A P Møller Mærsk A/S : Maersk Annual Report 2020 Remuneration report

ALL THE WAY

Annual Remuneration Report 2020

A.P. Møller - Mærsk A/S | 10 February 2021

Esplanaden 50, DK-1098 Copenhagen K / Registration no. 22756214

Table of contents

• 3 Introduction from the Remuneration Committee

  • 3 Company results

  • 3 Remuneration 2020 change and outcome

  • 4 Remuneration Committee engagement

• 5 Summary of Remuneration Policy

• 6 Remuneration - Executive Board

  • 6 Remuneration 2020 at a glance

  • 7 Short-term incentive plan measures and outcome

  • 8 Long-term incentive plans

  • 10 Composition changes

• 11 Remuneration - Board of Directors

  • 11 Board and Committee fees

  • 12 Total remuneration - Board of Directors

  • 12 Shareholding requirement

  • 12 Composition changes

• 13 Development in remuneration and company performance

  • 13 Development in remuneration - Executive Board

  • 14 Development in remuneration - Board of Directors

  • 14 Employee remuneration

  • 14 Company performance development

• 15 Application of claw-back and deviation from policy

• 16 Statement by the Board of Directors

• 17 Statement by the independent auditors

Introduction from the Remuneration Committee

On behalf of the Board of Directors (the 'Board') of

A.P. Møller - Mærsk A/S, the Remuneration Committee (the 'Committee') is pleased to present the Remuneration Report for 2020 (the 'Report').

Company results 2020 was a challenging year for A.P. Moller - Maersk, our employees, our customers and stakeholders due to the on-going impact of the COVID-19 pandemic. Despite challenging market conditions and uncertainties, we have closed the year with strong financial results as well as delivered tangible progress on our transformation.

Our focus continued to be on progressing our strategic trans-formation towards becoming the global integrator of container logistics and our ability to create shareholder value, whilst adapting our business where necessary to mitigate for the decrease in demand in our industry caused by the pandemic.

For 2020, we defined our key transformation metrics and tracked these on a quarterly basis. Our strategic growth areas have progressed according to the plan. This, combined with projects focusing on optimisation and general cost reduc-tion to support our ongoing commitment to capital disci-pline and free cash flow generation, has delivered strong business results and enabled us to manage through a chal-lenging year and remain well positioned both strategically and financially. Particularly, we achieved continued improve-ment in profitability and solid cash flow in 2020.

The bonus pay-out is determined based on the company's performance against the set annual scorecard. Performance is expressed on a scale of 0-200. In 2020, the company delivered solid financial results and transformation progress, resulting in a final score of 170 and bonus pay-out between 68% and 85% of the individual's base salary.

Annual scorecard 2020

Actual

170%

0% (Minimum)

100% (Target)

200%

(Maximum)

• • Long-term incentive (LTI) - Awarded under the two plans - Restricted Shares Plan and Stock Options Plan. The annual remuneration increases in 2020 for Søren Skou and Morten H. Engelstoft were both delivered in the form of restricted shares, which equal to 2.7% and 1.8% of their total target remuneration, respectively. The award level for the remaining members has not been adjusted for 2020.

  The adjustment for Søren Skou and Morten H. Engelstoft is in line with our commitment to strengthen the link between pay and long-term company performance and achieve a more market-aligned pay mix over time.

  Remuneration 2020 change and outcome

  This Report details the implementation of our Remuneration Policy and pay decisions for the Board and Executive Board members in 2020. In this section, we provide a summary of the remuneration changes and outcomes for the year.

  The LTI awards granted for all members in 2020 range between 42.5% and 50% of their base salary. The restricted shares will vest after five years in April 2025, and the stock options will vest after three years on 1 April 2023 followed by another three-year exercise period.

Executive Board

• • Base salary - None of the Executive Board members received an increase in the annual base salary during 2020.

• • Short-term incentive (STI, also known as bonus)

  - Implemented under the same framework as last year with the target award size between 40% and 50% of the base salary at the individual level.

Chart 1: Total remuneration awarded

DKK million 43.10

45

40

35

37.50

30

20

25

10

15

0

5

Actual Target

Chart 1 shows a breakdown of total remuneration awarded to the current members of the Executive Board in respect of 2020. Further information is detailed in the section 'Remuneration - Executive Board'.

23.10

21.95

17.81

15.71

Actual Target

Søren Skou

Patrick Jany

CEO

CFO

(Joined on 1 May 2020)

18.73

19.60

Actual Target

Morten H. Engelstoft

14.10

12.00

Actual TargetActual Target

Vincent Clerc

Henriette Hallberg Thygesen

CEO

APM Terminals

Fleet & Strategic Brands

CEO Ocean & Logistics

CEO

Base salaryBenefits

Other cash payments

STILTI

LTI actual LTI STI actual STI Other cash pOatyhme Benefits actBueanl Base salary Bacatsue

Board of Directors

For the Board members, their annualised fixed fees remained unchanged from 2019. The change of total actual remu-neration at an individual level in 2020 is due to pro-rating based on time served on the Board compared to last year, or additional committee responsibilities that the individ-ual member has taken on during the reporting year. Further information of the remuneration of the Board is detailed in the section 'Remuneration - Board of Directors'.

Remuneration Committee engagement

The Committee continuously monitors prevailing market practice and developments in remuneration in Europe and within our peer group companies specifically. We value ongoing dialogue with our shareholders, institutional inves-tors and other stakeholders to ensure that our Remunera-tion Policy remains fit for purpose and helps drive execu-tion of the company strategy.

In 2020, the Committee has focused on the following key areas:

• • Maintaining a close dialogue with shareholders, gathering their feedback and having subsequent discussions on their views about our remuneration arrangements.

• • Monitoring our business conditions in relation to the COVID-19 pandemic. Adjustment of the annual perfor-mance targets was considered when the pandemic ini-tially broke out, but the Committee decided to keep the targets as they were.

• • Reviewing the long-term incentive plan to ensure it con-tinues to fit business needs. Considering the ongoing uncertainties created by the pandemic as well as the business strategy update, it was decided to refrain from making any material changes to the current plans. With the intent to drive long-term success for all stakeholders, the Committee examined opportunities for improving the current framework, for example considering the inclusion of ESG (environmental, social and governance) metrics, and will continue looking into it in the coming year.

We would like to thank all our shareholders and stake-holders for your continued engagement and valuable input throughout 2020, and we look forward to your thoughts and feedback on this Report.

Copenhagen, 10 February 2021

Maersk Remuneration Committee

The Maersk Remuneration Committee

Jim Hagemann Snabe

Robert Maersk Uggla

Arne Karlsson

Chairman of the Remuneration Committee

The Committee plays a vital role in ensuring that A.P. Moller - Maersk's remuneration policies and practices support the company's strategy and create long-term value for shareholders.