ASSA ABLOY Corporate Governance

Corporate Governance Structure

The corporate governance structure comprises several key components:

• Shareholders
• General Meeting
• Nomination Committee
• Auditor
• Board of Directors
• Remuneration Committee
• Audit Committee
• CEO
• Executive Team
• Divisions

Important External Rules and Regulations:

• Swedish Companies Act
• Annual Accounts Act
• Nasdaq Stockholm's Rule Book for Issuers
• Swedish Corporate Governance Code (available at www.bolagsstyrning.se)

Important Internal Rules and Regulations:

• Articles of Association
• Board of Directors' rules of procedure
• Financial Policy
• Accounting Manual
• Communication Policy
• Insider Policy
• Internal control procedures
• Code of Conduct and Anti-Corruption Policy

Shareholders

As of year-end 2021, ASSA ABLOY had 45,698 shareholders. Principal shareholders included Investment AB Latour (9.5% of share capital, 29.4% of votes) and Melker Schörling AB (3.1% of share capital, 10.9% of votes). Foreign shareholders accounted for 67.3% of share capital and 45.9% of votes. The ten largest shareholders held 36.1% of share capital and 56.4% of votes.

ASSA ABLOY's Articles of Association include a pre-emption clause for Series A shares. A shareholders' agreement exists between the Douglas and Schörling families regarding Series A shares.

Share Capital and Voting Rights

At the end of 2021, ASSA ABLOY's share capital was SEK 370,858,778, representing 1,112,576,334 shares (57,525,969 Series A and 1,055,050,365 Series B). The total number of votes was 1,630,310,055, with Series A shares carrying ten votes and Series B shares one vote. All shares have a par value of approximately SEK 0.33 and grant equal rights to company assets and earnings.

Repurchase of Own Shares

Since 2010, the Board of Directors has had a mandate to repurchase and transfer ASSA ABLOY Series B shares, primarily to support long-term incentive programs. The 2021 Annual General Meeting authorized the repurchase of Series B shares, allowing ASSA ABLOY to hold up to 10% of total shares. As of year-end 2021, the company held 1,800,000 Series B shares, acquired at a cost of SEK 103 million, representing approximately 0.2% of the share capital. No shares were repurchased in 2021.

Share and Dividend Policy

ASSA ABLOY's Series B share is listed on Nasdaq Stockholm Large Cap. The company's market capitalization at the end of 2021 was SEK 307,294 million. The Board's long-term objective is to pay dividends equivalent to 33–50 percent of income after standard tax, while considering the company's long-term financing needs.

General Meeting

Shareholders exercise their decision-making rights at the General Meeting. Attendance requires registration and notification. Resolutions are typically passed by a simple majority, with certain matters requiring a higher majority as per the Swedish Companies Act. Shareholders can submit proposals to the Board of Directors. The Annual General Meeting (AGM) is held within six months of the financial year-end and covers matters such as dividend approval, financial statements, discharge of directors and CEO, election of the Board and auditor, and remuneration. An Extraordinary General Meeting may be convened if necessary or upon request from the auditor or shareholders holding at least 10% of the shares.

The 2021 AGM, held on April 28, 2021, was conducted via advance voting due to the COVID-19 pandemic. Key resolutions included a dividend of SEK 3.90 per share, re-election and election of Board members, re-election of the Chairman and Vice Chairman, re-election of the auditor (Ernst & Young AB), approval of remuneration, authorization for share repurchases, and adoption of the LTI 2021 program. The 2022 AGM was scheduled for April 27, 2022.

Nomination Committee

The Nomination Committee is responsible for preparing proposals for the election of the Chairman of the General Meeting, Board members, Chairman, Vice Chairman, auditor, and associated fees. It is composed of representatives from the five largest shareholders based on voting rights as of August 31 of the preceding year. For the 2022 AGM, the committee included representatives from Investment AB Latour, Melker Schörling AB, Swedbank Robur Fonder, Alecta, and Handelsbanken Fonder. The committee assesses the Board's composition and diversity, applying ASSA ABLOY's diversity policy. Shareholders can submit proposals via email to nominationcommittee@assaabloy.com.

Board of Directors

The Board of Directors is responsible for the Group's organization, administration, and financial control. It decides on overall objectives, strategies, Group policies, and significant investments or divestments. The Board approves financial reports, proposes dividends, and manages the Group's financial structure. Its duties also include appointing the CEO, overseeing sustainability impacts, establishing ethical guidelines, ensuring compliance with laws and regulations, and maintaining transparency in external information. The Board meets regularly, with at least four ordinary meetings and one statutory meeting annually. It operates through specialized committees, including the Remuneration Committee and the Audit Committee.

