• Ingen resultater fundet

Afgørelser

In document Kan Det Betale Sig? (Sider 87-99)

Erhvervs- og Selskabsstyrelsen (2010) – Bestyrelsesarbejdets omfang – Tidsforbruget er relevant – Nedsættelse af bestyrelseshonorar efter § 19 i lov om erhvervsdrivende fonde. 15. april 2010. Hentet på http://filer.erhvervsstyrelsen.dk/file/245759/nedsaettelse_bestyrelseshonorar.pdf

Finanstilsynets afgørelse af 14. september 2012. Lov om finansiel virksomhed § 71, stk. 1, nr. 9, § 77 a, stk. 1,

nr. 1, og § 77 d, stk. 2-3 – Administrativt bødeforlæg samt påtale og påbud efter aflønningsreglerne –

Forsikringsselskab

Bilag 1.

Remuneration in Danish Large

Cap companies (Deloitte, 2017)

Introduction 3

Key takeaways 4

Current trends 5

Experience from the UK 8

Overview 9

Methodology 10

Remuneration of executive directors 11

Base salary 15

Pension 18

Bonus (STIs) 19

Long-Term Incentives (LTIs) 22

Board remuneration 31

How can Deloitte help? 32

Our contacts 33

Appendix 35

Content

Remuneration in Danish Large Cap companies

Remuneration in Danish Large Cap companies

This report gives an overview of and insight into remuneration of executive directors and boards of listed companies within the Danish Large Cap

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index. In March 2017 the Large Cap Index is comprised of 38 companies, of which the names can be found in a list in the appendix.

These companies represent some of the largest Danish companies from a wide range of industries, from financial services to energy and supplies.

During 2016 no companies left the Danish Large Cap Index, while DFDS, NKT Holding, SimCorp and Össur entered following OMX Nasdaq’s annual review in December 2015. The annual review of the Large Cap Index in December 2016 resulted in an expansion of the index by ALK-Abelló, Ambu, Jeudan, Schouw & Co., and Spar Nord. During 2016 Scandinavian Tobacco Group (February), DONG Energy (June) and Nets (September) also entered the index through their IPOs.

Out of the companies of the Large Cap Index, 35 companies have financial year-ends 31 December 2016, while 3 companies have financial year-ends either 31 August or 30 September. The annual reports have been published during or before March 2017. One company, G4S

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, had not published its annual report for 2016 at the time of the writing of this report and has hence been omitted from the 2016 benchmarks. Hence, this report is based on the data from 37 companies.

The analysis is based strictly on publicly available information obtained from annual reports, company websites, press releases, general assembly notes, remuneration policies, etc. Not all companies report their remuneration with the same level of detail. For all the analysed benchmarks, we report the number of companies for which the required data has been

reported with the required level of detail to be included in our analysis. All the included company reports in accordance with IFRS and financial reporting on remuneration of executives are more specifically governed by IFRS 2 and the Danish Financial Statements Act. Remuneration of executive directors is required by IFRS to be disclosed on both fixed and variable elements for executive management. Although reporting this level of detail for all individual members of management is not a requirement, it is however best practice guidance from the Committee on Corporate Governance

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. LTI programmes must also be disclosed separately in their entirety, which includes all participants, both executives and non-executives. Where applicable, we have compared our findings with previous studies performed on the Danish market to put recent developments into a long-term perspective.

Disclaimer

This report is aimed at giving an overview of executive remuneration and the use of LTI in Danish Large cap companies. There may be very good reasons for a particular company to lie inside and outside of benchmarked ranges. This could be due to differences in company size, industry, market volatility or other company-specific factors. When using the report we recommend that you consult your advisers on the interpretation of the data and its relevance to your particular circumstances.

This report does not constitute the provision of advice or service to any reader of this report, and hence Deloitte may not be named in a company’s public documentation as having provided material assistance to the remuneration committee based solely on the use of the information provided in this report.

Introduction

1. Nasdaq OMX Copenhagen Large Cap Index. The index is comprised of 41 share listings of which 3 are listings of multiple share classes (38 individual companies). Nasdaq OMX Copenhagen Large Cap includes Danish listed companies with a market cap of above EUR 1bn 2. G4S Plc is incorporated in the UK and is dually listed on both London and Copenhagen Stock Exchanges. G4S Plc reports under UK

Remuneration in Danish Large Cap companies

Variable versus fixed remuneration of executive directors increased between 2013 and 2016 so that variable remuneration now comprises 37%

compared to previously 31%.

CEOs receive a higher degree of variable remuneration compared to CFOs and Other Executive Directors.

Base salaries of executive directors have increased significantly during the last 4 years. CEO base salaries have increased by approx. 10% annually while CFO base salaries have only increased by 2%.

