Danske Bank A/S : Voting Guidelines

Voting Guidelines

2023

1.	Purpose		2	3.5	Other Corporate Governance Issues	9
2.	Scope and application	2		3.5.1	Anti-takeover Mechanisms	9
3.	Voting Guidelines	2		3.5.2	Articles of association	9
	3.1	Operational Voting Decisions	3		3.5.3	Auditor Report on Related
	3.1.1	Allocation of Income	3			Party Transactions	10
	3.1.2	Appointment of External Auditors			3.5.4	Authority to Reduce Minimum
		and Auditor-related Fees	3			Notice Period for Calling a Meeting	10
	3.1.3	Financial Results/Director and			3.5.5	Mandatory Takeover Bid Waivers	10
		External Auditor Reports	4		3.5.6	Mergers and Acquisitions, Takeover
	3.1.4	Stock (Scrip) Dividend Alternative	4			bids and reincorporation proposals	10
	3.1.5	Transact Other Business	4		3.5.7	Other Governance issues	10
					3.5.8	Related-Party Transactions	10
3.2	Board of Directors	4		3.5.9	Reorganisations/Restructurings	10
	3.2.1	Board Structure	4		3.5.10	Shareholder Proposals	10
	3.2.2	Board Diversity	5		3.5.11	Virtual Meetings	10
	3.2.3	Bundling of Proposals	5		3.5.12	Tax and transparency	10
	3.2.4	Combined Chair/CEO	5
	3.2.5	Composition of Committees	5	3.6	Environmental and Social Issues	11
	3.2.6	Director election	5		3.6.1	Environmental issues	11
	3.2.7	Director, Officer and Auditor			3.6.1.1	Say on Climate and Transition
		Indemnification and Liability Provisions	6			plan proposals	11
	3.2.8	Discharge of Directors	6		3.6.1.2	Climate Disclosure	12
	3.2.9	Election of a Former CEO as Chairperson	6		3.6.1.3	Emissions	12
	3.2.10	Overboarded Directors	6		3.6.1.4	Energy	12
					3.6.1.5	Biodiversity	13
3.3	Capital Structure	6		3.6.1.6	Water	13
	3.3.1	Capitalisation of Reserves for			3.6.1.7	Toxic Emissions and Waste	13
		Bonus Issues/Increase in Par Value	6		3.6.2	Social matters	14
	3.3.2	Capital Structure	6		3.6.2.1	Labour Rights	14
	3.3.3	General Issuance	7		3.6.2.2	Human rights	15
	3.3.4	Increases in Authorised Capital	7		3.6.2.3	Anti-corruption and anti-bribery	15
	3.3.5	Preferred Stock	7
	3.3.6	Reissuance of Repurchased Shares	7	3.7	Appendix		16
	3.3.7	Share Repurchase Plans	7
	3.3.8	Specific Issuance	8	4.	Review		16
3.4	Remuneration	8
	3.4.1	Remuneration to executive management	8
	3.4.1.1	ESG-related performance metrics
		in remuneration	9
	3.4.2	Equity-based Remuneration	9
	3.4.3	Remuneration to non-executive directors	9

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1. Purpose

These Voting Guidelines serve to guide voting activities in adherence with the Active Ownership Instruction. The Guidelines are set out to guide the investment teams' voting activities and to help investee companies and customers understand how we are likely to vote in a given situation

Active Ownership is the use of rights and position of ownership to influence the activities or behaviour of investee companies by taking an active interest as an investor in investee companies' circumstances, development, and management, and a long-term focus in the company. We regard Active Ownership as an effective mechanism to manage risks, maximise returns and contribute to a positive impact on society and the environment. It is embedded in our fiduciary duty to customers and beneficiaries to achieve the highest and most stable investment returns.

Although there is no one-size-fits-all approach, when it comes to Active Ownership, Danske Bank exercises Active Ownership in, for example, the following situations:

• When required in order to protect the value of an investment; and/or
• When required in order to manage Principal Adverse Impacts, including adverse impacts managed through our Net Zero commitments under the Net Zero Asset Managers Initiative.

Voting refers to the exercise of ownership rights at General Meetings of companies where we own shares. We vote on management and/or shareholder resolutions to approve or disapprove of corporate governance as well as relevant environmental and social matters. We exercise voting by ourselves or by proxy through a third-party adviser.

We publish our Active Ownership activities - engagement in dialogue, voting, and collaborations with other investors and organizations - on our website.

