Ramsbury Invest

Mar 31, 2022

03/31/2022 | 02:36am EDT Message : Corporate governance report 2021 H & M Hennes & Mauritz AB Sound corporate governance ensures that companies are managed as sustainably, responsibly and efficiently as possible in the interests of the shareholders. It is a matter of complying with external regulations and doing the right things. At H & M Hennes & Mauritz AB (H&M), values, global policies and guidelines are important tools for the business. The Code of Ethics, which is signed by all colleagues who interact with business partners, clearly states the approach of H&M when doing business. H&M operates in many markets that have different challenges, and where laws, environmental requirements and social conditions may differ, why acting consistently and with a strong ethical compass is necessary. H & M Hennes & Mauritz AB is a Swedish public limited company. H&M's class B share is listed on Nasdaq Stockholm. H&M applies the Swedish Corporate Governance Code (the Code) since 2005. The Code is based on the principle of "comply or explain", which means that companies applying the Code may deviate from individual rules provided they give an explanation of the deviation, describe the chosen alternative and provide the reasons for the devi-ation. The code is available at corporategovern-anceboard.se. This report, which covers the financial year 1 December 2020 to 30 November 2021, here-after referred to as the 2021 financial year, was prepared in accordance with the Code and the Swedish Annual Accounts Act by the company's board of directors. It has been reviewed by the company's auditors. External and internal governance Examples of external regulations are: - The Swedish Companies Act - Accounting legislation including the Swedish Bookkeeping Act and Annual Accounts Act - MAR - the EU Market Abuse Regulation - Nasdaq Stockholm Rules for Issuers - The General Data Protection Regulation (GDPR) - Swedish Corporate Governance Code (the Code)Examples of internal control documents: - Articles of association - Whistleblowing Policy H&M's corporate governance is furthermore based on the company's seven values, which, in brief, encompass a sound, simple, straightfor-ward, cost-conscious, entrepreneurial corporate culture that focuses on teamwork, belief in people and constant improvement. Sustainability is part of H&M's business idea and sustainability work is well integrated into all parts of the business. For more information read page 63 of the annual and sustainability report 2021. Ethics, transparency and risk management As a global company, it is of the utmost impor-tance for H&M to always act ethically, transpar-ently and responsibly in all parts of the business from collaborating with suppliers to meeting with customers. Through good purchasing routines and close cooperation with suppliers, the com-pany's products should always be produced with the greatest possible consideration for people and the environment. H&M's risk management and internal control processes ensure purposeful work throughout the organisation. The board of directors and audit committee receive regular feedback from the organisation concerning how the internal control work is being conducted. H&M's risks are reviewed centrally on a quarterly basis with each brand and every central function. The quarterly meetings are conducted in order to ensure each listed risk has an action plan to minimise impact and is on an acceptable risk level. The risk management work also provides continu-ous input to the long-term commercial decisions. Responsibility for management and control is shared between the shareholders, the board, the audit committee and the CEO. The board's rule of procedure states how the work is to be distributed between the board, the board's audit committee and the CEO. The board is ultimately responsible for the company's organisation and administration and the CEO is responsible for ongoing management of the business, with regular feedback to the board. Board members and 2021 meetings The board of directors has eight members elected by the annual general meeting (AGM) - four women and four men. In accordance with Swedish law the board also has three employee representatives and three deputies for these. In total, the board has 14 members - eight women and six men. The composition of the board exhibits breadth and diversity, with the board members' different areas of expertise complementing each other well. Their experience in areas such as retail-ing, entrepreneurship, fashion, digitalisation, AI, advanced analytics and automation, sustainability and communication forms a good basis for deep and nurturing discussions with the CEO and management. During 2021 the board held 8 board meetings, including a statutory meeting in conjunction with the AGM. All board members have been present at all meetings during 2021. The CEO, CFO and chief accountant also attend all the meetings. Generally, one or two departments or brands are invited to each meeting to give a status presenta-tion concerning what their particular function or brand is working on. These presentations act as a complement to the CEO's status reports and provide opportunity for more in-depth discus-sions concerning specific areas of the operations. At each board meeting the chair of the audit committee also gives a summary of the matters addressed by the audit committee at its most recent meeting within areas such as accounting, audit, security, tax, internal control and risk, as well as various new regulations and legislation. Further reading Here you will find, among other things: - Previous corporate