevant markets and stakeholders.
At corporate level, Egmont informs stakeholders about important events via the Group’s website and press releases.
Annual reports are prepared in Danish and English. Press releases in connection with the publication of financial statements are prepared in Danish, English, Norwegian, Swedish and German.
As the Group has no shareholders, it does not publish quarterly reports.
4. The tasks and responsibilities of the supreme and the central governing bodies
4.1. Overall tasks and responsibilities
4.1.1. The Committee recommends that the central governing body determine the company’s overall strategy at least once every year with a view to sustaining value creation in the company.
4.1.2. The Committee recommends that the supreme governing body at least once every year discuss and ensure that the necessary qualifications and financial resources are in place in order for the company to achieve its strategic goals.
4.1.3. The Committee recommends that the supreme governing body at least once every year define its most important tasks related to the financial and managerial control of the company, including how to supervise the work of the executive board.
The Board of Trustees continuously discusses strategies for Egmont’s various business areas. At least once a year the Board of Trustees reviews and updates the company’s overall strategy, including ensuring that the necessary financial resources are in place.
The Board of Trustees has defined requirements for the financial and managerial control of the company in the rules of procedure for the Board of Trustees and Management Board as well as in special audit instructions.
4.2. Procedures
4.2.1. The Committee recommends that the supreme governing body review its rules of procedure annually to ensure that they are adequate and always match the activities and needs of the company.
4.2.2. The Committee recommends that the supreme governing body annually review and approve procedures for the executive board, including establish requirements for the executive board’s timely, accurate and adequate reporting to the supreme governing body and for any other communication between the two governing bodies.
The rules of procedure for the Board of Trustees and Management Board are reviewed annually.
4.3. The chairman and deputy chairman of the supreme governing body
4.3.1. The Committee recommends that a deputy chairman of the supreme governing body be appointed, who must be able to act in the chairman’s absence and also act as an effective sounding board for the chairman.
4.3.2. The Committee recommends the preparation of a scope of work and task list specifying the tasks, duties and responsibilities of the chairman and deputy chairman.
4.3.3. The Committee recommends that the chairman of the supreme governing body organise, convene and chair meetings to ensure efficiency in the body’s work and to create the best possible working conditions for the members, individually and collectively.
4.3.4. The Committee recommends that, if the board of directors in exceptional cases asks its chairman to perform special tasks for the company, including briefly participate in the day-to-day management, a board resolution to that effect should be passed and precautions taken to ensure that the board of directors will maintain responsibility for the overall management and control function. A reasonable distribution of duties must be ensured between the chairman, the deputy chairman, the other members of the board of directors and the executive board. Information about agreements on the chairman’s participation in the day-to-day management and the expected duration hereof must be disclosed in a company announcement.
The chairmanship of the Board of Trustees consists of a chairman and a vice chairman, cf. the Charter and the rules of procedure for the Board of Trustees.
The chairman convenes and chairs meetings of the Board of Trustees.
The chairman of the Board of Trustees does not participate in the day-to-day management and does not perform special tasks for the company.
5. Composition and organisation of the supreme governing body
5.1. Composition
5.1.1. The Committee recommends that the supreme governing body annually specify the skills it must have to best perform its tasks and that the specification be posted on the website. Proposals for the nomination/replacement of members of the supreme governing body to be submitted to the general meeting should be prepared in the light hereof.
5.1.2. The Committee recommends that the supreme governing body ensure a formal, thorough and transparent process for selection and nomination of candidates to the supreme governing body. When assessing its composition and nominating new candidates, the supreme governing body must take into consideration the need for integration of new talent and the need for diversity in relation to international experience, gender and age, etc.
5.1.3. The Committee recommends that a description of the nominated candidates’ qualifications, including information about other executive functions, e.g. memberships of executive boards, boards of directors and supervisory boards, including board committees, held by the candidates in both Danish and foreign companies as well as information on demanding organisational tasks should accompany the notice convening the general meeting when election of members to the supreme governing body is on the agenda.
