Corporate governance, defined as “the system used to lead and control a business”, is largely built into the requirements on boards laid down in the Danish Public Companies Act.
The Board of Directors and the Executive Management of Vestas continuously consider the principles of good corporate governance with due consideration to current legislation, practice and recommendations. The evaluation includes a review of the company’s business concept, business procedures, business goals, organization, stakeholder relations, risks and the exercise of control.
Once a year the Board of Directors considers the recommendations for good corporate governance elaborated by the Danish Committee on Corporate Governance.
Recommendations for good corporate governance
Vestas’ position on the individual recommendations is described in the following.
The recommendations specify that it is equally legitimate to provide an explanation and to comply with a specific recommendation, as the key issue is to create transparency in corporate governance matters. For each recommendation applies that Vestas has described if Vestas complies with the recommendation and if Vestas does not comply with the recommendation the reason has been explained and specified. Subsequently, reference is made to supplementary information.
The recommendations include the following eight main areas:
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I - The role of the shareholders and their interaction with the management of the company
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II - The role of the stakeholders and their importance to the company
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III - Openness and transparency
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IV - The tasks and responsibilities of the Board of Directors
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V - The composition of the Board of Directors
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VI - Remuneration of the members of the Board of Directors and the Executive Board
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VII - Risk management
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VIII - Revision
I - The role of the shareholders and their interaction with the management of the company
The shareholders, the owners of the company and society have a joint interest in the company always being capable of adjusting to changing demands, which allows the company to continue to be competitive and continue to create value. Corporate governance implies that the Board of Directors and the Executive Board understand that interaction between the management and the shareholders is of vital importance to the company. As owners of the company, the shareholders can actively exercise their rights and use their influence resulting in the management protecting the interests of the shareholders as best as possible, and ensuring efficient deployment of the company’s funds both in the short as well as the long term.
Therefore, good corporate governance depends on appropriate frameworks which encourage the shareholders to enter into a dialogue with the management of the company and each other. This can be encouraged through a strengthening of the general meeting’s role as a forum for communication and decisions.
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The Danish Committee on Corporate Governance's recommendations
Vestas’ comments to the recommendations
II - The role of the stakeholders and their importance to the company
It is essential for a company’s prosperity and future possibilities that the company have a good relationship with its stakeholders. Stakeholders are everyone directly affected by the company’s decisions and business. Thus, it is desirable that the company’s management run and develop the company with due consideration of its stakeholders, and that the management provide an incentive for dialogue with these stakeholders. Successful interaction between the company and its stakeholders implies openness and mutual respect.
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The Danish Committee on Corporate Governance's recommendations
Vestas’ comments to the recommendations
III - Openness and transparency
To a varying extent, it is necessary to provide shareholders, including potential shareholders, and other stakeholders with information about the company. Understanding and relating to the company depend on the amount of information and the quality of information published or provided by the company. Openness and transparency are essential conditions for ensuring that the company’s shareholders and other stakeholders are able to regularly evaluate and relate to the company and its prospects and so to contribute to constructive interaction with the company.
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The Danish Committee on Corporate Governance's recommendations
Vestas’ comments to the recommendations
IV - The tasks and responsibilities of the Board of Directors
The Board of Directors is responsible for safeguarding the interests of the shareholders with care and due consideration of the other stakeholders. As concerns the managerial division of tasks between the Board of Directors and the Executive Board, the Board of Directors is assigned with, and responsible for, undertaking the overall management of the company as well as establishing guidelines for and supervising the Executive Board’s work. One important management task is to develop and establish appropriate strategies for the company. It is essential that the Board of Directors ensures ongoing development of and follow-up on the necessary strategies in collaboration with the Executive Board.
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The Danish Committee on Corporate Governance's recommendations
Vestas’ comments to the recommendations
V - The composition of the Board of Directors
It is essential that the Board of Directors is composed in such a way as to allow it to perform its managerial tasks, including the strategic tasks of the company, in an effective and forward-looking manner and, at the same time, to act as a constructive and qualified sounding board for the members of the Executive Board. It is also essential that the members of the Board of Directors always act independently of special interests. The Board of Directors must regularly ensure that its composition and its procedures reflect the demands made by the company’s current situation and circumstances.
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The Danish Committee on Corporate Governance's recommendations
Vestas’ comments to the recommendations
VI - Remuneration of the members of the Board of Directors and the Executive Board
Competitive remuneration is a prerequisite for attracting and retaining competent members of the Board of Directors and the Executive Board. The remuneration of the members of the two boards should be reasonable in relation to the tasks assigned and the responsibilities involved in performing these tasks.
Performance-related pay may result in conflicting interests between the shareholders and the management of the company and may cause the management to focus on increasing the company’s value creation.
It is essential that there is openness about all important issues regarding the principles and amounts of the total remuneration offered to the members of the Board of Directors and the Executive Board.
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The Danish Committee on Corporate Governance's recommendations
Vestas’ comments to the recommendations
VII - Risk management
Effective risk management is a prerequisite allowing the Board of Directors to perform its tasks in the best possible way. Therefore, it is essential that the Board of Directors arranges for appropriate risk management systems to be established and generally ensure that such systems meet the requirements of the company at any time.
The purpose of risk management is to:
- develop and maintain an understanding of the organisation of the company’s strategic and operational goals, including an identification of the critical success factors for achieving such goals.
- analyse the possibilities and challenges related to the implementation of the above goals as well as the risk of these goals not being met.
- analyse the most important activities launched by the company to identify the risks in this connection.
- determine the venture spirit of the company.
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The Danish Committee on Corporate Governance's recommendations
Vestas’ comments to the recommendations
VIII - Audit
Ensuring a competent and independent audit is an essential part of the Board of Directors’ work. The Committee recommends that the contractual basis and thus the framework of the auditor’s work is determined between the Board of Directors and the auditors.
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The Danish Committee on Corporate Governance's recommendations
Vestas’ comments to the recommendations