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Corporate Governance

I. The part of the shareholders and the interaction with the board management
II. The role of stakeholders and their importance to the company 
III. Openness and transparency 
IV. Tasks and responsibilities of the board of directors 
V. Composition of the supervisory board 
VI. Remuneration of the board of directors 
VII. Risk management 
VIII. Auditors

The supervisory board and the management board are following the development winthin Corporate Governance and are aiming to improve the Group's relations to its shareholders and other stakeholders.

Management has actively addressed the recommendations given by the Committee on Corporate Governance founded by OM the Danish Stock Exchange. Today, the recommendations are complied with to a large extent and are currently evaluated by the supervisory board.

Please below find listed how the supervisory board in Dalhoff Larsen & Horneman A/S deal with the recommendations of the Committee on Corporate Governance's Recommendations for good corporate governance of August 2005, as amended on 6 February 2008 and 10 December 2008.

Committee on Corporate Governance’s Revised Recommendations for good corporate governance of August 2005, as amended on 6 February 2008 and 10 December 2008. DLH Practice
I. The part of the shareholders and the interaction with the board management
1. Exercise of ownership and communication Complied with.
It is recommended that the companies contribute to improving the communication between the company and the shareholders, and between the individual shareholders in the company via the use of e.g. information technology. Notifications and reports from the company are available both in hardcopy and electronically. The website also contains information of interest to shareholders.
2. Capital and share structures Complied with.
It is recommended that the supervisory board, at appropriate intervals, assess whether the company’s capital and share structures continue to be in the interests of the shareholders and the company and that the supervisory board account for this assessment in the company’s annual report. Evaluations are made annually. The company has two share classes. The Class A shares carry 10 votes, while the Class B shares carry one vote each. All Class A shares are owned by DLH-Fonden. In the annual report is described the charter of DLH-Fonden and details of the foundation’s ownership. Please refer to the company's website for additional information about Class A and Class B shares. The supervisory board finds that the share structure chosen has no material impact on the company's market value or business development.
3. Preparations of the general meeting, including notice of meeting and proxy Complied with.
It is recommended that the general meeting be called at sufficient notice to enable the shareholders to prepare for the meeting and consider the business to be transacted at the general meeting that the notice of meeting, including the agenda, be drawn up in such a way as to give the shareholders a satisfactory picture of the business covered by the items on the agenda and that proxies given to a company’s supervisory board, as far as possible, include the position of the shareholders regarding each item on the agenda. The annual general meeting is convened at a minimum of 8 days' and at a maximum of four weeks' notice. The company will endeavour not to apply the minimum period of notice. The notice convening the meeting is considered satisfactory and complete. Proxies for board members are given for one general meeting at a time. The shareholder is given the opportunity to indicate his vote on individual items on the proxy statement.
4. The duties of the supervisory board and the rights of the shareholders in the event of takeover bids Complied with.
In connection with a public takeover bid, the Committee recommends that in such situations, the supervisory board does not, without the acceptance of the general meeting or on its own, attempt to counter a takeover bid by making decisions which in reality prevent the shareholders from deciding on the takeover bid. The supervisory board has set up an emergency unit in connection with any potential takeover attempt. The attitude of the supervisory board coincides with the recommendations.
II. The role of stakeholders and their importance to the company
1. The company’s policy in relation to stakeholders Complied with.
It is recommended that the supervisory board adopts a policy on the company’s relationship with its stakeholders. The stakeholder policy is part of the company’s basic value statement and is described in the annual report. The complete version of the basic value statement is posted under group information at the company’s website. 
2. The role and interests of stakeholders Complied with.
It is recommended that the supervisory board ensure that the interests and roles of the stakeholders are respected in accordance with the company’s policy on such issues. The basic value statement and the underlying policies reveal how the interests and roles of stakeholders are respected.
III. Openness and transparency
1. Information and publication of information Complied with.
It is recommended that the supervisory board adopts an information and communication policy. The supervisory board has adopted an investor relations policy in accordance with the rules of the Copenhagen Stock Exchange. Please refer to the annual report or to the company’s website for the complete version of the policy.
Furthermore, it is recommended that the company draw up procedures to ensure immediate publication of all essential information of importance for how the shareholders and the financial markets evaluate the company and its activities as well as its business goals, strategies and results in a reliable and sufficient manner unless publication can be omitted according to stock exchange legal rules. Information and communication policy will be presented at the strategy meeting of the supervisory board and will subsequently be available at the website of the company.

