Recommendations

Recommendations for Corporate Governance from the Committee on Corporate Governance

In November 2017 the version of Recommendations for Corporate Governance applicable for the financial year 2018 was published. Topdanmark has a defined approach to each of the items. See Topdanmark's approach under each item:

1. Communication and interaction with investors and other stakeholders

1.1. Dialogue between Company, shareholders and other stakeholders

1.1.1. The Committee recommends that the Board of Directors ensure ongoing dialogue between the Company and its shareholders, so that the shareholders gain relevant insight into the Company, and in order for the Board of Directors to be aware of the shareholders’ views, interests and opinions in relation to the company.

Topdanmark recognises the value and necessity of an open dialogue with its shareholders and therefore it is giving, and has for many years given, high priority to its Investor Relations activities.

Topdanmark is striving to be active and proactive towards investors at home and abroad by using information and communication channels such as

• Investor meetings
• Conference calls
• Web casts, and
• Investment and insurance conferences.

Topdanmark holds around 150-200 investor meetings each year. Presentations from the investor meetings are available on the Company's website.

1.1.2. The Committee recommends that the Board of Directors adopt policies on the Company’s relationship with its stakeholders, including shareholders, and that the Board of Directors ensure that the interests of the shareholders are respected in accordance with company policies.

Topdanmark has identified clear guidelines for the company's relationship with its main stakeholders (shareholders, customers, employees). Topdanmark has also adopted policies for its Investor Relations activities. Read more about Topdanmark's objectives, goals and strategies, Topdanmark's customer-oriented values, Topdanmark's management values (in Danish only) and Topdanmark's Investor Relations philosophy.

1.1.3. The Committee recommends that the Company publish quarterly reports.

Topdanmark publishes quarterly reports.

1.2. General Meeting (AGM)

1.2.1. The Committee recommends that in organising the Company’s AGM, the Board of Directors plans the meeting to support active ownership.

Topdanmark recognises the value of active ownership and, for example, through its significant Investor Relations activities, it endeavors to support both the commitment shown by its shareholders and its dialogue with them.

Topdanmark convenes the AGMs in accordance with legislation and the Company's Articles of Association. Furthermore, about one month prior to the AGM, the Company sends a written invitation to all the Danish and foreign shareholders who had requested it and at that time were inscribed or registered by name, thus endeavoring to ensure the largest possible shareholder attendance at its general meetings.

Topdanmark regularly assesses whether to hold the AGM by physical attendance or as a part or full electronic AGM. The Board of Directors is not dismissive of a part electronic Annual General Meeting, but find that the risk of technical errors connected with the available technical solutions in the market is still too high.

1.2.2. The Committee recommends that proxies or votes by post for the AGM allow shareholders to consider each individual item on the agenda.

Topdanmark is only requesting proxies for one specific AGM.

Shareholders may grant the Board of Directors a proxy to vote for or against each individual item on the agenda and they may also actually vote by post. A proxy/postal vote form is sent to all shareholders who have requested it and are inscribed or registered by name prior to the AGM. Electronic proxy/postal vote may be cast on Topdanmark’s Investor Portal. Furthermore, proxy/postal vote forms are available for downloading from the Company's website.

1.3. Takeover bids

1.3.1. The Committee recommends that the Company set up contingency procedures in the event of takeover bids from the time that the Board of Directors has reason to believe that a takeover bid will be made. The contingency procedures should establish that the Board of Directors should not without the acceptance of the AGM, attempt to counter the takeover bid by making decisions which in reality prevent the shareholders from deciding on the takeover bid themselves.

The Board of Directors has adopted a contingency plan for uninvited takeover bids. The plan is revised regularly and at least once a year.

Topdanmark's contingency plan in the event of an uninvited takeover bid is intended to allow shareholders to consider the terms offered on an accurate and well-informed basis. Except for the authorisations granted in Articles 4A-4G to increase the Company's share capital, Topdanmark's Articles of Association have no provisions enabling the Board of Directors to establish measures to resist an attempted takeover unless accepted by the shareholders.

Topdanmark believes that a share price reflecting the future earnings potential is the only actual protection against an uninvited takeover bid.

2. Tasks and responsibilities of the Board of Directors

2.1. Overall tasks and responsibilities

2.1.1. The Committee recommends that at least annually the Board of Directors consider the matters that should be included in the Board of Directors’ performance of its work.

Topdanmark’s rules of procedure lay out the guidelines for the tasks of the Board of Directors’ in more detail.

The Board of Directors has adopted a work plan (an annual wheel) in order to ensure appropriate planning of the tasks of the Board of Directors. The plan is revised regularly and at least once a year.

In the same way, the rules of procedure for the Board of Directors is revised regularly and at least one a year. The review of the work plan and the rules of procedure are part of the work plan of the Board of Directors.

2.1.2. The Committee recommends that at least once annually, the Board of Directors consider the overall strategy of the Company with a view to ensuring value creation in the Company.

Topdanmark's Board of Directors holds an annual Board seminar to discuss and establish, among other things, the Company's overall strategy including how to ensure future value creation. Furthermore, the Board of Directors regularly considers all these matters.

2.1.3. The Committee recommends that the Board of Directors ensure that the Company has a capital and share structure which supports that the strategy and long-term value creation of the Company are in the best interest of the shareholders and the Company, and that the Board of Directors explain this in the management commentary and/or on the company’s website.

For a number of years, Topdanmark was working towards gradually removing the restrictions on, for example, voting rights. See Corporate Governance on the website for a historical review of Corporate Governance related initiatives taken by the Company since 1995.

