Alimak : Corporate Governance Report 2020 (opens in new window)

In brief

Strategy & Targets

Divisions

Sustainability

Board Report

Financial Statements

Other

Corporate governance

Directors' report

Risks and risk management

Corporate governance

Board

LeadershipTeam

54 Annual Report 2020

Alimak Group AB has its headquarters in Stockholm and is the Parent Company of Alimak Group, with subsidiaries in 21 coun- tries.The Group has approximately 2,000 employees worldwide and conducts sales to more than 100 countries via its own companies and distributors.The Company is a public limited company with shares listed on Nasdaq Stockholm.

Alimak Group is managed and controlled on the basis of a system of corporate governance comprising a number of principles, policies, guidelines, structures and processes, which are described in this report. Corporate governance is intended to ensure a decision-making process that is effective and creates value, with a clear division of roles and responsibilities among the Company's shareholders, Board, management and other employees. Corporate governance is based on external regulations such as the Swedish Companies Act, Nasdaq Stockholm's Rule Book for Issuers, the Swedish Code of Corporate Governance ("the Code") and other relevant laws, regulations and rules. Internal regulations such as Articles of Association, Code of Conduct, Insider and Communication policies and the Board's procedural rules also apply.

Corporate governance structure

1

• General meeting

• Board

Group Management Team

• - President and CEO
  - Senior Executives

Important internal regulations

• Articles of Association
• Board of Director's Rules of Procedures
• Policy regarding the composition of the Board, signers for the Company, authorisation
• Rules of procedure in the subsidiary boards
• Policies for communication, insider information, sustainability, Code of Conduct and Crisis Management
• Manuals and guidelines for important parts of the business
• Processes for internal control and risk management

Shareholders

3	Nomination Committee

7Auditor

Board committees

• - Audit Committee
• • Remuneration Committee

8	Internal control

Important external regulations

• Swedish Companies Act
• Rules for issuers at Nasdaq Stockholm
• Swedish Code of Corporate Governance
• IFRS standards
• UN Global Compact
• EU's accounting regulation

In brief

Strategy & Targets

Divisions

Sustainability

Board Report

Financial Statements

Other

Directors' report

Risks and risk management

Corporate governance

Board

LeadershipTeam

55 Annual Report 2020

SHAREHOLDERS

The Company's share capital on December 31, 2020 totalled approximately MSEK 1.1.The number of shares outstanding was 54,157,861. Each share carries the right to one vote at the Company's annual general meetings. According to the share register, the Company had 4,910 known shareholders on December 31, 2020. Investment AB Latour was the largest shareholder, with 29.6 per cent of the share capital. Alantra EQMC Asset Management was the second largest with 12.2 per cent of the share capital. At year-end, foreign shareholders accounted for approximately 33.6 per cent of the total.There are no restrictions as to how many votes each shareholder can cast at a general meeting.The Board is not aware of any shareholder agreements, or other agreements, between shareholders in the Company.

GENERAL MEETING

According to the Swedish Companies Act, the general meeting is the Company's highest decision-making body. In addition to the annual general meeting, extraordinary general meetings may also be convened.The Company's annual general meetings are held in Stockholm, Sweden, before the end of June each calendar year. At the annual general meeting, shareholders exercise their right to vote on key issues such as the adoption of the income statements and balance sheets, appropriation of the Compa- ny's earnings, discharge from liability for the Directors of the Board and the President & CEO, election of Directors of the Board and auditors and remuneration to the Board and auditors, as well as other issues in accordance with the Swedish Companies Act, the Articles of Association and the Code. During 2020, one general meeting was held:

Annual General Meeting 2020

The annual general meeting 2020 was held on May 7, 2020 in Stockholm, Sweden and 72.30 per cent of the total number of shares in the Company were represented, some in person or by proxy and some through postal voting.

