DENMARK Georgeson’s 2019 Proxy Season Review

Introduction

We are proud to present a thorough analysis of the seven major markets where Georgeson has a widespread client base, and where we are privileged to work closely with many of the leading issuers. Additionally we have included Denmark, in view of our expanding presence in the region. Our local client support, thorough investor engagement and deep market expertise allow us to highlight the issues and trends which will be of interest to both companies and investors.

As the world’s leading shareholder engagement firm and corporate governance advisor, Georgeson works hard to ensure that our clients understand the critical issues, trends and personalities which affect and motivate their shareholders, so that they do not become a statistic highlighted in this or any other report.

During the 2019 AGM season we have found that, across the seven major markets, the overall proportion of resolutions that received more than 10% opposition has increased by 6.67%. At the same time, proxy advisors continue to hold great influence on voting outcomes with a vast majority of resolutions opposed by proxy advisors receiving high levels of opposition from investors. This highlights how important it is for companies not only to address investor concerns but to proactively engage with proxy advisors as well.

Executive remuneration continues to remain a key focal point for investors, with remuneration-related resolutions being amongst the most contested resolutions in the majority of the markets surveyed by Georgeson.

This focus on remuneration will have further resonance in 2020, when the revised European Shareholder Rights Directive will introduce annual remuneration votes across the EU. Our analysis shows that the major markets that are most unprepared for this change are Germany and the Netherlands (where only a minority of companies held votes on executive remuneration in 2019).

Director elections also continue to attract investor scrutiny and negative votes. Furthermore, the considerable growth in negative votes on discharge resolutions in certain markets shows an increased investor willingness to oppose board members directly when they consider that there have been corporate governance failings.

Lastly, as investor and proxy advisor guidelines become stricter on dilution in continental Europe, proposals to issue shares have also been subject to greater scrutiny by investors, confirming a multi-year trend across European markets.

We hope that our report will give you greater insight into these markets both in terms of the general trends and of the particular issues that have arisen during the last AGM season. Georgeson remains available to help you with any more specific queries. For any support needed at your next general meeting, please do not hesitate to let us apply our market intelligence, which will help you avoid any possible pitfalls raised both by local developments and complex international trends that can affect a dispersed shareholder base.

A special thank you to all our colleagues across Europe who contributed to the production of this document, and in particular Daniele Vitale, our Corporate Governance Manager, who edited the report.

Domenic Brancati

Chief Executive Officer – UK/Europe [email protected]

Georgeson’s 2019 Proxy Season Review > 03 Key Figures

UK GERMANY FRANCE SWITZERLAND NETHERLANDS ITALY SPAIN

UNITED KINGDOM GERMANY FRANCE SWITZERLAND (FTSE 100) (DAX) (CAC 40) (SMI)

5 3.0 68.9 81.0 77.78 0% 7% 8% % ( ( ( (- + - + 1 1 8 2 4 6 . 4 6 1 . . . 0 6 .4 7 9 2 1 . 8 0 0 1 % % 6

% %

% 1 % 2

)

8 )

)

0 )

)

(

.

8

- ( .

)

4

1 %

+

7

1 3 1 14 1

9 0 1

%

%

.

.

2

0 5

%

. 9

9

0 2 ( 8 .

% + ) ( ) % 1 - 5 0

% change in number of % change in number of ISS contested resolutions (vs 2018) negative recommendations (vs 2018)

UK -13.29% UK -43.51%

GERMANY 108.59% GERMANY 84.19%

FRANCE -5.29% FRANCE 6.68%

SWITZERLAND 1.00% SWITZERLAND -12.17%

NETHERLANDS -15.37% NETHERLANDS 105.05%

ITALY -6.52% ITALY -2.70%

SPAIN 21.12% SPAIN -21.56%

04 > NETHERLANDS ITALY SPAIN (AEX+AMX) (FTSE MIB) (IBEX 35)

50 55 71 .0 .88 .43 0% % % Rejected ( ( ( + + -1 1 board proposals 1 7 5 5 . . 3 6 7 . .7 7 1 9 1 6 1 9 . % % 1 %

% 7 Companies with %

2

)

)

( )

1

- )

.

