Report of the Board of Directors Corporate governance ASSA ABLOY is a Swedish public limited liability company Shareholders with registered office in Stockholm, Sweden, whose Series B At year-end, ASSA ABLOY had 22,232 shareholders share is listed on the Nasdaq Stockholm. 1 (17,720). The principal shareholders are Investment The Group’s corporate governance is based on the Swedish AB Latour (9.5 percent of the share capital and 29.5 percent Companies Act, the Annual Accounts Act, the Nasdaq of the votes) and Melker Schörling AB (3.9 percent of the Stockholm Rule Book for Issuers and the Swedish Code of share capital and 11.4 percent of the votes). Foreign share- Corporate Governance, as well as other applicable external holders accounted for around 64 percent (65) of the share laws, regulations and recommendations, and internal rules capital and around 44 percent (44) of the votes. The ten largest and regulations. shareholders accounted for around 38 percent (35) of the This Corporate Governance Report has been prepared as share capital and 58 percent (56) of the votes. For further part of ASSA ABLOY’s application of the Swedish Code of information on shareholders, see page 123. Corporate Governance. The report is audited by A shareholders’ agreement exists between Gustaf Douglas, ASSA ABLOY’s auditor. Melker Schörling and related companies and includes an ASSA ABLOY’s objective is that its activities should gener- agreement on right of first refusal if any party disposes of ate good long-term returns for its shareholders and other Series A shares. The Board of Directors of ASSA ABLOY is not stakeholders. An effective scheme of corporate governance aware of any other shareholders’ agreements or other agree- for ASSA ABLOY can be summarized in a number of interact- ments between shareholders in ASSA ABLOY. ing components, which are described below. Corporate governance structure 1 Shareholders 3 Nomination Committee 2 General Meeting 9 Auditor 5 Remuneration Committee 4 Board of Directors 6 Audit Committee 7 CEO 7 Executive Team 8 Divisions Important external rules and regulations Important internal rules and regulations • Swedish Companies Act • Articles of Association • Annual Accounts Act • Board of Directors’ rules of procedure • Nasdaq Stockholm Rule Book for Issuers • Financial Policy • Swedish Code of Corporate Governance • Accounting Manual (www.bolagsstyrning.se) • Communication Policy • Insider Trading Policy • Internal control procedures • Code of Conduct and Anti-Corruption Policy 70 REPORT OF the Board OF Directors ASSA ABLOY ANNUAL REPORT 2015 Share capital and voting rights At the Annual General Meeting, Lars Renström, Carl Douglas, At the Annual General Meeting in May 2015, it was resolved to Birgitta Klasén, Eva Lindqvist, Johan Molin, Jan Svensson and increase the number of shares in the company by dividing Ulrik Svensson were re-elected as members of the Board of each share, irrespective of series, into three shares of the same Directors. Eva Karlsson was elected a new member of the series (stock split 3:1). ASSA ABLOY’s share capital amounted Board of Directors. Further, Lars Renström was re-elected as at year-end to SEK 370,858,778 distributed among 57,525,969 Chairman of the Board of Directors, and Carl Douglas as Vice Series A shares and 1,055,050,365 Series B shares. The total Chairman. After 14 years as a board member, Sven-Christer number of votes was 1,630,310,055. Each Series A share car- Nilsson chose to leave the Board of Directors at the Annual ries ten votes and each Series B share one vote. All shares have General Meeting. a par value of around SEK 0.33 and give share holders equal The 2015 Annual General Meeting approved a dividend rights to the company’s assets and earnings. of SEK 6.50 per share, in accordance with the proposal of the Board of Directors and the CEO. In addition, the Annual General Repurchase of own shares Meeting passed resolutions on fees payable to the Board of Since 2010, the Board of Directors has requested and received Directors, remuneration guidelines for senior management, a mandate from the Annual General Meeting to repurchase authorization of the Board of Directors regarding repurchase and transfer ASSA ABLOY shares. The aim has, among other and transfers of own Series B shares, implementation of a long- things, been to secure the company’s undertakings in connec- term incentive program for senior management and other key tion with its long-term incentive programs (LTI). The 2015 staff in the Group (LTI 2015), a stock split (3:1), and amend- Annual General Meeting authorized the Board of Directors to ment of the Articles of Association to adjust the limits for the repurchase, during the period until the next Annual General number of shares, as well as appointing members of the Nomi- Meeting, a maximum number of Series B shares so that after nation Committee prior to the 