Corporate governance report 2021

Corporate governance in NIBE Industrier AB (publ) (NIBE) is performed by the Annual General Meeting, the Board of Directors and the Managing Director/CEO in accordance with the Swedish Companies Act (Swedish Code of Statutes 2005:551), the company’s Articles of Association, the Swedish Annual Accounts Act (1995:1554), the listing agreement with the Nasdaq Stock Exchange in Stockholm, and good practice on the stock market. It is good practice for Swedish companies whose shares are traded on regulated markets to comply with the Swedish Code of Corporate Governance (the Code). NIBE complies with the Code, and this corporate governance report has been drawn up in accordance with the Code. The current Code may be accessed on the Swedish Corporate Governance Board’s website, www.bolagsstyrning.se. In addition, NIBE also provides information via the company’s

website in accordance with the Market Abuse Regulation and other requirements.

The corporate governance report is not part of the formal annual report documents. The company’s auditors have examined the corporate governance report, and it is their opinion that the corporate governance report has been properly drawn up and that the statutory information in the report is consistent with other parts of the annual report and consolidated financial statements.

Ownership

NIBE has its registered office in Markaryd, Sweden, and has been listed on Nasdaq Stockholm since 1997.

NIBE class B shares have also had a secondary listing on the SIX

Swiss Exchange since August 2011. On 31 December 2021, NIBE had

89,827 registered shareholders, excluding previous shareholders in

Schulthess Group AG who have become shareholders in NIBE. As

the Swiss authorities do not report any details relating to individual

shareholders in Switzerland to NIBE, it is not possible to determine

the total number of shareholders.

The ten largest shareholders comprise the constellations of ‘current

and former board members and senior executives’ with a total

of 20% of the capital and 46% of voting rights, followed by the

Schörling family, which holds 7% of the capital and 19% of the voting

rights, and eight institutional investors with a total of 31% of capital

and 15% of voting rights. Together these ten constellations of

investors hold a total of 58% of the capital in the company and 80%

of the votes. No individual shareholder has a direct or indirect shareholding

which represents at least 10% of the number of votes of all

shares in NIBE.

Annual General Meeting

The Annual General Meeting (AGM) is NIBE’s highest decision-making body. The AGM elects the company’s Board of Directors and auditors, adopts the accounts, makes decisions on dividends and other appropriations of profits/losses, and discharges the Board of Directors and the MD/CEO from liability.

NIBE’s Annual General Meeting was held on 11 May 2021. As a consequence

of the Covid-19 pandemic, the meeting was held with postal

voting only. 63% of the shares and 82% of the total number of votes

in the company were represented via postal voting. The minutes of

the AGM and the company’s articles of association are available on

the company’s website.

There are no limitations in the articles of association as to the

number of votes a shareholder may hold at a general meeting of the

company. Nor are there any provisions on the appointment or dismissal

of directors of the company, or changes to the company’s articles

of association.

The 2021 AGM gave the Board of Directors a mandate to issue new

class B shares in the company, on one or more occasions and with or

without regard for the shareholders’ preferential rights, to be used to

finance the acquisition of companies or businesses. This mandate is

valid until the 2022 AGM and is restricted to a maximum of 10% of the

number of shares issued at the time of the AGM.

The 2021 Annual General Meeting also resolved to change the

company’s articles of association in respect of limits on the number

of shares, and to divide the company’s shares by means of a share

split, irrespective of share class, so that each existing share was divided

into four shares.

Communication with the stock market

The ambition is to maintain a high standard of information issued by the company to the stock market. Such information must be accurate and transparent to create long-term confidence in the company.

Earnings and a summary of the Group’s financial position are presented

quarterly and, like the annual report, are issued in printed

form to all shareholders who so wish. All information that may have

an e ffect o n t he c ompany’s s hare p rice a nd i nformation o n a ll a cquisitions

is announced via press releases. All financial information

is also available on the website, www.nibe.com. Press releases and

reports are posted there at the same time as they are made public.

Press and financial analyst conferences are held when quarterly

reports are published. There is also continuous dialogue with Swedish

and foreign investors and financial analysts, the media and Aktiespararna,

the Swedish Shareholders’ Association. This took place

digitally during the year.

Board procedures

The NIBE Board of Directors consists of six members, elected by the AGM. Directors of the company and the Chairman of the Board are elected annually by the AGM to serve for the period until the next AGM. Company employees participate in board meetings as required to submit reports or to contribute expert knowledge in individual matters.