5.1.4. The Committee recommends that every year, the management commentary in the annual report contain an account of the composition of the supreme governing body, including its diversity, and of any special skills possessed by the individual members.
The Board of Trustees of the Egmont Foundation consists of six members appointed according to the Charter as well as three employee-elected members.
When nominating a new board member in accordance with the Charter, the Board must specify the qualifications and personal profile required. Relevant external sources such as recruitment agencies may be used to help with identifying board candidates.
The Board of Trustees appoints its own members, cf. the Egmont Foundation’s Charter. The Ministry of Justice approves the appointed board members.
The composition of the Board of Trustees and Management Board is published on Egmont’s website and in the annual report.
5.2. Training of members of the supreme governing body
5.2.1. The Committee recommendsthat new members joining the supreme governing body be given an introduction to the company.
5.2.2. The Committee recommends that the supreme governing body annually assess whether the skills and expertise of its members need to be updated.
New board members are given a thorough introduction to the company.
The Board of Trustees is kept updated on special issues related to the rapidly changing media world, including via the annual strategy meeting.
5.3. Number of members of the supreme governing body
5.3.1. The Committee recommends that the supreme governing body have only so many members as to allow a constructive debate and an effective decision-making process enabling all members to play an active role.
5.3.2. The Committee recommends that in connection with the preparation for each year’s general meeting, the supreme governing body consider whether the number of members is appropriate in relation to the requirements of the company.
The Charter stipulates the number of board members to be appointed according to the Charter. Additional employee-elected board members are appointed in accordance with existing legislation. The number of board members and the Board’s skills composition are considered appropriate for the company.
5.4. The independence of the supreme governing body
5.4.1. In order for the members of the supreme governing body to act independently of special interests, the Committee recommends that at least half of the members elected by the general meeting be independent persons.
The independent supreme governing body member may not:
- be, or have been within the last five years, a member of the executive board/managerial staff of the company or an associated company,
- have received significant additional remuneration from the company/group or an associated company apart from a fee for its services in the capacity as a member of the supreme governing body
- represent the interests of a controlling shareholder,
- within the last year, have had a material business relationship (e.g. personally or indirectly as a partner or an employee, shareholder, customer, supplier or member of a governing body of companies with similar relations) with the company or an associated company,
- be, or have been within the last three years, an employee or partner of the external audit firm,
- hold cross-memberships of governing bodies,
- have been a member of the supreme governing body for more than 12 years, or
- have close family ties with persons that are not regarded as independent persons.
Egmont’s Charter establishes criteria for members of the Board of Trustees of the Egmont Foundation. A board member appointed in accordance with the Charter must not be an employee of an Egmont company.
Board members must resign after expiry of the financial year in which the board member in question turns 70.
There is thus no limit on a board member’s length of service and no other regulations regarding the independence of board members.
Nonetheless the Board of Trustees of the Egmont Foundation complies with the recommendation.
5.5. Members of the supreme governing body elected by the employees
5.5.1. The Committee recommends that the individual company explain, in the company’s annual report or on its website, the system of employee-elected board members and the company’s use hereof in companies where the employees have chosen to apply the provisions of the Companies Act on employee representation.
The rules governing employee representation at corporate level gives employees in Denmark the right to elect three members to the respective boards of the Egmont Foundation, Egmont International Holding A/S and Dansk Egmont Holding A/S.
Members are elected by direct election for a term of four years.
5.6. Meeting frequency
5.6.1. The Committee recommends that the supreme governing body meet at regular intervals according to a predetermined meeting and work schedule or when meetings are deemed necessary or appropriate as required by the company and that the number of meetings held be disclosed in the annual report.
The Board of the Egmont Foundation and Egmont International Holding A/S holds six ordinary board meetings a year plus an annual strategy meeting. The Egmont Foundation also holds an annual meeting at which the annual report is presented. Extraordinary board meetings are held on an ad hoc basis.
As far as possible, the board meetings of the Egmont Foundation and Egmont International Holding A/S are conducted according to a common agenda.