2. Scope and application

The Voting Guidelines apply to relevant investment teams and functions involved in voting activities on behalf of assets held by Asset Management or Danica. It is the responsibility of each manager to ensure that the Voting Guidelines are known and complied with where relevant within the employees' respective areas of responsibility. In addition, all employees need to understand and comply with relevant Policies and Directives, such as the Code of Conduct and Conflict of Interest Policy.

The Voting Guidelines primarily apply to listed companies in the Nordic countries and Europe. The Voting Guidelines are also used as a foundation for companies outside the Nordic region and Europe.

Voting is done on a variety of management and shareholder resolutions for instance targetting corporate governance issues required under local listing requirements, including but

not limited to: approval of directors; acceptance of reports and accounts; approval of incentive plans; capital allocation; reorganisations; and mergers as well a as environmental and social aspects. Voting is also conducted on proposals not specifically addressed by the Voting Guidelines, in which case the proposal is based on an evaluation of a proposal's likelihood of enhancing the long-term financial return or profitability of the company, or maximising long-term shareholder value.

Voting rights will be exercised in accordance with respective fund's objective and investment strategy. The investment team in charge of the mandates will assess the resolutions and apply the Active Ownership Instruction and market standards to each agenda item. The investment teams have access to data, research and expertise, and voting decisions consider the sufficiency of information on particular matters.

3. Voting Guidelines

The Voting Guidelines take into account internationally recognised corporate governance standards, e.g., the G20/ OECD Principles of Corporate Governance, as well as voluntary principles, such as the UN Global Compact and OECD Guidelines for Multinational Enterprises.

Further, Voting Guidelines function to manage principal adverse impacts prioritised in We prioritise the management of principal adverse impacts in accordance with Group position statements and other sustainability-related strategies and commitments.

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This includes but is not limited to the following international standards and commitments; UN Sustainable Development Goals (SDGs), UN Global Compact, UN Guiding Principles on Business and Human Rights, UN Principles for Responsible Investment, OECD Guidelines for Multinational Enterprises, G20/OECD Principles of Corporate Governance, Sustainability Accounting Standards Board (SASB), The Task Force on Climate-related Financial Disclosures (TCFD), CDP (formerly Carbon Disclosure Project), ESG4Real, LuxFLAG, Paris Pledge for Action, The Montréal Carbon Pledge, Climate Action 100+, The Partnership for Biodiversity Accounting Financials (PBAF), The Partnership for Carbon Accounting Financials (PCAF). In addition, standards are indirectly refered to in Danske Bank Group position statement on Agriculture, Climate Change, Fossil Fuels, Mining and Metals, Arms and Defence, Forestry and Human Rights.

The Voting Guidelines also consider local regulations and/ or guidelines such as the Danish Stewardship Code, the Finnish Corporate Governance Code, the Norwegian Code of Practice for Corporate Governance, and the Swedish Corporate Governance Code, as well as variation in legal and regulatory requirements between countries. Note that countries vary on whether corporate governance is regulated by rules-based legislation or by a comply-or-explain principle, and this needs to be considered in the application of the Voting Guidelines.

The Voting Guidelines consist of the following eight overall principles for Corporate Governance, Environmental and Social matters:

1. The board should act in the best long-term interests of the company for the benefit of shareholders and take into account relevant stakeholders. The board

should have a sufficient mix of directors with adequate competences and independence appropriate to the company's operations. The Chair of the board and CEO should not be the same person.

1. Remuneration to executive management should align with company and shareholder interest, with the aim of achieving long-term performance and sustainable value creation. Remuneration to non-executive directors (NED) should reflect company size and complexity as well as the NEDs' expertise and board position requirements.
2. The board should strive to achieve an effective and well-balanced capital structure. Capital exceeding the company's needs in relation to its long-term strategies should be distributed to the company's shareholders.
3. Audits should be carried out by external auditors independent of the company and its management.
4. The rights of all shareholders should be equal and protected. The principle of one-share-one-vote is preferred. Minority shareholders should have voting rights on key decisions or transactions that could affect their interest in the company.
5. All shares in a company carrying the same rights to the company's assets and profits should be treated equally in public offers to acquire shares.

1. Companies should seek to establish an open dialogue with their shareholders. Information and disclosures should be unambiguous, correct, and transparent.
2. Companies should seek to manage the financial and economic implications of environmental and social matters that may have an impact on the company's reputation, and/or represent operational risks and costs to the business.