The last restrictions on voting rights and the voting ceiling set out in the Articles of Association were removed at Topdanmark's 2001 AGM. Therefore, today the Articles of Association set out no restrictions on voting rights.

The Board of Directors has adopted a policy for capital structure and regularly ensures that Topdanmark's capital and share structures continue to be appropriate and support the Company’s strategy and long-term value creation, for example when a quarterly report is published. Information on Topdanmark's capital and earnings distribution model is updated on the website when the quarterly reports are published and also described in the management's review in the Annual Report.

2.1.4. The Committee recommends that the Board of Directors annually review and approve the guidelines for the Executive Board; this includes establishing requirements for the Executive Board's reporting to the Board of Directors.

As a financial services company, Topdanmark is subject to detailed regulatory requirements on the distribution of duties between the Board of Directors and the Executive Board and on the reporting from the Executive Board to the Board of Directors. Of course, Topdanmark meets these requirements and the Board of Directors has adopted a wide range of policies and guidelines for the Executive Board, including Reporting policy and guidelines.

2.1.5. The Committee recommends that at least once annually, the Board of Directors discuss the composition, developments, risks and succession plans of the Board of Directors.

The Board of Directors holds an evaluation meeting at least once a year. The Executive Board does not participate in this meeting. Prior to the evaluation meeting, the Executive Board’s discussion paper on management succession planning of the Topdanmark Group has been presented to the Board of Directors. At the evaluation meeting, the Board of Directors discusses, among other things, the composition of the Executive Board, development, risks and succession plans.


2.2 Corporate Social Responsibility

2.2.1. The Committee recommends that the Board of Directors adopt policies on Corporate Social Responsibility.

Topdanmark has adopted policies for its Corporate Social Responsibility covering the entire Topdanmark Group and in accordance with the Danish accounting Order, it adopts and publishes an annual CSR report.

Read more about Topdanmark's CSR policy and CSR report.

2.3. Chairman and Deputy Chairman of the Board of Directors

2.3.1. The Committee recommends appointing a Deputy Chairman of the Board of Directors who will assume the responsibilities of the Chairman in the event of the Chairman’s absence, and who will also act as effective sparring partner for the Chairman.

There is and has always been a Deputy Chairman on Topdanmark's Board of Directors. The Deputy Chairman replaces the Chairman in the Chairman's absence. The Deputy Chairman attends chairmanship meetings with the Executive Board prior to each Board meeting in order, among other things, to be an effective sparring partner for the Chairman.

2.3.2. The Committee recommends that, if the Board of Directors, in exceptional cases, asks the Chairman of the Board of Directors or other Board members to perform special activities for the Company, including briefly participating in the day-to-day management, a board resolution to that effect should be passed to ensure that the Board of Directors maintains its independent, general management and control function. Resolutions on the Chairman’s or other Board member's participation in day-to-day management and the expected duration hereof should be publicly announced.

Neither the Chairman nor other Board members do - not even briefly - participate in the day-to-day management of the company, nor does the Chairman perform other special tasks for the Company besides the duty as Chairman of the Board of Directors or member of the Board respectively, noting that the employee-elected Board members of course perform their day-to-day duties as employees at Topdanmark.

3. Composition and organisation of the Board of Directors

3.1 Composition

3.1.1. The Committee recommends that the Board of Directors annually evaluate and in the mangagement commentary account for:

a) the competencies that it must have to best perform its tasks,
b) the composition of the Board of Directors, and
c) the special competencies of each member.


The Board of Directors has addressed the composition and qualifications of the Board of Directors in "Policy for diversity in the Board of Directors".

Topdanmark considers it important to have a small and active Board of Directors. The Board of Directors believes that by imposing very specific requirements on its members in advance, it risks to prevent the election of evidently qualified Board candidates if they do not fully meet the requirements.

Topdanmark wishes to make a specific decision on each Board candidate based upon an overall consideration of the candidate's qualifications as compared with the Company's business model and associated risks, present needs and the composition of the rest of the Board of Directors.

Topdanmark believes that in a company like Topdanmark, between them, its Board members should possess competencies within organisation, strategic management, insurance operations, reinsurance, long-tail business, financial and insurance reporting, general statistics, risk management and assessment, sales in the personal and professional markets, marketing/branding, outsourcing, finance, own funds, solvency and minimum capital requirements, rules for internal models, auditing, financing, investment, statutory limits, compliance, IT and IT security, digitalisation and recruitment/HR. With its current composition, Topdanmark's Board of Directors possesses all these skills.

Based on the Company's current needs, the Board of Directors evaluates, at least once a year, when assessing itself at the Board seminar, its composition, the need for renewal/supply of new skills, including whether, specifically or generally, there is a need for supplementary training of the existing Board members.

Compulsory introduction training is given to Board members elected by employees after each election of employee representatives. As of 1 January 2017, new requirements to compulsory basic training for Board members at financial businesses came into force. Topdanmark will ensure that the new requirements are met for new Board members. Additionally, dependent on each Board member's qualifications and needs, all newly elected Board members receive targeted introduction to Topdanmark and supplementary training, if required. Furthermore, training sessions are held regularly at Board meetings and seminars.

On its website and in its management's review in the Annual Report, Topdanmark specifies the skills Topdanmark's Board of Directors should currently have and whether the Board of Directors believes that it currently has these skills. Furthermore, when convening its Annual General Meeting, Topdanmark describes the specific criteria on which the nomination of each Board candidate has been based.

As the members of the Board of Directors are eligible for election each year, information on their profiles and qualifications is published every year when the Annual General Meeting is convened. Furthermore, this information is available in the management's review in the Annual Report which also includes a description of Topdanmark's recruitment philosophy, necessary skills and diversity. Finally, the information is available on the Company's website. The information on the website is updated regularly and at least quarterly.