5.7. Expected time commitment and the number of other executive functions
5.7.1. The Committee recommends that each member of the supreme governing body assess the expected time commitment for each function in order that the member does not take on more functions than he/she can manage in a satisfactory way for the company.
5.7.2. The Committee recommends that the annual report contain the following information about the members of the supreme governing body:
- the member’s occupation,
- the member’s other executive functions, e.g. memberships of executive boards, boards of directors and supervisory boards, including board committees, in Danish and foreign companies as well as demanding organisational tasks, and
- the number of shares, options, warrants, etc. that the member holds in the company and its consolidated companies and any changes in such holdings during the financial year.
The occupations and other executive functions of board members are disclosed in the annual report.
5.8. Retirement age
5.8.1. The Committee recommends that the company’s articles of association fix a retirement age for members of the supreme governing body and that the annual report contain information on such retirement age as well as the age of each member of the board of directors.
The Egmont Foundation’s Charter determines that board members must resign after expiry of the financial year in which the member in question turns 70.
The birth years of members of the Board of Trustees and Management Board are stated in the annual report.
5.9. Election period
5.9.1. The Committee recommends that members of the supreme governing body elected by the general meeting be up for re-election every year at the annual general meeting.
5.9.2. The Committee recommends that the annual report state when the individual member of the supreme governing body joined the body, whether the member was re-elected and when the current election period expires.
The year when each board member joined the Board is stated in the annual report.
Members are not re-elected as, under the terms of the Charter, the term of office runs until the member turns 70.
5.10. Board committees
5.10.1. The Committee recommends that the company publish the following information in the management commentary in its annual report or on the company’s website:
- the terms of reference for the board committees,
- important activities of the committees during the year and the number of meetings held by each committee, and
- the names of the members of each committee, including the chairmen of the committees, as well as information on which members are independent members and which members have special qualifications.
5.10.2. The Committee recommends that a majority of the members of a board committee be independent members.
5.10.3. The Committee recommends that the supreme governing body establish an actual audit committee.
5.10.4. The Committee recommends that the following be taken into account in composing the audit committee:
· the chairman of the supreme governing body should not be chairman of the audit
committee, and
- between them, the members should possess such an amount of expertise and experience as to provide an updated insight into and experience in the financial, accounting and audit conditions of companies whose shares are admitted to trading on a regulated market.
5.10.5. The Committee recommends that, prior to the approval of the annual report and other financial reports, the audit committee monitor and report to the supreme governing body about:
- significant accounting policies,
- significant accounting estimates,
- related party transactions, and
- uncertainties and risks, including in relation to the outlook.
5.10.6. The Committee recommends that the audit committee:
- annually consider whether there is a need for an internal audit function, and if so
- formulate recommendations on selecting, appointing and removing the head of the
internal audit function and on the budget of the internal audit function and
- monitor the executive board’s follow-up on the conclusions and recommendations of the internal audit function.
5.10.7. The Committee recommends that the supreme governing body establish a nomination committee with at least the following preparatory tasks:
- describe the qualifications required in the two governing bodies and for a given position, state the expected time commitment for a position and evaluate the balance of skills, knowledge and experience available in the two governing bodies.
- annually evaluate the structure, size, composition and performance of the governing bodies and make recommendations to the supreme governing body with regard to any changes,
- annually evaluate the skills, knowledge and experience of the individual members of the governing bodies and report such details to the supreme governing body,
- consider proposals submitted by relevant persons, including shareholders and members
- of the governing bodies, for candidates for executive positions, and
- identify and recommend to the supreme governing body candidates for the governing bodies.
5.10.8. The Committee recommends that the supreme governing body establish a remuneration committee with at least the following preparatory tasks:
- make proposals, for the approval of the supreme governing body prior to approval at the general meeting, on the remuneration policy, including the overall principles of incentive pay schemes, for members of the supreme governing body and the executive board,
- make proposals to the supreme governing body on remuneration for members of the supreme governing body and the executive board and ensure that the remuneration is consistent with the company’s remuneration policy and the evaluation of the performance of the persons concerned. The committee should have information about the total amount of remuneration that members of the supreme governing body and the executive board receive from other companies in the group, and
- oversee that the information in the annual report on the remuneration of the supreme governing body and the executive board is correct, true and sufficient.