governance reports - Information about the board of directors, CEO, auditors, audit committee - Information about guidelines and policies - Information and material from previous AGMs and Extraordinary General Meetings - Risks and uncertainties H & M Hennes & Mauritz AB has chosen to have the corporate governance report as a separate document to the annual report, in accordance with chapter 6 section 8 of the Swedish Annual Accounts Act. The information that must be provided under chapter 6 section 6 items 3-6 of the Annual Accounts Act is included in the annual and sustainability report on page 59 of the annual and sustainability report for 2021 of H&M Group and is therefore not included in this corporate governance report. In accordance with chapter 6 section 9 of the Annual Accounts Act, the company's auditors have issued a statement on the corporate governance report that can be found on page 15. During the financial year 2021 H&M did not deviate from the Code. CORPORATE GOVERNANCE IN SWEDEN For listed companies in Sweden it is important to be aware of the following aspects of corporate governance: - The nomination committee plays a key role and in contrast to the Anglo-American system, its members are appointed by a company's largest shareholders. It is the nomination committee's task to propose the size of the board of direc-tors and who is to be elected to the board at the general meeting of shareholders. Board members are elected by all those who vote at the general meeting, but in practice it is difficult to present alternative proposals to the nomination commit-tee's proposed board members while the general meeting is in progress. In practice, therefore, the nomination committee has a decisive influence over who is elected to the board. The nomination committee also provides the general meeting with a proposal for board fees and a proposed auditor. Principles for how members of the nomination committee are appointed are decided by the general meeting. - The law states that board members are appointed to represent the interests of all share-holders. Hence if a large shareholder group has proposed a new member via the nomination committee, that board member represents the interests of all shareholders not only the interests of the shareholder(s) which nominated her/him. - For many decades Swedish enterprise in general has held a positive view of board members in a company elected by its general meeting owning shares in the company. This is seen as a guarantee that the interests of the boardare aligned with the interests of all shareholders in positive development of the share price and that there is consensus regarding the company's risks and opportunities. - Neither the Swedish Corporate Governance Code nor the Swedish Companies Act impose any restrictions on the age of board members, or how long members may sit on the board, or any time limit for when an independent board member ceases to be independent of the company or its principal owners. - It is tradition in Sweden for a company's chief auditor to attend the general meeting of share-holders. The auditors are deemed to be the general meeting's control body for the board. As a result, shareholders can pose questions to the auditors at a general meeting irrespective of the size of their shareholding. - The option of having different classes of shares, usually known as "class A" and "class B" shares, usually with differing voting rights, has been present in the Companies Act in Sweden for a long time and is widely used. It is common for class A shares to carry 10 times the number of votes but otherwise have the same nominal value and the same dividend rights as other shares. - By law the employees have the right to appoint employee representatives to the board. All are invited to the same meetings and receive the same information, and the employee-elected members have the same voting rights as members elected by the general meeting. Board fees are paid only to members elected by the general meeting. H&M's corporate governance structure H&M's corporate governance structure encompasses shareholders, the board of directors, the audit committee, the CEO, the nomination committee, the auditors, the executive management team, business areas organised by brand, employees and employee organisations. The illustration to the right summarises the company's corporate governance structure. H&M's shareholders ultimately decide the com-pany's direction, since the shareholders at the general meeting appoint the board of directors and the chair of the board. Proposals for the composition of the board, board fees and the election of auditors are prepared in advance within the nomination committee. The board in turn appoints a CEO to take care of day-to-day adminis-tration. The CEO appoints members of the executive management team within H&M's matrix organisation. The board includes three employee representatives and three deputies for these, who are appointed by their respective employee organisations. The board appoints an audit committee from among its members, which deals with accounting and auditing matters on an ongoing basis and is the main channel of communication between the board and the auditors. Each year the auditors report to the board and to the annual general meeting on their scrutiny. REPORTS TO/PROVIDES INFORMATIONAPPOINTS/ELECTS/PROPOSES 1. SHAREHOLDERS AND ANNUAL GENERAL MEETING It is the shareholders of H&M who have the final decision on the company's governance by voting at the general meeting to adopt the articles of association, which decide what the business will focus on, and to appoint the board