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CORPORATE GOVERNANCE

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Chairman’s comment Governance report Board of Directors Group Management Remuneration report Chairman’s comment

Swedish Match continued to generate strong cash returns, while also investing what is needed to support its business.”

While every year brings new challenges and opportunities, 2020 progressed ahead of schedule. Even with some temporary factory will be remembered as a year of determination and fortitude in closures and border closures, the vast majority of the portfolio was the face of a worldwide pandemic. Every family, every employee, delivered to customers in full and on time. Nicotine pouches were and every customer has had to cope with profound change in their offered in more shops and in new countries. Swedish Match is now daily life, and most sadly, many have suffered the loss of a family working to build on its success by expanding its smokefree portfolio member, loved one, friend, or colleague. Still, the world moves on, into new markets. and I am filled with admiration and respect for all of the teams at Swedish Match continued to generate strong cash returns, while Swedish Match. Their perseverance, passion, and commitment, also investing what is needed to develop its business. Cash returns and their continued work toward the Swedish Match vision of a to shareholders during the year came in the form of both dividends world without has helped to enable the Company to be and an ongoing share repurchase program. At the upcoming Annual stronger than ever, providing customers and consumers with a General Meeting the Board will propose to shareholders that the broad range of outstanding products and building on its strengths annual dividend be increased to 15.00 SEK per share, as well as and strong relationships. a share split 10:1. We in the Board actively engage with Swedish This annual report highlights many of the activities of the past Match’s management, not only in keeping abreast of the work of year, in addition to providing some insight to key drivers of the the Company, but also, through our various board committees, financial results. Swedish Match demonstrated that through its helping to provide input and guidance with the support of a broad focus on the consumer, product development, quality, strong and balanced background of both businesses and functional customer relationships, and listening to consumers, along areas among our Board members. I would like to thank you, our with flexibility in the face of extraordinarily dynamic market shareholders, for your trust and support of the Company, and your conditions, the Company has a strong platform for success. On the participation in helping to ensure a strong, well governed, and sustainability front, the commitment to improving public health sustainable business. is evident, with the continued portfolio shift toward its smokefree businesses, and the establishment of ZYN nicotine pouches as the Conny Karlsson largest single brand of nicotine pouches on the US market and in Chairman of the Board the world. More than that, the Company continues to work toward the goals of its other sustainability focus areas, maintaining high standards of corporate governance, business ethics, a commitment to reducing greenhouse gas emissions, and so much more, while reinforcing its strong core values. While the COVID pandemic necessarily required changes to many of the programs and plans during the year, progress continued on ZYN expansion projects, not only in the US. Plans and projects to increase production for nicotine pouches met, and in some cases

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Chairman’s comment Governance report Board of Directors Group Management Remuneration report Governance report Swedish Match AB (publ) is a public Swedish limited liability company listed on Nasdaq . The objective of the Company’s operations, as stated in the Company’s Articles of Association, is to directly or indirectly conduct business relating to the development and manufacture of and trade in products, , and and to carry out other activities that are related to these businesses.

Swedish Match is subject to a variety of nine-month report. The reason for this meaning that no shareholders will attend rules that affect its governance, including deviation is that the Board of Directors, the General Meeting in person or through the Company’s Articles of Association, the with reference to the Company’s stable proxy. Instead, all shareholders who have Swedish Companies Act, the Rule Book for operations, is of the opinion that the extra been entered in the share register can Issuers on , the Swedish cost that would be incurred by such a participate in the Annual General Meeting Code of Corporate Governance, and other review is not warranted and that sufficient by voting according to the number of shares applicable laws and regulations. control is achieved through the Company’s held and submitting questions in advance. Internal regulations and standards internal reporting and control systems. Notice of the General Meeting is published that affect Swedish Match’s corporate This Corporate Governance report has in Post- och Inrikes Tidningar and on the governance include the Company’s been examined by the Company’s auditors Company’s website. Information that notice Articles of Association, the Board’s rules but does not represent part of the formal to a General Meeting has been issued, is of procedure, the Board’s instructions to annual report. published in the Swedish daily newspaper, the CEO, the Group’s Code of Conduct, Svenska Dagbladet. and other policy documents issued within Shareholding Shareholders who wish to have a matter the Group. The Articles of Association The share capital of Swedish Match was addressed by the Annual General Meeting are adopted by the General Meeting of 389,515,417.20 SEK distributed over must submit a written request to the Board shareholders.1) They do not contain any 162,200,000 shares at the end of 2020. Each in sufficient time prior to the meeting.4) limitations on the number of votes that a share carries one vote. On December 31, shareholder may cast at a General Meeting 2020, no shareholder had a shareholding Nominating Committee for the or any specific provisions concerning the in the Company representing one tenth Annual General Meeting 2021 appointment and dismissal of directors or or more of the votes of all shares of the The Nominating Committee for the Annual regarding amendments of the Articles of Company.3) The Swedish Match share General Meeting in 2021 was announced Association. is listed on Nasdaq Stockholm. Further on the Company’s website on September Swedish Match applies the Swedish Code information concerning Swedish Match’s 25, 2020. In addition to the Chairman of Corporate Governance (the Code).2) ownership structure and share performance of the Board of Swedish Match, Conny The Code is based on the “comply or are presented on pages 66–67 of the 2020 Karlsson, the Nominating Committee explain” principle, meaning that a company Annual Report. consists of the following members: Filippa that applies the Code may deviate from Gerstädt ( Funds), Roseanna Ivory regulations of the Code, but must provide Annual General Meeting 2021 (Aberdeen Standard Investments ), Dan explanations for each deviation. The Swedish Match’s 2021 Annual General Juran (Framtiden Management Company, Company is not reporting any deviations Meeting will be held on April 13. In light of LLC), and David Pawelkowski (Zadig from the Code for 2020, except with regard the continued COVID-19 pandemic, the Asset Management S.A.). Filippa Gerstädt to the Code’s regulation that auditors Annual General Meeting will be conducted serves as Chairman of the Nominating are to review the Company’s half year or pursuant to so called mail-in procedures, Committee.