3.1.2. The Committee recommends that the Board of Directors annually discuss the Company’s activities to ensure relevant diversity at management levels and prepare and adopt a policy on diversity. The policy should be published on the Company's website.

Topdanmark believes that diversity provides business value and that it is important that employees, irrespective of gender, nationality, religion or other characteristics, have equal access to executive positions at all levels.

In accordance with legislation, the Board of Directors has set target figures for the gender composition of the Board of Directors and adopted ”Policy for diversity in the Board of Directors”, which includes target figures for the underrepresented gender, and “Policy for diversity and the underrepresented gender in executive functions in Topdanmark”. The Board of Directors meets its goal and the statutory definition of an equal gender distribution. "Policy for diversity in the Board of Directors" and "Policy for diversity and the underrepresented gender in executive functions in Topdanmark" are published on the Company's website.

Topdanmark has also signed up to the UN Global Compact intended to ensure, among other things, the prevention of discrimination in businesses.

Topdanmark explains both its objective and the progress made in achieving it in its management's review and CSR Report published on the Company’s website.

The Board of Directors discusses regularly, and at least once a year, the Company’s activities of diversity and the current state of diversity.


3.1.3 The Committee recommends that the selection and nomination of candidates for the Board of Directors be carried out through a careful and transparent process approved by the Board of Directors. When assessing its composition and nominating new candidates, the Board of Directors should in addition to the need for compentencies and qualifications take into consideration the need for integration of new talent and diversity.

The Board of Directors regularly discusses its composition, specifically at the Board seminar when the annual evaluation is made. The Board of Directors takes into consideration whether it possesses the necessary and relevant skills, compentencies, diversity etc. needed to operate the Company. To the extent there is a need for one or more new Board candidates, the Board of Directors analyses the necessary and relevant skills and compentencies, and on this basis it starts a process held by the Nomination Committee of the Board of Directors to find one or more relevant candidates.

The Board of Directors has adopted "Policy for diversity in the Board of Directors"

3.1.4. The Committee recommends that the notice convening an AGM where the agenda includes the election of members to the Board of Directors, include (in addition to the statutory requirements) a description of the qualifications of the nominated candidates, including information about the candidates'

a) other executive functions, including positions on executive boards of directors and supervisory boards, including Board committees in Danish and foreign enterprises, and
b) demanding organisational tasks, and information
Furthermore, it should be indicated if the candidates to the Board of Directors are considered independent.


The Board of Directors is eligible for election each year.

The proposal made by the Board of Directors for Board candidates is accompanied by a detailed description of each candidate, stating their CVs including information on their education, current and previous occupation, industry experience, other executive functions in Danish and foreign companies, demanding organisational tasks and offices held and whether the candidate is considered to be independent. As of AGM 2019 Board candidate's CVs will also include information regarding recruitment criteria used.

3.1.5. The Committee recommends that members of the company's executive board be not members of the Board of Directors and that a resigning chief executive officer be not directly elected as chairman or deputy chairman for the same company

No members of Topdanmark's executive board are members of the Board of Directors. Neither the chairman nor the deputy chairman of the Board of Directors have been executive officers in the Company.

3.1.6. The Committee recommends that members of the Board of Directors elected by the AGM be up for election every year at the AGM.

All of Topdanmark's Board members elected by the AGM are up for election each year.

3.2. Independence of the Board of Directors

3.2.1. The Committee recommends that at least half of the members of the Board of Directors elected by the AGM be independent persons, in order for the Board of Directors to be able to act independently of special interests. To be considered independent, this person may not:

a) be or, within the past five years, have been member of the Executive Board, or senior staff member in the Company, a subsidiary or an associated company,
b) within the last five years, have received significant remuneration from the Company/Group, a subsidiary or an associated company in a different capacity than as member of the Board of Directors,
c) represent or be associated with a controlling shareholder,
d) within the past year, have had significant business relations (e.g. personal or indirectly as partner or employee, shareholder, customer, supplier or member of management in companies with corresponding connection) with the Company, a subsidiary or an associated company,
e) be or within the past three years have been employed or been a partner in the same company as the auditor elected by the AGM,
f) be part of the executive management in a company with cross-management representation in the company,
g) have been member of the Board of Directors for more than 12 years, or
h) be a close relative with persons who are not considered independent.
Even if a member of the Board of Directors is not covered by the above criteria, certain conditions may exits that will lead the Board of Directors to decide that one or more members cannot be regarded as independent

Torbjörn Magnusson, Ricard Wennerklint and Petri Niemisvirta, members of the Board of Directors, represent the interests of a controlling shareholder. Annette Sadolin has been a member of the Board of Directors for more than 12 years. Consequently, these four members of the Board of Directors do not meet the definition of independence set out by the Committee on Corporate Governance. Jens Aaløse and Lone Møller Olsen are independent.

Thus, Topdanmark does not meet the recommendation of item 3.2.1 that at least half of the members of the Board of Directors elected by the Annual General Meeting should be independent persons. Since the AGM in 2017, Topdanmark’s major shareholder has had a 50% representation in the Board of Directors, corresponding to its equity interest in Topdanmark. It is natural and widely recognized that a major shareholder’s representation on the Board of Directors corresponds to its equity interest. With such a strong representation of just one major shareholder, four members of the Board of directors with just one-two year’s seniority, it is desirable and in the interest of all Topdanmark’s shareholders that, due to high seniority and thorough knowledge of the insurance business, one of the members of the Board of Directors has extensive knowledge of Topdanmark and the ability to enter into a critical dialogue with the Executive Board and the representatives of the controlling shareholder on the Board of Directors. Therefore, it is the opinion of the Board of Directors that Annette Sadolin is particularly suited for being a member of Topdanmark’s Board of Directors due to her high seniority, although it means that Topdanmark does not meet the recommendation of item 3.2.1.

