Corporate Governance

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Corporate Governance 2012 Corporate Governance report re. annual report 2011 according to Danish Financial Statements Act, Sec. 107b 339.2 KB

CORPORATE GOVERNANCE

The Board of Directors defines the objectives, goals, and strategies of the company and makes decisions on matters of major significance and unusual nature. On behalf of the shareholders, the Board of Directors furthermore supervises the organization and ensures that the company is managed appropriately and in accordance with legislation and the company’s Articles of Association. The Board of Directors does not participate in the day-to-day management of the company.

In addition to undertaking the overall controlling of Topotarget, it is the primary responsibility of the Board of Directors to define the strategic framework for the activities and action plans of the company and to maintain a constructive dialogue with the Management Board regarding the implementation of the strategies. In addition, the Board of Directors appoints the Management Board, sets out its terms and tasks, and supervises its work and the company’s procedures and responsibilities.

Openness and transparency
Topotarget’s current and future shareholders as well as other stakeholders have different requirements in terms of corporate information. However, all rely on the quality of the information available. Openness and transparency are therefore pivotal for evaluating Topotarget and its prospects and Topotarget seeks to maintain open communication through company announcements, investor meetings, and company presentations. As a result, Topotarget’s annual report, interim reports, and other company announcements are available in both Danish and English. Topotarget seeks to ensure a timely convening of the company’s annual general meetings, allowing its shareholders and others to consider the issues on the agenda for the general meeting.

Diversity
Topotarget fully understands and supports the importance of diversity in the organization. We believe that a diverse work force and work place results in greater quality of work as well as a broader understanding of various organizational tasks. This mindset is thus also clearly supported in Topotarget when looking at the composition of both our Board of Directors, our management team, and in the company in general.

Composition of the Board of Directors
Pursuant to Article 14 of Topotarget’s Articles of Association, a maximum of seven members can serve on the Topotarget Board of Directors. The article further stipulates that board members must retire when they reach the age of 70. Topotarget seeks to ensure that at least a majority of the board members are independent of special interests. As such, six of Topotarget’s seven board members are independent. All board members are evaluated by the entire Board of Directors on a yearly basis.

The key considerations made in relation to the appointment of the Board of Directors were the professional background and industry experience of each candidate. The activities of the Board of Directors are governed by an internal set of procedural rules. For relevant background information on the individual board members, please go to page 26 or visit http://www.topotarget.com/about-us/board-of-directors.aspx

The Board of Directors has established a formal process for evaluating management, and objectives are agreed upon in connection with the budgeting procedure and evaluated finally at year-end. The Board of Directors continuously discusses the goals and strategies and Topotarget’s ability to implement the strategies and live up to expectations. The Chairman of the Board has well-defined tasks, duties, and responsibilities. Among these to make sure that the board members have the competencies that are required for a governing board. The entire Board of Directors evaluates the board’s composition to ensure that the needed competencies are at hand and also to ensure a transparent process on election of board members at the annual general meeting.

In 2011, the Board of Directors held 14 meetings (either in person, via telephone, or by way of written resolutions).

Audit Committee
Topotarget has established an Audit Committee and thus complies with the recommendations stipulated by the Danish Committee on Corporate Governance. The committee’s main purpose is to review the financial controls and to work with the independent auditors in connection with their audit of the company’s financial statements and to make reports and recommendations to the Board of Directors on these matters. The members of the Audit Committee are Bo Jesper Hansen (Chairman) and Per Samuelsson.

Internal rules in the form of a Management Instruction governing the allocation of powers between the company’s Board of Directors and the senior management have been established, and the company intends to have an on-going policy of actively pursuing a strategy of good corporate governance.

Remuneration and Nomination Committee
The Board of Directors has moreover established a Remuneration and Nomination Committee. In regard to nomination, the committee’s tasks are to describe and evaluate the required qualifications of the two governing bodies as well as making recommendations on changes. Furthermore, the committee considers and recommends proposals for candidates for executive positions in the company. With regard to remuneration, the sole purpose of the committee is to evaluate and make recommendations to the Board of Directors on the remuneration paid to board members and the senior management as well as recommendations concerning employee incentive programs. The committee consists of the following members: Bo Jesper Hansen (Chairman), Per Samuelsson, Ingelise Saunders, and Anker Lundemose.

Exceptions
It is the view of the Board of Directors that Topotarget complies with the Recommendations on Corporate Governance from August 2011, however, with the following exceptions:

Topotarget has, due to its size, not formally elected a Deputy Chairman. The Chairman of the Board of Directors and the Chairman of the Audit Committee and the Remuneration and Nomination Committee are identical reasoned by the qualifications of the Chairman.

Topotarget offers share-based remuneration programs to board members, the reason being that the company considers share-based remuneration programs essential and necessary tools to attract and retain board members with international experience and profiles and to secure alignment with the company strategy.

Topotarget does not disclose remuneration of board members or managers at an individual level. Topotarget considers this information to be private and believes that information at an individual level is of limited value to shareholders.

A full description on Topotarget’s approach to Corporate Governance can be found on our homepage http://investor.topotarget.com/governance.cfm