PROPOSALS TO THE NOMINATING COMMITTEE ARE TO BE SUBMITTED TO: Swedish Match AB The Nominating Committee

1) Available on Swedish Match’s website www.swedishmatch. c/o General Counsel Marie-Louise Heiman com/governance. 2) Available on Swedish Corporate Governance Board’s website SE-118 85 Stockholm, www.corporategovernanceboard.se. E-mail: [email protected] 3) Source: Euroclear Sweden AB. 4) More information is available on Swedish Match’s website www.swedishmatch.com/agm.

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Chairman’s comment Governance report Board of Directors Group Management Remuneration report

GOVERNANCE OF THE SWEDISH MATCH GROUP

Nominating Committee GENERAL MEETING External auditors

Remuneration Committee BOARD OF DIRECTORS Audit Committee

PRESIDENT AND CEO Disclosure Committee

US DIVISION EUROPE DIVISION LIGHTS DIVISION

GENERAL MEETING The Annual regarding any changes to these instructions. financial accounting, internal controls and General Meeting The Nominating Committee’s duties are to the quality of its financial reporting through (AGM) constitutes the highest governing prepare and submit proposals to the AGM the internal control system described in body in a limited liability company, and concerning the election of the Chairman of detail in the section entitled Internal shareholders’ rights to participate in the AGM, the election of the Chairman and control over financial reporting. The Board resolutions regarding the Company’s affairs other members of the Board, the amount of is responsible for establishing Swedish are exercised at General Meetings. The Board fees and their apportionment Match’s strategic and financial Long Range Company’s shareholders are informed of between the Chairman of the Board and Plan, monitoring the performance of the their legal rights to have issues addressed at other Board members and any fees for operations on an ongoing basis, evaluating General Meetings through the Company’s committee work, as well as the election of the overall approach to managing risks of website www.swedishmatch.com/agm. and fees to be paid to the auditors. The the Group, reviewing and approving the There are no special provisions on how the Nominating Committee’s proposals are financial accounts, and taking decisions General Meeting works in the Articles of publicly announced no later than on the regarding larger investments and Association or, as far as known to the date of notification of the AGM. divestments. Company, due to any shareholders Shareholders may submit proposals to the The Board of Directors appoints and agreement. Resolutions adopted by General Nominating Committee. issues instructions for the President and Meetings are generally resolved by a simple In the autumn of each year, the Board monitors the President’s work. majority. However, according to the of Directors commissions an external The working procedures for the Board Swedish Companies Act, certain matters are consultant to evaluate the performance of Directors are established annually at to be resolved by a qualified majority. and functioning of the Board’s work. the statutory Board meeting. The working The AGM must be held within six The Chairman of the Board informs the procedures include instructions relating months of the close of the fiscal year. At the Nominating Committee about the outcome to the role of the Chairman of the Board, AGM, resolutions are adopted concerning of the evaluation. This evaluation gives the the division of responsibilities between the such matters as dividend, approval of the Nominating Committee a basis from which Board of Directors and the President and annual report, discharge of the Board of to assess the competence and experience of the guidelines for financial reporting to the Directors and the President from personal the Board members and requirements for Board. liability, election and compensation of the future. The Nominating Committee is The Chairman of the Board is responsible the Chairman and members of the Board to meet as often as necessary to discharge its for organizing and directing the Board’s of Directors and auditors, guidelines for duties, but at least once per year. work and ensuring that the Board fulfills determination of compensation payable its obligations. The Chairman’s other to senior executives, and other matters of BOARD OF DIRECTORS The Board of responsibilities include forwarding the importance to the Company. Directors is the owners’ opinions to the Board of Directors. Company’s highest administrative body Nominating Committee The Nominating under the General Meeting. The Board of Remuneration Committee The Remuneration Committee is Directors is responsible for ensuring that Committee is established according to the principles the Group’s organization is appropriate for appointed annually by the Board of Directors resolved by the AGM. The AGM also its purpose and conducts ongoing and is a body within the Board. The resolves on instructions for the Nominating evaluations of the financial position of the Committee’s duties are to prepare and submit Committee and according to the Company, of management guidelines and of to the Board proposals for resolutions instructions the Nominating Committee the investment of company funds. The relating to remuneration and other terms of shall submit to the AGM proposals Board also safeguards the Company’s employment for the Company’s President,