1 2

( over 10% oppose

4 5 2 0

+

9

%

.

2

3

2

%

1

7 . 5 ) . 1

% ( 2 ) - 6

% Resolutions with over 10% oppose

% of resolutions with less than % change in number of Glass Lewis 80% support which had a negative negative recommendations (vs 2018) ISS or Glass Lewis recommendation

UK 16.42% UK 72.22%

GERMANY 40.66% GERMANY 97.92%

FRANCE 11.28% FRANCE 92.05%

SWITZERLAND -51.86% SWITZERLAND 85.71%

NETHERLANDS 36.70% NETHERLANDS 76.92%

ITALY -19.35% ITALY 75.00%

SPAIN 1.55% SPAIN 87.50%

Georgeson’s 2019 Proxy Season Review > 05 EU Revised Shareholder Rights Directive

IMPACT ON REMUNERATION

In March 2017 the European Parliament approved amendments to % of companies which held a vote the 2007 EU Shareholder Rights Directive (Directive 2007/36/EC) on executive remuneration in 2019 with the aim of encouraging “long-term shareholder engagement”. The revised Directive (Directive (EU) 2017/828) was published on UK 100.00% 20 May 2017. The remuneration-related provisions must be trans- posed into Member State law by June 2019 (but some Member States have fallen behind this deadline). GERMANY 13.79% Regarding remuneration, the revised Shareholder Rights Directive will implement a standardised framework of remuneration disclo- sure and shareholder votes at listed companies across the EU. FRANCE 100.00% Shareholders will have the right to know how much the company’s directors are paid and they will be able to influence this through a vote. According to the European Commission this will guarantee a SWITZERLAND 100.00% stronger link between pay and performance.

According to the Directive, shareholders must be given the option to express their views on remuneration through: NETHERLANDS 33.33% > a forward looking vote on a company’s remuneration policy which lays down the framework within which remuneration can be awarded to directors; ITALY 100.00% > a retrospective vote on the remuneration report describing the remuneration granted during the past year. SPAIN 100.00% The remuneration policy vote can be either advisory or binding, de- pending on each Member State’s implementation of the Directive, and has to be submitted to shareholders at least every four years (and also if material changes are made to the policy). The vote on the remuneration report is advisory and has to be submitted to shareholders annually.

In March 2019 the European Commission published non-binding draft guidelines1 on “the standardised presentation of the remuner- ation report” and ran a public consultation on them. Industry partic- ipants expect the final guidelines to be issued in the autumn of 2019 and it appears likely that the extent to which companies voluntarily comply with the final guidelines will be closely watched by the inves- tor community.

Below is an overview of the current status of remuneration votes across the major markets covered in this document, as well as an indication of the potential impact of the revised Shareholder Rights Directive versus current practices.

1) https://ec.europa.eu/info/consultations/public-consultation-remuneration-report-guidelines-implementing-shareholders-rights- directive_en

06 > EU Revised Shareholder Rights Directive

UNITED KINGDOM

> Current status: Remuneration policy submit- ted to binding vote at least every three years; remuneration report submitted to advisory vote annually. > Annual remuneration votes introduced: 2002 > Expected impact: Minimal

GERMANY

> Current status: A remuneration system vote should be submitted to shareholders at reg- ular intervals or in case of material changes. > Annual remuneration votes introduced: n/a > Expected impact: Major

FRANCE

> Current status: Annual binding vote on ex-an- te remuneration policy, and annual ex-post vote on individual executive remuneration awarded in the previous financial year. > Annual remuneration votes introduced: 2013 > Expected impact: Minimal

SWITZERLAND ITALY

> Current status: Annual approval by share- > Current status: Remuneration report sub- holders of the total amount of compensation mitted for annual advisory vote (binding for of the Board of Directors, executive manage- financials) and binding vote to adopt ment and of any advisory board. Voluntary equity-related incentive schemes. annual vote on remuneration report is wide- > Annual remuneration votes introduced: 2011 spread. > Expected impact: Moderate > Annual remuneration votes introduced: 2013 > Expected impact: No direct impact SPAIN