The increase in CFO base salaries has been affected by the many replacements of CFOs. Adjusted for this turnover, the increase in base salaries for the remaining CFOs has been approx. 8% annually or around the same level as for CEOs. Nine CFOs were replaced between 2014 and 2016.

Key takeaways

Median base salaries for CEOs and CFOs are DKK 8.2m and DKK 4.8m.

Short-term incentives (STI or bonus) are approx. 40% of base salary for executive directors.

Around two thirds of long-term incentives (LTI) programmes comprise performance share units or restricted stock units.

The average size of outstanding LTI programmes is approx. 1.5% of the share capital. Companies allocate approx. 0.1%

of the share capital in yearly allocations, indicating that the size of LTI programmes has decreased on earlier years.

LTI allocations increased for CEOs while it decreased for CFOs from 2013 to 2016.

There is a sign that boards in general wish

for their CFOs to be more risk averse (gate

keepers) and that their CEOs accept more

risk (innovators).

Remuneration in Danish Large Cap companies

Danish environment

The recent IPO’s of Scandinavian Tobacco Group, Dong Energy and Nets have renewed public discussions about executive remuneration.

Especially the IPO of Nets and its remuneration and incentives of management drew much media and investor attention. During the latest months Danish institutional investors have publicly made clear that long term incentives potentially are becoming too favourable for executive management.

Recently the ATP stated that the incentives programmes of Nets were too favourable and in future, programmes should possibly be capped in order to avoid payouts to become unreasonable. In recent weeks ATP have also stated that the a new programme at Genmab which will be capped 400% of base salary, is an extreme of what they can accept as a shareholder. ATP also voiced criticism of Carlsbergs proposed increases of director remuneration and bonus at the recent annual general meeting and subsequently voted against the boards proposal.

We expect recent developments to have an impact on how remuneration committees (Remco) plan and execute remuneration for the coming years. As one direct effect, we expect that most Remco’s will need to revisits benchmarks applied for the size and characteristics such as vesting criteria, duration, gearing etc. We believe that communication more openly on remuneration policies with key investors, such as institutional investors, will be of key importance in the coming years. This will be amplified with the upcoming implementation of the Shareholder Rights Directive (see further below) and further international alignment.

Shareholder Rights Directive

Executive remuneration is subject to increased scrutiny in Europe. The revised Shareholder Rights Directive

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was adopted in March 2017 and may lead to significant changes across Europe. The European Commission will issue standardised guidance for the implementation of the Directive within 15 months following the adoption of the Directive. Member states will hereafter have 24 months to bring national laws/regulations into force.

Individuals covered by the new voting and reporting regime include any member of the administrative, management or supervisory bodies of a company.

Member states can also opt to include individuals who perform similar functions. The chief executive and deputy chief executive (if applicable) are both considered directors, irrespective of their membership of the board.

The impact for Danish companies is expected to be significant. Below we have listed some of the key elements of the revised requirements for the remuneration policies and reporting.

Current trends

The Shareholder Rights Directive is an EU directive, which was adopted in 2007, with the purpose of setting out minimum rights and responsibilities for shareholders at company meetings held in the EU. Since the publication there has been a number of revisions, of which the latest is now in March 2017.

The Commission’s aim is to tackle corporate governance shortcomings relating to listed companies and their boards, shareholders (institutional investors and asset managers), intermediaries and proxy advisors (e.g. firms providing services to shareholders, notably voting advice) in line with long-term investment horizons.

Will within the next 15 months the European

Commision will issue implementation guidance,

after which member states will have 24 months

to bring national laws and regulation into force.

Remuneration in Danish Large Cap companies

Remuneration policy

Companies will be required to establish a remuneration policy for directors, which shareholders will have the right to vote on at the general meeting. Member states will decide whether this vote should be binding or advisory.

Irrespective of whether the vote is binding or advisory, companies can only pay remuneration to directors in accordance with the remuneration policy submitted to a general meeting.

Where the vote is binding and a new policy fails to gain approval, the company must continue to pay in accordance with the previously approved policy and submit a revised policy for approval at the next meeting.

Where the vote is advisory and a new policy is not approved by the shareholders, the company must submit a revised policy to a vote at the next general meeting.

Member states might allow companies to derogate from specific elements of the remuneration policy in exceptional circumstances. The policy must specify the elements of the policy, which may be derogated from. Exceptional circumstances must be considered to be necessary to serve the long-term interests and sustainability of the company as a whole or to assure its viability.

The policy must be put to a vote at every material change and at least every 4 years.

The remuneration policy must be clear, understandable and set out:

How the policy, and also specifically each component of variable remuneration, contributes to business strategy, the long-term interests and sustainability of the company.

The different components of fixed (including benefits in whatever form) and variable

How the pay and conditions for employees of the company were taken into account when setting the remuneration policy.