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principles regarding remuneration to senior auditors. The Committee’s responsibilities Disclosure Committee The President has executives, which the Board will present to are to large extent set by the EU Audit appointed a the AGM for a resolution and other and Auditor Regulation, which includes Disclosure Committee whose primary remuneration and employment term matters responsibility for the audit selection responsibility is to ensure that all external which by law or other regulations, the procedure and otherwise to assist the reporting, including interim reports, Swedish Code of Corporate Governance or Nominating Committee in preparing annual reports, and press releases, whose established practice shall be resolved by the proposals regarding election of auditors content could have an impact on the share General Meeting or the Board of Directors. and recommendations on audit fees. It price or that contains financial information, The Board of Directors has delegated keeps itself informed regarding the audit is prepared in accordance with the Group’s decision-making authority to the of the annual report and consolidated prevailing procedural routines. Remuneration Committee in certain issues accounts. In conjunction with the Audit such as calculation and payment of variable Committee’s review of the financial External auditors The auditors are salary to the Company’s President, salary reporting, the members of the Committee elected by the and other compensation that, within the discuss accounting issues relating to AGM for a term of between one and four framework of the guidelines resolved by the Company’s financial reporting. The years. According to the Articles of the AGM, is to be paid to members of the Committee establishes guidelines by which Association, the number of authorized Group Management Team other than the services other than auditing may be secured public auditors must be one or two with a President, including performance criteria, from the Company’s auditors. The Audit maximum of one or two deputy auditors or and targets in any long term incentive plan Committee also discusses other important one or two auditing firms. and approval of significant engagements issues relating to the Company’s financial The duties of the external auditors outside the Company with respect to reporting and reports its observations to the include auditing the management of members of the Group Management Team Board.1) the Board and the President as well as other than the President. the Company’s annual accounts and The Committee is to meet as often as PRESIDENT AND CEO The President is accounting records. The external auditors necessary but at least twice annually.1) appointed by the report continuously to the Board’s Audit Board of Directors and manages the Committee and, in conjunction with Audit Committee The Audit Company’s operations within the framework preparation of the annual accounts, they Committee is of rules established by the Board. also report their observations from the appointed annually by the Board of With regard to the Board of Directors, the audit to the Board. Directors and is a body within the Board. President’s duties include responsibility for Although the Audit Committee’s work is ensuring that the Board of Directors receives primarily of a preparatory and advisory objective, comprehensive, and relevant nature, the Board of Directors delegates information prior to Board meetings, thus decision-making authority on specific enabling the Board to reach well-founded issues to the Committee. The Committee is decisions. The President also submits responsible for monitoring the Company proposals for decisions by the Board. On and its subsidiaries’ accounting and a monthly basis, the President provides financial reporting processes as well as, in Board members with the information respect of the financial reporting, the required to monitor the position, liquidity efficiency of the internal controls, internal and development of the Group, while also www.swedishmatch.com 1) Further information regarding for example the committees’ audit and risk management. providing the Chairman with ongoing respective responsibilities and authorizations, the Company’s The Committee reviews and monitors information regarding the operations of the system of variable remuneration to senior executives as well as minutes from shareholders’ meetings, is to be found on the the impartiality and independence of the Group. Company’s website, www.swedishmatch.com/governance.

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GOVERNANCE OF THE SWEDISH MATCH GROUP 2020

ANNUAL GENERAL MEETING 2020

In 2020, the Annual General Meeting was held • The Chairman shall receive 2,165,000 SEK, • Authorization of the Board of Directors to on April 2. The minutes of the meeting are the deputy Chairman shall receive 1,000,000 decide on transfer of the Company’s own available on the Company’s website SEK and the other Board members elected shares and to issue new ordinary shares. www.swedishmatch.com/agm. by the Meeting shall each receive 865,000 • Guidelines for remuneration to members of The Annual General Meeting 2020 passed the SEK. Furthermore, as compensation for the executive management. following resolutions, amongst others: committee work carried out, it was decided • Adoption of income statements and balance • A dividend of 12.50 SEK per share for the 2019 to allocate 280,000 SEK to the Chairman of sheets for 2019 and discharge from personal fiscal year. the Remuneration Committee, 350,000 SEK liability granted of the Board of Directors and • Re-election of Charles A. Blixt, Andrew to the Chairman of the Audit Committee and the Chief Executive Officer. Cripps, Jacqueline Hoogerbrugge, Conny to allocate 150,000 SEK to each of the other Karlsson, Pauline Lindwall, Wenche Rolfsen, members of these committees. For information on the utilization of the and Joakim Westh as Board members. • Withdrawal of 7,750,000 repurchased shares authorization granted by the General Meeting Alexander Lacik was elected as new member in the Company. to the Board of Directors to acquire treasury of the Board. Re-election of Conny Karlsson • Authorization of the Board of Directors to shares, see section The share of the Board as Chairman of the Board and Andrew Cripps acquire, on one or more occasions prior to the of Directors report, pages 66–67 of the 2020 as deputy Chairman of the Board. next Annual General Meeting, a maximum of Annual Report. as many shares as may be acquired without the Company’s holding at any time exceeding 10 percent of all shares in the Company.