The Board of Directors in 2021 comprised Hans Linnarson (Chair),

Georg Brunstam, Anders Pålsson, Jenny Sjödahl, Jenny Larsson and

Gerteric Lindquist (CEO of the NIBE Group). With the exception of the

CEO, none of the directors of the company is employed by the company

or has any operational responsibilities in the company.

It is the opinion of the Board of Directors that all directors are

independent in relation to the company, with the exception of the

CEO. Please see page 183 for a presentation of the directors of the

company.

The work of the Board is governed by formal rules of procedure

adopted annually to regulate the decision-making processes within

the company, authority to sign for the company, meetings of the

Board and the duties of the Chairman of the Board. The Board of

Directors has not otherwise distributed responsibilities among its

members. However, some Board members are more familiar with

certain matters than others due to their particular expertise and experience.

The Board of Directors oversees the work of the MD/CEO and is

responsible for ensuring that the organisation, management and

administrative guidelines for the company’s funds are suitable for

the purpose. The Board is also responsible for developing and monitoring

the company’s strategies through plans and objectives, decisions

on acquisitions, major investments, appointments to managerial

positions and the continual supervision of operations during the

year. In addition, the Board sets the budget and is responsible for the

annual accounts.

The Chairman leads the work of the Board and ensures that it is

carried out in accordance with the Swedish Companies Act and oth-

er relevant legislation. The Chairman follows the progress of operations

through consultations with the MD, and is responsible for ensuring

that other members of the Board receive the information they

need to hold discussions of a high quality and make the best possible

decisions.

The Board of Directors evaluates its work every year. The evaluation

is carried out by means of a survey of the directors. The results

of the survey are then presented to the full Board, which uses

them to make specific proposals on how its work can be developed,

improved and made more efficient, where necessary. The Board survey

for 2021 revealed an open, constructive climate with well-functioning

control and decision-making processes. The areas covered

by the evaluation included the composition, working methods, communication

and internal control of the Board, the Board’s evaluation

of the MD/CEO and other company management, and the need for

committees.

Decision-making process

The NIBE Board deals with all matters of significance.

Issues such as the composition of the Board and directors’ fees are

dealt with once a year prior to the AGM, when the Chairman of the

Board contacts major shareholders personally.

The company’s auditor makes his report to the Board as a whole.

The company does not have a Nomination Committee (Section III,

item 2.1, of the Code), a Remuneration Committee (Section III, item

9.1, of the Code) or an Audit Committee (Section III, item 7.2, of the

Code). NIBE does not comply with the Code in respect of nominations

because of the clear ownership structure with two principal shareholder

constellations, which together control 65% of the company’s

votes, and which also enjoy mutually cordial relations. The Board of

Directors is not too large to carry out the tasks of the audit and remuneration

committees and possesses the necessary expertise,

which is consistent with the Swedish Companies Act and the Code.

The CEO (who is also a Board member) does not participate in the

Board’s work on the tasks that are otherwise performed by a remuneration

committee.

Group management

The CEO, who is also appointed by the Board of Directors as Managing Director of the parent, exercises day-to-day control of the Group, and the three directors of the Group’s business areas report to him.

The CEO leads operations in accordance with the instructions adopted

by the Board in respect of the division of duties between the Board

and the MD/CEO. The work of the MD/CEO and of Group management

is evaluated annually.

Financing, currency management, corporate acquisitions, new

establishments, financial control, financial information, human resources

policy, sustainability and other overall policy matters are

coordinated at Group level.

Governance of business areas

NIBE consists of three business areas.

Each business area has its own operational management with profit

responsibility. Each business area has a Business Area Board

chaired by the Group’s CEO.

Each Business Area Board, in addition to responsibility for dayto-

day operations, is also responsible to the NIBE Board of Directors

for the strategic development of its respective business area. Each

Business Area Board meets once per quarter.

Management of the Group’s sustainability work

The Group’s sustainability workgroup reports to the Sustainability Council which, in addition to the workgroup, consists of the CEO, CFO and business area managers. 

Much of the work is regulated in national legislation, such as environmental

laws and labour law, but we are also obliged to comply

with regional and international law and make voluntary commitments

such as to the UN Global Compact and the UN Sustainable

Development Goals/Agenda 2030.

NIBE’s Board has the ultimate responsibility for ensuring that

risks are managed and that sustainability initiatives comply with the

requirements of authorities, shareholders and other stakeholders.