The Board composition, elected annually, comprises a minimum of six and a maximum of ten members elected by the Annual General Meeting, along with two members appointed by employee organizations. In 2021, the Board consisted of eight elected members and two employee representatives, with a gender balance of 50% women and 50% men among the elected members.

Major issues addressed by the Board in 2021 included Group strategy, the impact of the COVID-19 pandemic, acquisition strategies, and specific acquisitions and divestments. The Board's work is evaluated annually through a survey.

Board of Directors' Composition and Shareholdings (as of December 31, 2021)

Note: Shareholdings are through companies and related natural parties.

Independence of the Board of Directors

Remuneration Committee

The Remuneration Committee, comprising Lars Renström (Chairman) and Johan Hjertonsson since the 2021 AGM, is tasked with preparing remuneration guidelines for senior executives. It also monitors and evaluates executive compensation, including salaries, bonuses, pensions, and incentive programs. The committee held two meetings in 2021, focusing on remuneration reports, executive compensation proposals, and incentive programs.

Audit Committee

The Audit Committee, consisting of Lars Renström (Chairman), Johan Hjertonsson, and Lena Olving since the 2021 AGM, oversees the quality and integrity of ASSA ABLOY's financial reporting. It communicates regularly with the external auditor, evaluates audit assignments, and reviews auditor independence. The committee held four meetings in 2021, addressing internal control, financial statements, tax matters, insurance, and risk management.

Remuneration of the Board of Directors

The 2021 AGM approved Board fees totaling SEK 8,500,000 (excluding committee work). The Chairman received SEK 2,700,000, the Vice Chairman SEK 1,000,000, and other elected members SEK 800,000 each. Committee work remuneration was also set, with the Audit Committee Chairman receiving SEK 325,000 and the Remuneration Committee Chairman SEK 150,000.

Executive Team

The Executive Team is led by the President and CEO, Nico Delvaux, and includes heads of divisions and key business units, the CFO, and the Chief Human Resources Officer. Key members include Erik Pieder (CFO), Lucas Boselli (Head of Americas), Simon Ellis (Head of Asia Pacific), Maria Romberg Ewerth (CHRO), Massimo Grassi (Head of Entrance Systems), Björn Lidefelt (Head of Global Technologies - HID Global), Stephanie Ordan (Head of Global Technologies - Global Solutions), Martin Poxton (Head of Asia Pacific - Opening Solutions Greater China and South East Asia), and Neil Vann (Head of EMEIA).

Notable changes in the Executive Team during 2021 included the departure of Mogens Jensen, the appointment of Massimo Grassi and Stephanie Ordan, and the announcement of Maria Romberg Ewerth's departure.

Organization

ASSA ABLOY operates a decentralized organizational structure divided into five divisions: EMEIA, Americas, Asia Pacific, Global Technologies, and Entrance Systems. This structure aims to ensure divisional responsibility for business operations, supported by Group Center functions for coordination and policy setting. The Group comprises approximately 55 business units. Significant policies and guidelines cover financial control, communication, information security, business ethics, and compliance with various laws and regulations.

Auditor

Ernst & Young AB (EY) was re-elected as the external auditor at the 2021 AGM. Authorized public accountant Hamish Mabon serves as the auditor in charge. EY is responsible for auditing ASSA ABLOY AB, the Group, and its subsidiaries, including the administration by the Board and CEO. The auditor in charge attends Audit Committee meetings and reports findings to the Board. Audits are conducted according to International Standards on Auditing (ISA) and Swedish auditing standards.

Internal Control - Financial Reporting

ASSA ABLOY's internal control process for financial reporting ensures reliability and compliance with accounting principles, laws, and regulations. The Board of Directors is responsible for effective internal control, supported by fundamental documents like the Board's rules of procedure and the Code of Conduct. The Group maintains an internal audit function. Risk assessment is integrated into processes, and control activities are managed by the Group's controller and accounting organization, supported by a global financial internal audit function and divisional internal auditors. Information and communication are facilitated through the Group's intranet, with regular reviews of financial outcomes and established procedures for external communication. The Board and Audit Committee review financial reports, and business units report results monthly. The process includes quarterly financial reviews and annual business planning.