NETHERLANDS > Current status: Remuneration policy is sub- mitted to shareholders for a binding vote > Current status: Shareholders vote only in every three years, and remuneration report case of material changes to the remuneration is submitted to shareholders for an advisory system. vote annually. > Annual remuneration votes introduced: n/a > Annual remuneration votes introduced: 2011 > Expected impact: Major > Expected impact: Moderate

Georgeson’s 2019 Proxy Season Review > 07 NotableKey Trends European Trends

> During the 2019 AGM season (1 July 2018 to 30 June 2019), across the seven major European markets, the overall proportion of resolutions that received more than 10% opposition increased by 6.67%, from 506 (out of 5,182) in 2018 to 546 (out of 5,242) in 2019. > SRD II will introduce annual remuneration votes across the EU from the 2020 AGM season. > The major markets that are most unprepared for this change are Germany and the Netherlands (where only a minority of companies held votes on executive remuneration in 2019). > All other major markets already have mandatory annual remuneration votes. > Executive remuneration continues to be a flashpoint for investors across all major European markets. > Director elections continue to grow as an area of focus and negative votes. This has extended to board discharge votes in some markets. > Authorities to issue shares have also come under greater scrutiny across a number of major markets.

EXECUTIVE REMUNERATION

Executive remuneration continues to be an important area of focus for many investors. > The EU’s revised Shareholder Rights Directive will introduce annual remuneration votes across the EU from the 2020 AGM season. The major markets most unprepared for this change are Germany and the Netherlands, where only a minority of companies (13.79% and 33.33% respectively) held votes on executive remuneration in 2019. All other major markets already have a mandatory annual remuneration vote. > In Spain (IBEX 35), there was a 57% increase in the number of contested (10%+ opposition) remuneration-related resolutions (compared to 2018). Remuneration-related proposals remain the second most penalized topic among investors at AGMs. > In the UK (FTSE 100) there has been a 107% increase (on a calibrated basis) in the dissent over remuneration policy votes, from 6 contested resolutions out of 39 in 2018 to 6 out of 19 in 2019. However, there has been an 8% decrease in contested (10%+ opposition) remuneration report votes compared to the 2018 AGM season. > In France (CAC40), there was a 6% increase in the number of contested (10%+ opposition) remuneration related resolutions. These continue to be the most contested resolution type across the index, representing 39% of the total number of contested resolutions. > In Switzerland (SMI), there was a 10% increase in the number of contested (10%+ opposition) advisory remunera- tion report votes (compared to 2018). These proposals remain very contentious, with 65% of remuneration report proposals receiving more than 10% opposition. > In Italy (FTSE MIB), remuneration-related proposals continue to be the most contested resolution type (10%+ op- position) for the fifth year in a row within the FTSE MIB. Moreover, since 2015 the number of contested proposals has increased by 88%. > In Germany (DAX), 25% of remuneration system votes were contested (10%+ opposition) during the 2019 AGM season. It should be noted that only 4 companies put forward an executive remuneration vote in 2019. > In the Netherlands (AEX and AMX), 6 remuneration proposals out of 34 were contested (10%+ opposition), repre- senting 18% of the total.

08 >

DIRECTOR ELECTIONS

Director elections continue to grow as an area of focus and negative votes. This has extended to board discharge votes in some markets.

> In Germany, since 2018 there has been a 366% increase in the number of contested (10%+ opposition) proposals relating to the election of supervisory board members. Moreover, investors have expressed their concerns with board members by also opposing the management and supervisory board discharge resolutions, which saw a 614% increase in the number of contested proposals over a three year period (from 7 in 2017, to 15 in 2018, to 50 in 2019). We note that the number of companies putting discharge votes forward for individual board members has increased from 5 in 2018 to 8 in 2019.

> In the Netherlands (AEX+AMX) there has been a 200% increase in the number of contested (10%+ opposition) proposals relating to director elections (from 3 in 2018 to 9 in 2019).