The Managing Director reports to the Board. The business area managers

are responsible for communicating and implementing their

strategic work at the local board level.

The management of each company is responsible for local operational

sustainability work and for compliance with Group guidelines.

These managers report to the business area managers in each area.

The sustainability workgroup regularly visits companies in the

Group to monitor compliance with common policies and guidelines.

The workgroup also works strategically and reports on sustainability

issues to the Boards at Group and business area level.

Any need for improvement or nonconformities are documented

and reported to the individual company, business area managers

and Group management. Each business area head is responsible for

ensuring that measures proposed are taken.

Code of conduct

NIBE has a code of conduct that reflects the NIBE culture and the ten principles of the UN Global Compact.

The C ode of C onduct is r eflected in NIBE’s documents on business

principles, values and working methods and the content of these is

based on a long tradition of honest and sincere business practices.

The information can be found on pages 12–13.

All employees receive the printed version in the local language.

When a new company joins the Group, its management is obliged to

communicate and implement the Code of Conduct in the organisation.

The Code of Conduct is available to external parties and stakeholders

on NIBE’s website at nibe.com.

All businesses comply with national legislation regarding financial,

environmental and labour legislation, and are also obliged to

comply with regional and international law and voluntary commitments

such as the UN Global Compact. Management is responsible

for seeking advice on ethical and legal behaviour according to established

escalation procedures when their knowledge or mandate

is insufficient.

NIBE has a whistleblower function through which all Group employees

can confidentially report suspicions of serious deviations

from NIBE’s values, business principles and applicable legislation

without risking retaliation. To ensure the anonymity of the whistleblower

and the proper, secure handling of submissions, whistleblower

cases go directly to an external recipient who also leads the investigation

of the case.

Diversity policy

NIBE has adopted a diversity policy for the Board.

NIBE’s Board of Directors must have overall expertise and experience

that is appropriate to its work and the business that is conducted, as

well as to be able to identify and analyse opportunities for and risks

to the Group. When new directors are nominated and elected, it is

necessary to consider each director’s suitability to obtain a Board of

Directors with the overall expertise required for appropriate governance

of the Group. The composition of the Board of Directors must

be characterised by versatility and breadth in terms of the expertise,

experience, gender, age, education and professional background of

the directors elected. The objective of the policy is to achieve an appropriate

composition of the Board as regards the company’s operations

and relationships in general. In 2021, the composition of the

Board was evaluated within the framework of the Board’s own annual

evaluation (presented above under ‘Board procedures’) and taking

into account the diversity policy. The result of the evaluation is that

the composition of the Board is deemed compliant with the policy.

Remuneration, 2021

The 2021 AGM resolved that the fees to the Board of Directors and the fees to the auditors should be paid in accordance with approved accounts.

At the same time, policies for the remuneration of the MD/CEO and

other senior executives were detailed and approved. Further information

about the principles that apply can be found in Note 6 to the

annual report and on NIBE’s website at www.nibe.com.

Remuneration to the Managing Director/CEO is a matter decided

by the Board, but the preparatory work for this decision is undertaken

by the Chairman of the Board after discussions with the Managing

Director/CEO. The remuneration of other senior executives is

determined by the Managing Director in consultation with the Chairman

of the Board and in accordance with the guidelines adopted by

the AGM. Decisions in this regard are reported to the Board of Directors.

Information on the fees paid to directors, as well as the salary and

other remuneration paid to the MD/CEO and other senior executives

can be found in Note 6 to the annual report.

Incentive programme

An incentive programme applies to certain key members of staff/senior executives, under which they are paid variable remuneration if set targets are met. 

The variable bonus is limited to a maximum of four months’ salary. It

is also possible for an additional month’s salary to be paid on condition

that this additional payment plus another monthly salary paid as

a variable bonus or part of a variable bonus is used to purchase NIBE

shares on the stock market. A further condition for entitlement to

receive this additional month’s remuneration is that the NIBE shares

purchased are retained for at least three years. Under normal circumstances,

shares acquired in this way by members of staff shall

be purchased on one occasion each year in February/March and the

purchase shall be subject to the relevant market abuse regulations.

No i ncentive p rogramme i s o ffered t o t he M D/CEO. C ertain k ey i ndividuals

in the foreign companies acquired during the year have

incentive programmes that, in certain respects, deviate from the

principles for remuneration that are otherwise applied in the NIBE

Group. Further information about the principles that apply for senior

executives can be found in Note 6 to the annual report.

