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Corporate governance

The Board of Trustees of Egmont Fonden has described Egmont's Corporate Governance policy based on the latest recommendations of the Danish Committee on Corporate Governance from May 2013 (as updated in November 2014). The description follows below and is given in connection with Egmont's Annual Report for the financial year 2015. The description is given in addition to Egmont Fonden's Statutory Report on Foundation Governance.

1. Communication and interaction by the company with its investors and other stakeholders

1.1. Dialogue between company, shareholders and other stakeholders

1.1.1. The Committee recommends that the board of directors ensure ongoing dialogue between the company and its shareholders in order for the shareholders to gain relevant insight into the company’s potential and policies, and in order for the board of directors to be aware of the shareholders’ views, interests and opinions on the company.

1.1.2. The Committee recommends that the board of directors adopt policies on the company’s relationship with its stakeholders, including shareholders and other investors, and that the board ensures that the interests of the stakeholders are respected in accordance with company policies.

1.1.3. The Committee recommends that the company publish quarterly reports.

Egmont Fonden 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 Egmont Fonden according to the Foundation’s Charter which is available at www.egmontfonden.dk.

Egmont Fonden is subject to supervision by the Danish Business Authority. The foundation engages in dialogue with the Danish Business Authority as necessary regarding matters dealt with in the Charter that may require the approval of the supervisory authority.

Egmont Fonden’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. Egmont has a Communication Strategy which, among other things, identifies Egmont’s key stakeholders and their main interests in relation to the Group.

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 English. Press releases in connection with the publication of financial statements are prepared in Danish, English, Norwegian and Swedish.

As the Group has no shareholders, it does not publish quarterly reports.

1.2. General meeting

1.2.1. The Committee recommends that, when organizing the company’s general meeting, the board of directors plans the meeting to support active ownership.

1.2.2. The Committee recommends that proxies granted for the general meeting allow shareholders to consider each individual item on the agenda.

The Group’s parent entity, Egmont Fonden, has no shareholders, but is subject to supervision by the Danish Business Authority. Egmont Fonden holds annual meetings, cf. the Charter.

Egmont International Holding A/S has a single shareholder, Egmont Fonden, which participates actively in general meetings.

1.3. Takeover bids

1.3.1. The Committee recommends that the company set up contingency procedures in the event of takeover bids from the time that the board of directors has reason to believe that a takeover bid will be made. According to such contingency procedures, the board of directors should 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 themselves.

The recommendations are not relevant for Egmont owing to its structural organization with Egmont Fonden as the parent entity, whose objective is to carry on commercial activities.

The Charter stipulates that without the approval of the supervising authority, the Board of Trustees of Egmont Fonden 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. Tasks and responsibilities of the board of directors

2.1. Overall tasks and responsibilities

2.1.1. The Committee recommends that at least once a year the board of directors take a position on the matters related to the board’s performance of its responsibilities.

2.1.2. The Committee recommends that at least once a year the board of directors take a position on the overall strategy of the company with a view to ensuring value creation in the company.

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. At the same time the Board defines its most important tasks and decides on an annual plan.

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. The rules of procedure for the Board of Trustees are reviewed annually.

The Board of Egmont Fonden and Egmont International Holding A/S holds six ordinary board meetings a year plus an annual strategy meeting.  Egmont Fonden 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 Egmont Fonden and Egmont International Holding A/S are conducted according to a common agenda.

2.1.3. The Committee recommends that the board of directors ensure that the company has a capital and share structure ensuring that the strategy and longterm value creation of the company are in the best interest of the shareholders and the company, and that the board of directors presents this in the management commentary in the company’s annual report and/or on the company’s website.

Egmont Fonden is the sole shareholder of Egmont International Holding A/S, which carries on the Group’s commercial media activities that are not conducted through Egmont Fonden. In addition, the foundation wholly owns a number of real estate companies.

Egmont Fonden 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.

2.1.4. The Committee recommends that the board of directors annually review and approve guidelines for the executive board; this includes establishing requirements for the executive board on timely, accurate and adequate reporting to the board of directors.

The Board of Trustees supervises the work of the Management Board and has issued rules of procedures for the Management Board which are reviewed annually. The Management Board currently reports to the Board of Trustees on the development within the most important areas of risk and risk management, compliance, financial performance and material business matters and the Board on that basis regularly discusses these issues at its meetings.

 

2.1.5. The Committee recommends that at least once a year the board of directors discuss the composition of the executive board, as well as developments, risks and succession plans.

The Board of Trustees discusses the composition of the Management Board and succession plans etc. once a year.

2.1.6. The Committee recommends that once a year the board of directors discuss the company’s activities to ensure relevant diversity at management levels, including setting specific goals and accounting for its objectives and progress made in achieving the objectives in the management commentary on the company’s annual report and/or on the website of the company.