of directors and its chair, whose task it is to administer the company's affairs on behalf of the shareholders. The shareholders at the general meeting also elect auditors, decide on the principles for the nomination committee and select the members of this committee. The general meeting is thus the company's highest decision-making body and is the forum in which shareholders exercise their right to decide on the company's affairs. H&M's annual general meeting (AGM) is held once a year, in late April or early May. The date and venue are announced in conjunc-tion with H&M's nine-month report as well as at hmgroup.com. The notice of the meeting is pub-lished in full usually five weeks before the meeting as a press release and in the newspaper Post- och Inrikes Tidningar and at hmgroup.com. Publication of the notice is announced by an advertisement placed in the newspapers Dagens Nyheter and Svenska Dagbladet. Shareholders registered directly in the register of shareholders who have given notice of their attendance on time are entitled to participate in the meeting and vote for the total number of shares that they hold. Share-holders who cannot be present in person may be represented by proxy. Shareholders wishing to have a particular matter considered by the meeting may submit a written request to the board at least seven weeks before the meeting. H&M's email address is also given in the press release for the notice of the meeting, for shareholders who wish to submit their ques-tions in advance. All the material belonging to the meeting, including the minutes of the meeting, is available on the website in both Swedish and English. Extraordinary general meetings can also be held when there is a particular need to do so. Shareholders' decision-making powers Among other things, the general meeting makes decisions concerning: - The election of board members and the chair of the board - Board fees including the compensation paid to members for work on the audit committee - Discharge of the members of the board and the CEO from liability - Amendments to the articles of association - The election of the auditor - The adoption of the income statement and balance sheet - The distribution of the earnings for the past financial year - The election of members of the nomination committee and establishment of principles for the nomination committee - Guidelines for remuneration to senior executives Articles of association According to the H&M articles of association, H&M's board of directors is to consist of at least three and no more than twelve members elected by the general meeting and no more than thesame number of deputies. The annual general meeting decides the exact number of board members, and which individuals are to be elected to the board. Board members are elected for the period until the close of the next annual general meeting. The general meeting also decides on amendments to the articles of association. Annual general meeting 2021 H&M's annual general meeting (AGM) 2021 was held on 6 May as a digital meeting in view of the infection risk from Covid-19. Shareholders attended remotely and were allowed to choose between postal voting and voting digitally. A digital tool allowed those attending the meeting remotely to ask questions. The company appeared on video from a venue at H&M's head office. A total of 910 shareholders were represented at the meeting, representing 87.8 percent of the votes and 74.9 percent of the capital. The main resolutions passed were the following: - The lawyer Sven Unger was elected as chair of the meeting. - Balance sheets and income statements for H&M and for the group including its subsidiar-ies were adopted. - No dividend was to be paid to the sharehold-ers and the funds at the disposal of the annual general meeting were to be carried forward. - The board members and the CEO were dis-charged from liability for the 2020 financial year. - The number of board members elected by the meeting to serve until the close of the next AGM was set at eight, with no deputies. - The following ordinary board members were re-elected: Stina Bergfors, Anders Dahlvig, Danica Kragic Jensfelt, Lena Patriksson Keller, Christian Sievert, Erica Wiking Häger, Niklas Zennström and Karl-Johan Persson. Karl-Johan Persson was re-elected as the chair of the board. - The AGM approved the proposal from the nomination committee that board fees be paid as follows, unchanged from the previous year: chair of the board SEK 1,700,000; board members elected by the AGM SEK 650,000; members of the audit committee an additional SEK 175,000; and the chair of the audit commit-tee an additional SEK 225,000. - The AGM resolved to appoint Deloitte AB as auditors until the close of the 2022 AGM. Auditors' fees to be paid based on approved invoices. - The proposed principles for the nomination committee were approved and members of the nomination committee were elected. - The proposed guidelines for remuneration to senior executives were approved. Votes and capital represented at H&M's annual general meeting: YEAR Extraordinary general meeting 2021 On Thursday 28 October 2021 an extraordinary general meeting was held in order to approve the dividend of SEK 6:50 per share in accordance with the board of directors' proposal. No meeting with the possibility to attend in person or to be repre-sented by a proxy took place in view of the risk of spreading Covid-19. The meeting took the form solely of postal voting under temporary legislative rules. A total of 932 shareholders were represented at the meeting, representing 86.5 percent of the votes and 72.2 percent of the capital. Number