3.3. Members of the Board of Directors and the number of other management functions

3.3.1. The Committee recommends that each member of the Board of Directors assess the expected time commitment for each function so that the member does not take on more functions than he/she can complete at satisfactory level for the Company.


Topdanmark believes that it is up to each individual Board member to decide how many other positions they can handle and that the amount of managerial work varies significantly from company to company. Therefore, each Board member is responsible for not taking on more functions than he/she can handle in a satisfactory way.

Regularly and specifically when assessing itself once a year and when nominating candidates for the annual election of Board members, the Board of Directors assesses, based on, inter alia, an overboarding assessment, whether each Board member/candidate has been and will continue to be able to allocate sufficient time and attention to perform his/her Board duties in Topdanmark.

3.3.2. The Committee recommends that the management commentary, in addition to the provisions laid down by legislation, includes the following information about the members of the Board of Directors:

a) the position of the relevant person,
b) the age and gender of the relevant person,
c) the person's competencies and qualifications that are relevant to the company
d) whether the member is considered independent,
e) the member's date of appointment to the Board of Director,
f) expiry of the current election period,
g) other management functions, including memberships in executive boards, boards of directors, and supervisory boards, including board committees in Danish and foreign enterprises and demanding organisational tasks, and
h) the number of shares, options, warrants and similar owned by the member in the Company, and other Group companies, as well as changes to the member's portfolio of the mentioned securities which have occurred during the financial year.

The management’s review, Topdanmark's website and the notice convening the AGM disclose information on, among other things, each Board member’s – and Candidate’s – position, age, gender, independence, date of joining the Board, his/her other executive functions and demanding organisational tasks. As of the Annual Report 2018 information regarding boardmembers and -candidate's competencies and qualifications will be included in the management commentary.

The period of election for Board members elected by the AGM in Topdanmark is one year. The date of expiry of the election period is self-explanatory.

On its website, Topdanmark discloses information on holding of shares, options etc. at Group level, i.e. for the entire Board of Directors, the entire Executive Board etc. The management’s review and/or the Annual Report contain information of the number of shares, options, warrants etc. in Topdanmark and Topdanmark’s subsidiaries owned by the individual Board members and the changes in these holdings during the financial year. The transactions of the members of the Board of Directors and the Executive Management in Topdanmark shares, options etc. are reported to the Danish FSA in accordance with current rules.

3.3.3. The Committee recommends that the annual evaluation procedure, cf. section 3.5 include an evaluation of what is regarded as a reasonable level for the number of other management functions, where the number, level and complexity of the other individual management functions are taken into account.

In Topdanmark the board evaluation covers the board member's other management function including an assessment of the number, level and complexity of each other management function. Overboarding assessment is based upon guidelines from ISS combined with a subjective estimation. As of the Annual Report 2018 the evaluation procedure and the overall findings from that will be described in the management commentary and on the Company's website.

3.4. Board Committees

3.4.1. The Committee recommends that the Company publish the following on the Company’s website:

a) the terms of reference of the Board Committees,
b) the most important activities of the committees during the year, and the number of meetings held by each committee, and
c) the names of the members of each committee, including the Chairmen of the Committees, as well as information on which members are independent members and which members have special qualifications.


Topdanmark has set up a joint Audit Committee in accordance with the rules of the Danish Audit Act.

Topdanmark has set up a joint Remuneration Committee in accordance with the relevant rules of the Danish Executive Order on wage policy and remuneration at insurance companies and insurance holding companies.

Topdanmark has set up a Nomination Committee for the whole Topdanmark Group.

The terms of reference for the committees, their rules of procedure and most important activities have been published on Topdanmark's website. The website also discloses information on the number of meetings held by the committees, the names, qualifications and independence of the members, the Chairmen of the committees and the members with special qualifications, when specifically required.

3.4.2. The Committee recommends that a majority of the members of a Board Committee be independent.

Topdanmark's Board Committees comprise those Board members considered most suitable by the Board of Directors to attend to the function concerned.

The Audit Committee consists of three members of whom solely Lone Møller Olsen meets the definition of independence set out by the Committee on Corporate Governance.  One of the reasons his educational background and long experience as CFO in If, Sweden, Richard Wennerklint, Chairman of the Audit Committee, possesses thorough knowledge and experience of audit and accounting matters in financial businesses. Consequently and in the Board of Directors’ opinion, Richard Wennerklint is the most suitable person as Chairman of the Audit Committee despite the fact that he does not meet the definition of independence set out by the Committee on Corporate Governance. As to Annette Sadolin, the third member of the Audit Committee, she has been a member of Topdanmark’s Board of Directors for more than 12 years and therefore neither Annette Sadolin meets the definition of independence set out by the Committee on Corporate Governance. In particular because of her many years of seniority, thorough knowledge of the insurance business combined with her substantial expertise of Topdanmark, the Board of Directors believes that Annette Sadolin adds great value to the Audit Committee.Governance.

The Remuneration Committee has three members, and the Nomination Committee has two members. These committees comprise Topdanmark's Chairmanship and in respect of the Remuneration Committee, also a Board member elected by employees in accordance with the statutory rules. Topdanmark's Chairmanship comprises a Chairman who represents the interests of a controlling shareholder and a Deputy Chairman who is independent. Consequently, the majority of the members of the Remuneration and Nomination Committee is not independent.