In June 2013 the Board of Trustees adopted a Policy on the Gender Composition in Management and a target for the proportion of the underrepresented gender on the Board of Trustees. The Policy and target are mentioned in the annual report for 2015 and are a part of Egmont’s reporting on CSR, which is available on Egmont’s website.

Egmont aims at being a company that is considered an attractive workplace in which both men and women consider that they have equal and fair opportunities to be promoted and where their competencies can be used best possibly despite gender. Employment in Egmont is based on qualifications and is offered without consideration to, exclusion of or preferences based on gender, nationality, religion or other similar characteristics.

Initiatives are on an ongoing basis assessed with the aim of increasing diversity in Egmont and the Board of Trustees discusses these once a year.

2.2. Corporate social responsibility

2.2.1. The Committee recommends that the board of directors adopt policies 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. 

In 2013, Egmont became a signatory participant of UN Global Compact which then became the frame for Egmont’s policies on corporate social responsibility, including the Group’s Code of Conduct that defines standards in four areas: human rights, working conditions, anti-corruption 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 and the UN Global Compact Report which are both available on Egmont’s website.

2.3. Chairman and vice-chairman of the board of directors

2.3.1. The Committee recommends appointing a vice-chairman of the board of directors who will assume the responsibilities of the chairman in the event of the chairman’s absence, and who will also act as effective sparring partner for the chairman.

2.3.2. The Committee recommends ensuring that, if the board of directors, in exceptional cases, asks the chairman of the board of directors to perform special operating activities for the company, including briefly participating in the day-to-day management, a board resolution to that effect be passed to ensure that the board of directors maintains its independent, overall management and control function. Resolutions on the chairman’s participation in day-to-day management and the expected duration hereof should be published 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 of the Board of Trustees has not participated in the day-to-day management and has not performed special tasks for the company.

3. Composition and organisation of the board of directors

3.1. Composition

3.1.1. The Committee recommends that the board of directors annually accounts for

  • the skills it must have to best perform its tasks,
  • the composition of the board of directors, and
  • the special skills of each member.

3.1.2. The Committee recommends that the selection and nomination of candidates for the board of directors be carried out through a thoroughly transparent process approved by the overall board of directors. When assessing its composition and nominating new candidates, the board of directors must take into consideration the need for integration of new talent and diversity in relation to age, international experience and gender.

3.1.3. The Committee recommends that a description of the nominated candidates’ qualifications, including information about the candidates’

  • other executive functions, e.g. memberships in executive boards, boards of directors, and supervisory boards, including board committees in foreign enterprises,
  • demanding organizational tasks, and information, and
  • about whether candidates to the board of directors are considered independent

be accompanied by the notice convening the general meeting when election of members to the board of directors is on the agenda.

The Board of Trustees of Egmont Fonden 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. The Board uses relevant external sources, in particular recruitment agencies to help identify board candidates.

The Board of Trustees appoints its own members, cf. Egmont Fonden’s Charter subject to approval from the Danish Business Authority

The composition of the Board of Trustees and Management Board is published on Egmont’s website and in the annual report and includes detailed information about each member.

3.1.4. The Committee recommends that the company’s articles of association stipulate a retirement age for members of the board of directors.

Egmont Fonden’sCharter 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.

3.1.5. The Committee recommends that members of the board of directors elected by the general meeting be up for election every year at the annual general meeting.

Egmont Fonden’s Charter determines that Board members shall be elected for a four-year term and can be re-elected for a maximum of two additional four-year terms by a majority of the Board members. The member shall then resign from the Board, unless the other Board members unanimously encourage the resigning Board member to continue for a maximum of two additional two-year terms. Notwithstanding the above, Board members must resign after expiry of the financial year in which the board member in question turns 70.

The year when each board member joined the Board is stated in the annual report. 

3.2 Independence of the board of directors

3.2.1. The Committee recommends that at least half of the members of the board of directors elected by the general meeting be independent persons, in order for the board of directors to be able to act independently of special interests.

To be considered independent, this person may not:

  • be or within the past five years have been member of the executive board, or senior staff member in the company, a subsidiary undertaking or an associate,
  • within the past five years, have received larger emoluments from the company/group, a subsidiary undertaking or an associate in another capacity than as member of the board of directors,
  • represent the interests of a controlling shareholder,
  • within the past year, have had significant business relations (e.g. personal or indirectly as partner or employee, shareholder, customer, supplier or member of the executive management in companies with corresponding connection) with the company, a subsidiary undertaking or an associate,
  • be or within the past three years have been employed or partner at the external auditor,
  • have been chief executive in a company holding cross-memberships with the company,
  • have been member of the board of directors for more than 12 years, or
  • have been close relatives with persons who are not considered independent.