> In Spain (IBEX 35), director elections continue to be the most contested (10%+ opposition) resolution type, rep- resenting 41% of the contested proposals brought forward during the 2019 AGM season.

> In Switzerland (SMI), directors receiving more than 10% opposition continues to be the most contested resolu- tion type within the SMI, representing 28% of all contested proposals in 2019.

> In Italy (FTSE MIB), the number of director election resolutions which were contested (10%+ opposition) in- creased by 400% (from one in 2018 to five in 2019). Directors are only rarely elected outside the slate voting system.

> In the UK (FTSE 100), 33 director elections were contested (10%+ opposition), representing the most contested category of resolution across the index. Contested director elections had reached a four-year peak of 40 in 2018. This represents an 17% decrease between 2018 and 2019.

> In France (CAC40), 13% of the total number of contested (10%+ opposition) proposals was related to director elections, representing the third most contested resolution type across the index. This is the lowest number of contested director elections in three years.

SHARE ISSUANCE

Authorities to issue shares have also come under greater scrutiny across a number of major markets. This reflects a multi-year trend across continental Europe, which has seen investor and proxy advisor guidelines becoming stricter on dilution and many companies making significant adjustments.

> In Spain (IBEX 35) the proportion of share issuance authorities that were contested (10%+ opposition) increased from 30% in 2018 to 59% in 2019. This was the third most contested resolution type across the index.

> In France (CAC 40) there has been a 38.5% increase in the number of contested (10%+ opposition) resolutions related to share issuance authorities, from 26 in 2018 to 36 in 2019.

> In Netherlands (AEX+AMX) share issuance authorities continue to be the most contested (10%+ opposition) resolution type, representing 23% of the contested proposals brought forward during the 2019 AGM season. Moreover, ISS recommended against 13 share issuance authorities up from just one in 2017 and none in 2018.

> n Germany (DAX 30) authorities to issue shares represented the third most contested (10%+ opposition) catego- ry across the index, with 18% of these resolutions being contested by shareholders.

> In Italy (FTSE MIB), share issuance authorities represented the third most contested (10%+ opposition) category across the index. Of the 22 authorities put forward, 6 were contested representing 16% of the total.

> In the UK (FTSE 100) 21 authorities to issue shares were contested (10%+ opposition) by shareholders during the 2019 AGM season.

Georgeson’s 2019 Proxy Season Review > 09

Denmark (OMX Large Cap)

REJECTED BOARD PROPOSALS 0

AVERAGE QUORUM 67.00%

RESOLUTIONS WITH OVER 10% OPPOSE 1.21%

COMPANIES WITH OVER 10% OPPOSE 10.81%

Highlights > The average quorum for the 37 OMX Large Cap companies surveyed has increased sig- nificantly from 63.7% in 2018 to 67.0% in 2019. This is a clear sign that the institutional investors have increased their corporate governance activities to exercise stewardship over the assets in their portfolio by proxy voting and exercising other formal shareholder rights. > In our 2019 OMX Large Cap sample, no board resolutions failed to gather sufficient support. > 43% of the OMX Large Cap companies surveyed received at least one against recommen- dation from ISS or Glass Lewis for a total of 28 management resolutions. > Remuneration continue to be the most contested resolution type. Glass Lewis voted against 16 management resolutions in 13 companies, and ISS voted against 12 management resolutions in 10 companies. 71% of the against votes were related to remuneration. > Four companies saw at least one management resolution receive more than 10% share- holder opposition. > A total of 31 shareholder proposals were filed at the AGMs of A.P. Moller-Maersk, Danske Bank, Copenhagen Airports, FLSmidth & Co., Jyske Bank, Lundbeck, Novo Nordisk, Rockwool, Royal Unibrew and Top Danmark. 30 proposals were rejected due to insufficient support and one shareholder proposal was approved (Jyske Bank). > Shareholder activism continues to increase, and the 2019 season saw increased activity on the AGMs from institutional investors and private shareholders with primary focus on remuneration, overboarding, diversity and transparency.