2016 Annual General Meeting. each repurchase ASSA ABLOY holds a maximum 10 percent of the total number of shares in the company. Nomination Committee ASSA ABLOY holds a total of 1,800,000 (1,800,000)1 Series B The Nomination Committee prior to the 2016 shares after repurchase. These shares account for around 0.2 3 Annual General Meeting comprises Carl Douglas percent (0.2) of the share capital and each share has a par value (Investment AB Latour), Mikael Ekdahl (Melker Schörling AB), of around SEK 0.33. The purchase consideration amounted to Liselott Ledin (Alecta), Marianne Nilsson (Swedbank Robur SEK 103 M (103). No shares were repurchased in 2015. fonder) and Anders Oscarsson (AMF and AMF fonder). On 4 November 2015, it was announced that Carl Douglas had Share and dividend policy replaced Gustaf Douglas as Investment AB Latour’s represen- ASSA ABLOY’s Series B share is listed on the Nasdaq Stockholm tative on the Nomination Committee. Large Cap list. At year-end, ASSA ABLOY’s market capitalization Carl Douglas is Chairman of the Nomination Committee. amounted to SEK 197,718 M. The Board of Directors’ objective Carl Douglas is also Vice Chairman of ASSA ABLOY’s Board of is that, in the long term, the dividend should be equivalent to Directors. The Nomination Committee thus deviates from the 33–50 percent of income after standard tax, but always taking Swedish Code of Corporate Governance in that the Vice Chair- into account ASSA ABLOY’s long-term financing requirements. man of the Board of Directors is Chairman of the Nomination Committee. The reason for this deviation is that the Nomina- General Meeting tion Committee considers it important to have the represen- Shareholders’ rights to decide on the affairs of tative from the largest shareholder as Chairman of the Nomi- 2 ASSA ABLOY are exercised at the General Meeting. nation Committee. Shareholders who are registered in the share register on the If a shareholder represented by one of the members of the record date and have duly notified their intent to attend are Nomination Committee ceases to be among the major share- entitled to take part in the General Meeting, either in person holders in ASSA ABLOY, the Committee has the right to or by proxy. Resolutions at the General Meeting are normally appoint another representative of one of the major sharehold- passed by simple majority. For certain matters, however, the ers to replace such a member. The same applies if a member of Swedish Companies Act prescribes that a proposal should be the Nomination Committee ceases to be employed by such a supported by a higher majority. Individual shareholders who shareholder or leaves the Nomination Committee before the wish to submit a matter for consideration at the General Meet- 2016 Annual General Meeting. ing can send such request to ASSA ABLOY’s Board of Directors The Nomination Committee has the task of preparing, on at a special address published on the company’s website well behalf of the shareholders, resolutions on the election of the before the Meeting. Chairman, the Vice Chairman and other members of the Board The Annual General Meeting should be held within six months of Directors, the appointment of the auditor, the election of of the end of the company’s financial year. Matters considered at the Chairman of the Annual General Meeting, the appoint- the Annual General Meeting include: dividend; adoption of the ment of the Nomination Committee prior to the Annual income statement and balance sheet; discharge of the Board of General Meeting, and fees and associated matters. Directors and the CEO from liability; election of members of the Prior to the 2016 Annual General Meeting, the Nomination Board of Directors and Chairman of the Board of Directors; Committee makes an assessment of whether the current appointment of the Nomination Committee and auditors; and Board of Directors is appropriately composed and fulfills the determination of remuneration guidelines for senior manage- demands made on the Board of Directors by the company’s ment and fees for the Board of Directors and auditors. An Extra- present situation and future direction. The annual evaluation ordinary General Meeting may be held if the Board of Directors of the Board of Directors is part of the basis for this assess- considers this necessary or if ASSA ABLOY’s auditors or share- ment. The search for suitable board members is carried on holders holding at least 10 percent of the shares so request. throughout the year and proposals for new board members are based in each individual case on a profile of requirements 2015 Annual General Meeting established by the Nomination Committee. The Annual General Meeting in May 2015 was attended by Shareholders wishing to submit proposals to the shareholders representing 56.1 percent of the share capital Nomination Committee can do so by e-mailing: 1 Adjusted for stock split (3:1).