Activities during the year

Annual General Meeting

Essity held its AGM in Stockholm on Thursday, April 2, 2020.

The AGM elected the company’s Board of Directors. Moreover, the Meeting resolved – in accordance with the Board of Director’s proposal – to withhold its decision on a dividend for 2019 on account of the uncertainty arising from the effects of the COVID-19 pandemic. Finally, guidelines for remuneration of senior executives and the President were adopted, see the chapter Remuneration and Note C2.

Extraordinary General Meeting

Essity held an Extraordinary General Meeting on Wednesday, October 28, 2020. Pursuant to the Swedish Act (2020:198) regarding Temporary Exemptions to Facilitate the Execution of General Meetings, the Meeting was held through postal voting only.

The Meeting addressed the Board’s proposal regarding payment of a dividend of SEK 6.25 per share. The Meeting resolved in accordance with the Board’s proposal.

Nomination Committee

The Nomination Committee of Essity is tasked with making proposals to the AGM in respect of the election of the Chairman of the Meeting, Board of Directors, Chairman of the Board and auditor, remuneration of each Board Member (divided between the Chairman of the Board and other Board Members), remuneration of the auditor and, where applicable, proposals for amendments to the instruction for the Nomination Committee. At the 2020 AGM, the following instructions to the Nomination Committee were adopted to apply until further notice:

“The Nomination Committee is to comprise representatives of the four largest shareholders, who express a wish to take part in the Nomination Committee, in terms of voting rights as per the shareholders’ register maintained by the company on the final banking day of August, as well as the Chairman of the Board, who also convenes the first meeting of the Nomination Committee. The member representing the largest shareholder in terms of votes is to be appointed as Chairman of the Nomination Committee. The Chairman of the Board shall not be Chairman of the Nomination Committee. If necessary, due to subsequent ownership changes, the Nomination Committee is entitled to call on one or two additional members from among the next largest shareholders in terms of voting rights. The total number of members shall be not more than seven. In the event that a member steps down from the Nomination Committee before the task is completed and the Nomination Committee decides it would be beneficial for a replacement to be appointed, such a replacement is to be appointed by the same shareholder or, if this shareholder is no longer among the largest shareholders in terms of voting rights, by the next largest shareholder in terms of voting rights. Changes to the composition of the Nomination Committee are to be disclosed immediately.

The composition of the Nomination Committee is to be announced by Essity no later than six months prior to the AGM. No remuneration is to be paid to the members of the Nomination Committee. Any expenses incurred during the work of the Nomination Committee are to be paid by Essity. The mandate period of the Nomination Committee extends until the composition of the next Nomination Committee is disclosed. The Nomination Committee is to submit proposals relating to the Chairman of the Meeting, the Board of Directors, the Chairman of the Board, Board fees for the Chairman of the Board and each of the other Board members, including remuneration for committee work, the company’s auditor and auditor’s fees and, to the extent deemed necessary, proposals for amendments to this instruction.”

In its work, the Nomination Committee is to consider the rules that apply to the independence of Board members, as well as the requirement of diversity and breadth with the endeavor to achieve an even gender distribution and that the selection shall be based on expertise and experience relevant to Essity.

All shareholders have had an opportunity to submit proposals to the Nomination Committee. The Nomination Committee’s proposal for the 2021 AGM is presented in the notice convening the AGM available on Essity’s website www.essity.com. The 2021 AGM will be held on Thursday, March 25, see the chapter Information to shareholders.

The Nomination Committee was convened on seven occasions prior to the 2021 AGM. The Chairman of the Board presented the Board evaluation and provided the Nomination Committee with information regarding Board and committee work during the year. When preparing proposals for the Board for the 2021 AGM, particular attention has been paid to the issues of diversity and an even gender distribution, and the Nomination Committee thus applied Item 4.1 of the Swedish Corporate Governance Code as its diversity policy. When preparing its proposal for the election of auditors, the Nomination Committee also gave consideration to the recommendation of the Audit Committee.

Nomination Committee for the 2021 AGM

Member

Representative of

Votes as of
August 31, 2020 (%)

Helena Stjernholm, Chairman

AB Industrivärden

29.7

Jonas Jølle

Norges Bank Investment Management

7.0

Anders Oscarsson

AMF and AMF Funds

5.4

Marianne Nilsson

Swedbank Robur Funds

1.9

Pär Boman

Chairman of the Board

 

Board of Directors and composition of the Board of Directors

Essity’s Board of Directors comprises nine members elected by the AGM.

Ewa Björling, Pär Boman, Maija-Liisa Friman, Annemarie Gardshol, Magnus Groth, Bert Nordberg, Louise Svanberg, Lars Rebien Sørensen and Barbara Milian Thoralfsson were elected as Board members in 2020. Pär Boman was elected as the Chairman of the Board.

The independence of Board members is presented in the table below. Essity complies with the requirements of the Swedish Corporate Governance Code that stipulate that not more than one member elected by the AGM shall be a member of corporate management, that the majority of the members elected by the AGM shall be independent of the company and company management, and that not fewer than two of these shall also be independent of the company’s major shareholders. All of the AGM-elected Board members have experience of the requirements incumbent upon a listed company. Five of the Board members are women, corresponding to 55% of the total number of AGM-elected Board members. The employees have appointed Susanna Lind (formerly Naumanen), Örjan Svensson and Niclas Thulin as representatives to the Board for the period until and including the 2021 AGM, and their deputies Niklas Engdahl, Martin Ericsson and Andreas Larsson.