Georgeson’s 2019 Proxy Season Review > 11 1 | Voting in Denmark

1.1 QUORUM OVERVIEW

We have reviewed the quorum levels of the OMX Large Cap1 companies over the past five years. The survey includes the companies that were part of the index as of 1 July 2019, and which held their AGMs between 1 July 2018 and 30 June 2019.

The average quorum at the AGMs of OMX Large Cap companies has increased from 63.7% in 2018 to 67.0% in 2019.

The average AGM quorum level has increased significantly since 2015, which is a clear indication that shareholders have become increasingly aware of their potential for influence. This trend has been further supported by the implementation of the revised Shareholder Rights Directive (SRD II), which is intended to increase transparency and enhance long-term shareholder engagement.

Graph 1: Average AGM quorum levels of the OMX Large Cap companies surveyed between 2015 and 2019.

70%

65% 67.0%

60% 63.7%

55% Quorum 57.0% 56.1%

50% 53.8%

45%

40%

2015 2016 2017 2018 2019

1) http://www.nasdaqomxnordic.com/index/index_info?Instrument=SE0001776667 not including GS4 and Nordea Bank as they are headquartered abroad.

12 > DENMARK

1.2 REJECTED RESOLUTIONS

1.2.1 BOARD RESOLUTIONS

Among the surveyed OMX Large Cap companies that held their AGMs between 1 July 2018 and 30 June 2019, no board resolutions failed to get sufficient support.

1.2.2 SHAREHOLDER PROPOSALS

In the 2019 AGM season, a total of 31 shareholder proposals were filed at the AGMs of A.P. Moller-Maersk, Danske Bank, Copenhagen Airports, FLSmidth & Co., Jyske Bank, Lundbeck, Novo Nordisk, Rockwool, Royal Unibrew and Top Danmark.

30 proposals were rejected due to insufficient support and one shareholder proposal was passed at the AGM of Jyske Bank.

A.P. Moller-Maersk At the AGM of A.P. Moller-Maersk one shareholder proposal was on the agenda: > Instruct the Company’s management to ensure that vessels owned by the Company or vessels which the Company or the Company’s subsidiaries sell to third parties for the purpose of scrapping or continued operation are not sent to scrapping on beaches.

The proposal was rejected with 98.68% negative votes.

Both ISS and Glass Lewis issued an ‘against’ recommendation on this resolution.

Copenhagen Airports At the AGM of Copenhagen Airports six shareholder proposals were on the agenda: > Control the breeding of large birds such as geese, cormorants and herons etc. in the airspace surrounding CPH. > Work together with local hunters. > Make data results from CPH’s bird radar investigations available to the public on a daily basis. > Implement a practice to the effect that all data from the bird radar will be compiled in case of a birdstrike. > Implement a practice to the effect that all data from the bird radar will be compiled in case of a close birdstrike. > Control migrating and moulting birds in the airspace surrounding CPH. All proposals were rejected with 99.98% negative votes. Both ISS and Glass Lewis issued ‘against’ recommendations on all resolutions.

Georgeson’s 2019 Proxy Season Review > 13 Danske Bank At the AGM of Danske Bank 17 shareholder proposals were on the agenda: > The general meeting expresses mistrust in certain members of the audit committee, risk committee and executive board. > Instruct board to look into the possibilities of claiming damages from certain members of the audit committee, risk committee and executive board. > Instruct board to audit the remuneration/compensation agreements of Danske Bank to ensure the possibility of exercising clawback of paid compensation. > Instruct board to account for the Estonian branch’s non-resident banking policy. > Insert phrase in the corporate covernance report regarding the adoption of an explicit policy on Danske Bank’s relationship with national, EU and international authorities and stakeholders. > Conduct a scrutiny pursuant to section 150 of the Danish Companies Act. > Amend articles re: translation into Danish of the annual report. > Amend articles re: communications with the authorities. > The general meeting expresses disapproval with Danske Bank’s board having made transactions pursuant to section 195 on charitable gifts of the Danish Companies Act. > The general meeting expresses disapproval with Danske Bank’s group internal audit having been deprived of the duty to conduct financial audits and no longer issuing an auditor’s report on Danske Bank’s financial statements. > Recommend board to ensure that real active ownership be taken in relation to fossil fuel companies working against the aim of the Paris agreement. > Recommend Danske Bank to sell its shares and corporate bonds in fossil fuel companies which do not adjust their business models to achieve the aim of the Paris agreement by 2021. > Recommends board to work to avoid offering investments and pension schemes which are placed with companies working against the aim of the Paris agreement. > Recommend that the lending policy does not work against the aim of the Paris agreement. > Prepare a plan for splitting up Danske Bank. > Limit fees and other income from Danske Bank’s customers. > Set upper limit on the remuneration of management. All proposals failed to gain a significant level of support from shareholders and were rejected.