Nominating Committee for the Committee to be able to assess the The Nominating Committee advised before Pursuant to instructions established by competence and experience that is required the Annual General Meeting 2020 that the Annual General Meeting 2019, the by the Board. In addition, the Committee the Nominating Committee had applied Nominating Committee is to include the must consider independence rules the Swedish Corporate Governance Code, Chairman of the Board of Directors and applicable to the Board of Directors and section 4.1, as diversity policy with the one member appointed by each of the four its committees. When preparing proposals aim to propose a composition of Board largest shareholders who wish to appoint for the Board for the 2020 Annual General members with complementing experiences a member to the Nominating Committee. Meeting, the Nominating Committee paid and competencies that is diverse also The four largest shareholders are to be particular attention to the issues of diversity in terms of age, gender and cultural/ identified on the basis of the known and for gender balance on the board and geographical background. The current numbers of votes on July 31, the year before the Committee thus applied Item 4.1 of the Board composition is the result of the work the forthcoming Annual General Meeting. Swedish Corporate Governance Code as of the Nomination Committee prior to the its diversity policy when preparing these Annual General Meeting 2020. Nominating Committee for the proposals. Since the Annual General Meeting 2020, Annual General Meeting 2020 The Nominating Committee held three the Board of Directors consisted of the The Nominating Committee for the Annual meetings during the period between the following directors elected by the General General Meeting in 2020 comprised 2019 and 2020 Annual General Meetings Meeting: Conny Karlsson, Charles A. Blixt, the following five members: Filippa combined. Andrew Cripps, Jacqueline Hoogerbrugge, Gerstädt (Nordea Funds), Hans Ek (SEB Alexander Lacik, Pauline Lindwall, Investment Management AB), Will James Board of Directors Wenche Rolfsen, and Joakim Westh. Conny (Standard Life Aberdeen PLC), and David Composition Karlsson served as Chairman of the Board. Pawelkowski (Zadig Gestion (Luxembourg) According to the Articles of Association, Employee representatives on the Board S.A.) as well as Conny Karlsson (the the Company’s Board of Directors shall were, Patrik Engelbrektsson, Pär-Ola Chairman of the Board). Filippa Gerstädt consist of at least five and at most ten Olausson and Dragan Popovic, with Niclas served as Chairman of the Nominating directors, apart from those persons Bengtsson, Niclas Ed and Matthias Eklund Committee. who, pursuant to law, may be appointed as deputies. Detailed information about The main task of the Committee is to according to other arrangements. At the individual Board members and deputies propose Board members for election by end of 2020, the Swedish Match Board is provided on pages 140–141 of the 2020 the Annual General Meeting. As member of Directors comprised eight members Annual Report. of the Nominating Committee, the elected by the General Meeting plus three Chairman of the Board of Directors fulfills employee representatives and their three Independence of Board members an important role to inform the Committee deputies in accordance with the Trade According to the Nominating Committee, of the Company’s strategy and future Union Representatives (Status at the all Board members elected by the Annual challenges. Such insights are necessary Workplace) Act. General Meeting are considered to be

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independent, under the rules of the Swedish Evaluation of the work of the Activities of the Board of Code of Corporate Governance, in relation Board of Directors Directors during 2020 to the Company’s major shareholders and in During autumn 2020, the Board’s work During the period from January 1, until relation to management and the Company. was evaluated with the assistance of an December 31, 2020, the Board held eight independent consulting company. The scheduled meetings and one statutory Meetings Nominating Committee was informed of meeting. During 2021 (until and including The Board of Directors convenes for at the result of the evaluation. February) one Board meeting has been least six scheduled meetings and one held. statutory meeting per year. In addition to Compensation to the Board of Directors At all scheduled Board meetings, with the the scheduled Board meetings, the Board Compensation to the Board for the period exception of the statutory Board meeting, is summoned to additional meetings from the 2020 Annual General Meeting up the Board received a general report from convened at the discretion of any director to and including the 2021 Annual General the CEO and discussed the activities and or of the President. The auditors participate Meeting was paid in accordance with the financial results of the Company and the in the Board meeting at which the annual resolution adopted by the 2020 Annual associated companies, as well as other accounts for the fiscal year are presented in General Meeting. No compensation for pertinent projects and matters. order to communicate their observations directorship work was paid to directors All meetings held during the year from the audit. The auditors also meet employed by the Swedish Match Group. followed an approved agenda. Prior to each with the Board without the presence of For further information about Directors’ meeting, a proposed agenda and, where the President or any other member of the fees for 2020, see Note 5 Personnel, page 90 applicable, documents relevant to the items Group Management Team. of the 2020 Annual Report. on the agenda were sent to the Board. The

Composition of the Board Board of ­ Audit ­ Remuneration Member Compensation, and attendance 2020 Directors Committee Committee Independent1) since TSEK Total number of meetings 9 5 2

Members elected by the General Meeting Conny Karlsson (Chairman) 9 2 Yes 2006 2,445 Andrew Cripps (Deputy Chairman) 9 5 Yes 2006 1,150 Charles A. Blixt 8 2 Yes 2015 1,005 Jacqueline Hoogerbrugge 9 2 Yes 2015 1,005 Alexander Lacik 6 Yes 2020 865 Pauline Lindwall 9 Yes 2017 865 Wenche Rolfsen 9 5 Yes 2013 1,015 Joakim Westh 9 5 Yes 2011 1,215

Employee representatives Patrik Engelbrektsson 8 Pär-Ola Olausson 8 Dragan Popovic 8

Employee representatives (deputies) Niclas Bengtsson 8 Niclas Ed 8 Matthias Eklund 8 1) As defined in the Swedish Code of Corporate Governance.

Ordinary Board meeting: Full year report Ordinary Board meeting: Ordinary Board meeting: Talent management and and annual report, summons for AGM Strategy updates Europe succession planning, LRP and enterprise risk and proposals for AGM, annual revision Division, US Division, management, sustainability updates, compensation of Code of Conduct, mandate to continue Lights division. issues, Board evaluation, evaluation of CEO performance, with share repurchases. financial policy, update Global MTN bond program.

2020 2021 JAN MAR APR MAY JUN JUL AUG OCT NOV JAN FEB

FEB SEP DEC

Ordinary Board meeting: Full Statutory meeting. year report and annual report, Extra Board meeting per Ordinary Board meeting: summons for AGM and proposals capsulam, adoption of Q1 interim report, for AGM, annual revision of Code annual report. utilization of mandate to Ordinary Board meeting: Ordinary Board meeting: Q3 of Conduct, mandate to continue Extra Board Meeting. repurchase shares. Half year report. interim report. with share repurchases.