Business goals, strategies and results are also stated at segment level.
It is recommended that information be published in both Danish and English, and, if necessary, in any other relevant languages; this also applies to the company’s website, which must display identical information in these languages. Publication is in Danish and in English, also at the website.
2. Investor relations Complied with.
It is recommended that the supervisory board lays the groundwork for an ongoing dialogue between the company and the company’s shareholders and potential shareholders. The executive board participates in meetings with analysts and investors, etc. as the need arises. The majority of such meetings are accessible via the Internet, and the company also comments on its affairs via the StockWise presentations of the Copenhagen Stock Exchange.

Issues related to corporate governance are discussed at the company’s website.
3. Annual report Complied with.
It is recommended that the supervisory board considers to what extent generally accepted accounting standards other than those required, such as USGAAP, shall be applied as a supplement to the annual report if trade conditions or other circumstances make this relevant in relation to the information needs of the recipients, including the need for comparability. The annual report is presented in accordance with Danish law (IFRS).
In connection with the preparation of the annual report, it is recommended that the supervisory board decides whether it is expedient that the company publishes details of a non-financial nature, even in instances where this is not required by any applicable legislation or standards.

In addition, the annual report contains information on non-financial matters, such as the environment. In addition to the formal annual report, a brief brochure is also prepared (The DLH Group 2008) as a presentation of the DLH group with the key information from the annual report.

Furhteron, DLH has elaborated a CSR-report describing the focus areas within CSR and providing an overview of the environmental and social initiatives we have implemented in 2008 together with the results optained. The report is available at www.dlh-group.com.