Both ISS and Glass Lewis issued ‘against’ recommendations on all resolutions except the proposal regarding the ‘conduct a scrutiny pursuant to section 150 of the Danish Companies Act’ where Glass Lewis recommended in favour.

FLSmidth & Co. At the AGM of FLSmidth & Co. one shareholder proposal was on the agenda: > Limit executive compensation to nine times average remuneration of the company’s employees. The proposal was rejected with 99.13% negative votes.

Both ISS and Glass Lewis issued an ‘against’ recommendation on this resolution.

14 > DENMARK

Jyske Bank At the AGM of Jyske Bank one shareholder proposal was on the agenda: > Initiate share repurchase program and approve omission of dividends. The proposal was passed with 66.2% votes in favour.

Both ISS and Glass Lewis issued an ‘against’ recommendation on this resolution.

Lundbeck At the AGM of Lundbeck one shareholder proposal was on the agenda: > Reduction on prices of medicine sold by the company if return on equity exceeds 7 per cent. The proposal was rejected with 97.13% negative votes.

Both ISS and Glass Lewis issued an ‘against’ recommendation on this resolution.

Novo Nordisk At the AGM of Novo Nordisk one shareholder proposal was on the agenda: > Reduction of price of insulin and other products if return on equity exceeds 7%. The proposal was rejected with 99.61% negative votes.

Both ISS and Glass Lewis issued an ‘against’ recommendation on this resolution.

Rockwool At the AGM of Rockwool one shareholder proposal was on the agenda: > Assess environmental and community impacts from siting of manufacturing facilities and use of water. The proposal was rejected with 99.55% negative votes.

Both ISS and Glass Lewis issued an ‘against’ recommendation on this resolution.

Royal Unibrew At the AGM of Royal Unibrew one shareholder proposal was on the agenda: > Amendment of section 9.2 in the Articles of Association regarding location and notice of general meetings. The proposal was rejected with 94.12% negative votes.

Both ISS and Glass Lewis issued an ‘against’ recommendation on this resolution.

Topdanmark At the AGM of Topdanmark one shareholder proposal was on the agenda: > Instruct board to annually publish statement for the exercise of active ownership in coal, oil and gas companies; dispose shares in coal, oil and gas companies where active ownership does not lead to fulfillment of the Paris agreement.

The proposal was rejected with 99.79% negative votes.

Both ISS and Glass Lewis issued an ‘against’ recommendation on this resolution.

Georgeson’s 2019 Proxy Season Review > 15 1.3 CONTESTED RESOLUTIONS

Among our sample of OMX Large Cap companies that held their AGM during the reporting period, not all companies provide a precise breakdown of vote results by resolution as this is not a legal requirement.

Of the companies which provided detailed vote results, four companies saw at least one management resolution receive more than 10% shareholder opposition for a total of eight resolutions in 2019 at the AGMs of DSV, Genmab, Lundbeck and Royal Unibrew.

The most commonly contested resolutions were the approval of remuneration of directors and remuneration policies (five resolutions) followed by equity issuance authorities (two resolutions) and article amendments (one resolution).

The graph below summarises the main categories of management resolutions that received more than 10% opposition from shareholders.

Graph 2: Number of resolutions which received more than 10% against votes in the OMXC Large Cap companies (by resolution type) 2017-2019.