Egmont’s Charter establishes criteria for members of the Board of Trustees of Egmont Fonden. It is a requirement that a board member appointed in accordance with the Charter is not an employee of an Egmont company.

Five of the six members of the Board of Trustees of Egmont Fonden who are elected according to the Charter are considered independent on the basis of the criteria set out above. The chairman is not considered independent on the basis of these criteria as he has served for more than 12 years.

3.3. Members of the board of directors and the number of other executive functions

3.3.1. The Committee recommends that each member of the board of directors assesses the expected time commitment for each function in order that the member does not take on more functions than he/she can manage satisfactorily for the company.

3.3.2. The Committee recommends that the management commentary, in addition to the provisions laid down by legislation, includes the following information about the members of the board of directors:

  • the position of the relevant person,
  • the age and gender of the relevant person,
  • whether the member is considered independent,
  • the date of appointment to the board of directors of the member,
  • expiry of the current election period,
  • other executive functions, e.g. memberships in executive boards, boards of directors, and supervisory boards, including board committees in foreign enterprises,
  • demanding organizational tasks, and
  • the number of shares, options, warrants and similar in the company, and other group companies of the company, owned by the member, as well as changes in the portfolio of the member of the securities mentioned which have occurred during the financial year.

The occupations and other executive functions of board members are disclosed in the annual report and on Egmont’s website.

3.4. Board committees

3.4.1. The Committee recommends that the company publish the following on the company’s website:

  • the terms of reference of the board committees,
  • the most 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.

3.4.2. The Committee recommends that a majority of the members of a board committee be independent.

3.4.3. The Committee recommends that the board of directors set up a formal audit committee composed such that

  • the chairman of the board of directors is not chairman of the audit committee, and
  • between them, the members should possess such expertise and experience as to provide an updated insight into and experience in the financial, accounting and audit aspects of companies whose shares are admitted to trading on a regulated market.

3.4.4. The Committee recommends that, prior to the approval of the annual report and other financial reports, the audit committee monitors and reports to the board of directors about:

  • significant accounting policies,
  • significant accounting estimates,
  • related party transactions, and
  • uncertainties and risks, including in relation to the outlook for the current year.

 3.4.5. The Committee recommends that the audit committee:

  • annually assesses the need for an internal audit, and in such case, makes 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.

 3.4.6. The Committee recommends that the board of directors establish a nomination committee chaired by the chairman of the board of directors with at least the following preparatory tasks:

  • describe the qualifications required by the board of directors and the executive board, and for a specific membership, state the time expected to be spent on having to carry out the membership, as well as assess the competences, knowledge and experience of the two governing bodies combined,
  • annually assess the structure, size, composition and results of the board of directors and the executive board, as well as recommend any changes to the board of directors,
  • annually assess the competences, knowledge and experience of the individual members of management, and report to the board of directors in this respect, 
  • consider proposals from relevant persons, including shareholders and members of the board of directors and the executive board for candidates for the board of directors and the executive board, and
  • propose an action plan to the board of directors on the future composition of the board of directors, including proposals for specific changes.

3.4.7. The Committee recommends that the board of directors establish a remuneration committee with at least the following preparatory tasks:

  • to recommend the remuneration policy (including the general guidelines for incentive-based remuneration) to the board of directors and the executive board for approval by the board of directors prior to approval by the general meeting,
  • make proposals to the board of directors on remuneration for members of the board of directors and the executive board, as well as ensure that the remuneration is in compliance with the company’s remuneration policy and the assessment of the performance of the persons concerned. The committee should have information about the total amount of remuneration that members of the board of directors and the executive board receive from other companies in the group, and
  • recommend a remuneration policy applicable for the company in general.

3.4.8. The Committee recommends that the remuneration committee do not consult with the same external advisers as the executive board of the company.

Egmont’s Board of Trustees has not established any specific committees or terms of reference relating to committee tasks. All members of the Board of Trustees are considered to perform the tasks with which an audit committee can be charged.

Board members appointed under the Charter handle the 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 perform the tasks recommended for a remuneration committee, and prepare proposals on remuneration for approval by the Board of Trustees.

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 Steen Riisgaard (chairman of the Board) and Ulrik Bülow who are both elected to the Board of Trustees on the basis of the Charter.

3.5. Evaluation of the performance of the board of directors and the executive board

3.5.1. The Committee recommends that the board of directors establish an evaluation procedure where contributions and results of the board of directors and the individual members, as well as collaboration with the executive board are annually evaluated. Significant changes deriving from the evaluation should be included in the management commentary or on the company’s website.