Decisions at the annual general meeting 2020 included:

• adoption of balance sheets and profit and loss accounts, as well as the consolidated profit and loss account and consolidated balance sheet for the financial year 2019.
• adoption of the Board's proposal that a dividend of SEK 1.75 per share would be paid, the record day being Mon- day, May 11, 2020.
• discharge from liability during the 2019 financial year for the Directors and the CEO.
• re-electionof Helena Nordman-Knutson, Christina Hallin,Tomas Carlsson and SvenTörnkvist as Directors. Johan Hjertonsson, Petra Einarsson and Ole Kristian Jødahl were elected as new Directors. Johan Hjertonsson was elected Chair of the Board.
• re-appointmentof the registered audit firm Ernst &Young AB as auditor of the Company.
• adoption of the guidelines for salary and other remuneration, as proposed by the Board.
• adoption of a performance-based stock savings programme for senior executives, LTI 2020.
• a resolution to authorise the Board to, on one or more occasions until the next annual general meeting of 2021, pass resolutions on the acquisition and/ or transfer of own shares.The later may be resolved with deviation from the shareholders' preferential rights.

Annual General Meeting 2021

The annual general meeting 2021 will be held on May 6, 2021. All shareholders who are registered in the share register maintained by Euroclear Sweden AB ("Euroclear") five days prior to the annual general meeting are entitled to participate in the annual general meeting. Such shareholders must have informed the Company of their intention to attend no later than on the date stated in the notice convening the annual general meeting. Further information about the annual general meeting is available at alimakgroup.com.

NOMINATION COMMITTEE

According to the Code, the Company is required to have a Nomination Committee tasked with presenting a proposal for a Chair for the annual general meeting.The Nomination Committee also presents proposals regarding number of Directors of the Board, fees to be paid to each of the Direc- tors, election of Directors and Chair of the Board, remuneration to the auditor and election of the auditor and, if nec- essary, proposal for changes in the instruction for the Nomination Committee. In 2016, the Company's annual general meeting adopted an instruction regarding the appointment of the Nomination Committee, applicable until the general meeting resolves otherwise. Pursuant to this instruction, the Nomination Committee shall, prior to the annual general meeting, be composed of persons appointed by the four largest shareholders listed in the shareholders' register maintained by Euroclear as of August 31 each year together with the Chair of the Board, who will also convene the first meeting of the Nomination Committee.The member appointed by the largest shareholder shall be Chair of the Nomination Committee. Shareholders who wish to present proposals to the Nomination Committee prior to the annual general meeting may submit them to the Chair

In brief

Strategy & Targets

Divisions

Sustainability

Board Report

Financial Statements

Other

Directors' report

Risks and risk management

Corporate governance

Board

LeadershipTeam

56 Annual Report 2020

Board Members, independence and attendance 2020

					Indepen-					Fees during the 2020 financial year
				Independ-	dence		Attendance	Attendance at	(All input in thousands of SEK)
				ence in	in relation	Attendance	at Audit	Remuneration
		Member		relation to	to major	at Board	committee	committee			Audit	Remuneration
Name	Born	since	Position	Group	shareholders	Meetings	meetings	meetings		Basic fee	committee	committee	Total
Jan Svensson1	1956	2017	Chair	Yes	No	6/6	-	2/2 (Chair)		240	-	26	266
Johan Hjertonsson2	1968	2020	Chair	Yes	No	6/6		0/0 (Chair)		400	-	44	444
Anders Jonsson1	1950	2012	Board Member	Yes	Yes	6/6	-	2/2		116	-	19	135
Helena Nordman-Knutson	1964	2016	Board Member	Yes	Yes	12/12	4/4 (Chair)	-		310	100	-	410
Christina Hallin	1960	2018	Board Member	Yes	Yes	12/12	-	0/0		310	-	31	341
Tomas Carlsson	1965	2018	Board Member	Yes	Yes	12/12	4/4	-		310	75	-	385
SvenTörnkvist	1971	2019	Board Member	Yes	Yes	12/12	-	-		310	-	-	310
Petra Einarsson2	1967	2020	Board Member	Yes	Yes	6/6	-	-		194	-	-	194
Ole Kristian Jødahl2	1971	2020	Board Member	No	Yes	6/6					-	-	-	-
Örjan Fredriksson	1968	2016	Employee	-	Yes	11/12	-	-		-	-	-	-
			representative
Greger Larsson	1959	2009	Employee	-	Yes	12/12	-	-		-	-	-	-
			representative
1. Board and Committee member until the AGM 2020.	2. Board and Committee member since the AGM 2020.						Total	2,190	175	120	2,485

