Policies and systems
For more information about the policies and systems supporting the ROCKWOOL Group's corporate governance
The aim of ROCKWOOL International A/S’ corporate governance work is to ensure that the structure and function of all decision-making bodies are the best possible for our business and our stakeholders.
As a company organised under Danish law, and with a listing on the Nasdaq Copenhagen stock exchange, ROCKWOOL International A/S is in compliance with the Danish Securities Trading Act and is guided by the corporate governance recommendations of the stock exchange.
ROCKWOOL International A/S is generally in compliance with such recommendations but has, in few cases, chosen to differ. The variations are generally due to company specific views on the requirements to optimise value for our shareholders. See our Report regarding the recommendations from the Danish Committee on Corporate Governance.
Further to these stipulated regulations from the Danish authorities, our Corporate Governance framework also comprises internal instructions such as the Articles of Association, the Business Procedure for the Board of Directors and the Management Instructions for the Registered Directors.These work in accordance with our corporate values and Principles of Leadership, and the business rules applied within the ROCKWOOL Group.
Pursuant to the provisions of the Danish Companies Act and the ROCKWOOL International A/S Articles of Association, the supervision and management of the ROCKWOOL Group is divided among the General Meeting of shareholders, the Board of Directors (with well-defined committees), and Group Management.
Annual General Meeting of shareholders
The ROCKWOOL International A/S ordinary General Meeting is of great significance as it convenes our shareholders. It is held once a year and is broadcasted live in Danish and English on our corporate website.
Voting at the General Meeting is based on possession of two types of ROCKWOOL shares: A shares (51.1% of the capital) carry ten votes each and B shares (48.9% of the capital) carry one vote each. This share structure is deemed optimal for the strategic development of the company, thereby creating long-term value. Together with the high equity ratio – currently 68% - this structure provides independence from financial markets, plus stability to counterbalance fluctuating conditions in building sector markets, as well as the high operational leverage of our business model. This leverage is linked to the capital intensive nature of our factories – one new plant may cost more than EUR 120 million and must operate with sufficiently high capacity to pay back the investment.
The ROCKWOOL Foundation – our largest shareholder with 23% of share capital – works for the benefit of society while also duly considering the long-term interests of the Group. Members of the Board of the ROCKWOOL Foundation include ROCKWOOL International A/S Board of Directors member Søren Kähler and Lars Elmekilde Hansen - one of three employee-elected members – as well as Andrzej Kielar, Managing Director of ROCKWOOL Polska.
There is an agreement between certain members of the Kähler family (founders of the business), to meet regularly to coordinate their interests in the company, including voting strategy at General Meetings, although there is no requirement for them to vote jointly. Søren Kähler and Thomas Kähler – both members of the Board of Directors – participate in these meetings.
ROCKWOOL International A/S Board of Directors and Group Management are not aware of the existence of any shareholder agreements containing pre-emption rights or restrictions in voting rights.
The Board of Directors
The Board of Directors today consists of nine members, six of whom are elected by the shareholders at General Meetings for a period of one year and may be re-elected. Of these, four members, including the chairman, are deemed independent according to the Danish Recommendations on Corporate Governance. Three members are elected by the employees, for a period of four years, pursuant to the Danish Companies Act. The roles and responsibilities of the Board of Directors are defined in the Business Procedure for the Board of Directors.
The Board of Directors evaluates its own competences and the work and performance of Group Management on an annual basis.
The Board of Directors has established a structure consisting of the Chairmanship and two Deputy Chairs.
The Board of Directors established an Audit Committee and a Remuneration Committee. The committees report to the Board of Directors. The majority of the members of the committees are independent members of the Board of Directors.
The Board of Directors has appointed an Audit Committee consisting of three members of the Board of Directors. The majority of the members of the Audit Committee are independent.
The Audit Committee monitors accounting and audit policies plus conditions which, if determined by the Board of Directors or the Audit Committee, should be subject to thorough evaluation. Further, the Audit Committee evaluates internal control and risk systems.
The Board of Directors has appointed a Remuneration Committee consisting of three members of the Board of Directors. The majority of the members of the Remuneration Committee are independent.
The Remuneration Committee prepares the Remuneration Policy for the members of the Board of Directors and Group Management, and ensures that the guidelines for Group level variable pay schemes support the strategy. The Remuneration Policy and the Incentive Guideline, and all changes thereto, are approved by the Board of Directors, as well as the General Meeting. The Remuneration Committee evaluates and brings forward recommendations for the remuneration of the Board of Directors. The Remuneration Committee is authorised by the Board of Directors to approve remuneration for senior executives.
Group Management is responsible for the day-to-day management of the company and compliance with the guidelines and recommendations set forth by the Board of Directors. The responsibility of Group Management covers organisation of the company, as well as allocation of resources, creating and implementing strategies and policies, and ensuring timely reporting to the Board of Directors.
In 2015, the Group launched a major Business Transformation Programme to improve the company’s competitiveness and profitability. As a consequence, Group Management was restructured and increased from six to nine executives. The CEO and CFO are the Registered Directors (in Danish “Direktionen”) with the Danish Business Authority.
To safeguard the interests of shareholders and the general public, an independent auditor is appointed at the General Meeting following a recommendation from the Board of Directors. Before making its recommendation, the Board of Directors undertakes a critical evaluation of the auditor’s independence and competence.
The auditor submits a written report to the assembled Board of Directors once a year but also immediately if any issues of which the Board of Directors should be informed are identified. The auditor’s report is discussed in detail in the Audit Committee.
The Group works closely with the auditor in relation to procedures and internal controls by exchanging controller reports and audit reports, and by generally sharing all relevant information.
The ROCKWOOL Group considers strong internal controls to be an essential management tool.
Group Management sets out general requirements for business processes and internal controls relating to the financial affairs of subsidiaries. The internal control system includes clearly defined organisational roles and responsibilities, reporting requirements and authorities. Local management teams are responsible for ensuring that the control environment in each subsidiary company is sufficient to meet local and Group requirements.
Each month the ROCKWOOL Group companies report financial data and every quarter they comment on financial and commercial developments to head office. This information is used to prepare consolidated financial statements and reports for Group Management. As part of this process, the accounting information reported by all companies in the Group is reviewed, both by controllers with regional links and in-depth knowledge of the individual companies, and by Group Controlling.
Twice a year, the financial directors of the ROCKWOOL Group’s companies meet with Group Controlling to align financial procedures and reporting, and suggest possible improvements. Commercial and financial developments, and associated risks, are also discussed regularly by Group Management, regional management teams and our subsidiary companies’ supervisory committees and management teams.
Group Internal Audit
The Group has set up a Group Internal Audit to ensure objective and independent assessment of the adequacy and quality of the Group’s internal controls. The most important role of the Group Internal Audit is to assess whether the Group has well-established accounting practices, written policies and procedures in all important business areas, plus adequate internal control measures.
The ROCKWOOL Group publishes its statutory report on Corporate Governance for the financial year 2015 cf. the Danish Financial Statements Act section 107b (in Danish “Lovpligtig redegørelse for virksomhedsledelse, jf. årsregnskabsloven § 107b") including a detailed description of the Board of Directors' consideration in respect of all the recommendations.