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Company’s auditors attended the Board During 2020, the committee devoted Compensation to the Group meeting in February 2020 to present the special attention to determination of Management Team audit report and observations from the variable compensation for 2019 to be paid The 2020 Annual General Meeting audit. Due to the ongoing COVID-19 in 2020, and on targets relevant to variable established certain guidelines for pandemic the Board did not conduct any compensation, proposals to the Board determining salary and other compensation site visits or market visits during the year. concerning adjustments of the President’s to the President and other members of the One of the focus area was instead to closely salary and variable compensation for Group Management Team. For information monitor and follow up on the pandemic’s 2021, and determination of salaries and on the guidelines established at the Annual impact on the Group’s employees and the variable compensation for other members General Meeting, see Note 5 Personnel, business. of the Group Management Team for 2021. page 90 of the 2020 Annual Report. For In addition, the committee submitted information concerning compensation and Audit Committee a proposal to the Board concerning other benefits to the Group Management In 2020, the members of the Audit guidelines for the determination of salary Team, see Note 5 Personnel, page 90 of the Committee were Joakim Westh, and other remuneration paid to the 2020 Annual Report. (Chairman), Andrew Cripps, and Wenche President and other members of the Group Rolfsen. Management Team. Audit and auditors Throughout the year, the Chairman The accounting firm Deloitte AB was of the Audit Committee kept the Board Group Management Team elected by the General Meeting 2020 as of Directors regularly informed of the In 2020, the Swedish Match Group the Company’s external auditors for the committee’s work and decisions. A total Management Team consisted of Lars period from 2020 up to and including the of five meetings were held in 2020. The Dahlgren, President and Chief Executive Annual General Meeting in 2021. During Company’s auditor, as well as the head Officer; Richard Flaherty, President US 2020, in addition to auditing, Deloitte of the Internal Audit, participated in all Division (until October 1, 2020); Thomas AB provided consultancy services to the meetings of the Audit Committee in 2020 Hayes, Chief Financial Officer and Senior Group constituting of tax and audit related and, at two of these meetings, also met with Vice President, Group Finance (until services. the committee without the presence of the July 31,2020) and President US Division Peter Ekberg, authorized public management of the Company. (from August 1, 2020); Anders Larsson, accountant, served as auditor in charge. For Chief Financial Officer and Senior Vice information concerning compensation to Remuneration Committee President, Group Finance (from August the Swedish Match’s auditors during 2020, Following the AGM and the statutory 1, 2020), Marie-Louise Heiman, Senior see Note 6 Audit fees, page 93 of the 2020 meeting, the members of the Remuneration Vice President Group Legal Affairs; Lars Annual Report. Committee in 2020 were Conny Karlsson Olof Löfman, Senior Vice President R&D, (Chairman), Charles A. Blixt, and Europe Division; Fredrik Peyron, Senior Disclosure Committee Jacqueline Hoogerbrugge. The Company’s Vice President Regulatory Affairs and Members of the Disclosure Committee President presents reports on certain issues Group Communication; Håkan Söderberg, during 2020 included the heads of Group but is not a member of the committee and President, Lights Division and Joakim Tilly, Legal Affairs, Investor Relations, as is not present when the committee prepares President, Europe Division. well as Regulatory Affairs and Group decisions regarding compensation to the Detailed information about the Communications. President. President and Chief Executive Officer During the year, the Remuneration Lars Dahlgren, including his and related Committee’s Chairman kept the Board persons shareholding in the Company, is of Directors regularly informed about provided on page 142 of the 2020 Annual the committee’s work and decisions. The Report. Lars Dahlgren has no significant committee is to meet as often as necessary shareholdings and partnerships in but at least twice annually. Two meetings companies with which Swedish Match has were held in 2020. important business relations.

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INTERNAL CONTROL OVER FINANCIAL REPORTING

The Board of Directors is responsible for addition, each operating unit is charged with the management review the financial information internal control over financial reporting responsibility to assess company-specific risks to validate completeness and accuracy. The pursuant to the Swedish Companies Act and and identify additional key internal controls not Board receives monthly reports, and the the Swedish Corporate Governance Code. The covered by the standardized system of controls. financial status of the Group is discussed at Audit Committee has a specific responsibility every scheduled Board meeting. At these Board for monitoring the effectiveness of risk Control activities meetings the Chairman of the Audit Committee management and internal controls regarding Based on the framework of Group policies also informs the Board on the work of the Audit financial reporting. This report describes the and instructions, the heads of Swedish Committee relating to the monitoring of the Group’s system for internal control and risk Match’s operating units are charged with the effectiveness of internal controls regarding management regarding financial reporting. responsibility to establish internal controls over financial reporting. The Disclosure Committee financial reporting to meet the requirements monitors the sufficiency of financial reports Control environment of the standardized system of controls as with regard to disclosure requirements. The foundation for internal control over financial well as to mitigate material company specific The Group Internal Audit department reporting is the control environment that financial reporting risks. Control activities is established with the primary task of has been documented and communicated. It are established in all business processes and independently evaluating the effectiveness of includes the Swedish Match Code of Conduct systems supplying information to the financial internal controls. Internal Audit’s work is based and internal policies and instructions on accounts in order to safeguard the reliability of on annual risk-focused plans that are updated delegation of authority, accounting and the information. throughout the year based on changes and reporting, internal control and information events which influence the risks relating to the security. All governing documents are regularly Information and communication system for internal control. These plans are updated and distributed to key individuals The information and communication component reviewed and approved by the Audit Committee who implement them within their area of includes the systems and procedures that and Internal Audit reports regularly on the responsibility. Fundamental to creating an support the identification, capture, and results directly to the Audit Committee and to effective control environment is the Board exchange of information in a form and company management. The Audit Committee of Directors’, the Audit Committee’s and timeframe that enable personnel to carry out monitors implementation of recommended management’s dedication to reliable financial their responsibilities and reliable financial actions to improve financial controls over reporting. Swedish Match has established reports to be generated. Management has financial reporting. The head of Internal Audit clear decision-making and review structures, established communication channels and reports directly to the Chairman of the Audit including a system of regular review meetings forums to allow for an effective information flow Committee and to the CFO. The Audit Committee between the Group, operating units and local relating to business conditions and changes also receives regular reports from the external management during which the Group values affecting financial reporting. The Swedish Match auditor. are reinforced. Code of Conduct encourages employees to raise compliance concerns promptly and prohibits Risk assessment retribution for doing so. Stockholm, February 9, 2021 The Group applies a risk assessment and a risk management method to ensure that the risks to Monitoring which the Group is exposed are managed within The Group monitors compliance with governing The Board of Directors of the established framework. Based on the risk documents in the form of internal policies and Swedish Match AB assessment, the Group defines a standardized instructions, and evaluates the effectiveness system of controls to ensure reliable financial of the control structure. Financial accounts recordkeeping, transparent financial reporting are provided on a monthly, quarterly and and disclosure, and protection of tangible annual basis to the Group and operating unit and intangible assets. These standardized management through a common reporting and controls are reviewed and updated annually. In consolidation system. Financial and operating