5.10.9. The Committee recommends that the remuneration committee do not consult with the same external advisers as the executive board of the company.
All members of the Board of Trustees perform the tasks with which an audit committee can be charged.
Board members appointed under the Charter handle tasks related to the nomination of new board members, cf. the Charter provisions regarding the appointment of board members.
The chairman and vice chairman jointly constitute the remuneration committee, which prepares proposals on remuneration for approval by the Board of Directors.
In accordance with the Charter provisions, the Board of Trustees has appointed an aid and grant administration committee related to the charitable grants. The aid and grant administration committee currently consists of the chairman and vice chairman of the Board of Trustees.
5.11. Evaluation of the performance of the supreme governing body and the executive board
5.11.1. The Committee recommends that the supreme governing body undertake an annual evaluation of the performance and achievements of the supreme governing body and of the individual members of the body.
5.11.2. The Committee recommends that the chairman be in charge of the evaluation of the supreme governing body, that the outcome be discussed in the supreme governing body and that the details of the procedure of self-evaluation and the outcome be disclosed in the annual report.
5.11.3. The Committee recommends that the supreme governing body at least once every year evaluate the work and performance of the executive board in accordance with pre-defined criteria.
5.11.4. The Committee recommends that the executive board and the supreme governing body establish a procedure according to which their cooperation is evaluated annually through a formalised dialogue between the chairman of the supreme governing body and the chief executive officer and that the outcome of the evaluation be presented to the supreme governing body.
The Board of Trustees conducts an annual evaluation of the work of and cooperation between the Board of Trustees and Management Board.
The chairman is in charge of the evaluation.
The results are presented to the Board of Trustees and Management Board.
6. Remuneration of members of the governing bodies
6.1. Content and form of the remuneration policy
6.1.1. The Committee recommends that the supreme governing body adopt a remuneration policy applicable to the supreme governing body and the executive board.
6.1.2. The Committee recommends that the remuneration policy and any changes to the policy be approved by the general meeting of the company.
6.1.3. The Committee recommends that the remuneration policy include a thorough description of the components of the remuneration for members of the supreme governing
body and the executive board.
6.1.4. The Committee recommends that the remuneration policy include:
- the reasons for choosing the individual components of the remuneration, and a description of the criteria on which the balance between the individual components of the remuneration is based.
6.1.5. The Committee recommends that, if the remuneration policy includes variable components,
- limits be set on the variable components of the total remuneration package,
- a reasonable and balanced linkage be ensured between remuneration for governing body members, expected risks and the value creation for shareholders in the short and long term,
- there be clarity about performance criteria and measurability for award of variable
- components, and
- there be criteria ensuring that vesting periods for variable components of remuneration agreements are longer than one calendar year.
6.1.6. The Committee recommends that remuneration of members of the supreme governing body do not include share or warrant programmes.
6.1.7. The Committee recommends that if members of the executive board receive share-based remuneration, such programmes be established as roll-over programmes, i.e. the options are granted periodically and should not be exercisable earlier than three years from the date of grant. An explanation of the relation between the redemption price and the market price at the time of grant should be provided.
6.1.8. The Committee recommends that, in exceptional cases, companies should be able to reclaim in full or in part variable components of remuneration that were paid on the basis of data, which proved to be manifestly misstated.
6.1.9. The Committee recommends that termination payments should not amount to more than two years’ annual remuneration.
Members of the Board of Trustees receive fixed annual remuneration. There are no bonus or incentive schemes.
Members of the Management Board receive fixed remuneration, composed of a fixed salary, pension and company car scheme plus a performance-related bonus.
6.2. Disclosure of the remuneration policy
6.2.1. The Committee recommends that the remuneration policy be clear and easily understandable and that it be disclosed in the annual report and posted on the company’s
website.