of shareholders and ownership structure At the end of the financial year H&M had 246,424 shareholders. The total number of shares in H&M is 1,655,072,000, of which 194,400,000 are class A shares with ten votes per share and 1,460,672,000 are class B shares with one vote per share. H&M's largest shareholder is Stefan Persson and family, who via Ramsbury Invest AB hold all the class A shares, which represent 57.1 percent of the votes, as well as 604,856,427 (587,971,466) class B shares, representing 17.8 (17.3) percent of the votes. In addition, the family privately own 36,400,289 class B shares. This means that as at 30 November 2021, Stefan Persson and family privately and via Ramsbury Invest AB represent 75.9 (75.4) percent of the votes and 50.5 (49.5) percent of the total number of shares. Ramsbury Invest AB is thus the parent company of H & M Hennes & Mauritz AB. Ramsbury Invest AB is owned by Stefan Persson and family, and primarilyby Stefan Persson. Karl-Johan Persson is also a shareholder in Ramsbury Invest AB. A class A share has greater voting power at the company's general meetings. All the shares have the same dividend entitlement and right to share in the company's assets. Since the company was first listed on the stock exchange in 1974 all the class A shares in H&M have belonged to the founding Persson family, as is usual when fam-ily-owned businesses are floated on the stock exchange since it allows the founding family to have a controlling interest. The division into class A and class B shares is set out in H&M's articles of association and is thus transparent to those con-sidering buying shares in H&M. Annual general meeting 2022 H&M's AGM 2022 will be held on Wednesday, 4 May 2022. To register to attend the 2022 AGM, see the notice of the meeting at hmgroup.com/ agm. 2. NOMINATION COMMITTEE The nomination committee prepares information that will be used as a basis for decisions at the general meeting concerning election of the board of directors, chair of the board, auditors and chair of the annual general meeting, fees to the board and auditors, as well as principles for the nomi-nation committee. The nomination committee's proposal for the composition of the board exhibits diversity and breadth as regards expertise, experience, background and gender balance. It also takes into consideration the company's stage of development and future focus. Before each annual general meeting the nomi-nation committee's report is available to read as a separate document at hmgroup.com/ corporategovernance. The composition of the nomination committee is based on the principles for the nomination committee adopted at the 2021 annual general meeting. The nomination committee below is based on the principle that the nomination committee is to consist of the chair of the board plus four others nominated by the four largest shareholders in terms of voting rights, as recorded in the register of shareholders. In autumn 2021 the nomination committee consisted of: - Karl-Johan Persson, chair of the board - Stefan Persson, Ramsbury Invest AB - Lottie Tham - Erik Durhan, Nordea fonder The nomination committee meets the require-ments of the Code regarding the independence of members. Stefan Persson chairs the nomina-tion committee, in accordance with the principles of the nomination committee which state that the chair of the nomination committee shall be the member representing the largest shareholder unless the members of the nomination commit-tee agree otherwise. The nomination committee unanimously decided that in view of H&M's own-ership structure, Stefan Persson in his capacity as principal shareholder is the natural choice to chair H&M's nomination committee. Work of the nomination committee in prep-aration for the 2021 AGM including description of diversity policy for the board of directors Before the 2021 annual general meeting the nomination committee held two meetings at which minutes were taken and was also in contact at other times. As a basis for its work to analyse the composition of the board ahead of the 2021 annual general meeting, the nomination commit-tee studied the report by the chair of the board on the work of the board of directors and also met on one occasion with CEO Helena Helmersson. Its work has functioned well over the course of the year. The information from the chair of the board, along with interviews conducted with board members elected by the general meeting, provided a basis for the nomination committee's work on its proposal to the 2021 annual general meeting regarding the composition of the board. The members' competencies complement each other well, forming a good whole. In view of this, as well as the fact that 2020 and the start of 2021 were challenging and unusual because of the Covid-19 pandemic, the nomination committee decided not to propose any changes to the com-position of the board. The nomination committee's proposal to the 2021 annual general meeting was therefore the re-election of all the current board members: Stina Bergfors, Anders Dahlvig, Danica Kragic Jensfelt, Lena Patriksson Keller, Karl-Johan Persson, Christian Sievert, Erica Wiking Häger and Niklas Zennström; and the re-election of Karl-Johan Persson as chair of the board. The nomination committee judged that the proposed board complied well with section 4.1 of the Code, which the nomination committee applies as its diversity policy. The policy aims to ensure that the proposed board exhibits diversity and breadth of qualifications, experience and This is an excerpt of the original content. To continue reading it, access the original document here . Attachments