In brief

Strategy & Targets

Divisions

Sustainability

Board Report

Financial Statements

Other

Directors' report

Risks and risk management

Corporate governance

Board

LeadershipTeam

57 Annual Report 2020

of the Committee, in accordance with the information on procedure published on the Company's website prior to the annual general meeting.The proposals will be assessed by the Nomination Committee according to its instruction and the Code.The Nomination Committee's proposal and reasoned statement will be reported prior to the annual general meeting.The Company's Articles of Association have no Company-specific provisions concerning the appointment and dismissal of Directors of the Board or concerning amendment of the Articles of Association.

Nomination Committee prior to the 2021 annual general meeting

The Nomination Committee ahead of the annual general meeting 2021 comprises the following members:

• Anders Mörck, Investment AB Latour, Chair of the Nomination Committee
• Francisco De Juan, Alantra EQMC Asset Management
• Johan Lannebo, Lannebo Fonder
• Ulrik Grönvall, Swedbank Robur Fonder
• Johan Hjertonsson, Alimak Group's Chair of the Board As a basis for its proposal, the Nomination Committee has conducted an evaluation of the work of the Board. Prior to the 2021 annual general meeting, the Nomination Com- mittee has held a number of meetings, interviewed the Directors of the Board and had a number of contacts between the meetings. In addition, the Chair of the Board has presented the results of the evaluation of the work car- ried out by the Board, to the Nomination Committee.The requirements regarding competence, experience and back- ground that should be placed for the Board in the Com- pany have been discussed in detail. Matters of independ- ence have been highlighted and an extra focus has been placed on the question of gender balance.The Nomination

Committee has applied a diversity policy as set out in section 4.1 of the Swedish Code of Corporate Governance.

BOARD

The tasks of the Board are regulated first and foremost by the Swedish Companies Act and the Code.The work of the Board is also regulated by rules of procedure adopted annually by the Board.The rules of procedure for the Board determine the division of work and responsibilities among the Directors, the President & CEO and the com- mittees. Furthermore, the division of work between the Board and President & CEO is governed by instructions to the President & CEO, which are adopted annually by the Board.The instructions to the President & CEO also include instructions on financial reporting.The duties of the Board include the establishment of strategies, business plans, budgets, interim reports, year-end accounts and annual reports, as well as the adoption of instructions, policies and guidelines.The Board shall also monitor financial performance and ensure quality in financial reporting and internal controls and shall assess operations in terms of the targets and guidelines established by the Board. Finally, the Board makes decisions on significant investments and changes to the Company's organisation and operations.

The Chair of the Board is responsible for the Board's work, and for ensuring that it is conducted efficiently and that the Board fulfils its obligations.The Chair shall monitor the Company's performance via regular contact with the President & CEO.The Chair presides over the Board meetings, but the agenda is agreed and the meetings prepared in consultation with the President & CEO.The Chair is also responsible for ensuring that each year the Board evaluates its work and that the Board members receive on

an ongoing basis the information they need to perform their work.The Chair represents the Company vis-à-vis its shareholders.