AUDITORS’ REPORT ON THE CORPORATE GOVERNANCE REPORT To the general meeting of the shareholders in Swedish Match AB (publ.), Corporate Identity Number 556015-0756

Engagement and responsibility Opinions The Board of Directors is responsible for the corporate governance statement A corporate governance statement has been prepared. Disclosures in for the financial year 2020-01-01 – 2020-12-31 on pages 131–143 and that it has accordance with chapter 6 section 6 the second paragraph points 2–6 the been prepared in accordance with the Annual Accounts Act. Annual Accounts Act and chapter 7 section 31 the second paragraph the same law are consistent with the annual accounts and the consolidated accounts and The scope of the audit are in accordance with the Annual Accounts Act. Our examination has been conducted in accordance with FAR’s auditing standard RevU 16 The auditor’s examination of the corporate governance Stockholm, March 15, 2021 statement. This means that our examination of the corporate governance statement is different and substantially less in scope than an audit conducted in Deloitte AB accordance with International Standards on Auditing and generally accepted auditing standards in Sweden. We believe that the examination has provided Peter Ekberg us with sufficient basis for our opinions. Authorized Public Accountant

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Board of Directors 2020

Conny Karlsson Andrew Cripps Charles A. Blixt

CONNY KARLSSON ANDREW CRIPPS CHARLES A. BLIXT Chairman of the Board of Directors since 2007. Deputy Chairman of the Board of Directors and Member of the Remuneration Committee. Chairman of the Remuneration Committee. member of the Audit Committee. Board member since 2015. Board member since 2006. Board member since 2006. Born 1951. Jur. Dr. and B.A University of Illinois. Born 1955. M.Sc. in Economics and Business, Born 1957. B.A. University of Cambridge. Other board assignments: Non-Executive Stockholm School of Economics. Chartered Accountant. Chairman, Atrum Coal Limited; Non-Executive Other board assignments: Chairman of Cake 0 Other board assignments: Non-Executive Director and Director, Lamb Weston Holdings Inc. emission AB. Non-Executive Board member of Audit Committee Chair of the Howden Joinery Group plc. Previous positions: Interim General Counsel, Malte Månsson AB and Yrkesakademin AB. Previous positions: Director of Corporate Finance, Krispy Kreme Doughnuts Inc; Executive Vice Previous positions: Chief Executive Officer, Duni Rothmans International; Director of Investments, President and General Counsel, Reynolds AB; Marketing Director, Procter & Gamble British American Tobacco; President, Laurens American Inc. UK; Marketing Director and Regional Director, International SA. Board member of a number of Own and related parties’ shares: 3,750 Procter & Gamble Scandinavia; Marketing European consumer products businesses. Director, Procter & Gamble E&SO. Own and related parties’ shares: 19,200 Own and related parties’ shares: 30,000

Jacqueline Hoogerbrugge Alexander Lacik Pauline Lindwall

JACQUELINE HOOGERBRUGGE ALEXANDER LACIK PAULINE LINDWALL Member of the Remuneration Committee. Board member since 2020. Board member since 2017. Board member since 2015. Born 1965. BSc in Business Administration, Born 1961. BSc., Växjö högskola. Born 1963. M.Sc. Chemical Engineering, University of Växjö högskola. Chief Executive Officer of Other board assignments: Non-Executive Board Groningen. Pandora A/S. member of McKesson Europe AG and Duni AB. Other board assignments: Non-Executive Board Other board assignments: Board member, Coxa Previous positions: Category Director Coffee, France member of Dometic AB, Broadview B.V., BA Glass I- Carry International AB. and Southern Europe Mondelez International; Country Serviços de Gestão e Investimentos S.A. and Jumbo Previous positions: Chief Executive Officer, Business Manager, Nestlé Nutrition Germany & Groep Holding B.V. Britax Ltd.; President of North America Austria; Country Business Manager, Nestlé Nutrition Previous positions: Non-Executive Director, Ikea Region, Reckitt Benckiser; various Indonesia; Nordic Marketing Director, Nestlé Nordic; Industry AB; President Operations, Cloetta AB; international management positions, Reckitt Head of Nestlé Innovation, Out of Home Coffee President Operations, Leaf International BV; Vice Benckiser; positions in sales and marketing, UK; Nordic Marketing Manager, Nestlé Coffee & President Operations, Danone’s Medical Nutrition Procter & Gamble. Beverages. Division; Vice President Procurement, Numico Baby Own and related parties’ shares: 1,100 Own and related parties’ shares: 2,365 & Medical Food; various positions in engineering, manufacturing and procurement, Unilever; and various positions in engineering and sales, Fluor Daniel. Holdings of own and related parties shares as of December 31, 2020. For a detailed report of remuneration and benefits for the Own and related parties’ shares: 3,200 Board of Directors, refer to Note 5 Personnel.