Voting decisions reflect information from several sources. The depth and specificity of voting evaluations will vary with the materiality of the investment and the issue.

A principled and consistent voting approach guides us in both complex and more straightforward voting situations. Many resolutions have common and predictable attributes that mean they can be voted on by the direct application of the relevant stance presented in the Voting Guidelines.

3.1 Operational Voting Decisions

3.1.1 Allocation of Income

Vote for approval of the allocation of income, unless:

• The allocation of income, including dividends and share repurchases, does not reflect the company's financial situation and strategy.

3.1.2 Appointment of External Auditors and Auditor-related

Fees

Generally vote for proposals to (re)appoint external auditors and/or proposals authorising the board to fix auditor fees, unless:

• There are serious concerns about the effectiveness of the auditors;

• There is reason to believe that the auditor has rendered an opinion which is neither accurate nor indicative of the company's financial position;

• There are serious concerns about the statutory reports presented or the audit procedures used;

• Questions exist concerning any of the statutory auditors being appointed;

• The auditors have previously served the company in an executive capacity or can otherwise be considered affiliated with the company;

• The name(s) of the proposed auditors has not been published;

• The company's auditors are suddenly changed without explanation; or

• Fees for non-audit services exceed the audit-related fees and, if not properly explained by the board, questions arise about how the auditors' independence.

In circumstances where fees for non-audit services include fees related to significant one-time capital structure events (IPOs, bankruptcy emergencies, spinoffs) and the company publically discloses the amount and nature of those fees (which

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are an exception to the standard "non-audit fee" category), such fees may be excluded from the non-audit fees considered in determining the ratio of non-audit to audit fees.

If there are concerns about the fees paid to the auditors, Danske Bank may vote against the remuneration of the auditors if it is presented a separate voting item. If not, we may vote against electing the auditors.

Companies are encouraged to incorporate material climate- related matters in their financial accounts and in the audit report. However, we will consider such matters on a case-by- case basis, and would in general not vote against the auditor or the auditor fees based solely the absence of such information.

See Appendix for specific guidelines concerning:

• Appointment of Audit Commission Members in Russia: appendix p. 4.
• Denmark, Finland, Norway and Sweden: appendix p. 4.
• Early Termination of Powers of the Audit Commission in Russia: appendix p. 4.

3.1.3 Financial Results/Director and External Auditor Reports

Vote for approval of financial statements and director and auditor reports, unless:

• There are concerns about the accounts presented or audit procedures used; or

• The company is not responsive to shareholder questions about specific items that should be publicly disclosed.

Companies are encouraged to incorporate material climate- related matters in their financial accounts and in the audit report. However, we will consider such matters on a case-by- case basis, and would in general not vote against the accounts, or the director and/or external auditor reports, solely based the absence of such information.

3.1.4 Stock (Scrip) Dividend Alternative Vote for most stock (scrip) dividend proposals.

Vote against proposals that do not allow for a cash option unless management demonstrates that the cash option is harmful to shareholder value.

3.1.5 Transact Other Business

Vote against other business when it appears as a voting item.

3.2 Board of Directors

The board should have a combination of competences (knowledge and experience) appropriate to the company's operations and phase of development.

The board, or the shareholder-led nomination committees in Nordic countries, should disclose the process for director

nomination and election/re-election. Further, information should be disclosed about board candidates, including:

• Board member identities and rationale for appointment;
• Core competences, qualifications and professional background;
• Recent and current board and management mandates at other companies, as well as significant roles in organisations;
• Factors affecting independence, including relationship(s) with controlling or major shareholders;
• Length of tenure;
• Board and committee meeting attendance; and
• Any shareholdings in the company.

With regard to elections to Corporate Assemblies and similar corporate bodies, disclosure should at least be in line with market practice.

The board should identify how sustainability issues impact risks to, and business opportunities for, the company.

An annual evaluation of the board should consider board composition, diversity and how effectively the board and its members work to achieve objectives.

Diversity among the board of directors supports the company's business operations and long-term development. Examples

of diversity principles include age, gender and international experience.

Generally vote against the election or re-election of any non- independent directors (excluding the CEO) if less than one third of the board members are independent.