The Board of Directors believes that it has greater value for Topdanmark to ensure that the Board Committees comprise those persons who are best qualified and to ensure a balance in the committees between members attending to the interest of Topdanmark’s controlling shareholder and members who, due to high seniority and thorough knowledge of the insurance business and/or audit conditions, have extensive knowledge of Topdanmark and the ability to enter into critical dialogue with the representatives of the controlling shareholder in the committees, rather than ensuring that the majority of the members of a small committee meets the definition of independence set out by the Committee on Corporate Governance.

3.4.3. The Committee recommends that the members of the Board of Directors set up among its members an Audit Committee and that chairman is appointed who is not the Chairman of the Board of Directors.

Topdanmark has set up a joint Audit Committee for the Topdanmark Group in accordance with the rules of the Danish Audit Act. All members of the Audit Committee are members of the Board of Directors.

The Chairman of the Board of Directors is not a member of or Chairman of the Audit Committee.

3.4.4. The Committee recommends that, prior to approval of the Annual Report and other financial reports, the Audit Committee monitor and report to the Board of Directors about:

a) significant accounting policies,
b) significant accounting estimates,
c) related party transactions, and
d) uncertainties and risks, including in relation to the outlook for the current year.


The Audit Committee monitors and reports to the Board of Directors on material account-ing policies, significant accounting estimates, related party transactions and uncertainties and risks. The final decision on these matters continues to be made by Topdanmark's en-tire Board of Directors, also after the establishment of the Audit Committee.

Additionally the work of Topdanmark's Audit Committee focuses on accounting processes and risk management.

The Audit Committee reports to the Board of Directors at each Board meeting.

3.4.5. The Committee recommends that the Audit Committee:

a) annually assesses the need for an internal audit, and in such case, presents mandates and recommendations on selecting, appointing and removing the head of any internal audit function and on the budget of the internal audit function
b) ensure that if an internal audit has been established, a description of its functions is approved by the Board of Directors,
c) ensure that if an internal audit has been established, adequate resources and competencies are allocated to carry out the work, and
d) monitor the Executive Board’s follow-up on the conclusions and recommen-dations of the internal audit function.

As a financial services company with more than 125 full-time employees Topdanmark shall have an internal audit function. The internal audit function has been appointed by and refers to the Board of Directors.

The Audit Committee considers and formulates recommendations on the head of the in-ternal audit function and on the budget of the internal audit function.

The Audit Committee ensure that a description of the internal audit's functions exists, and that adequate resources and competencies are allocated to the internal audit function. The description of the internal audit's functions is evaluated annually by the Board of Directors.

At each Audit Committee meeting, the Audit Committee receives a report on the Executive Board's follow-up on the conclusions and recommendations of the internal and external audit functions.

3.4.6 The Committee recommends that the Board of Directors establish a Nomination Committee which is at least, responsible for the following preparatory tasks:

a) describing the qualifications required by the Board of Directors and the
Executive Board and for a given position, indicating the time expected to be spent carrying out a specific position, as well as assessing the competencies, knowledge and experience of the two governing bodies,
b) annually assessing the structure, size, composition and results of the Board of Directors and the Executive Board, and recommend any changes to the Board of Directors,
c) annually assessing the competencies, knowledge, experience and succession of the individual members of management, and report to the Board of Directors in this respect,
d) recommending candidates for the Board of Directors and the Executive Board, and
e) proposing an action plan to the Board of Directors on the future composition of the Board of Directors, including proposals for specific changes.


Topdanmark has set up a joint Nomination Committee for the entire Topdanmark Group.

The nomination committee consists of Topdanmark's Chairmanship. The Chairman of the
Board of Directors is Chairman of the Nomination Committee.

The Nomination Committee is in charge of the preparatory work for the decisions made by the Board of Directors on the structure and composition of the Board of Directors and the Executive Board.

3.4.7. The Committee recommends that the Board of Directors establish a Remuneration Committee which is at least, responsible for the following preparatory tasks:

a) recommending the remuneration policy (including the "general guidelines for incentive-based remuneration") to the Board of Directors and the Executive Board for approval by the Board of Directors prior to approval by the AGM,
b) making proposals to the Board of Directors on remuneration for members of the Board of Directors and the Executive Board, as well as ensuring that the remuneration is in compliance with the Company’s remuneration policy and the assessment of the performance of the persons concerned. The Committee should have information on the total remuneration that members of the Board of Directors and the Executive Board receive from other companies in the Group,
c) recommending a remuneration policy applicable for the Company in general, and
d) assisting with the preparation of the annual remuneration report.


Topdanmark has set up a joint Remuneration Committee for the entire Topdanmark Group.

The Board of Directors has adopted a working plan for the Remuneration Committee providing that the Committee submits the remuneration policy including general guide-lines for performance-related pay for approval of the Board of Directors prior to the approval of the AGM, submits proposals to the Board of Directors for remuneration of the Board of Directors, Executive Board, General Managers and other employees of similar or higher ranks, decides the guidelines for reporting on the observance of the remuneration policy, receives and reviews reporting on the observance of the remuneration policy, remuneration of the management of the risk organisation and the management of the part of the organisation that is otherwise in charge of control and audit, and reviews the Annual Report in order to check its information on the remuneration of the Board of Directors.

Topdanmark’s remuneration policy is applicable to the Topdanmark Group in general.

3.4.8. The Committee recommends that the Remuneration Committee do not consult with the same external advisers as the Executive Board of the Company

The Executive Board, Board of Directors and Remuneration Committee do not use external advisers when deciding Topdanmark's remuneration policy.