6.2.2. The Committee recommends that the company’s remuneration policy and compliance with this policy be explained and justified in the chairman’s statement at the company’s general meeting.
6.2.3. The Committee recommends that the total remuneration granted to each member of the supreme governing body and the executive board by the company and other consolidated companies be disclosed in the (consolidated) financial statements and that the linkage with the remuneration policy be explained.
6.2.4. The Committee recommends that the details of any defined-benefit schemes offered to members of the supreme governing body or the executive board and the actuarial value of such schemes as well as changes during the year be included as part of the information on the total remuneration.
6.2.5. The Committee recommends that the most important aspects of retention and severance programmes be disclosed in the company’s annual report.
6.2.6. Severance programmes cover a wide area, including period of notice and qualification, termination payment, change of control agreements, insurance and pension schemes, payment of pension contributions after retirement, etc.
As a result of the structure of the Egmont Foundation, including the circumstance that it has no shareholders, the remuneration policy is not presented at general/annual meetings.
The annual report provides information about the total remuneration received respectively by the Board of Trustees and the Management Board.
7. Financial reporting
7.1. Other relevant information
7.1.1. The Committee recommends that the annual report and other financial reports be supplemented by additional financial and non-financial information, if deemed necessary or relevant in relation to the information needs of the recipients.
The annual report contains relevant financial and non-financial information.
7.2. The going concern assumption
7.2.1. The Committee recommends that, upon consideration and approval of the annual report, the supreme governing body decide whether the business is a going concern, including supporting assumptions or qualifications where necessary.
The annual report of the Egmont Foundation is presented in accordance with the provisions of the Danish Financial Statements Act. When considering the annual report, the Board of Directors decides whether the financial statements have been prepared on the assumption that the business is a going concern.
8. Risk management and internal control
8.1. Identification of risks
8.1.1. The Committee recommends that the central governing body at least once every year identify the most important business risks associated with the realisation of the company’s strategy and overall goals as well as the risks associated with financial reporting.
8.1.2. The Committee recommends that the executive board currently report to the supreme governing body on the development within the most important areas of risk and compliance with adopted policies, frameworks etc. in order to enable the supreme governing body to track the development and make the necessary decisions.
8.2. Whistleblower
8.2.1. The Committee recommends that the supreme governing body decide whether to establish a whistleblowing scheme for expedient and confidential notification of possible or suspected wrongdoing.
8.3. Openness about risk management
8.3.1. The Committee recommends that the management commentary in the annual report include information about the company’s management of business risks.
The Board of Trustees and Management Board regularly assess and discuss risks related to the activities of the Egmont Foundation. This work is expected to be further formalised and strengthened in the years to come.
The Board has decided not to establish a whistleblowing scheme.
The annual report contains a general description of the special risks associated with the activities of the Egmont Foundation.
9. Audit
9.1. Contact to auditor
9.1.1. The Committee recommends that the supreme governing body maintain a regular dialogue and exchange of information with the auditor.
9.1.2. The Committee recommends that the auditor agreement and auditors’ fee be agreed between the supreme governing body and the auditor on the basis of a recommendation from the audit committee.
9.1.3. The Committee recommends that the supreme governing body and the audit committee meet with the auditor at least once every year without the executive board present. This also applies to the internal auditor, if any.
9.2. Internal audit
9.2.1. The Committee recommends that the supreme governing body, on the basis of a recommendation from the audit committee, once every year decide whether to establish an internal audit for support and control of the company’s internal control and risk management systems and state the reasons for its decision in the annual report.
The Board of Trustees of the Egmont Foundation has formulated audit instructions defining requirements for the auditor’s work.
The auditor participates regularly twice a year in board meetings and on additional occasions as required.
The Board of Trustees and auditor hold a meeting once a year without the presence of the Management Board.
The Board of Trustees has decided not to establish an internal audit function.
The Board of Trustees of the Egmont Foundation
26 March 2012