For awards of variable remuneration, set clear, comprehensive and varied criteria for the award of variable remuneration (including an indication of financial and non-financial criteria including, where appropriate, criteria related to corporate social responsibility) and the methods to be applied to determine the extent that performance conditions have been achieved.

The possibility for the company to reclaim variable remuneration as well as any deferral periods applicable to variable remuneration.

Where share-based remuneration is awarded, specify vesting periods and, where applicable, retention of shares after vesting.

The duration of directors’ contracts and their notice periods, the main characteristics of supplementary pension or early retirement schemes, the terms applicable in instances of termination, including any payment linked to termination.

The decision-making process followed for the determination, review and implementation of the policy, including measures to avoid or manage conflicts of interest and where applicable the role of the remuneration committee or other committees concerned.

Where the policy is revised, describe and explain all

significant changes and how it takes into account the

votes and views of shareholders on the policy and

reports since the last vote. The policy, together with

the date and the results of the vote, must be publicly

disclosed online for as long as it is applicable.

Remuneration in Danish Large Cap companies

Remuneration report

Companies will be required to draw up a clear and understandable report on remuneration awarded or due over the last financial year to individual directors, which will be subject to an advisory vote at the annual general meeting.

Member states may allow small and medium-sized companies to submit the report for a discussion at the annual general meeting, rather than an advisory vote.

The report should contain the following information on each individual director’s remuneration:

Total remuneration split out by component

The relative proportion of fixed and variable remuneration

An explanation of how total remuneration complies with the adopted policy, including how it contributes to the long-term performance of the company

Information on how the performance criteria were applied

A comparison of the annual change in remuneration over the last 5 years against the evolution

of company performance and the average remuneration of employees other than directors (which is to be calculated on a full-time equivalent basis)

The number of shares/options granted and any applicable performance conditions

The use of the possibility to reclaim variable remuneration

Any deviation from the policy, including an explanation of the exceptional circumstances and the indication of the specific elements of remuneration concerned.

The European Commission will adopt guidelines to specify a standardised presentation of this information.

The report must be publicly available online for 10 years after publication.

Companies must explain in the next remuneration

report how the vote (or, where applicable, discussion)

at last year’s meeting has been taken into account.

Remuneration in Danish Large Cap companies

The Shareholder Rights Directive provisions are broadly in line with the voting and reporting regime that has been operated in the UK since October 2013.

Since the new reporting regime has come into force, significant changes have occurred in the UK:

The engagement between companies and their shareholders has increased significantly.

Remuneration structures have been simplified with the vast majority of companies using a single bonus and a single long-term share plan. Ten years ago, over half of FTSE 100 companies were using more than 1 form of long-term. This figure has now dropped to less than 20% and continues to decline in 2017.

The time horizon of long-term incentives has been increasing with the majority of FTSE 100 companies requiring executives to hold shares for a period of 2 years following the end of the performance period.

Virtually all FTSE 100 companies now have in place some mechanism to reduce unvested awards or reclaim incentives (clawback provisions).

The level of shareholding requirement has also significantly increased with a median requirement of 200% of base salary within the FTSE 100.

Besides structural changes, a notable change has been the disclosure of annual bonus targets. Only 2 or 3 years ago, it was very uncommon for FTSE 100 companies to disclose bonus targets and achievements against these targets. This is now the norm.

We also observe a continued trend towards the use of more customised performance measures, notably in long-term incentives. Whilst the majority of companies were using total shareholder return 10 years ago, now less than 10% uses only 1 measure of performance and over half of companies use 3 or more measures in their long-term incentive plan.

The UK reporting requirement include the disclosure of the total remuneration earned in respect of the year.

year as well as the value of share awards where the performance conditions have been assessed. This in turn has led to increased scrutiny on equity awards and associated performance conditions. As equity awards are typically expressed as a percentage of base salary, a number of companies received criticism when they did not scale back the size of their equity awards following a significant reduction in share price as shareholders and proxy advisors feel there is a risk of windfall gain when the share price recovers. One large mining company received significant vote against its remuneration report and this year is proposing to cap the maximum value that can be received from its longterm incentive plan (at twice the value of the award at grant). This is so far the only example of such cap being introduced. Other companies only cap the award and will consider the appropriateness of the size of the award on an annual basis.

We believe that similar developments as has been seen in the UK in recent years can be expected to be seen in Danish Large Cap companies, as the revised Shareholder Rights Directive will be implemented over the coming years. The requirement that executive remuneration is disclosed for each executive director and thereby increasing transparency has the potential effect of driving up executive pay further, as direct benchmarking will be more easily accessible.

Experience from the UK

Remuneration in Danish Large Cap companies

Remuneration of executive directors can generally be divided into a fixed and variable remuneration.