3.5.2. The Committee recommends that in connection with preparation of the general meeting, the board of directors consider whether the number of members is appropriate in relation to the requirements of the company. This should help ensure a constructive debate and an effective decision-making process in which all members are given the opportunity to participate actively.

3.5.3. The Committee recommends that at least once every year the board of directors evaluate the work and performance of the executive board in accordance with predefined clear criteria.

3.5.4. The Committee recommends that the executive board and the board of directors establish a procedure according to which their cooperation is evaluated annually through a formalised dialogue between the chairman of the board of directors and the chief executive officer and that the outcome of the evaluation be presented to the board of directors.

The Board of Trustees (led by the chairman) conducts an annual evaluation of the work of and cooperation between the Board of Trustees and Management Board. In 2015 the evaluation was carried out with the assistance of an external consultant. The process included self-assessment (through a web based questionnaire), interviews by the external consultant of each member of the Board of Trustees and Management Board, presentation and discussion of results and recommendations at a Board meeting.

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 applicable legislation. The number of board members and the Board’s skills composition are considered appropriate for the company.

4. Remuneration of management

4.1. Form and content of the remuneration policy

4.1.1. The Committee recommends that the board of directors prepare a clear and transparent remuneration policy for the board of directors and the executive board, including

  • a detailed description of the components of the remuneration for members of the board of directors and the executive board,
  • 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.

The remuneration policy should be approved by the general meeting and published on the company’s website.

 4.1.2. 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 terms,
  • there be clarity about performance criteria and measurability for award of variable components,
  • there be criteria ensuring that qualifying periods for variable components in remuneration agreements are longer than one calendar year, and
  • an agreement is made which, in exceptional cases, entitles the company to reclaim in full or in part variable components of remuneration that were paid on the basis of data, which proved to be misstated.

 4.1.3. The Committee recommends that remuneration of members of the board of directors does not include share options.

 4.1.4. The Committee recommends that if share-based remuneration is provided, such programs be established as roll-over programs, i.e. the options are granted periodically and should have a maturity of at least three years from the date of allocation.

 4.1.5. The Committee recommends that agreements on termination payments should not amount to more than two years’ annual remuneration.

Members of the Board of Trustees receive fixed annual remuneration. They are not subject to any 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.

 4.2. Disclosure of the remuneration policy

4.2.1. The Committee recommends that the company’s remuneration policy and compliance with this policy be explained and justified annually in the chairman’s statement at the company’s general meeting.

4.2.2. The Committee recommends that the proposed remuneration for the board of directors for the current financial year be approved by the shareholders at the general meeting.

4.2.3. The Committee recommends that the total remuneration granted to each member of the board of directors and the executive board by the company and other companies in the group, including information on the most important contents of retention and retirement/resignation schemes, be disclosed in the annual report and that the linkage with the remuneration policy be explained.

As a result of the structure of Egmont Fonden, 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. The Board of Trustees has decided not to disclose remuneration on an individual level as it is not considered relevant for a company as Egmont with no shareholders above Egmont Fonden or considered otherwise to serve any objective purpose.

5. Financial reporting, risk management and audits

5.1. Identification of risks and transparency about other relevant information

5.1.1. The Committee recommends that the board of directors in the management commentary review and account for the most important strategic and business related risks, risks in connection with the financial reporting as well as for the company’s risk management.

The Board of Trustees and Management Board reviews the overall risk exposure and the individual risk factors associated with the Egmont Group’s activities. Such reviews are conducted as required and at least once a year. On the basis of Egmont’s risk management framework a divisional risk picture and a consolidated Group risk picture is established. Group Management identifies the owners of short-term and long-term risks who are then responsible for mitigating the risks through risk-reducing activities.

The annual report contains a general description of the special risks associated with the activities of Egmont Fonden.

5.2. Whistleblower scheme

5.2.1. The Committee recommends that the board of directors decide whether to establish a whistleblower scheme for expedient and confidential notification of possible or suspected wrongdoing.

In 2013 Egmont established a whistleblower scheme. During 2015 no reports were made into the whistleblower system.

5.3.1. The Committee recommends that the board of directors ensure regular dialogue and exchange of information between the auditor and the board of directors, including that the board of directors and the audit committee at least once a year meet with the auditor without the executive board present. This also applies to the internal auditor, if any.

5.3.2. The Committee recommends that the audit agreement and auditors’ fee be agreed between the board of directors and the auditor on the basis of a recommendation from the audit committee.

The Board of Trustees of Egmont Fonden has formulated audit instructions defining the requirements for the auditor’s work. The Board reviews and approves the audit plan as well as the fee.

The auditor participates twice a year in board meetings and on additional occasions as required.

The Board of Trustees and the 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 but considers this once a year in accordance with its annual plan.

Board of Trustees
14 March 2016