4. Quarterly reports Complied with.
It is recommended that companies publish quarterly reports. The company has published quarterly reports since 2001.
IV. Tasks and responsibilities of the board of directors
1. The overall tasks and responsibilities of the supervisory board Complied with.
It is recommended that the supervisory board as a minimum once a year discusses and establishes its most important tasks related to the overall strategic management as well as the financial and managerial supervision of the company and regularly evaluates the executive board’s work. It appears from the rules of procedure of the supervisory board.
2. The tasks of the chairman of the supervisory board Complied with.
It is recommended that the company prepares a work and task description specifying the tasks, duties and responsibilities of the chairman, and of the deputy chairman, if required. The rules of procedure contain a general description of the tasks, duties and responsibilities of the chairman and deputy chairman of the supervisory board.
It is recommended that the chairman ensures that the special knowledge and competence of each individual member of the supervisory board are used in the best possible manner in the supervisory board’s work to the benefit of the company.
It is recommended that the company appoints a deputy chairman, who must be able to act in the chairman’s absence and also to act as an effective sounding board for the chairman.
3. Procedures Complied with.
It is recommended that the procedures always match the needs of the individual company and that all the members of the supervisory board review the procedures at least once a year for this purpose. The rules of procedure are examined annually. When preparing the meeting plan for the next year ahead, the supervisory board makes sure that annually recurring issues are considered at one particular board meeting.
4. Information from the executive board to the supervisory board Complied with.
It is recommended that the supervisory board establishes procedures for how the executive board reports to the supervisory board and for any other communication between the supervisory board and the executive board with a view to ensuring that such information about the company’s business as required by the supervisory board is regularly provided to the supervisory board. The procedures are outlined, among other things, in the rules of procedure of the supervisory board.
V. Composition of the supervisory board
1. Composition of the supervisory board Complied with in part.
The committee recommends that the supervisory board regularly assess the competences it must have to best perform its tasks, and in light hereof, assess the composition of the supervisory board.
As a way to achieve this, it is recommended that:
  • when assessing its composition, the supervisory board take into consideration diversity in relation to gender, age etc.
 DLH-Fonden expects to nominate a candidate for election to the supervisory board from among the supervisory board of DLH-Fonden. The supervisory board, including the chairman, is obliged to ensure that the composition and qualifications of board members meet the company's requirements.
  • the supervisory board ensure a formal, thorough and transparent process for selection and nomination of candidates.
  • every year, the supervisory board publishes a profile of its composition and provide information about any special competence possessed by the individual members that is important for the performance of their duties.
 The supervisory board highlights the qualifications of nominees to the board and any executive positions they may hold in other companies and important organisations on the notice convening the general meeting.
  • the recruitment criteria established by the supervisory board be stated in the description, including requirements for professional qualifications, international experience, formal educational background etc., which represent essential qualities with regard to the supervisory board, and that shareholders are given an opportunity to discuss these recruitment criteria at the general meeting.
  • the description provides information about the supervisory board’s assessment of its composition, including its diversity, and that shareholders of the company be given an opportunity to discuss the composition of the supervisory board at the general meeting.
 The supervisory board regards the informal internal evaluation as being sufficient to ensure the presence of the necessary competencies. The executive functions published reflect the competencies of the individual board members.
  • every year, in the management review, the supervisory board account for its composition, including its diversity, and for any special competences possessed by individual members.
2. Training and introduction for members of the supervisory board Complied with in part.
The committee recommends that new members joining the supervisory board be given an introduction to the company and that the chairman, in collaboration with each individual supervisory board member, decide whether it is necessary to offer the member in question relevant supplementary training. Board members receive an introduction to their duties through a meeting with the chairman and the president & CEO. In addition, they may participate in relevant courses as the need arises.
The committee recommends that every year, the supervisory board assess whether the qualifications and expertise of the members need to be updated in some respect. The supervisory board regards it as sufficient that individual members in consultation with the chairman assess the need for any competence-based development.
3. The number of supervisory board members Complied with.
It is recommended that the supervisory board have only so many members as to allow a constructive debate and an effective decision-making process that enables all the members of the supervisory board to play an active role and so that the size of the supervisory board allows the competence and experience of the supervisory board members to match the requirements of the company and so that the size of the supervisory board allows the competence and experience of the supervisory board members to match the requirements of the company. There are 6 board members elected by the shareholders at the general meeting. The articles of association allow for the election of 5-7 board members to be elected by the shareholders. The supervisory board finds the present number expedient.
"It is recommended that at regular intervals, the supervisory board considers whether the number of supervisory board members is appropriate in relation to the requirements of the company. The supervisory board finds the present number of board members appropriate.
4. The independence of the supervisory board Complied with.
In order for the supervisory board members to act independently of special interests, it is recommended that at least half of the supervisory board members elected by the general meeting be independent persons. In this context, an independent supervisory board member elected by the general meeting may not: The majority of the members of the supervisory board elected by the shareholders, including the chairman, are deemed to be free of private interests. No members of the executive board sit on the supervisory board. Information on the members of the supervisory board is contained in the annual report as recommended.
  • be an employee of the company or have been employed by the company within the past five years.
  • be or have been a member of the executive board of the company.
  • be a professional consultant to the company or be employed by, or have a financial interest in, a company which is a professional consultant to the company.
  • have some other essential strategic interest in the company other than that of a shareholder.
Furthermore, any person related, in terms of business or in any other way, to the company’s major shareholder, is not regarded as an independent person.
Family ties with persons not regarded as independent persons also imply a situation of non-independence.
It is recommended that at least once a year, the supervisory board list the names of the members of the supervisory board who are not regarded as independent persons and also disclose whether new candidates for the supervisory board are considered independent persons and state the grounds for such consideration.