Fixed elements include base salary, pension and other remunerations (car, phone, housing benefits, etc.) whereas variable elements typically include short-term incentives (STIs) and long-short-term incentives (LTIs).

Typically, STIs are 1-year cash-based considerations, while LTIs are longer than 1 year and may include either cash or share-based pay (shares or options/

warrants).

Fixed elements of remuneration can popularly be said to compensate expected performance, while the purpose of variable elements is to incentivise extraordinary or exceptional performance.

Consequently, variable elements are typically linked to a number of KPIs or benchmarks, which must be achieved to trigger variable remuneration to be payable.

Variable salary types

Variable remuneration can be either short-term or long-term. Short-term incentives is a term that typically applies to a bonus arrangement that is settled within the financial year of the company, while long-term incentives apply to arrangements that are longer than 1 financial year. Below is a non-exhaustive overview of different types of LTIs.

The purpose of incentive programmes is to align the interests of executive management with those of the shareholders and to ensure that management works towards achieving goals that are aligned with the company strategy. The goals of incentive programmes are typically one or more individual or companywide financial and non-financial key performance indicators (KPIs), which can be evaluated on an absolute or a relative basis. Examples are relative total shareholder return, absolute EBITDA performance of a division or companywide customer service KPIs.

Overview

Via a monthly salary reduction the employee may save up to buy shares - typically at a discount

The employee buys shares at market value which will be matched by a certain ratio after a number of years, in case the employee has not sold his/her shares or left the company

The employee is granted free shares, which may not be transferred or exercised until certain conditions are met - for example financial goals or ongoing employment

The employee is granted the right to buy existing company shares in the future at a price determined in advance

The employee is granted the right to buy newly issued company shares in the future at a price

Programme Description

Employee shares

Matching shares

Performance share unit and restricted stock units

Share-based options

Base salary Pension Other Bonus Share-based

remuneration

Fixed elements Variable elements

Incentive programmes Remuneration components

Remuneration in Danish Large Cap companies

Data

The analyses in this report are based on the executive remuneration of companies included in the Danish Large Cap Index as of March 2017. Data is based strictly on publicly available information obtained from annual reports, company websites, press releases, general assembly notes, remuneration policies, etc.

Not all companies report their remuneration with the same level of detail and the number of companies or executives that are included will vary from analyses to analyses.

Remuneration analysis

The analyses of base salary include only those individual executive directors where remuneration for the full financial year was provided in the annual report or where it was possible to reasonably pro rata adjust any part-year salary information.

When using published data, analyses are based on annual reports relating to different financial periods. We have applied the latest 4 financial periods. The analyses therefore attempt to reflect, as accurate as we are able, salary levels effective during 2013, 2014, 2015 and 2016.

We have not applied any ageing factor to the disclosed salaries.

We have categorised main executive management positions into 3 main groups – the top full-time executive (CEO), the finance director (CFO) and other executive directors (Other Executive Directors). In some companies, the only executive management are the CEO and the CFO and hence not all companies are represented in the other analyses. It is also worth noting that in some companies where an executive director has left during the year the details of the new incumbent are not yet known at the time of reporting, or are not disclosed. This means that there will not always be a top full-time executive or finance director for every company.

For the analysis of total remuneration, STI and LTI all companies with remuneration split for total or individuals all 4 years have been included. Leaving 28, 20, 15 and 7 companies for all executive directors, CFOs, CFOs and Other Executive Directors, respectively.

where companies have more than 1 effective CEO we apply all CEOs as observations.

When analysing base salary, all companies with remuneration split for individual executive directors all 4 years have been included. This includes 21, 15 and 11 individuals for the CEO, CFO and Other Executive Directors categories, respectively. However, for some companies, pension is included in the base salary and for other companies it is not clear whether pension is a part of the reported base salary. For this analysis one executive director is applied as one observation.

We apply individuals as observations for the pension analysis. If the individual split is not available for a company, we apply numbers for total remuneration of executive directors. This leaves 72 observations.

For analysis of LTI programmes, we apply each programme as one observations. This means all individual programmes of the companies have been included separately. For the LTI analysis, we do not apply programmes consisting of cash bonuses, leaving 53 programmes.

The analysis of board salaries is based on companies as observations. Only 1 company does not disclose remuneration to total board all 4 years, leaving 36 observations. 29 companies disclose salaries of the chairman for all 4 years.

Statistics

Throughout the report, data is presented by using the following statistics:

Upper quartile – separates the top 25% of a sample from the bottom 75%

Median – the middle point of a sample

Lower quartile – separates the bottom 25% of a sample from the top 75%

Average – the arithmetic mean of a sample

Methodology

In document Kan Det Betale Sig? (Sider 87-99)