Corporate governance | Report of the Board of Directors Corporate governance ASSA ABLOY AB is a Swedish public limited liability company in that the Vice Chairman of the Board of Directors, Carl with registered office in Stockholm, Sweden, whose Series B Douglas (Investment AB Latour), is also the Chairman of the share is listed on Nasdaq Stockholm. Nomination Committee. The reason for this deviation is that ASSA ABLOY’s corporate governance is based on the the major shareholders consider it to be important to have Swedish Companies Act, the Annual Accounts Act, Nas- the representative from the largest shareholder as Chairman daq Stockholm’s Rule Book for Issuers and the Swedish of the Nomination Committee. Corporate Governance Code (the Code), as well as other The Corporate Governance Report is examined by ASSA applicable external laws, rules and regulations, and internal ABLOY’s auditor. rules and regulations. ASSA ABLOY’s objective is that its operations should gen- This Corporate Governance Report has been prepared erate good long-term returns for its shareholders and other as part of ASSA ABLOY’s application of the Code. ASSA stakeholders. An effective scheme of corporate governance ABLOY follows the Code’s principle to “comply or explain” for ASSA ABLOY can be summarized in a number of interact- and in 2020 ASSA ABLOY has one deviation to explain. The ing components, which are described below. Nomination Committee deviates from Rule 2.4 of the Code 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’s Rule Book for Issuers • Financial Policy • Swedish Corporate Governance Code • Accounting Manual (www.bolagsstyrning.se) • Communication Policy • Insider Policy • Internal control procedures • Code of Conduct and Anti-Corruption Policy Shareholders ASSA ABLOY’s Articles of Association contains a pre-emp- 1 At year-end 2020, ASSA ABLOY had 43,734 share- tion clause for owners of Series A shares regarding shares holders (29,784). ASSA ABLOY’s principal shareholders are of Series A. A shareholders’ agreement exists between the Investment AB Latour (9.5 percent of the share capital and Douglas and the Schörling families and their related com- 29.4 percent of the votes) and Melker Schörling AB (3.1 panies that includes an agreement on right of first refusal if percent of the share capital and 10.9 percent of the votes). any party disposes of Series A shares. The Board of Direc- Foreign shareholders accounted for 66.8 percent (69.5) of tors of ASSA ABLOY is not aware of any other shareholders’ the share capital and 45.6 percent (47.5) of the votes. The agreements or other agreements between shareholders in ten largest shareholders accounted for 34.9 percent (36.5) ASSA ABLOY. of the share capital and 55.5 percent (56.7) of the votes. For further information on shareholders, see page 106. ANNUAL REPORT 2020 | ASSA ABLOY 47 Report of the Board of Directors | Corporate governance Share capital and voting rights Board of Directors, Chairman of the Board of Directors and ASSA ABLOY’s share capital at the end of 2020 amounted auditor; and fees for the Board of Directors and auditor. An to SEK 370,858,778 distributed among a total of Extraordinary General Meeting may be held if the Board of 1,112,576,334 shares, comprising 57,525,969 Series A Directors considers this necessary or if ASSA ABLOY’s audi- shares and 1,055,050,365 Series B shares. The total number tor or shareholders holding at least 10 percent of the shares of votes amounted to 1,630,310,055. Each Series A share so request. carries ten votes and each Series B share one vote. All shares have a par value of around SEK 0.33 and give shareholders Annual General Meeting 2020 equal rights to the company’s assets and earnings. The Annual General Meeting was held in April 2020 in Stock- holm, and shareholders representing 52.3 percent of the Repurchase of own shares share capital and 67.5 percent of the votes participated. In Since 2010, the Board of Directors has requested and light of the Covid-19 pandemic and pursuant to temporary received a mandate from the Annual General Meeting to legislation, shareholders were able to exercise their voting repurchase and transfer ASSA ABLOY Series B shares. The rights at the Annual General Meeting through advance vot- aim has been, among other things, to secure the company’s ing (postal voting). undertakings in connection with its long-term incentive The Annual General Meeting’s resolutions included the programs (LTI). The Annual General Meeting 2020 author- following. ized the Board of Directors to acquire, during the period • Dividend of SEK 2.00 per share. until the next Annual General Meeting, a maximum number • Lars Renström, Carl Douglas, Eva Karlsson, Birgitta Klasén, of Series B