Carlsberg A/S : Group 2022 Remuneration Report

Frontpage: Inserted in the pdf

Below text is automatically copied to the header on all pages

Carlsberg Group

REMUNERATION

REPORT 2022

REMUNERATION REPORT

TABLE OF CONTENT
Introduction	3
Remuneration Committee	4
Remuneration of the Supervisory
Board	5
Remuneration of
the Executive Board	7
CEO pay ratio	11
Summary of Executive Board
remuneration	12
Changes in Supervisory Board
remuneration	13
Supervisory Board statement	14
Independent auditor's statement	15

Remuneration Report 2022

INTRODUCTION

OUR

REMUNERATION

CARLSBERG GROUP REMUNERATION REPORT 2022

3

The Group's financial, strategic and organisational health is strong, and we're confident that we'll be able to continue to deliver appealing top- and bottom-line growth and value creation for our shareholders and other stakeholders.

Richard Burrows

Chair of the Remuneration Committee

The Carlsberg Group's Remuneration Policy balances our short-term and long-term performance, taking into consideration our business strategy, our purpose of brewing for a better today and tomorrow, and our aim to deliver value for shareholders.

2022 was a volatile year and our business was significantly impacted by the war in Ukraine, rising commodity prices and energy costs, and the continuing ramifications of

COVID-19. Nevertheless, the Group delivered a strong set of results. The strong top-line, operating profit and adjusted EPS growth, strong cash flow, increased ROIC and the step- up in cash returns to shareholders all serve as significant proof points for the strong financial and strategic health of the business.

In the three-year period ending in 2022, the business fundamentals and results continued to be very strong. ROIC, revenue and earnings per share developed strongly over the period. However, share price

development in the period has been negatively affected both by COVID- 19 and the war in Ukraine, which has impacted Carlsberg more directly than many of our peers.

Accordingly, annual incentive payments to the Executive Board recognise the strong delivery of our business plans against the tough external trading environment.

On 28 March, the Group announced its decision to seek a full divestment of the Russian business.

Consequently, the net result from the Russian operations is presented separately in the income and cash flow statements, and the evaluation of achievement of short-term and long-term targets relating to incentive payments made to the Executive Board are based upon the continuing business.

The remuneration outlined in this report complies in full with the Carlsberg Group's approved Remuneration Policy.

LOOKING AHEAD

Board will add ESG to the long- term incentive (LTI) scheme with effect from 2023. This builds on our successful recent experience of having ESG in the short-term incentive (STI) plan and signals our long-term commitment to the delivery of these key business priorities.

More specifically, the following three focus areas and supporting targets will be added to the LTI scheme:

ZERO Carbon Footprint

• Reduction in value chain carbon

footprint

Group performance

Performance indicator	20221	20212	20202	20192	20182
Volume, organic growth	+5.7%	+7.4%	-3.8%	+0.1%	+4.8%
Revenue, organic growth		+15.6%		+10.0%		-8.4%		+3.2%		+6.5%
Operating profit, organic growth	+12.2%	+12.5%	-3.1%	+10.5%	+11.0%
Operating margin, reported	16.3%	16.3%	16.6%	15.9%	14.9%
Free cash flow, DKKm	9,884	8,876	5,057	9,962	6,156
Return on invested capital (ROIC)	15.2%	10.3%	8.9%	8.8%	8.1%

¹ As reported, continuing business. ² As reported, including Russia.

2023 will be the first year of our SAIL'27 strategy. In general, the Board remains confident that our incentive plans continue to support the short- and long-term strategic vision of the Carlsberg Group.

To acknowledge the importance of Together Towards ZERO and Beyond as an integral part of the Company's long-term strategy, the

• Number of carbon-neutral

breweries

ZERO Water Waste

• Reduction in water usage at our breweries
• Water replenishment in water priority areas

Diversity, Equity & Inclusion

• Females in leadership positions

REMUNERATION COMMITTEE

CARLSBERG GROUP REMUNERATION REPORT 2022

4

REMUNERATION COMMITTEE

The Carlsberg Group's remuneration approach is set out in the Remuneration Policy. It is designed to enable recruitment and retention of individuals with the expertise and ability required to run a growing international company, and to do so in a way that drives our business success and rewards executives when shareholders are rewarded. Levels of fixed remuneration are set based on individuals' experience and contribution, and in the context of the external market.

While we do not seek to adhere rigidly to market benchmarks, we monitor and take into account pay

Remuneration Committee meetings

levels and incentive opportunities in the principal markets from which we recruit: our European brewing and spirits peers, the consumer goods sector, as well as companies across industry sectors in the Nordic region.

Many of our investors - including our majority shareholder - are long- term holders of our shares. We want our executives to share our shareholders' perspective and believe remuneration should align their interests accordingly. The balance between the short-term remuneration package and long-termshare-based pay and shareholding requirements strengthens this alignment.

The Remuneration Committee did not propose any changes to the pay

structure in 2022 and confirms that there were no deviations from the Remuneration Policy in 2022.