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Chairman’s comment Governance report Board of Directors Group Management Remuneration report

Wenche Rolfsen Joakim Westh AUDITOR Deloitte AB, Peter Ekberg, Authorized Public Accountant. Swedish Match auditor since 2017. Peter Ekberg’s other auditing assignments include Loomis, Fabege and SJ.

SECRETARY Marie-Louise Heiman, Senior Vice President Group Legal Affairs and General Counsel. Secretary to the Board since 2015.

WENCHE ROLFSEN JOAKIM WESTH Member of the Audit Committee. Chairman of the Audit Committee. Board member since 2013. Board member since 2011. INDEPENDENCE OF BOARD MEMBERS Born 1952. M.Sc. in Pharmacy and Ph.D. in Born 1961. M.Sc., KTH Royal Institute of According to the Nominating Committee, Pharmacology, Uppsala University. Technology and M.Sc., Aeronautics and all of the Board members elected by the Other board assignments: Chairman of InDex Astronautics, MIT. Annual General Meeting are considered to be Pharmaceuticals and BioArctic AB; Board member of Other board assignments: Chairman of the Board independent, under the rules of the Swedish Cinclus Pharma AB. of Amexci AB. Board member and Chairman of the Code of Corporate Governance, in relation Previous positions: Vice President, Quintiles Phase Audit Committee of Saab AB; Board member and to the Company’s major shareholders and in I, Europe; Chief Executive Officer, Quintiles, Chairman of the HR Committee of CGI Inc; Non- relation to management and the Company. Scandinavia; Director, Quintiles, Sweden; Managing Executive Board member of Absolent Group AB. Director of Pharmacology, Pharmacia Upjohn; Head Previous positions: Senior Vice President and CHANGES IN THE BOARD OF DIRECTORS of Pharmacology, Pharmacia Ophthalmics; Head of Head of Group Function Strategy and Operational Alexander Lacik was elected as a new Pharmacology, Pharmacia Läkemedel. Excellence and member of Group Management member. Own and related parties’ shares: 3,180 Team, Telefonaktiebolaget LM ; Group Vice President and member of the Executive Management Team, AB; Chairman, Holdings of own and related parties shares as of Absolent AB; Partner, McKinsey & Co. Inc. December 31, 2020. For a detailed report of Own and related parties’ shares: 2,500 remuneration and benefits for the Board of Directors, refer to Note 5 Personnel.

EMPLOYEE REPRESENTATIVES EMPLOYEE REPRESENTATIVES (DEPUTIES)

Patrik Engelbrektsson Pär-Ola Olausson Dragan Popovic Niclas Bengtsson Niclas Ed Matthias Eklund

PATRIK ENGELBREKTSSON NICLAS BENGTSSON Board member since 2013. Appointed by the Swedish Trade Union Confederation (LO) Deputy member since 2018. Appointed by the Council for Negotiation and within Swedish Match. Chairman of the Trade Union Association at Swedish Match’s Co-operation (SACO) within Swedish Match. factory in Gothenburg, Sweden. Born 1969. Vice President Group Tax at Swedish Match’s headquarters, Born 1965. Logistic Technician at Swedish Match’s factory in Gothenburg. Stockholm, Sweden. Previous positions: Mill worker, Machine Operator, Forklift driver at Swedish Match’s Previous positions: Tax Director Group Finance, Swedish Match; Manager, factory in Gothenburg. Ernst & Young; Tax Litigation Officer, the Swedish Tax Agency. Own and related parties’ shares: 0 Own and related parties’ shares: 558

PÄR-OLA OLAUSSON NICLAS ED Board member since 2018. Appointed by the Swedish Trade Union Confederation (LO) Deputy member since 2017. Appointed by the Council for Negotiation and within Swedish Match. Chairman of IF Metall’s Trade Union Association at Swedish Co-operation (PTK) within Swedish Match. Deputy Chairman of the Trade Match’s factory in Tidaholm, Sweden. Union Association (Sälj-klubben) within Swedish Match Europe Division. Born 1972. Technical support at Swedish Match’s factory in Tidaholm. Born 1968. Sales Representative, Swedish Match Europe Division. Own and related parties’ shares: 0 Previous positions: Sales Representative, JC – Brothers; Sales support, Skandia; Sales Representative, Ellte; Sales Representative, Nikko. DRAGAN POPOVIC Own and related parties’ shares: 0 Board member since 2017. Appointed by the Council for Negotiation and Co-operation (PTK) within Swedish Match. Board member of the Swedish Association MATTHIAS EKLUND of Management and Professional Staff (Ledarna) at the factories in Gothenburg and Deputy member since 2018. Appointed by the Swedish Trade Union Confederation Kungälv, Sweden. (LO) within Swedish Match. Board member of the Swedish Food Workers’ Trade Born 1973. Area Manager Production at Swedish Match’s factory in Gothenburg. Union Association (Livs) at SMD Logistics in Kungsängen, Sweden. Previous positions: Area Manager Pilot Plant and Machine Operator, at Swedish Born 1980. Warehouse worker at SMD Logistics in Kungsängen. Match’s factory in Gothenburg. Previous positions: Warehouse worker, Swedish Match Distribution in Solna. Own and related parties’ shares: 0 Own and related parties’ shares: 0