2017 2018 2019 6

5

4

3

Number of proposals Number of 2

1

0

Remuneration Equity issuance Article amendments

16 > DENMARK

1.3.1 REMUNERATION

Under the Danish Companies Act (§139), the board of a listed company must prepare general guidelines for incentive based compensation for executive management and board members before entering into any specific agreement on incentive pay with a member of management. These guidelines must be considered and adopted by the AGM.

The following companies received more than 10% against votes on remuneration related resolutions: DSV > Approve guidelines for incentive-based compensation for executive management and board (15.45% against votes).

ISS recommended their clients to vote ‘for’ the resolution, while Glass Lewis issued an ‘against’ recommendation.

Genmab > Approve remuneration principles for the Board of Directors and executive management (40.8% against). > Approve remuneration for the Board of Directors (35.6% against). Both ISS and Glass Lewis issued an ‘against’ recommendation.

Lundbeck > Approve guidelines for incentive-based compensation for executive management and board (12.5% against). Both ISS and Glass Lewis issued an ‘against’ recommendation.

1.3.2 AUTHORITIES TO ISSUE SHARES WITH OR WITHOUT PRE-EMPTIVE RIGHTS

Among our sample, the companies with more than 10% against votes on approval of equity issuance were:

Genmab > Approve amendment of articles of association on authorisation to issue warrants (11.4% against). ISS issued a ‘for’ recommendation while Glass Lewis issued an ‘against’ recommendation.

Georgeson’s 2019 Proxy Season Review > 17 2 | Proxy Advisors

With more than 52% of the Danish shares held by foreign investors who to an increasing extent rely on proxy advisory firms such as ISS and Glass Lewis for meeting agenda analysis and vote recommendations, it is very important to stay updated on the proxy advisors’ guidelines. A negative recommendation from a proxy advisor can have an adverse impact on the vote outcome of a given resolution.

In the 2019 season, 16 (43%) of the OMX Large Cap companies surveyed received at least one against recommendation from ISS or Glass Lewis for a total of 28 management resolutions.

A total of 31 shareholder proposals in 10 companies received at least one against recommendation from ISS or Glass Lewis.

2.1 INSTITUTIONAL SHAREHOLDER SERVICES (ISS)

Institutional Shareholder Services2 (ISS) is a leading provider of corporate governance solutions for asset owners, hedge funds, and asset service providers.

In the 2019 proxy season, 10 (27%) of the OMX Large Cap companies surveyed received at least one against recommendation from ISS for a management resolution.

A total of 12 negative recommendations were issued by ISS on resolutions put forward by management compared to 16 in 2018. Remuneration related resolutions received 6 of the 12 against recommendations, followed by equity issuance and share repurchase authorities.

Below is an overview of the number of against recommendations by ISS at the OMX Large Cap AGMs surveyed over the past three years.

Graph 3: Overview of the number of against recommendations by ISS at OMX Large Cap AGMs over the past three years.

2017 2018 2019 12

10

8

6

Number of proposals Number of 4

2

0 Remuneration Equity issuance Share repurchase Other items

2) http://www.issgovernance.com/about/about-iss/

18 > DENMARK

2.2 GLASS LEWIS

Glass Lewis3 is a leading provider of governance services that support engagement among institutional investors and corporations through its research, proxy vote management and technology platforms.

In the 2019 proxy season, 13 (35%) of the OMX Large Cap companies surveyed received at least one against recommendation from Glass Lewis.

A total of 16 negative recommendations were issued by Glass Lewis on resolutions put forward by management compared to 13 in 2018. Remuneration related resolutions received 14 against recommendations and equity issuance resolutions received two.

Below is an overview of the number of negative recommendations by Glass Lewis at the OMX Large Cap AGMs surveyed over the past three years.

Graph 4: Overview of the number of against recommendations by Glass Lewis at the OMX Large Cap AGMs over the past three years.

