Royal Unibrew Management emphasises corporate governance and regularly performs reviews of the Company’s rules, policies and practice. The objective is to ensure that the Company meets its obligations to shareholders, customers, employees, authorities and other stakeholders in the best possible way and that long-term value creation is supported.
NASDAQ OMX Copenhagen has issued Corporate Governance Recommendations, and Royal Unibrew is generally in compliance with these, with a few exceptions which are described below.
Supervisory board members’ other duties, (recommendation V, 7):
It is recommended that a supervisory board member who is also a member of the Executive Board of an active company hold not more than three ordinary directorships or one chairmanship and one ordinary directorship in companies not forming part of the group unless in exceptional circumstances.
- Several members of the Supervisory Board do not comply with this recommendation, and the Supervisory Board assesses in each individual case the duties of the individual members outside the Group with a view to continuously ensuring that the individual supervisory board member can allocate the necessary resources to his/her work on the Supervisory Board of Royal Unibrew.
Remuneration of the Supervisory and Executive Boards, (recommendation VI, 5):
It is recommended that the Annual Report disclose remuneration of the individual members of the Supervisory Board and the Executive Board.
- The remuneration of members of the Supervisory Board is disclosed in the below section ”Remuneration of Supervisory Board and Executive Board”. Disclosure of remuneration of the individual members of the Executive Board is not at present considered material to stakeholders’ assessment. The total remuneration of the Executive Board is disclosed in note 4. The remuneration of the Executive Board is considered in line with that of peer companies.
Market price of options at the time of allocation, (recommendation VI, 3):
It is recommended that redemption prices of allocated share options be higher than the market price at the time of allocation.
- Royal Unibrew has fixed the redemption price of allocated share options on the basis of the average market price of the Company’s share over the 10 trading days following the publication of the Annual Report in question. The pricing method is applied to ensure that the options are attractive. In connection with the capital increase in 2009, the number and exercise price of unexercised options have been adjusted with a view to maintaining an unchanged value of the options.
Shareholder and stakeholder relations
Royal Unibrew’s Management wants and works actively to maintain good and open communication and dialogue with its shareholders and other stakeholders. The Company believes that a high level of openness in the communication of information on the Company’s development supports the Company’s work and a fair valuation of the Company’s shares. The Group‘s openness is limited only by the duties of disclosure of NASDAQ OMX Copenhagen and by competitive considerations.
The dialogue with and communication to shareholders and stakeholders take place by the issuing of Interim Reports and other announcements by the Company, via webcasts , meetings with investors, analysts and the press. Interim Reports and other announcements are accessible at Royal Unibrew’s website immediately after being published. Our website also includes material used in connection with investor presentations and webcasts.
According to the Articles of Association of the Company, general meetings shall be convened at not less than one week’s and not more than four weeks’ notice. However, the Supervisory Board aims at convening general meetings of the Company at not less than three weeks’ notice. It aims at formulating the notice convening the meeting and the agenda so as to give shareholders an adequate presentation of the business to be transacted at the general meeting. Proxies are limited to a specific general meeting and are formulated in such a way as to allow absent shareholders to give specific proxies for individual items of the agenda.
Work of the Supervisory Board
The Supervisory Board handles overall strategic management, financial and managerial supervision of the Company as well as continuous evaluation of the work performed by the Executive Board.
The Supervisory Board performs its work in accordance with the Rules of Procedure of the Company governing the Supervisory and Executive Boards. These Rules of Procedure are reviewed and updated regularly by the full Supervisory Board.
The supervisory board members meet for four annual ordinary board meetings, one of which focuses on the Company’s strategic situation and prospects. In addition, the supervisory board members meet when required. In 2009, the Supervisory Board held 13 meetings.
Royal Unibrew has not in the past established any standing board committees, but ad-hoc committees are established as required.
New rules require that as of 2009 audit committees be established by listed companies, and such committees must have at least one independent member with qualifications within accounting and/or auditing. The Supervisory Board of Royal Unibrew has decided to take on the audit committee tasks jointly.
Composition of the Supervisory Board
When composing the Supervisory Board, we emphasise that the members have the competencies required to solve the task. Candidates for the Supervisory Board are recommended for election by the general meeting supported by motivation in writing by the Supervisory Board as well as a description of the recruiting criteria.
At present, the Supervisory Board consists of five members elected by the general meeting and two members elected by the employees. When joining the Supervisory Board, the members elected by the employees are offered relevant training in serving on a board.
All members of the Supervisory Board elected by the general meeting are considered independent.
The members of the Supervisory Board of Royal Unibrew are governed by an age limit of 65. A member of the Supervisory Board who changes his principal occupation during his term of office shall in principle be prepared to offer to resign if the rest of the Supervisory Board considers this advisable.
Regular evaluation of the work of the Supervisory Board is performed. The Executive Board and the cooperation between the Supervisory Board and the Executive Board are evaluated on an annual basis.
Remuneration of Supervisory Board and Executive Board
The members of the Supervisory Board are remunerated by a fixed annual amount for their continuing work on the Board. In connection with particularly comprehensive ad-hoc committee work, the Supervisory Board may, based on the scope of the work, determine a special remuneration. It is the aim that the remuneration of the Supervisory Board should match the level of peer companies.
The Supervisory Board does not participate in incentive programmes, such as share option programmes, bonus pay, etc.
For 2009, fixed remuneration of DKK 2.5 million was paid to the Supervisory Board (2008: DKK 1.7 million). The remuneration paid to the Supervisory Board has not been adjusted in the preceding five years but is now considered to be at the level of that paid by peer companies. Other than that, no special remuneration has been paid. The annual remuneration paid to ordinary members of the Supervisory Board amounts to DKK 250k. The Chairman and the Deputy Chairman receive remuneration of 2.5 and 1.75 times, respectively, the remuneration paid to ordinary members of the Supervisory Board.
A bonus pay programme has been established for Royal Unibrew’s Executive Board and other executives as well as the sales organisations.
Redundancy payment agreed with the Executive Board is considered in line with arrangements of peer companies. It has been agreed with the CEO that he will be considered discharged by the Company if, in connection with a transfer of shares, an acquirer obtains control of the Company, or if the Company transfers a material part of its activities to a third party.
The Supervisory Board continuously assesses the various risks with which an internationally operating enterprise like Royal Unibrew is faced.
The key risks are summarised by the following main areas:
· Financial risks (currency, interest rates, liquidity)
· Exposure hazard and third-party risks
· Credit risks (financial institutions and commercial receivables)
· Market risks
· Environmental risks
Furthermore, the Supervisory Board monitors the special risks that may result from the Company’s involvement in the production and sale of alcoholic beverages.
A detailed description of the Company’s risks is provided on page 43 and in note 2 on page 56 in the Annual Report 2009.