The Company's full Remuneration Policy for the Supervisory Board and Executive Board as well as guidelines for incentive programmes as approved at the Annual General Meeting on 16 March 2020 are available on the Company's website.

MAIN ACTIVITIES IN 2022

In 2022, the main activities of the Remuneration Committee were:

• Finalising terms and conditions for

Ulrica Fearn as the new Chief

Financial Officer, effective 1

January 2023.

• Increasing the weighting of the

revenue target in the short-term

incentive scheme to reflect the

Group's growth strategy.

• Reviewing overall incentive

arrangements to ensure continued

fit with the Group's strategy in light

of the SAIL'27 ambitions.

• Reviewing ESG in the incentive

arrangements, with a view to

moving ESG targets into the long-

term incentive scheme in 2023.

THE COMMITTEE'S RESPONSIBILITIES

The Carlsberg Group's Remuneration Committee is responsible for the Remuneration Policy (including the general guidelines for incentive programmes) for all members of the Supervisory Board and the Executive Board, for making proposals on changes to the Remuneration Policy, and for obtaining the approval of the Supervisory Board prior to seeking shareholders' approval at the Annual General Meeting.

The Committee is responsible for making proposals to the Supervisory Board on the actual structure and content of the remuneration packages of members of the Supervisory Board and the Executive Board, in accordance with the policy approved by the shareholders.

The Committee advises the Supervisory Board on any major changes to the policy on senior employee remuneration structures for the Group, including for the Executive Committee. The Committee's Terms of Reference, which govern how it operates, are approved by

Committee member

Committee meetings attended

Richard Burrows (Chair)

Magdi Batato1

Søren-Peter Fuchs Olesen

Henrik Poulsen1

1 Independent.

Attended meeting. Did not attend meeting (position of hop leaf does not represent actual meeting). Not a Committee member at the time.

• Closely monitoring incentive plans

for impacts of the announced

divestment of the Russian business.

This included delaying the grant of

the 2022-2024 LTI award.

the Supervisory Board and are available on the Company's website.

[TRUMPET]

CARLSBERG GROUP REMUNERATION REPORT 2022

5

REMUNERATION OF THE SUPERVISORY BOARD

The members of the Supervisory Board of Carlsberg A/S are remunerated for duties performed in the Company.

The remuneration of the Supervisory Board consists of a fixed annual base fee. The Chair receives a single fee of four-and-a-half times the base fee and no additional fees for any committee work.

The fees are reviewed, but not necessarily increased, each year, taking into account market practice with reference to an international peer group, as well as the need to

attract and retain high-calibre individuals.

Members of the Supervisory Board are not included in share incentive programmes, retirement benefit plans or other benefit plans.

REMUNERATION IN 2022

The remuneration of the Supervisory Board for 2022 was approved by

the Annual General Meeting on 14 March 2022.

The fees for members of the Supervisory Board for the financial year 2022 and additional fees are shown in the table on page 6.

BOARD SHAREHOLDINGS The number of shares in Carlsberg A/S held by Supervisory Board

members, including holdings of related parties, is shown in the table below.

No member of the Supervisory Board owns shares or bonds in any of the subsidiaries or associates of Carlsberg A/S.

Supervisory Board remuneration

		Base fee		Additional fee
		(DKK		(as % of base
		thousand)		fee)
All Supervisory Board members	440
Chair of the Supervisory Board			350%
Deputy Chair of the Supervisory Board			50%
Chair of the Audit Committee			113%
Chair of the Remuneration Committee and of the
Nomination Committee			50%
Member of board committee (per committee)			38%

Supervisory Board committee membership

		Audit		Nomination		Remuneration
Henrik Poulsen (Chair)		Member		Chair		Member
Majken Schultz (Deputy Chair)				Member
Mikael Aro		Member
Carl Bache				Member
Magdi Batato		Member				Member
Lilian Fossum Biner		Chair
Richard Burrows		Member		Member		Chair
Punita Lal				Member
Søren-Peter Fuchs Olesen						Member

Supervisory Board members' holdings of shares in Carlsberg A/S

										Number		DKK million
				1 Jan. 2022		Additions		Sold		31 Dec. 2022		Market value
Henrik Poulsen		B shares	3,056	-	-	3,056		2.82
Majken Schultz		B shares	-	-	-	-		-
Hans Andersen		B shares	1	-	-	1		-
Mikael Aro		B shares	-	-	-	-		-
Carl Bache		B shares	-	-	-	-		-
Magdi Batato		B shares	201	-	-	201	0.19
Lilian Fossum Biner		B shares	250	-	-	250	0.23
Richard Burrows		B shares	2,040	-	-	2,040	1.88
Eva Vilstrup Decker		B shares	68	-	-	68	0.06
Punita Lal		B shares	-	-	-	-	-
Erik Lund		B shares	54	-	-	54	0.05
Olayide Oladokun		A shares	-	-	-	-	-
Søren-Peter Fuchs Olesen		B shares	652	-	-	652	0.60
Tenna Skov Thorsted		B shares		11		-		-		11		0.01
Total				6,333	-	-	6,333		5.84