It is recommended that the members of the executive board of a company not be members of the supervisory board of the same company.
It is recommended that the annual report contain the following information about supervisory board members:
  • occupation of the individual supervisory board member.
  • other managerial positions or directorships held by the supervisory board member in Danish and foreign companies as well as demanding organisational tasks performed by that individual.
  • number of shares, options and warrants held by the supervisory board member in the company and group enterprises as well as changes in the member’s portfolio of the mentioned securities having taken place during the financial year.
 The deputy chairman of the supervisory board is also a board member of the principal shareholder’s fund.
5. Supervisory board members elected by the staff Complied with.
It is recommended that the individual company consider the need to explain the system of staff-elected supervisory board members in the company’s annual report or on its website. Employees in limited liability companies which employ at least 35 members of staff (Danish Companies Act, s. 49) are entitled to appoint a number of board members from among the employees corresponding to half the board members appointed by the general meeting. The term of office for board members elected by employees is 4 years.
6. Meeting frequency Complied with.
It is recommended that the supervisory board meet at regular intervals according to a predetermined meeting and work schedule or when meetings are deemed necessary or appropriate as required by the company and that the annual meeting frequency be published in the annual report. The supervisory board normally holds 6 ordinary meetings a year plus one strategy meeting. The annual frequency of meetings is published in the annual report.
7. Time allocated to supervisory board work and the number of directorships Complied with in part.
The committee recommends that a supervisory board member who is also a member of the executive board of an active company hold no more than three ordinary directorships or one chairmanship and one ordinary directorship in companies not forming part of the group except in extraordinary circumstances. Please refer to the annual report. Directorships in intra-group companies are not considered independent directorships.
8. Retirement age Complied with.
It is recommended that the company agree on a retirement age for members of the supervisory board and that the annual report contain information about the age of the individual members of the supervisory board. The annual report contains information on the ages of board members. The articles of association stipulate an age limit of 70.
9. Election period Complied with.
It is recommended that members of the supervisory board be up for re-election every year at the general meeting and that the supervisory board in this connection makes special efforts to ensure the balance between replacement and continuity on the supervisory board as regards the chairmanship and the deputy chairmanship. Board members are elected for one year at a time. There is no upper limit for the number of years for which a member may be re-elected. The annual report describes changes in the composition of the supervisory board, including board members joining and retiring. The supervisory board meets the recommendation of giving notification on changes in employment.
It is recommended that the annual report state when the individual member of the supervisory board joined the board, whether the member of the supervisory board was re-elected and when the new election period expires.
10. Use of supervisory board committees Complied with.
It is recommended that the supervisory board consider and decide whether to establish committees, including nomination, remuneration and audit committees. At present DLH does not consider the use of board committees relevant.
If the supervisory board appoints a committee, it is recommended that such appointment take place only in connection with matters relating to specific issues for the purpose of preparing decisions to be made by all the members of the supervisory board.
In the event of appointment of a supervisory board committee, it is recommended that the supervisory board draw up terms of reference for that committee setting out its responsibilities and powers.
It is recommended that the company’s annual report describe important issues included in the terms of reference of the individual supervisory board committee and that the annual report list the names of the members of the individual supervisory board committee as well as the number of meetings of that committee held during the financial year.
11. Assessment of the supervisory board’s work Complied with.
It is recommended that the supervisory board establish an assessment procedure that regularly and systematically evaluates the work, results and composition of the supervisory board as well as the work and results of the individual members, including the chairman, for the purpose of improving the supervisory board’s work and that the criteria of assessment are clearly defined. The supervisory board does not consider an actual, formal self-assessment procedure relevant. The work and the results of the executive board are assessed once a year by the chairman of the supervisory board based on already established criteria. Subsequently, the co-operation with the executive board is assessed and formally discussed by the executive board.
It is recommended that the supervisory board assess the executive board’s work and results once a year according to previously established explicit criteria.
It is recommended that the executive board and the supervisory board establish a procedure to assess the collaboration between the two boards at an annual meeting between the CEO and the chairman of the supervisory board and that the outcome of such assessment be presented to the entire supervisory board.
VI. Remuneration of the board of directors
1. Remuneration Complied with.
It is recommended that the total remuneration (fixed pay, incentive pay covering all forms of variable pay, pensions, severance pay and other benefits) be at a competitive and fair level, reflecting the independent performance and value creation in the company of the members of the executive board and the supervisory board. The members of the supervisory board receive a fixed annual fee. Members of the executive board are paid a fixed annual salary supplemented by a bonus depending on the company’s financial results. In addition, the executive board and group management are eligible for a share option scheme. The total remuneration of the supervisory and executive boards is deemed to be at a competitive and reasonable level.
2. Remuneration policy Complied with in part.
It is recommended that the supervisory board adopt a remuneration policy and that the company disclose the contents of such policy in its annual report as well as on the company's website. It is the aim to ensure that the total remuneration of the supervisory and executive boards conforms to that of the market. The total remuneration of the supervisory board appears from the annual report.
It is recommended that the remuneration policy reflects the interests of the shareholders and the company, match the specific conditions of the company and be reasonable in relation to the tasks and responsibilities undertaken and that it promotes long-term behaviour and is easy to understand. The chairman and the deputy chairman each receive a fee of 250 % and 175 %, respectively, of the fee of an ordinary board member.
It is recommended that the remuneration policy includes a statement explaining the fixed pay and the overall principles of the incentive pay programme (covering all forms of varibale pay), incentive schemes, etc. as well as pension schemes and severance programmes and other benefits. Information on the relationship between the fixed pay, the incentive pay and the other elements of the pay is a part of the remuneration policy. The fixed annual pay for the executive board appears from the annual report, where as the overall principles for establishing incentive schemes will be submitted as an item on the agenda at the annual general meeting and subsequently be visible at the company's website.