3.5. Evaluation of the performance of the Board of Directors and the Executive Board

3.5.1. The Committee recommends that the Board of Directors establish an evaluation procedure for an annual evaluation of the Board of Directors and the individual members. External assistance should be obtaines at least every third year. The evaluation should inter alia include:

a) contribution and results,
b) co-operation with the Executive Board,
c) the chairman’s leadership of the Board of Directors,
d) the composition of the Board of Directors (including competencies, diversity and the number of members),
e) the work in the committees and the committee structure, and
f) the organization and quality of the material that is submitted to the board of directors.
The evaluation procedure and the general conclusions should be described in the management commentary and on the Company’s website. The chairman should account for the evaluation of the Board of Directors, including the process and general conclusions, on the general meeting prior to the election of the Board of Directors.

The Board of Directors regularly evaluates its work and the performance and achieve-ments of the entire Board and each member, its co-operation with the Executive Board, the chairman’s leadership of the Board of Directors, the composition of the Board of Directors, the work in the committees and the committee structure and the organization and quality of the material that is submitted to the Board of Directors.

On the basis of anonymous questionnaires regarding the work and cooperation in the Board of Directors, anonymous evaluation of the individual members of the Board of Directors and the Executive Management, individual interviews between the Chairman and each Board member and a questionnaire about each Board member’s skills, the Board of Directors evaluates itself annually. The Chairman of the Board of Directors is in charge of the evaluation without the participation of the Executive Board.

The evaluation is included in the rules of procedure and the work plan of the Board of Directors.

The evaluation procedure and significant resulting changes are described in the Annual Report and on the Company's website. As of the Annual Report 2018 the evaluation procedure, general conclusions and significant resulting changes will be described in the management commentary, on the Company’s website and in the chairman’s report on the AGM.

The Board of Directors consider in the concrete situation whether obtaining of external assistance is necessary and/or relevant.

3.5.2. The Committee recommends that at least once annually, the Board of Directors evaluate the work and performance of the Executive Board in accordance with predefined criteria. Furthermore, the Board of Directors should evaluate the need for changes to the structure and composition of the Executive Board, in light of the Company's strategy.

The Board of Directors evaluates the work and performance of the Executive Board on an ongoing basis and discusses this at least annually in connection with the annual board evaluation. These discussions are conducted without the presence of the Executive Board.

Furthermore, the Board of Directors discusses the need for changes to the structure and composition of the Executive Board, in light of the Company’s strategy, on an ongoing basis.

3.5.3. The Committee recommends that the Executive Board and the Board of Directors establish a procedure according to which their co-operation is evaluated annually through a formalised dialogue between the Chairman of the Board of Di-rectors and the Chief Executive Officer, and that the outcome of the evaluation be presented to the Board of Directors.

The Board of Directors and the Executive Board has established a procedure to which their cooperation is evaluated annually.

The evaluation is based on, among other things, regular meetings between the CEO and the Chairman of the Board of Directors, reporting to the Board of Directors in connection with the annual board evaluation and individual interviews between the Chairman and each Board member.

The evaluation is included in the rules of procedure and the work plan of the Board of Directors. It is described in both the Annual Report and on the Company's website.

4. Remuneration of management

4.1 Form and content of the remuneration policy

4.1.1. The Committee recommends that the Board of Directors prepare a remuneration policy for the Board of Directors and the Executive Board, which includes:

a) detailed description of the components of the remuneration for members of the Board of Directors and the Executive Board,
b) the reasons for choosing the individual components of the remuneration,  
c) a description of the criteria that form the basis for the balance between the individual components of the remuneration, and
d) an explanation for the correlation between the remuneration policy and the Company's long-term value creation and relevant goals.
The remuneration policy should be approved by the AGM at least every fourth year and upon any material amendments and published on the Company’s website.

The Board of Directors has adopted a remuneration policy for itself, the Executive Board, significant risk takers and a number of other employees.

The remuneration policy has in accordance with the rules applicable for insurance companies been approved by the AGM upon amendments. The remuneration policy is approved by the AGM at least every fourth year. The remuneration policy is published on the Company's website.

The AGM adopts the remuneration to be paid to the Board of Directors.

In his speech, the Chairman of the Board of Directors explains the remuneration paid to the Company's Board of Directors and Executive Board in accordance with the rules of the Danish Executive Order on wage policy and remuneration at insurance companies and insurance holding companies.

The remuneration policy includes a detailed description of the components of the remuneration for the Board of Directors and Executive Board. The remuneration policy also includes a reason for choosing the individual components of the remuneration and information on the criteria on which the balance between the individual components of the remuneration is based. Finally, the remuneration policy includes an explanation for the correlation between the remuneration policy and the Company's long-term value creation and relevant goals.

4.1.2. The Committee recommends that, if the remuneration policy includes variable components,

a) limits be set on the variable components of the total remuneration package,
b) a reasonable and balanced composition be ensured between remuneration for members of management and the value creation for shareholders in the short and long term,
c) clarity be established about performance criteria and measurability for award of variable components,
d) it is ensured that variable remuneration not only consists of short term remuneration components, and that long-term remuneration components must have a vesting or maturity period of at least three years, and
e) it be ensured that the Company has the ability to re-claim, in full or in part, variable components of remuneration that were paid on the basis of information, which subsequently are found to be incorrect.

Topdanmark's remuneration structure which is described in both the Annual Report and on the Company's website, is intended to optimise value creation at Group level. The remuneration to the Executive Board and a number of executives is based on a fixed basic salary. A fixed share, 10%, is paid as share options. In addition to this it is possible to include performance-dependent bonuses in the salary package to the Executive Board. Criteria and measureability for the remuneration element are defined.