The AGM-elected Board members have broad international experience from various cultural and geographic areas and wide-reaching expertise and experience of relevance to Essity’s areas of business and products. Accordingly, the Board has – with reference to the company’s business, stage of development and general situation – a suitable composition. In addition, the Board of Directors and its committees have an even gender distribution.

Board of Directors and committees

 

 

 

Committees

 

Attendance1)

Board of Directors

Elected

Dependence

Audit Committee

Remuneration Committee

 

Board of Directors
(12)

Audit Committee
(6)

Remuneration Committee
(3)

Ewa Björling

2016

 

 

 

 

12/12

 

 

Pär Boman

2016

 

x

Chairman

 

12/12

6/6

3/3

Maija-Liisa Friman

2016

 

 

 

 

11/12

 

 

Annemarie Gardshol

2016

 

 

 

 

12/12

 

 

Magnus Groth

2016

 

 

 

 

12/12

 

 

Bert Nordberg

2016

 

x

x

 

12/12

6/6

3/3

Louise Svanberg

2016

 

 

x

 

11/12

 

3/3

Lars Rebien Sørensen

2017

 

 

 

 

12/12

 

 

Barbara Milian Thoralfsson

2016

 

Chairman

 

 

12/12

6/6

 

1)

Board meetings January 1–December 31, 2020.

= Dependent in relation to the company’s major shareholder, AB Industrivärden.

= President of Essity, dependent in relation to the company and corporate management.

Board activities

The Board was convened 12 times, primarily in the form of virtual meetings due to COVID-19. The Board has fixed working procedures that describe in detail which ordinary agenda items are to be addressed at the various Board meetings of the year. Recurring agenda items are finances, the market situation, sustainability issues, investments and adoption of the financial reports. The Board also establishes and evaluates the company’s overall targets and strategy and decides on significant internal rules. Another key task is to continuously monitor the internal control of the compliance of the company and its employees with relevant internal and external rules, and that the company has well-functioning procedures for market disclosures. On a regular basis throughout the year, the Board has also dealt with reports from the Audit and Remuneration Committees and reports on strategy, market, internal audit, internal control and financial operations. The company’s auditor regularly presents a report on its audit work and these issues are discussed by the Board. The Business Unit Presidents present their respective operations and current issues affecting them.

In 2020, in addition to customary Board work, the Board of Directors had a strong focus on digitalization and sustainability, and closely monitored developments in light of the COVID-19 pandemic and its general impact on the company and, in particular, the markets where the company is active. The Board also focused on strategy work during the autumn.

Evaluation of the Board’s work

The work of the Board, like that of the President and the Chairman, is evaluated annually using a systematic and structured process. The purpose of this work is to obtain a sound basis for the Board’s own development work and to provide the Nomination Committee with decision data for its nomination work. External expertise was used. The evaluation took the form of an anonymous questionnaire and interviews as well as group and individual discussions. The evaluation covers such areas as the Board’s methods of work, effectiveness, expertise and the year’s work. The Board was provided with feedback after the results were compiled. The Nomination Committee was also informed of the results of the evaluation.

Audit Committee

The Audit Committee comprises Chairman Barbara Milian Thoralfsson, Pär Boman and Bert Nordberg. The Audit Committee held six meetings during the year. In addition, members have also held meetings with internal audit, the auditors and the CFO. In its monitoring of the financial reporting, the Committee dealt with relevant accounting issues, internal auditors’ reviews, auditing work, a review of various measurement issues, such as testing of impairment requirements for goodwill, and the preconditions for the year’s pension liability calculations. The Audit Committee also prepared a recommendation to be used by the Nomination Committee when deciding on its proposal to the AGM regarding the election of auditors.

Remuneration Committee

The Remuneration Committee comprises Chairman Pär Boman, Bert Nordberg and Louise Svanberg. The Remuneration Committee held three meetings in 2020. Activities mainly concerned remuneration and other employment terms and conditions for senior executives, and current remuneration structures and remuneration levels in the Group. In addition, the Committee prepared the Board’s remuneration report relating to remuneration of senior executives taking into account new legislative requirements.

Internal audit

The basis of the work of the internal audit is a risk analysis based on external and internal information carried out in close dialogue with management teams at Essity. The risk analysis forms the basis of an audit plan, which is presented to the Audit Committee together with the risk analysis. In 2020, 91 audit projects were performed and reported at meetings with the Audit Committee.

Work in 2020 involved follow-up of the units’ progress with process-based control, efficiency in internal governance and control, major investments, information security, sustainability and compliance with Essity’s policies.

External auditor

The 2020 AGM appointed the accounting firm of Ernst & Young AB as the company’s auditor for a mandate period of one year. The accounting firm notified the company that Hamish Mabon, Authorized Public Accountant, would be the auditor in charge. Hamish Mabon is also the auditor for SEB, Skanska AB, Assa Abloy AB and Husqvarna AB. He owns no shares in the company.

In accordance with its formal work plan, the Board met with the auditor at three scheduled Board meetings in 2020. The auditor also attended each meeting of the Audit Committee. At these meetings, the auditor presented and received opinions on the focus and scope of the planned audit and delivered verbal audit and review reports. Furthermore, at the Board’s third scheduled autumn meeting, the auditor delivered an in-depth verbal report on the audit for the year. The working procedures specify a number of mandatory issues that must be addressed. These include matters of importance that have been a cause for concern or discussion during the audit, business routines and transactions where differences of opinion may exist regarding the choice of accounting methods. The auditor shall also disclose consultancy work conducted for Essity as well as other dependencies in relation to the company and its management. On each occasion, Board members have had an opportunity to ask the auditors questions. Certain parts of the detailed discussion on the accounts take place without representatives of corporate management being present.