It is the judgement of the supervisory board that such a statement would have no material impact on the assessment by stakeholders of the company and its management.
It is recommended that any defined benefit schemes be disclosed.

It is recommended that the company’s remuneration, including incentive pay, policy reporting include a statement explaining how such policy was implemented in the past financial year, how such policy is implemented in the current financial year and how the company plans to implement it in the next financial year		 The remuneration mentioned is a gross amount and apart from this no defined contribution or defined benefit pension scheme exists for the executive board or the supervisory board.

Please see the principles for remuneration on our website and in the annual report. It is the judgement of the supervisory board that such statement would have no material impact on the assessment by stakeholders of the company and its management.
It is recommented that the remuneration policy contain clear and comprehensible information that is easy to understand by the individueal shareholder and which enables the shareholder to see that the supervisory board complies with the remuneration policy and the guidelines adopted for incentive pay. Thus, there must be a connection between the information communicated to and approved by the general meeting prior to the granting and the annual report stating the facts after the granting.
It is recommended the company’s remuneration policy be mentioned in the statement given by the chairman at the company’s general meeting and that the remuneration of the supervisory board for the current financial year be presented for adoption at the general meeting when the annual report for the previous year is submitted for adoption.
3. Principles for establishing incentive schemes Complied with.
It is recommended that the general guidelines for incentive pay reflect the interests of the shareholders and the company, match the specific conditions of the company and be reasonable in relation to the tasks and responsibilities undertaken. There must be a connection between the information communicated to and approved by the geneal meeting prior to the granting and the annual report showing the specific results of the approved guidelines for incentive pay. See the annual report and the website under share options.
It is recommended that remuneration to the supervisory board does not consist of share option schemes, but e.g. bonus schemes and shares at market price. The supervisory board does not have share option programmes or any other kind of bonus programmes.
If the remuneration of the members of the executive board consists of share or subscription options, it is recommended that the schemes be set up as roll-over schemes (i.e. options are granted periodically e.g. every year and expire over a number of years) and that the redemption price be higher than the market price at the time of allocation. The share option programme of the executive board is revolving. The redemption price is based on the market price at the time of grant and is index-adjusted subsequently.
Moreover, it is recommended that the schemes be designed in such a way that they promote long-term behaviour and are transparent and easy to understand, even for outsiders, and that valuation at the time of granting be made according to generally accepted methods.
4. Severance Programmes Not complied with.
It is recommended that information about the most important aspects of severance schemes be disclosed in the company’s annual report. In the event of payment of severance pay to the executive board, the amount will be published in the annual report. The scheme is regarded as conforming to those of the market.
5. Openness about remuneration Complied with.
It is recommended that the annual report include information about the amounts of total remuneration of the individual members of the supervisory board and the executive board provided by the company or other companies within the same group. The principles of remuneration have been discussed at the company's general meeting and subsequently published on its website.