Severance pay

No severance pay or other benefits apply to the Chairman of the Board or to the directors, apart from the MD/CEO.

The period of notice for the MD/CEO is six months in the event that

the company gives notice. In addition to salary during the period of

notice, the MD/CEO is entitled to severance pay equal to 12 months’

salary. Other senior executives are entitled to receive their salaries

during a period of notice which varies between 6 and 12 months.

Pensions

The Chairman of the Board and the directors of the company receive no retirement benefits for their work on the Board.

No special agreements have been reached that entitle senior executives

to retire before the official retirement age while still retaining

part of their salary in the interim.

Information on the retirement benefits of the Managing Director/

CEO and other senior executives can be found in Note 6 to the annual

report.

Under the Group’s policy, no further pension premium payments

are made if employment continues after the age of 65.

Internal controls of financial reporting in 2021

Under the Swedish Companies Act and the Code, the Board of Directors is responsible for internal control.

This report on internal control and risk management as regards financial

reporting complies with the requirements in Chapter 6, Section

6, of the Annual Accounts Act.

NIBE is characterised by simplicity in its legal and operational

structure, transparency in its organisation, clear divisions of responsibility,

and an efficient management and control system.

NIBE complies not only with laws and regulations in respect of financial

reporting, but also with internal instructions and policies set

out in the Group’s Finance Handbook. These are applied by all companies

in the Group, along with systems aimed at ensuring effective

internal controls in financial reporting.

Consolidated financial statements containing comprehensive

analyses and comments are prepared each quarter for the Group

and its business areas. Monitoring also takes place monthly.

There are finance functions and controllers with responsibility

for accounting, reporting and the analysis of financial trends at

Group level, business area level and unit level.

In addition to the statutory audits of the annual report and statutory

audits of the parent and all subsidiaries, the auditors carry out

an annual review of how the companies are organised, of existing

routines and of compliance with the instructions issued, based on

guidelines drawn up by corporate management and approved by the

Board of Directors. A summary of internal control procedures is presented

each year as part of the Board meeting that deals with the

year-end financial statements. The Board also has the option of requesting

a special audit of a selected business during the year if the

Board deems it necessary.

In 2021, the project aimed at reinforcing internal control continued.

It is our opinion that this review increases insight and awareness,

provides explicit instructions and proposes a clear organisation

as regards internal control. It is therefore the opinion of the

Board that, because of the implementation of this review, there is no

need for any separate internal control (item 7.3 of the Code).

External auditors

NIBE’s auditors were elected at the AGM to serve for a period of one year.

The registered public accounting firm KPMG AB has held the position

of the company’s auditors since the AGM in 2013. Jonas Nihlberg has

been auditor in charge since the AGM in 2021.

The auditor in charge has continual access to the approved minutes

of company Board meetings and the monthly reports that the

Board receives.

The company’s auditor in charge reports his observations from

the audit and his assessment of the company’s internal controls to

the Board as a whole.

Over and above normal auditing duties, KPMG AB assists in particular

with due diligence reviews in conjunction with corporate acquisitions

and with accounting consultations. Information on the remuneration

of auditors is given in Note 9 to the annual report.

The work of the Board in 2021

The agenda includes several standing items, which are considered at every meeting.

Status report
Report of significant events affecting operations that have not been listed in the written report that has been circulated.

Financial report
Review of the financial information circulated.

Investments
Decisions regarding investments exceeding SEK 10 million, based on the data circulated.

Legal processes
Review of new or ongoing legal processes, where appropriate.

Acquisitions
Report on ongoing discussions and decisions concerning the acquisition of companies, as and when appropriate.

Press releases, etc.
When appropriate, a review of proposals for external reports to be published after the meeting.

Internal control
Report on the internal control work

Every ordinary board meeting focuses on one principal topic of discussion

February

Financial statements
The meeting in February considers the financial statements for the preceding year. The company auditor presents his comments to the entire Board of Directors on this occasion.

May

Inaugural meeting
Following the AGM, the Board of Directors holds its inaugural meeting, at which the Board discusses the rules of procedure and determines who has authority to sign for the company.

August

Strategy 
In August, the Board holds strategic discussions over two working days.

November

Auditor’s review
November, the company’s auditor gives his view on the interim figures for the period January to September.

December

Budget 
At the end of the year, the Board discusses the Group’s budget for the coming year.