Remuneration

Report2020

This report is prepared according to section 139b of the Danish Companies Act - the accounting period 1 January 2020 - 31 December 2020

Preface

This remuneration report ("Remuneration Report") provides the overview of the total remuneration received by the Board of Directors (the Board) and the Executive Management of Vestas Wind Systems A/S, CVR no. 10403782 (the Company), during the financial year 2020 with comparative figures for the past five years. Executive Management refers in this Remuneration Report only to members of the Executive Management of the Company registered as such with the Danish Business Authority. This is currently the Group President & CEO (CEO) and the Executive Vice President & CFO (CFO).

The remuneration of the Board and Executive Management during the past financial year has been provided in accordance with the Remuneration Policy1 of the Company adopted by the Annual General Meeting on 7 April 2020 (the Remuneration Policy).

The overall objective of the Remuneration Policy is to attract, motivate, and retain qualified members of the Board and Executive Management, to align the interests of the Board and Executive Management with the interests of the Company's shareholders and stakeholders as well as to support Vestas' strategic goals and promote value creation aligned to the interest of the shareholders. Vestas' vision of becoming the global leader in sustainable energy solutions requires Vestas to sustain a talented, agile, and cost-effective organisation. This combined with the long-term performance of the Company and the corporate values - Simplicity, Collaboration, Accountability, and Passion - guides the overall principles for and the individual elements of remuneration for both the Board and Executive Management. To ensure that Vestas' remuneration promotes both strategic goals as well as long-term value creation and sustainability, the remuneration includes both fixed remuneration, short-term incentives, and long-term incentives.

Remuneration of Executive Management is related to the result of Vestas' financial and sustainable performance through incentives. Vestas' financial health and performance is directly linked to its abilities to invest in research and development, thereby paving the way for even better solutions to provide the world with sustainable energy.

Remuneration Report 2020

The Remuneration Report has been prepared in accordance with section 139b of the Danish Companies Act and the European Commission Guidelines on the standardised presentation of the remuneration report under Directive 2007/36/EC, as amended by Directive (EU) 2017/828 as regards the encouragement of long-term shareholder engagement (the Guidelines).

The information included in the Remuneration Report has partly been derived from the audited annual reports of Vestas for the financial years 2016-20202 with additional information to support the explanation of the remuneration of the Board and Executive Management. All amounts are included in EUR, gross.

  • 1 The Remuneration Policy can be found at the Company's Investor Relations website under the section Corporate governance (Governance principles).

  • 2 Financial reports can be found at the Company's Investor Relations website under the section Reports and presentations (Financial reports).

Contents

  • 1 Introduction .................................................................................................................................................................................................... 4

  • 2 Board of Directors ....................................................................................................................................................................................... 5

  • 2.1 Fixed remuneration ................................................................................................................................................................................................... 5

  • 2.2 Shareholding obligations ....................................................................................................................................................................................... 7

  • 3 Executive Management ............................................................................................................................................................................ 8

  • 3.1 Annual fixed salary ................................................................................................................................................................................................ 10

  • 3.2 Benefits ........................................................................................................................................................................................................................ 10

  • 3.3 Pension scheme ...................................................................................................................................................................................................... 11

  • 3.4 Cash bonus ................................................................................................................................................................................................................. 11

  • 3.5 Performance shares .............................................................................................................................................................................................. 11

  • 3.6 Shareholding obligations ................................................................................................................................................................................... 14

  • 3.7 Extraordinary items, termination and severance payments .......................................................................................................... 15

  • 3.8 Claw-back .................................................................................................................................................................................................................... 15

  • 4 Development in financial performance and remuneration ................................................................................................ 16

  • 5 Compliance with the Remuneration Policy ................................................................................................................................. 18

  • 6 Independent Auditor's Statement on the Remuneration Report .................................................................................... 18

  • 7 The Board of Director's Statement on the Report .................................................................................................................. 19

1

Introduction

For the year 2020, Vestas' revenue amounted to EUR 14.8bn, with an EBIT margin before special items of 5.1 percent, and total investments* of EUR 659m, all in line with expectations. Compared to 2019, revenue increased while earnings decreased, and free cash flow* stayed at around the same level. The value of the combined order backlog increased from EUR 34bn to 43bn as the offshore business is now included.

As a result of the performance in 2020, the Board proposes to the Annual General Meeting that a dividend of DKK 8.45 per share be distributed to the shareholders, compared to DKK 7.93 last year, and equivalent to 30.0 percent of the net profit for the year.

Vestas at a glance

Specific management results in 2020

- Guided Vestas through a challenging COVID-19 year

  • - Reached milestone of 100 GW under service

  • - Achieved 100 percent control of the offshore joint venture

  • - Implemented a Sustainability Strategy

  • - First renewable energy manufacturer to reach the validation Science Based Targets of emission reduction targets

In 2020, Vestas included two new members to the Board while one member resigned. Executive Management stayed consistent with Henrik Andersen, CEO, and Marika Fredriksson, CFO. Like the rest of the world, Vestas felt the effect of the pandemic in 2020 and regarding remuneration this resulted in a 10 percent deduction in salary for Executive Management. The Nomination & Compensation Committee met six times in 2020 and had regular follow-up on the performance of Vestas and the link to the expected incentive pay-out, discussed the future position and succession for Board and Executive Management, performed an external review of the executive benchmarking approach, and discussed and proposed the future incentive design for Executive Management.

*) Excl. acquisitions of subsidiaries and any financial investments.

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Vestas Wind Systems A/S published this content on 10 February 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 10 February 2021 08:56:08 UTC.