Composition of the Board

The Company's Board is currently made up of seven members elected by the annual general meeting and two employee representatives. No deputies have been appointed for Directors of the Board. At the annual general meeting held on May 7, 2020, Helena Nordman-Knutson, Christina Hallin,Tomas Carlsson and SvenTörnkvist were re-elected as Directors. Johan Hjertonsson, Petra Einarsson and Ole Kristian Jødahl were elected as new Directors. Johan Hjer- tonsson was elected Chair of the Board.The employee rep- resentatives, Greger Larsson and Örjan Fredriksson, are appointed by the trade union organisations. Further information about the Directors is provided on pages 62-63.

Independence of the Board

According to the Code, more than half of the Directors appointed by the general meeting must be independent in relation to the Company and the Company's management. At least two of the Directors who are independent in relation to the Company and the Company's management shall also be independent in relation to the Company's major shareholders.To determine the independence of a Director, an overall assessment shall in each case be conducted regarding the Director's relationship to the Company. One of the Company's Directors elected by the general meeting is employed by the Company. Six out of seven Directors elected by the general meeting are deemed to be independent in relation to the Company and the Company's management. When determining whether a Director is independent in relation to a major shareholder, the extent

In brief

Strategy & Targets

Divisions

Sustainability

Board Report

Financial Statements

Other

Directors' report

Risks and risk management

Corporate governance

Board

LeadershipTeam

of the Director's direct and indirect relationships with the major shareholder shall be taken into consideration.

A Director is deemed not to be independent in relation to the Company's major shareholders if he or she is or recently has been employed at, or a Director of, a company that is a major shareholder. Six of seven Directors elected by the general meeting are independent in relation to the Company's major shareholders.The Company therefore satisfies the Code's requirements regarding the independence of the Board in relation to the Company, the Company's management and the Company's major share-

holders.The table on page 56 provides details of the Director's year of birth, the year they were first elected to the Board and whether they are deemed independent in relation to the Company, the Company's management and major shareholders as defined in the Code.

Work of the Board during the year

The Board met on twelve occasions during 2020.The current Board was appointed by the annual general meeting held on May 7, 2020 and met on six occasions during the year. In the course of the financial year, the Board not only

produced financial reports but also addressed issues regarding strategic policy, budgets, business planning, auditing, investments, incentive programmes, succession planning, environment, health, insurance cover, internal control and safety, as well as issues relating to the acquisition agenda.The COVID-19 impact on the business and migitation activities was a recurring theme. Given travel restrictions, the Board did not visit any of the Group's production and assembly facilities during 2020.

The Board's working year 2020

Board Meeting

• Full year results and Q4 report
• Dividend
• Audit memorandum
• Performance and remuneration review of CEO and senior management
• Succession planning

Board Meeting	Board Meeting	Board Meeting	Board Meeting
Adoption	Discussion	Risk and insurance	•	Q2 report
annual report	about	coverage review	•	Business
	postponing			review update
	LTI 2020

Board Meeting

• New Heights programme
• Reorganisation and changes in senior leadership
• Cost savings programme

Jan

Feb

Mar

Apr

May

June

July

Aug

Sept

Oct

Nov

Dec

58 Annual Report 2020

Board Meeting	Board Meeting	Board Meeting
CEO resignation	Appointment	Revised dividend
	new CEO	proposal

Board meetings also deal with ongoing issues (in addition to the current state of operations), market overviews, investments, divestments, financing, employees, IT systems, updates on the integration, reports from the committee chairs on the work of the committees, as well as issues regarding the work environment, customer-related issues and reporting of incidents.

Statutory Board Meeting

• Signing authorisation
• Appointment of members of the committees
• Adoption of the procedural rules for the Board
• Adoption of instructions for the CEO, the Audit committee and the Renumeration committee
• Adoption of Code of Conduct and Insider Policy
• Decisions on Board meeting dates for the coming year

Board workshop	Board Meeting
Business review	• Adoption of budget 2021
workshop	•	Business review R&D and IT
	•	Evaluation of Board