Bang & Olufsen a/s : Remuneration report

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REMUNERATION REPORT 2020/21

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Bang & Olufsen A/S, Bang & Olufsen Allé 1, DK-7600 Struer, Tel. [phone], www.bang-olufsen.com,Reg. number: 41257911

REMUNERATION REPORT 2020/21

Remuneration report 2020/21

Table of content

Introduction	3
Overview financial performance	3
Compliance with the remuneration policy	4
Remuneration Board of Directors	5
Fixed Annual Fee	5
Shareholding Requirement	5
Remuneration Executive Management Board	8
Annual Base Salary	8
Variable Remuneration	8
Award of extraordinary incentive-based
remuneration	9
Termination and Severance Payments	9
Non-Monetary Benefits	9
Claw-Back	9
Cash bonus paid	9
Shares delivered	9
Remuneration comparative overview	15
Management's statement	17
Independent auditor's report	18

This remuneration report (the "Report") provides an	support Bang & Olufsen's strategic goals and pro-
overview of the total remuneration received by each	mote value creation for the benefit of the sharehold-
member of the Board of Directors ("Board") and of	ers.
the Executive Management Board ("EMB") of Bang
& Olufsen A/S, CVR no. 41257911, ("Company") dur-	The Report has been prepared in accordance with
ing the 2020/21 financial year with comparative fig-	section 139b of the Danish Companies Act (the
ures for the past five financial years. The EMB means	"DCA") and the draft European Commission Guide-
the members of the executive management board of	lines on the standardized presentation of the remu-
Bang & Olufsen registered as such with the Danish	neration report under Directive 2007/36/EC, as
Business Authority.	amended by Directive (EU) 2017/828 as regards the
	encouragement of long-term shareholder engage-
The remuneration of the Board and EMB during the	ment (the "Guidelines").
past financial year has been provided in accordance
with the remuneration policy of Bang & Olufsen	The information included in the Report has been de-
adopted by the Annual General Meeting on 20 Au-	rived from the audited annual reports of the Com-
gust 2020 and available on the Company's website,	pany for the financial years 2016/17 ­ 2020/21 availa-
https://investor.bang­olufsen. com, (the "Remunera-	ble on the Company's website,
tion Policy"). The overall objective of the remunera-	https://bang­olufsen.com. All amounts are included
tion is to attract, motivate and retain qualified mem-	in DKK, gross.
bers of the Board and the EMB, to align the interests
of the Board and the EMB with the interests of the
shareholders and other stakeholders as well as to

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REMUNERATION REPORT 2020/21

Introduction

Despite being faced with many challenges related to the pandemic, the strategy is working, and the Group completed the first phase of the turnaround. The company returned to profitability while also taking the important steps to create the foundation for future sustainable growth.

The Group has strong momentum from the first strategy phase getting back into black and is now entering the second phase of the turnaround, where the Group wants to build robustness in the business while delivering profitable growth.

During 2020/21 there have been the following changes in the EMB:

1. Line Køhler Ljungdahl, Executive Vice President and Chief Legal Officer was appointed member of the EMB on 15 July 2020
2. Snorre Kjesbu, Executive Vice President and Head of Design, Creation and Fulfilment left the Company 11 August 2020

Overview financial performance

Revenue increased by 31% in local currencies to DKK 2,629m. EBIT before special items amounted to DKK 38m, equivalent to a margin of 1.4%, up 16.5pp compared to 2019/20. Free cash flow was DKK 119m, driven by the financial performance and lower net working capital.

A solid strategy execution supported by higher demand for home entertainment drove the improved financial performance. However, the improvements were partly offset by the continued effects of the global pandemic. Several markets experienced new lockdowns, and worldwide scarcity of electronic components resulted in supply constraints and subsequent higher production and logistics cost

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REMUNERATION REPORT 2020/21

Compliance with the remuneration policy

The remuneration of the Board and EMB for the 2020/21 financial year complies with the framework provided by the Remuneration Policy. There has been no deviation or derogation from the framework provided by the Remuneration Policy.

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REMUNERATION REPORT 2020/21

Remuneration Board of Directors

Fixed Annual Fee

Members of the Board receive a fixed annual base fee approved by the Annual General Meeting. The Chairman and the Deputy Chairman each receive a multiplier of the annual base fee of 3 and 1.5, respectively, for their extended duties. Members of the Board, who are also members of a Board committee, receive an additional fixed fee as remuneration for their committee work. No member of the Board is entitled to receive any share-based incentive, other variable remuneration or pension contribution.

The following fees for 2020/21 were approved at the Annual General Meeting on 20 August 2020:

TABLE 1: BOARD FEE

			Nomination	Remuneration	Technology
	Board	Audit Committee	Committee	Committee	Committee
	DKK 300,000
Member	(base fee)	DKK 75,000	DKK 75,000	DKK 75,000	DKK 75,000
	DKK 900,000
Chairman	(3x base fee)	DKK 150,000	DKK 75,000	DKK 75,000	DKK 75,000
	DKK 450,000
Deputy Chairman	(1.5x base fee)	-	-	-	-

As part of the Company's COVID-19 initiatives the Board of Directors accepted a temporary and voluntary fee reduction of 20% from June 2020 to August 2020.

Members of the Board may be entitled to additional fees as set out in the Remuneration Policy, including for undertaking specific ad hoc tasks outside the scope of the ordinary tasks of the Board, reasonable travel allowance and participation in relevant training.

Shareholding Requirement

With the purpose of aligning the interests of the Company's shareholders and the members of the Board in regard to the development of the share price, each member of the Board elected by the general meeting is obliged to invest in shares issued by the Company not later than 12 months after the date of the member's election to the Board for an amount at least corresponding to the gross annual base fee paid to an ordinary member of the Board according to the most recent annual report and to keep such shareholding for as long as the individual is member of the Board.

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