See Appendix for specific guidelines concerning:

• Board Independence in Denmark, Finland, Norway, Sweden and the UK: appendix p. 4.
• Danske Bank's Classification of Directors - European Policy: appendix p. 8.
• Danske Bank's Classification of Directors - Russian Policy: appendix p. 10.
• Widely-heldcompanies in Denmark, Finland, Norway and Sweden: appendix 1 p. 11.
• Non widely-held companies in Denmark, Finland, Norway and Sweden: appendix p. 12.
• Gender diversity in the UK & Ireland: appendix p. 13.

3.2.1 Board Structure

Vote for routine proposals to fix board size.

Vote against the introduction mandatory retirement ages for directors.

Vote against proposals to alter board structure or size in the context of a fight for control of the company or the board.

See Appendix for specific guidelines concerning:

• Denmark, Finland, Norway and Sweden: appendix p. 13.

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3.2.2 Board Diversity

Board gender diversity should be clearly reported by the company.

For companies traded in the primary market (the main indices in the company's home market), we expect at least one-third (33 percent), or any higher domestic threshold, of shareholder- elected directors on the Board of Directors to be of the underrepresented gender.

For any other company, we expect both genders to be represented on the Board of Directors. If both genders are not represented, we may vote against the Chair of the Nomination Committee, or other directors on a case-by-case basis.

Possible reasons for not voting against the chair of the nomination committee include compliance with the board diversity standard at the preceding AGM and a firm public commitment to comply with the relevant standard within a year.

We believe companies should strive for equal gender representation at Board and executive level, and may vote in favour of proposals aiming to increase disclosure regarding the gender pay gap ratio and measures taken to promote gender equality.

3.2.3 Bundling of Proposals

Vote against a bundled proposal if one or more items of significant governance importance raise serious concerns and shareholders have no opportunity to vote on each item individually at the General Meeting.

See Appendix for specific guidelines concerning:

• Bulgaria, Croatia, Czech Republic, Estonia, Finland, France, Germany, Greece, Hungary, Italy, Latvia, Lithuania, Luxemburg, Norway, Poland, Romania, Slovakia, Slovenia and Sweden: appendix p. 14.

3.2.4 Combined Chair/CEO

Generally vote against the (re)election of combined chair/ CEO. When a chairperson is also an employee of the company, a judgement must be made whether or not the situation is comparable to a combined chair/CEO, or if a clear demarcation exists between the chairperson and the executive management of the company (CEO).

See Appendix for specific guidelines concerning:

• Denmark, Finland, Norway and Sweden: appendix p. 14.

3.2.5 Composition of Committees

It is recommended that all members of the audit, remuneration and nomination committees are independent of the company and its executive management.

For widely-held companies, generally vote against the (re) election of any non-independent members of the audit committee in non-Nordic markets if this would mean that:

• Fewer than 50 percent of the audit committee members, who are elected by shareholders in such capacity or another - excluding, where relevant, employee shareholder representatives - would be independent or
• Less than one-third of all audit committee members would be independent.

See Appendix for specific guidelines concerning:

• Committee of Representatives and Corporate Assembly Elections in Denmark and Norway: appendix p.14.
• Composition of Committees in Nordic and non-Nordic countries: appendix p. 14.
• Board and committee composition in the UK & Ireland: appendix p. 17.
• CEOs and Chairs in the UK & Ireland: appendix p. 17.
• Controlling shareholders in the UK & Ireland: appendix p. 17.
• Overboarding in the UK & Ireland: appendix p. 21.

3.2.6 Director election

Vote for management or shareholder-led nomination committees' qualified nominees in the election of directors, unless:

• Adequate disclosure has not been provided in timely manner;
• There are clear concerns over questionable finances or restatements;
• There have been questionable transactions with conflicts of interest;
• There are any records of abuse against minority shareholder interests;
• The board fails to meet minimum corporate governance standards, i.e., fails to comply with corporate governance codes and laws regarding the information required in the company's remuneration policy, remuneration report, corporate governance report or sustainability report;
• There are specific concerns about the individual, such as criminal wrongdoing or breach of fiduciary responsibilities; or
• Repeated absences from board meetings have not been explained (in countries where this information is disclosed).

Under extraordinary circumstances, a vote against individual directors is may be warranted if:

• There have been material failures of governance, stewardship or risk oversight; or
• Egregious actions related to the director's service on other boards that raise substantial doubt about that director's ability to effectively oversee management and to serve the best interests of shareholders at any company.

For contested elections of directors, a case-by-case vote is followed through determining which directors are best suited to add value for shareholders.

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