2017 2018 2019 16

14

12

10

8

6 Number of proposals Number of

4

2

0 Remuneration Supervisory Board and Equity issuance Article amendments Other items Management elections

3) http://www.glasslewis.com/about-glass-lewis/

Georgeson’s 2019 Proxy Season Review > 19 3 | Corporate Governance developments

3.1 UPDATE OF THE RECOMMENDATIONS FOR CORPORATE GOVERNANCE

The Danish Recommendations for Corporate Governance are best practice guidelines for the management of companies admitted to trading on a regulated market, including NASDAQ OMX Copenhagen A/S. The objective is that the “comply or explain” recommendations are appropriate for such companies and comply with Danish and EU company law, the OECD’s Principles of Corporate Governance and recognised best practice.

The recommendations were most recently revised in November 2017 with the purpose of enhancing active stewardship and preparing the Danish listed companies for the implementation of the Shareholder Rights Directive.

With the implementation of SRD II, which regulate parts of the Committee’s recommendations regarding management’s remuneration, the Committee has announced that the recommendations will be reviewed and updated to reflect SRD II.

In the fall of 2019, the Committee will begin to monitor the impact of the legislation and gather experience from the General Meetings to be held in 2020. The updated recommendations shall apply to fiscal years starting January 1, 2021 and thereafter.

The Committee plans to publish the updated recommendations by the end of 2020.

3.2 DANISH STEWARDSHIP CODE

The Danish Stewardship Code issued by the Corporate Governance Committee entered into force in January 2017. The 7 stewardship principles aim to promote companies’ long-term value creation and thereby contribute to maximizing long-term return for investors. Thus, the Recommendations on Corporate Governance and the Stewardship Code are mutually reinforcing in serving a common purpose. The Stewardship Code should result in increased transparency as to how the individual investor chooses to exercise stewardship activities. Accordingly, the Code is not meant to establish a uniform approach for investors’ exercise of stewardship activities.

Like the Recommendations on Corporate Governance, the stewardship principles are soft law to be applied on a “comply or explain” basis. Thus, investors can choose either to comply with a given principle or not, in which case the investor should give an explanation as to why and how the investor has chosen to act in that particular regard.

The Corporate Governance Committee has published a list of institutional investors who have stated that they will apply the Stewardship Code. In September 2018, a total of 35 institutional investors was included on the list4.

SRD II requires institutional investors and asset managers to develop and publish an engagement policy on active ownership or explain why they have chosen not to do so. It must be clear how their active ownership policy has been implemented, including a general description of voting records, an explanation of the most significant resolutions and the use of proxy advisors. With the new regulation which enters into force for fiscal years starting January 1, 2020 and thereafter, the Danish Stewardship Code will likely be made redundant.

4) https://corporategovernance.dk/sites/default/files/180921_positivliste_aktivt_ejerskab_170918_002.pdf

20 > DENMARK

Georgeson’s 2019 Proxy Season Review > 21 About Georgeson

Established in 1935, Georgeson is the world’s original and foremost provider of strategic services to corporations and investors working to influence corporate strategy. We offer unsurpassed advice and representation for annual meetings, mergers and acquisitions, proxy contests and other extraordinary transactions. Our core proxy expertise is enhanced with and complemented by our strategic consulting services, including solicitation strategy, investor identification, corporate governance analysis, vote projections and insight into investor ownership and voting profiles. Our local presence and global footprint allow us to analyse and mitigate operational risk associated with various corporate actions worldwide. For more information, visit www.georgeson.com

GEORGESON’S EUROPEAN CORPORATE GOVERNANCE TEAM

Daniele Vitale (London) Araceli López (Madrid) [email protected] [email protected]

Luca Rizzi (London) Alberto d’Aroma (Rome) [email protected] [email protected]

Nicolò Dall’Antonia (London) Jolanda Ranieri (Rome) [email protected] [email protected]

Claudia Morante (Madrid) Silvano Tripodi (Rome) [email protected] [email protected]

Eva Martí (Madrid) [email protected]

22 > Contacts

DENMARK GLOBAL

Michael Kjøller-Petersen Europe Managing Director Domenico Brancati [email protected] Chief Executive Officer UK/Europe [email protected]

North America William Jackson Chief Executive Officer North America [email protected]

Australasia Laks Meyyappan Chief Executive Officer Australasia [email protected]

Georgeson’s 2019 Proxy Season Review > 23 georgeson.com | a Computershare company