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Group Management 2020

LARS DAHLGREN President and Chief Executive Officer, Swedish Match since 2008. Joined Swedish Match in 1996. Member of the Group Management Team since 2004. Born 1970. M.Sc. in Business and Economics, Stockholm School of Economics, Sweden. Previous positions: Senior Vice President and Chief Financial Officer, Swedish Match AB; Vice President, Group Finance, Swedish Match AB; Finance Director, Swedish Match Philippines; Financial analyst, SBC Warburg. Own and related parties’ shares: 44,050

Lars Dahlgren

Thomas Hayes Marie-Louise Heiman Anders Larsson

THOMAS HAYES MARIE-LOUISE HEIMAN ANDERS LARSSON President, US Division, Swedish Match as of Senior Vice President, Group Legal Affairs and General Chief Financial Officer and Senior Vice August 1, 2020. Joined Swedish Match in 2006. Counsel, Swedish Match since 2015. Joined Swedish President, Group Finance, Swedish Match as Member of the Group Management Team since Match in 1996. Member of the Group Management of August 1, 2020. Joined Swedish Match in 2017. Team and Secretary to the Board since 2015. 2008. Member of the Group Management Team Born 1966. B.S. in Accounting, Wake Forest Born 1965. Master of Laws (LLM), Uppsala University, since 2020. University, USA. Sweden. Born 1982. M.Sc. in Business and Economics, Previous positions: Chief Financial Officer and Previous positions: Vice President, Legal Affairs, Stockholm School of Economics, Sweden. Senior Vice President, Group Finance, Swedish Swedish Match AB; General Counsel, Swedish Match Previous positions: Vice President, Group Match AB; Vice President and Chief Financial North Europe AB; Legal Counsel, AB Fortos, BCP Finance, Swedish Match AB; Vice President, Officer, Swedish Match US Division; Chief Branded Consumer Products AB and Procordia AB. Business Control, Swedish Match Scandinavia Financial Officer, Swedish Match International Own and related parties’ shares: 3,300 Division; Director, Group Business Control, Division; Controller and Chief Accounting Swedish Match AB; Business Controller, Officer, Chesapeake Corporation; Managing Swedish Match AB. Director, PricewaterhouseCoopers. Own and related parties’ shares: 863 Own and related parties’ shares: 6,730 Holdings of own and related parties shares as of December 31, 2020. For a detailed report of remuneration and benefits for the Board of Directors, refer to Note 5 Personnel.

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Chairman’s comment Governance report Board of Directors Group Management Remuneration report

Lars Olof Löfman Fredrik Peyron Håkan Söderberg

LARS OLOF LÖFMAN FREDRIK PEYRON HÅKAN SÖDERBERG Senior Vice President, R&D, Europe Division, Senior Vice President, Regulatory Affairs and Group President, Lights Division, Swedish Match Swedish Match since 2017. Joined Swedish Communications. Joined Swedish Match in 2016. since 2017. Joined Swedish Match in 2007. Match in 1987. Member of the Group Member of the Group Management Team since 2016. Member of the Group Management Team since Management Team since 2004. Born 1967. Master of Laws (LLM), Lund University, 2017. Born 1956. M.Sc. in Engineering, Chalmers Sweden. Born 1969. M.Sc BA, Stockholm University, University of Technology and Controller, DIHM Previous positions: Group Vice President, Legal Affairs, Sweden. Business School, Sweden. General Counsel and Secretary, Autoliv; Senior Vice Previous positions: COO, Lights International Previous positions: Senior Vice President, President, Legal Affairs and General Counsel, Swedish Division, Swedish Match; COO, Continental Product Supply and Innovation, Swedish Match Match AB; Vice President, Corporate Affairs, Swedish Europe Division Netherlands, Swedish Scandinavia Division; President, Swedish Match AB; Legal Counsel, Akzo Nobel; Associate, Match; Vice President, Finance & IT Match Smokefree Products Division; President, Mannheimer Swartling law firm. International Division Netherlands, Swedish Swedish Match Distribution AB; President, Own and related parties’ shares: 3,100 Match; Regional Finance Director Belgium, Swedish Match North Europe Division; Vice AstraZeneca; CFO South Africa, AstraZeneca; President, Production & Development, Swedish Director, Finance Supply chain and Logistics Match North Europe Division; Vice President England, AstraZeneca; Director, Business Operations, Swedish Match Snuff Division; logistics and Finance, AstraZeneca; Corporate Plant and Production Manager, Swedish Match controller, Astra AB. North Europe Division. Own and related parties’ shares: 3,098 Own and related parties’ shares: 10,689

JOAKIM TILLY CHANGES IN THE GROUP MANAGEMENT President, Europe Division, Swedish Match since TEAM 2020 2013. Joined Swedish Match in 2004. Member of Richard Flaherty retired from his position as President the Group Management Team since 2008. US Division, on October 2, 2020. Born 1970. M. Sc. in Business and Economics, Thomas Hayes transitioned from his position as Chief Stockholm School of Economics, Sweden. Financial Officer and Senior Vice President, Group Previous positions: Senior Vice President Group Finance and assumed the role of President US Division, Finance and IT and Chief Financial Officer, Swedish on August 1, 2020. Match AB; Senior Vice President, Group Finance, Anders Larsson was appointed Chief Financial Officer Swedish Match AB; Vice President, Group Finance, and Senior Vice President, Group Finance as of Swedish Match AB; Chief Executive Officer and August 1, 2020. Chief Financial Officer, Netgiro International; Chief Financial Officer, Swedish Match Division. Own and related parties’ shares: 8,240

Joakim Tilly

Holdings of own and related parties shares as of December 31, 2020. For a detailed report of remuneration and benefits for the Board of Directors, refer to Note 5 Personnel.

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