As the expected value creation at Group level is reflected in the share price, the share option scheme encourages the executives to be more holistic in their approach to value creation. Those participating in the share option scheme do not receive performance-related bonuses.

Topdanmark's remuneration agreements take into account the rules, including rules-on a three-year accumulation- and maturity period, pay-out-postponement and claw-back rules, of the Danish Financial Business Act.

4.1.3. The Committee recommends that remuneration of members of the Board of Directors does not include share options or warrants.

The remuneration of Topdanmark’s Board of Directors does not include share options or warrants.

4.1.4. The Committee recommends that if, in relation to long-term incentive programmes, a share-based remuneration is used, the programs should have a vesting or maturity period of at least three years after being allocated and should be roll-over programs, i.e. the options should be granted periodically.

As described in Topdanmark's remuneration policy published on the Company's website, its share option scheme for the Executive Board and a number of the heads of the business sectors and administrative departments is revolving. The options may not be exercised any earlier than subsequent to the publication of the first interim results announced three years after the options were acquired. The strike price is equivalent to the market price on the last trading date in the financial year immediately preceding the granting of options, plus 10%.

4.1.5. The Committee recommends that the total value of the remuneration relating to the notice period, including serverance pay, do not exceed two years of remuneration, including all components of the remuneration.

In executive management contracts entered into after November 2017 the total value of the remuneration relating to the notice period, including severance pay, do not exceed two years of remuneration, including all components of the remuneration. 

In executive management contracts entered into before November 2017 the maximum termination payments, in accordance with the previous corporate governance recommendations, will represent the last two years' remuneration. 

4.2. Disclosure of the remuneration policy

4.2.1. The Committee recommends that the Company’s remuneration policy and compliance with this policy be explained and justified annually in the Chairman’s statement at the Company’s AGM.

The Company's remuneration policy and compliance with this policy is explained and justified in the speech of the Chairman of the Board of Directors at the Company's AGM in accordance with the rules of the Danish Executive Order on wage policy and remuneration at insurance companies and insurance holding companies.

4.2.2. The Committee recommends that shareholders at the AGM consider proposals for approval of remuneration for the Board of Directors for the current financial year.

The remuneration paid to the Board of Directors for the current financial is reviewed at the AGM.

4.2.3. The Committee recommends that the Company prepares a remuneration report that includes information on the total remuneration received by each member of the Board of Directors and the Executive Board from the Company and other companies in the group and associated companies for the last three years, including information on the most important content of retention and resignation arrangements and that the correlation between the remuneration and company strategy and relevant related goals be explained.

In accordance with the rules of the Danish Executive Order on wage policy and remuneration at insurance companies and insurance holding companies, in its Annual Report, Topdanmark discloses information on the remuneration paid to the Board of Directors and the Executive Board at an individual level.

Topdanmark discloses information on the most important contents of retention and retirement/resignation schemes in accordance with the rules of the Danish Accounting Order.

As of the Annual Report 2018, Topdanmark will publish a remuneration report for the Topdanmark Group.

5. Financial reporting, risk management and audits

5.1 Identification of risks and transparency about other relevant information

5.1.1. The Committee recommends that the Board of Directors consider and in the management commentary account for the most important strategic and business-related risks, risks in connection with the financial reporting as well as for the Company’s risk management.

The Board of Directors regularly discusses, and particularly in relation to the relevant rules for insurance companies on Solvency II, Topdanmark's risk profile, including the most important risks associated with the realisation of the Company's strategy and over-all goals, as well as the risks associated with financial reporting. The risk assessment made by the Board of Directors is included in Topdanmark’s annual risk assessment reported to the Danish FSA.

Topdanmark believes that the Company’s future growth should be created by accepting primarily business risks and to a lesser extent financial risks.

Based on reporting and a discussion paper made by the Executive Board, the Board of Directors regularly discusses Topdanmark's risk management, ensuring that efficient risk management systems have been established.

Additionally, the risk profile and risk management of the Company are thoroughly re-viewed at the Audit Committee meetings.

At Topdanmark, risk management is coordinated by the cross-organisational risk management function. The risk management function and the decentralised risk management units refer to the Risk Committee. The Risk Committee reports to the Board of Directors at each Board meeting. Once a year, Topdanmark prepares a risk report, that previously was available on the Company’s website, but as of the Annual Report 2018 will be included in the Annual Report.

Furthermore, Topdanmark has established a compliance function in order to ensure, among other things, knowledge and observance of all relevant acts, rules etc. The compliance function reports to the Board of Directors via the Audit Committee.

The establishment of a risk management policy etc. is included in the rules of procedure and the work plan of the Board of Directors.

Topdanmark's internal auditors control and report to the Board of Directors whether the risk policy adopted on the acceptance of, for example, business risks, including reinsurance cover, meets the frameworks set out by the Board of Directors. Furthermore, they check that the investment restrictions set out by the Board of Directors are observed.

5.2. Whistle blower scheme

5.2.1. The Committee recommends that the Board of Directors establish a whistle blower scheme for expedient and confidential notification of serious wrongdoing or suspicions thereof.


Topdanmark has since 2012 had a whistle blower scheme.

5.3. Contact to auditor

5.3.1. The Committee recommends that the Board of Directors ensure regular dialogue and exchange of information between the auditor elected by the AGM and the Board of Directors, including that the Board of Directors and the Audit Committee meet with the auditor elected by the AGM at least once annually without the Executive Board present. This also applies to the internal auditor, if any.


