Remuneration guidelines

General guidelines for remuneration of the Board of Directors and Executive Management of Copenhagen Airports A/S (“CPH”)

Approved at CPH´s Annual General Meeting on 27 March 2012

1. General principles for remuneration of the Board of Directors

The general principles for remuneration to the members of CPH’s Board of Directors are the following:

  1. The ordinary board members will receive remuneration which is comparable with that paid by other Large Cap companies. The remuneration of the Board of Directors member consists of a fixed fee and no member is eligible for variable pay;
  2. The Deputy Chairmen of the Board of Directors will receive remuneration which is twice the remuneration of the ordinary members of the Board of Directors;
  3. The Chairman of the Board of Directors will receive remuneration which is triple the remuneration of the ordinary members of the Board of Directors.

CPH has decided to establish an Audit and Risk Management Committee (“ARMC”)

Members of the ARMC will receive a fixed fee on top of the remuneration for membership of the Board of Directors, which is comparable with that paid by other Large Cap companies.

Individual members of the Board of Directors may request not to receive remuneration or to receive a lower level of remuneration than following from the above principles. The Board of Directors each year prior to holding the Annual General Meeting will review whether the above principles should be revised. 

2. General principles for remuneration of the Executive Management

CPH uses a mix of fixed and variable salary components to reward its Executive Management. The main purpose of these guidelines is to create a framework for the various components which are used in due consideration of CPH’s short- and long-term targets.

The total remuneration to a member of the Executive Management shall be competitive when compared with other Danish and European companies of a similar size and complexity. The various elements of the total remuneration package are put together taking into account prevailing market practices.

The Board of Directors wishes to incentivize the Executive Management to ensure the continued positive development of CPH and, as a result, good value creation for CPH’s shareholders. The Board of Directors believes that the best results are achieved when a relatively high proportion of the Executive Management’s total remuneration is dependent on the achievement of a mix of the Executive Management member’s individual targets and CPH’s financial targets.

3. Total remuneration to members of the Executive Management

The total remuneration to members of Executive Management comprises:

  1. A fixed base salary (base salary, pension contribution and severance pay)
  2. A short-term incentive scheme (cash bonus)
  3. A long-term incentive scheme (cash bonus)

Executive Management has a defined contribution pension scheme, with a company paid pension contribution of 20% of base salary. Members of the Executive Management have a number of work-related benefits at their disposal, including a company car, free telephony and other benefits related to their positions. The scope and level of the individual benefits are negotiated with the individual member of the Executive Management.

Pursuant to the contract of employment for each member of the Executive Management, the notices of termination is up to 12 months in case of termination of the employment by CPH and up to 6 months in case of termination by a member of the Executive Management. The contract of employment for each member of the Executive Management also includes a termination clause that, in the event of termination on the part of CPH, entails payment of a severance amount in addition to paying salary during the notice period.

This severance amount cannot amount to more than 24 times the monthly salary (base salary and pension contributions). The contract of employment includes a change of ownership-clause, specifying that the notice period on behalf of the CPH is doubled in case of a change of ownership.

4. Guidelines for the short-term incentive scheme for Executive Management

Individual members of the Executive Management will be entitled to an annual cash bonus when achieving the targets set. The size of the cash bonus is considered to be a confidential and personal agreement between CPH and each member of the Executive Management. CPH will benchmark versus the market and set an appropriate split between fixed and variable remuneration. Pursuant to the short term incentive scheme, the total annual cash bonus to each member of the Executive Management may amount to up to 75 per cent of the annual base salary. 

Half of the annual cash bonus target for the member of the Executive Management is paid when some minimum thresholds are met and CPH delivers on the financial targets set by the Board of Directors ("Financial Objectives"). If CPH delivers significantly higher financial results than stipulated in the Financial Objectives, this component of the bonus can be increased up to a maximum of 100% of the annual cash bonus target. 

The other half of the annual cash bonus target is paid when the member of the Executive Management delivers on all of his or her individual targets (“Personal Objectives”). Partial delivery of Personal Objectives results in a partial bonus payout. If no Personal Objectives are met, the member of the Executive Management will not be entitled to any bonus, including bonus based on Financial Objectives.

The Financial Objectives and the Personal Objectives are agreed upon at the beginning of the fiscal year with CPH’s CEO in line with overall objectives set by the Board of Directors. In the case of the CEO, the Financial Objectives and the Personal Objectives are agreed with the Chairman of the Board of Directors. 

5. Guidelines for the long-term incentive plan for the Executive Management

Individual members of the Executive Management can achieve an annual pro-rated payout when achieving the targets set in the rolling three-year long-term incentive plan. The size of the cash bonus is considered to be a confidential and personal agreement between CPH and each member of the Executive Management. The total payout for each three-year long-term incentive plan to each member of the Executive Management may amount to up to 50 per cent of the annual base salary.

The general purpose of incentive-based remuneration in the form of a long-term oriented cash plan is:

  1. To ensure retention (and, if necessary, attraction of new members) of the Executive Management by offering an attractive addition to the fixed salary and short-term bonus plan.
  2. To ensure that the members of the Executive Management focus on long-term growth and earnings in CPH, in order to ensure that shareholders’ interests are met as best possible.
  3. To ensure that the remuneration of the members of the Executive Management is partly linked to the shareholders’ loss of and gain in value.

Each year a three-year target is set focusing on long-term value creation for the shareholders. When fully implemented, a member of the Executive Management will have three parallel running long-term incentive plans at any time. The Board of Directors will determine to what degree the member of the Executive Management has achieved the objectives set and if successful, the member of the Executive Management can achieve a pay-out from some or all of the three rolling plans.

6. Implementation 

These general guidelines for remuneration of the Board of Directors and the Executive Management have been approved by the Board of Directors at its meeting on 1 March 2012. In accordance with section 139 of the Danish Companies Act and the Recommendations of Corporate Governance of August 2011, pursuant to which these guidelines have been prepared, these guidelines will be presented for approval at CPH’s Annual General Meeting on 27 March 2012 and be made publicly available on CPH’s corporate website (www.cph.dk) as soon as possible stating the date of approval of the Annual General Meeting. Any changes to these guidelines must be approved by the Annual General Meeting. 

The adopted guidelines replace the guidelines approved at the annual General Meeting on 30 March 2011, cf. section 139 of the Danish Companies Act.

These guidelines apply to all agreements on remuneration of members of the Board of Directors and Executive Management that may be entered into after the publication of these guidelines. In addition, these guidelines apply to all amendments to existing agreements with members of Board of Directors and Executive Management.