Principles for Ownership and Corporate Governance

Odin’s position on:

1. A and B shares
2. Dividend policy
3. Incentive programs for management and the board
4. Board composition and competence
5. Investor communication
6. Environmental and social considerations
7. Capital raising

Principle: One share, one vote
The general principle is that all shares should carry equal rights in the company. However, under certain circumstances, differentiated voting rights may be justified:

If a principal shareholder has demonstrated the ability to create long-term value and shares that value with co-shareholders, A and B shares with different voting rights can be beneficial. Such a structure can ensure that the principal shareholder retains sufficient influence to execute long-term strategic decisions, thereby fostering value creation and providing management with stability during periods of diverging shareholder views.

Principle: Dividend as a mechanism for capital discipline
Dividends play an important role in ensuring disciplined capital allocation. The company’s dividend policy should be clearly communicated to shareholders. The level of dividends should be adapted to the company’s objectives, strategy, and earnings development while ensuring a solid balance sheet. Companies with volatile earnings should avoid committing to a fixed dividend level. During periods of weak earnings, dividends should not be distributed, whereas in periods of strong earnings, additional capital may be returned to shareholders.

Share repurchases are an alternative to extraordinary dividends. Repurchased shares should either be cancelled or used for value-creating purposes. Buybacks should only be executed if management deems them the best long-term value proposition for shareholders.

Principle: Alignment of interests with shareholders
Guidelines for executive remuneration should be structured to align the interests of management with those of shareholders to the greatest extent possible.

• Performance-based compensation should primarily reflect long-term value creation for shareholders.
• It should not incentivize short-term actions that could be detrimental to the company.
• Performance-based remuneration should be tied to objectives that executives can directly influence.

When structuring incentive programs, we prefer that management receives shares with a lock-up period rather than options. Senior executives should be encouraged to retain a significant portion of their allocated shares after the lock-up period. Base salaries should compensate for the risks associated with holding a senior position. When assessing appropriate total compensation, we compare executive remuneration with salary levels in independent professions.

Principle: Independence and expertise
As active owners, we participate in nomination committees where deemed appropriate. Ensuring that the board possesses the necessary competencies in relation to the company’s development phase is a key priority.

• The board’s composition should reflect the expertise required to support the company’s long-term strategy.
• Diversity in background and competence should be promoted, including gender balance.
• To ensure independence, board members should have personal finances that do not make them financially dependent on board remuneration.
• The board should consist of individuals with strong collaboration skills. The chairperson should have the ability and commitment to harness the full potential of the board.
• Board members should own shares in the company.

Principle: Equal access to information for all shareholders
The board should establish clear guidelines for the company’s communication with shareholders outside the general meeting. Information should be made available on the company’s website at the same time it is distributed to shareholders.

If the company provides earnings forecasts to investors and analysts, these should be long-term in nature and regularly reviewed and commented on.

Short-term earnings guidance on a quarterly basis may lead management to prioritize short-term objectives at the expense of long-term value creation, which we view as undesirable.

Principle: Sustainable business as a foundation for long-term value creation
As long-term owners, we recognize that a sustainable business model and financial sustainability go hand in hand. Companies that successfully integrate environmental and social considerations into their corporate strategy will gain competitive advantages over time and be better positioned to meet future challenges.

Companies that incorporate key sustainability factors into their business models will attract top talent and be better equipped to generate sustainable shareholder value. The risk profile of such companies is generally lower compared to those that fail to address sustainability-related matters.

Principle: Protection of existing shareholders’ rights
In share issues, existing shareholders should have preferential rights to subscribe for new shares in proportion to their ownership stake. In the case of private placements, existing shareholders should be given the opportunity to maintain their relative ownership in the company.