The supervisory board has no share option programmes or any other kind of bonus programmes.

The share option programme of the executive board is revolving. The redemption price is based on the market price at the time of grant and is index adjusted subsequently.
VII. Risk management
1. Identification of risks Complied with.
It is recommended that the supervisory board and the executive board, when formulating the company’s strategy and overall goals, identify the greatest business risks involved in achieving such strategy and goals. At the annual strategy meeting the supervisory and executive boards assess such matters as business risks in connection with the achievement of the company’s objectives.
2. Plan for risk management Complied with in part.
It is recommended that the executive board prepare a plan for the company’s risk management on the basis of the risks identified and submit this plan to the supervisory board for approval, and that the executive board regularly report to the supervisory board to allow the latter to systematically follow the trends in significant risk areas. Managing and reporting on financial and insurable risks has been fully implemented. The management of strategic and other operational risks will in future be expanded through more systematic processing.
3. Openness regarding risk management Complied with in part.
It is recommended that the company’s annual report include information about the company’s risk management activities. In the annual report the risk profile of the risk management measures already in place is explained in detail.
VIII. Auditors
1. The supervisory board’s nomination of an auditor candidate Complied with.
It is recommended that having consulted the executive board, the supervisory board make a specific and critical assessment of the auditor’s independence and competence, etc., to be used in connection with the nomination of a candidate at the general meeting.
2. Agreement with the auditor Complied with.
It is recommended that the auditor agreement and the auditor’s fee be agreed between the company’s supervisory board and the auditor.
3. Non-audit services Complied with in part.
It is recommended that every year, the supervisory board lay down the overall, general scope of the auditor’s provision of non-audit services with a view to ensuring the auditor’s independence, etc. The supervisory board is briefed on an ongoing basis about non-audit services such as ad hoc tasks including tax, accounting standards, advice in connection with acquisitions.
4. Internal control systems Complied with.
It is recommended that at least once a year, the supervisory board review and assess the internal control systems within the company as well as the management’s guidelines for and supervision of such systems and that the supervisory board consider the extent to which this function is able to assist the supervisory board in this work. The supervisory board regularly monitors internal control systems through the company’s management information. The company has no internal audit, but an established controlling system.
5. Accounting policies and accounting estimates Complied with.
When the supervisory board reviews the annual report (or a draft of it) together with the auditor, it is recommended that particular efforts be made to discuss the accounting policies applied in the most important areas as well as important accounting estimates and that the expediency of the accounting policies applied be assessed.
6. Result of the audit Complied with.
It is recommended that the result of the audit be discussed at meetings with the supervisory board for the purpose of reviewing the auditor’s observations and opinion, possibly on the basis of the long-form audit report.
7. Audit committee Not complied with.
In companies with complex accounting and audit conditions, it is recommended that the supervisory board consider establishing an audit committee to assist the supervisory board in accounting and audit matters. The supervisory board believes that the full supervisory board is capable of handling accounting and audit matters.