Approved by Carlsberg A/S' Annual General Meeting on 24 March 2011
1. Preambel
These guidelines include the general guidelines concerning the remuneration of the Supervisory Board and the Executive Board of Carlsberg A/S and for incentive programmes for the Executive Board. “The Executive Board” means the executives registered as executives of the company with the Danish Commerce and Companies Agency.
In accordance with Section 139 of the Danish Companies Act, before a listed company enters into a specific incentive agreement with a member of the company’s Supervisory Board or Executive Board, the Supervisory Board must specify general guidelines for incentive programmes for the company’s Supervisory Board and Executive Board.
The guidelines must be considered and approved at the company’s annual general meeting.
For a number of years, Carlsberg A/S has had incentive programmes for i.a. the Executive Board of the company but not for the Supervisory Board.
2. General principles for the remuneration of the Supervisory Board
The remuneration to the Supervisory Board consists of a fixed annual base fee, however the Chairman receives double base fee and the Deputy Chairman receives one and a half times the base fee. A member of a Board Committee receives an additional annual fee per committee of 38% of the base fee. The Chairman of the Audit Committee receives an additional annual fee of 75% of the base fee and the Chairman of other Committees receives an additional annual fee of 50% of the base fee. Carlsberg A/S pays travel and accommodation expenses in connection with board meetings.
The Supervisory Board of Carlsberg A/S is not included in the company’s incentive programmes and does not receive a bonus on a completion of a takeover bid.
At each year’s Annual General Meeting the remuneration to the Supervisory Board for the financial year in question shall be approved.
The Supervisory Board evaluates its remuneration at least once a year on the basis of a recommendation from the Remuneration Committee. When making its recommendation, the Remuneration Committee takes into account relevant benchmarks for other Danish and global companies.
3. General principles for the remuneration of the Executive Board
In order to attract and retain managerial expertise, the elements of the remuneration of the members of the Executive Board are determined on the basis of the work they do and the value they create as well as of the conditions in other Danish and global companies. The remuneration of the Executive Board includes a fixed salary, a cash bonus, share-based instruments and other usual allowances. Each element of the remuneration has been weighted in order to ensure a continuous positive development of the company both in the short and long term.
The Executive Board does not receive a bonus on a completion of a takeover bid but its terms of notice change.
In order to encourage common goals for the Executive Board and shareholders of Carlsberg and to meet the short as well as long-term goals, the Supervisory Board considers it appropriate that incentive programmes exist for the Executive Board. Such incentive programmes may comprise any form of variable remuneration, including share-based instruments such as shares, share options, warrants and phantom shares as well as non-share-based bonus agreements – both ongoing, one-off and event-based. Any specific incentive agreement with members of the Executive Board will be subject to these guidelines.
Any decision to include a particular member of the Executive Board in an incentive programme – and which agreement(s) to specifically conclude – will depend on whether the Supervisory Board considers it expedient in order to encourage common goals for the Executive Board and the shareholders as well as to take into account the short and long-term goals. In addition, the Executive Board’s historic and expected performance, motivation and loyalty concerns and the general situation and development of the company will also be taken into consideration.
a. Share-based instruments
The value of the share-based instruments granted in a given financial year may be up to 100% of the fixed annual remuneration of the individual member of the Executive Board.
The estimated present value of the share-based incentive programmes that are subject to these guidelines is calculated in accordance with the International Financial Reporting Standards (IFRS).
The exercise price is the market price during the first five days following the publication of the consolidated financial statements for the year. However, the exercise price of the share-based instrument cannot be less than the share price of the company’s stock at the time of allotment. The executive shall not pay for the share-based instrument unless the Supervisory Board specifically decides otherwise.
The allotment may take place on tax conditions which mean that the executive’s capital gain is subject to a tax rate lower than normal provided that the company is not granted any tax deduction for the expenses related to the allotment.
The share-based instruments may be exercised no earlier than three years after the time of allotment and no later than eight years after the time of allotment.
If Carlsberg, as part of a share-based incentive programme, has to obtain shares in order to meet its obligations under the incentive programme, such shares may be obtained through a buyback of treasury shares and through Carlsberg’s holding of treasury shares.
b. Non-share-based instruments
A non-share-based instrument, most often in the form of a bonus scheme or a performance contract typically has a term of one or several years and/or may be subject to a specific event occurring in relation to Carlsberg. Non-share-based instruments may also include retention bonus, loyalty bonus or the like. Bonus payments are conditional upon compliance in full or in part with the terms and targets defined in the agreement. These may comprise personal targets linked to the performance of the executive in question, Carlsberg’s results, the results of one or more business units under Carlsberg or the occurrence of a relevant event.
Ongoing bonus schemes for the Executive Board allow members to receive a bonus per financial year of up to 100% of the member’s fixed annual remuneration.
4. Amendments to and discontinuation of incentive programmes
The Supervisory Board is entitled to amend or discontinue one or more incentive programmes introduced in accordance with these guidelines. Any assessment to this effect must include the criteria forming the basis of the establishment of the programme. Such amendments may only be effected within the scope of these guidelines. More extensive amendments are subject to approval by the Annual General Meeting.
5. Publicity and commencement of specific incentive agreements
In accordance with Section 139 of the Danish Companies Act, a provision is included in the Company’s Articles of Association, stipulating that the Annual General Meeting has adopted guidelines for the incentive remuneration of the Executive Board.
Following approval at Carlsberg’s Annual General Meeting on 24 March 2011, the guidelines will immediately be published on Carlsberg’s website (www.carlsberggroup.com). If at a later point in time the Annual General Meeting adopts amendments to the guidelines, the revised guidelines will immediately be published on Carlsberg’s website (www.carlsberggroup.com) indicating the date of amendment of the guidelines by the Annual General Meeting.