shares so that after each repurchase ASSA ABLOY Lena Olving, Sofia Schörling Högberg and Jan Svensson holds a maximum 10 percent of the total number of shares were re-elected as members of the Board of Directors, in the company. and Joakim Weidemanis was elected as new member ASSA ABLOY holds a total of 1,800,000 (1,800,000) Series of the Board. Further, Lars Renström was re-elected as B shares after repurchases. These shares account for around Chairman of the Board of Directors, and Carl Douglas was 0.2 percent (0.2) of the share capital and each share has a re-elected as Vice Chairman. par value of around SEK 0.33. The purchase consideration • The audit firm Ernst & Young AB was appointed as the amounted to SEK 103 M (103). No shares were repurchased company’s new auditor. in 2020. • Remuneration of the Board of Directors. • Guidelines for remuneration to senior executives. Share and dividend policy • Authorization to the Board of Directors regarding repur- ASSA ABLOY’s Series B share is listed on the Nasdaq Stock- chase and transfers of own Series B shares. holm Large Cap. At the end of 2020, ASSA ABLOY’s market • A long-term incentive program for senior executives and capitalization amounted to SEK 225,297 M, calculated on other key employees in the Group (LTI 2020). both Series A and Series B shares. The Board of Directors’ • Formal changes of the Articles of Association. objective is that, in the long term, the dividend should be equivalent to 33–50 percent of income after standard tax, For more information about the Annual General Meeting, in- but always taking into account ASSA ABLOY’s long-term cluding the minutes, see ASSA ABLOY’s website assaabloy.com. financing requirements. Extraordinary General Meeting 2020 Due to the uncertainty about the market situation caused General Meeting by the Covid-19 pandemic, the Annual General Meeting in 2 Shareholders’ rights to decide on the affairs of ASSA April 2020 decided on a dividend of SEK 2.00 per share in ABLOY are exercised at the General Meeting. Shareholders accordance with a revised dividend proposal by the Board. who are registered in the share register on the record date The Board’s original proposal was a dividend of SEK 3.85 per and have duly notified their intent to attend are entitled share. The Extraordinary General Meeting on 24 November to take part in the General Meeting, either in person or by 2020 resolved, in accordance with the Board’s proposal, proxy. Resolutions at the General Meeting are normally on a second dividend of SEK 1.85 per share. At the General passed by simple majority. For certain matters, however, the Meeting shareholders representing 53.8 percent of the Swedish Companies Act prescribes that a proposal should share capital and 68.5 percent of the votes participated. In be supported by a higher majority. Individual shareholders light of the Covid-19 pandemic, the General Meeting was who wish to submit a matter for consideration at the Gen- carried out solely through advance voting (postal voting) eral Meeting can send such request to ASSA ABLOY’s Board pursuant to temporary legislation. For more information of Directors at a special address published on the company’s about the General Meeting, including the minutes, see ASSA website well before the Meeting. ABLOY’s website assaabloy.com. The Annual General Meeting should be held within six months of the end of the company’s financial year. Mat- Annual General Meeting 2021 ters considered at the Annual General Meeting include: ASSA ABLOY’s next Annual General Meeting will be held on dividend; adoption of the income statement and balance 28 April 2021. sheet; discharge of the members of the Board of Direc- tors and the CEO from liability; election of members of the 48 ASSA ABLOY | ANNUAL REPORT 2020 Corporate governance | Report of the Board of Directors Nomination Committee jor importance. Acquisitions and divestments with a value 3 According to the instructions for the Nomination (on a debt-free basis) exceeding SEK 200 M are decided by Committee adopted at the Annual General Meeting 2018, the Board of Directors. The threshold amount presumes that the Nomination Committee shall be composed of repre- the matter relates to acquisitions or divestments in accord- sentatives of the five largest shareholders in terms of voting ance with the strategy agreed by the Board of Directors. The rights registered in the shareholders register maintained Board of Directors approves documents such as the Annual by Euroclear Sweden AB as of 31 August the year before the Report and Interim Reports, proposes a dividend to the An- Annual General Meeting who wish to participate on the nual General Meeting, and makes decisions concerning the Nomination Committee.