Topdanmark's Board of Directors has regular contact with both the internal and external auditors.

The internal and external auditors report to the Board of Directors in audit reports. Furthermore, internal auditors attend the Audit Committee meetings on a permanent basis in January and additional meetings, if required.

Internal and external auditors attend, on a permanent basis, the Board meeting where the Annual Report is being reviewed and approved. In continuation of this meeting, the Board of Directors meets with the internal and external auditors without the presence of the Executive Board. Furthermore, the Audit Committee/the Chairman of the Audit Committee meets with the auditors without the presence of the Executive Board.

5.3.2. The Committee recommends that the audit agreement and auditors’ fee be agreed by the Board of Directors and the auditor elected by the AGM based on a recommendation from the Audit Committee.

The auditor agreement and the auditors' fee, including the framework for the external auditors' provision of non-audit services and the audit plan and budget of the internal audit function, are adopted by the Board of Directors on the basis of a recommendation from the Audit Committee.

Statutory report on Stewardship Code

Recommendations for Stewardship Code from the Committee on Corporate Governance
In November 2016 Recommendations for Stewardship Code was published. Topdanmark has a defined approach to each of the items. See Topdanmark's appoach under each item.

1. Engagement policy

1. Engagement policy

1.1. It is recommended that institutional investors should publicly disclose an engagement with respect to investment in shares companies that are publicly listed in Denmark.

Topdanmark publicly discloses an engagement policy.

2. Monitoring and dialogue

2.1. It is recommended that institutional investors monitor and engage in a dialogue with the companies, in which they invest taking due account of the investment strategy and the principle of proportionality.

Topdanmark monitor and engage in a dialogue with the companies in which Topdanmark invests taking due account of the investment strategy and the principle of proportionality.

Topdanmark addresses any key information relevant to investors that the companies, in which Topdanmark has a significant ownership, publish such as the annual report, quarterly and half year reports, period announcements, investor presentations and statements of corporate management.

As an investor, Topdanmark’s purpose is to exercise active ownership in order to make use of its potential influence to disseminate a responsible and value adding behaviour with due respect towards the surrounding community. However, Topdanmark’s influence should never displace the primary purpose of the stakeholders’ interests to create an attractive profit of investment to the portfolio owners.

3. Escalation

3.1. It is recommended that institutional investors as part of the engagement policy determine how they may escalate their stewardship activities beyond regular monitoring and dialogue.

As part of the engagement policy, Topdanmark has laid down guidelines for how Topdanmark can escalate Topdanmark’s stewardship beyond the regular monitoring and dialogue.

If Topdanmark has a share in a company, where the operation does not live up to the norms of Topdanmark’s CSR policy, and Topdanmark’s share is regarded as profitable, a solution must be sought in accordance with this prioritised sequence:

  • If the share in the company provides a realistic possibility for influencing the company to change behavior by dialogue with the management
  • In cooperation with other stakeholders seek to obtain a similar influence
  • Divest ownership.

4. Cooperation with other investors

4.1. It is recommended that institutional investors as part of the engagement policy should describe how they will act collectively with other investors in order to achieve greater effect and impact.

As part of the engagement policy, Topdanmark has addressed how to cooperate with other investors in order to achieve greater effect and impact.

Particularly in connection with an escalation, Topdanmark works together with other investors cf. paragraph 4.1.

5. Voting policy

5.1. It is recommended that institutional investors as part of the engagement policy adopt a policy for voting and are willing publicy whether and how they have voted.

As part of the engagement policy, Topdanmark has adopted a voting policy.

Pursuant to Topdanmark’s policy, Topdanmark will vote at general assemblies in order to increase the value adding activities. In companies, where Topdanmark controls more than 2% of the votes or share capital, and is not represented in the board of directors, annual reporting on company level must include:

 

  • Whether Topdanmark has participated in the company’s annual general meeting
  • How Topdanmark has voted
  • Whether there are unsettled matters between Topdanmark and the company covered by “Financial Business Act §78” or other substantial unsettled business concerns with the company in relation to the size of the company. However, this only applies if it can take place within the scope of the current legislation including the rules against insider trading.

In order to increase the return of investment of Topdanmark’s shares, these have been made subject to stock lending. Topdanmark’s policy is to maximize the long-term return of investment of the shares and only to recall the share loan if it serves the overall purpose of Topdanmark.

6. Conflicts of interest

6.1. It is recommended that the engagement policy contains a discription of how conflicts of interest in relation to stewardship are identified and managed.

Topdanmark’s engagement policy includes a description of how conflicts of interest in relation to stewardship are identified and managed.

  • As mentioned in paragraph 5, annual reporting on company level is made for companies, where Topdanmark controls more than 2% of the votes or share capital, and is not represented on the board of directors, whether there are unsettled matters between Topdanmark and the company covered by “Financial Business Act §78” or other substantial unsettled business concerns with the company in relation to the size of the company. However, this only applies if it can take place within the scope of the current legislation including the rules against insider trading.

7. Reporting

7.1. It is recommended that institutional investors at least annually report on their stewardship activities, including voting activity.

Topdanmark reports at least annually on Topdanmark’s stewardship activities including voting activities.

As mentioned in paragraph 5, annual reporting on company level takes place for companies, where Topdanmark controls more than 2% of the votes or share capital, and is not represented on the board of directors:

  • Whether Topdanmark has participated in the company’s annual general meeting
  • How Topdanmark has voted
  • Whether there are unsettled matters between Topdanmark and the company covered by “Financial Business Act §78” or other substantial unsettled business concerns with the company in relation to the size of the company. However, this only applies if it can take place within the scope of the current legislation including the rules against insider trade