Foundation governance

As per 1 January 2015, the legislation for commercial foundations in Denmark was modernised with focus on ­transparency and openness, board tasks and responsibilities, remunerations and donations, etc. A committee for good governance in commercial foundations issued in late 2014 a number of recommendations in this respect. The recommendations are “soft law” and considered as ­supplementary to the legislation for commercial ­foundations with rules of comply or explain procedures. Failure to comply with a recommendation is not considered as a breach of rules but merely implies that the board has chosen a different approach.

The Hempel Foundation’s Trust Deed defines the overall principles for the Foundation’s activities. In addition, the Hempel Foundation is governed by a set of Rules of Procedures for board work and an Annual Wheel on planning of work during the year.

Based on the Trust Deed, Rules of Procedures and the Annual Wheel, the Board of Trustees considers the Hempel Foundation to be in full compliance with the new legislation and basically to comply with all recommendations from the committee for good governance in commercial foundations.

Regarding the recommendations from the committee for good governance in foundations, the Board of Trustees has made a full report available at our website hempelfonden.dk/

 

Purpose of the foundation and ownership structure of Hempel A/S

According to the Trust Deed, the Foundation's primary purpose is to provide and maintain a solid economic base for the Hempel Group companies, and to ensure that the companies are able to operate on a sound business and financial basis. This is of greatest importance since the Foundation is the 100 per cent owner of the Hempel Group companies.

According to the goals stated in the Trust Deed, the policies and priorities adopted by the Foundation for its activities, including decisions on the extent of ­Foundation support for charitable purposes, are to be focused ­primarily on the continued ability to provide a solid ­financial base for the optimum business performance of the Hempel Group.

 

Board of Trustees

The Hempel Foundation is administered by a Board of ­Trustees comprising 5-7 members elected by the ­Foundation and 3-4 members elected by the employees.

The Foundation’s Trust Deed states that the Board is a self-electing entity. Elections take place annually. Board members appointed by the Foundation are elected for a three-year term, and may be re-elected. The ­three-year term is stipulated in the Trust Deed, with a view to ­maintaining satisfactory continuity in the Board's ­activities. Board ­members must be no more than 65 years of age when elected for the first time. The age limit for Board members elected by the Foundation is 70 years, subject to an ­extension to 75 years under special circumstances.

The members appointed by employees are elected under Danish legislative provisions for employee representation on boards of directors, and accordingly are elected for a term of four years.

Under the Trust Deed, the following requirements apply to Board members appointed by the Foundation:

  • A majority cannot at the same time be board members of Hempel A/S.
  • A majority should preferably be current or former Hempel employees or persons who have somehow been involved with the Hempel Group over many years.
  • At least two of the members must have international financial and business experience.

The Board of Trustees has additionally set targets for gender representation for members elected by the Foundation. In April 2015, a new female Board member joined the Board of Trustees and as such the first target was achieved. A new target has therefore been set that no later than 2020 preferably minimum two of the Board members appointed by the Foundation are female members.

The Chairman and Deputy Chairman are elected from among the Board members for a three-year term. The Chairman and the Deputy Chairman of the Board monitor and assess the composition of the Board and its performance on an ongoing basis, in consultation with individual Board members and the Board as a whole. This evaluation aims to ensure that the required commercial and investment and personal skills, as well as competences regarding charitable donations, are available among the Board members appointed by the Foundation.

Detailed information on Board of Trustee members can be found on the Foundation homepage hempelfoundation.com/hempel-foundation/board-of-trustees


All new Board members appointed by the Foundation are selected through a structured process based on the above mentioned evaluation and specific need for additional competencies on the Board. A professional executive search firm is used for external searches. To meet the specific requirement, stipulated in the Trust Deed, that certain Board members preferably should have been involved with the Hempel Group, the Chairman and Deputy Chairman use a regularly updated list of potential candidates to be presented to the members appointed by the Foundation for evaluation and selection.

The Foundation has elected and established an Investment Committee among Board members for the preparation i.e. of the Board's higher-level decisions regarding the Foundation's financial investments, and evaluate portfolio managers.

The Foundation has also elected and established a ­Donations Committee. The Committee examines and evaluates the great number of applications the Foundation receives every year, many of which are for large and complex projects. The final decisions on donations are taken by Board members appointed by the Foundation (ref. Erhvervsfondslovens § 64). The final decision on the total amount of yearly contribution to donations is taken by all Board members.

Finally, the Board has also appointed, among its members, honorary board members of the two related foundation entities, Hempel Employee Foundation and Hempel Cultural Foundation.

The Chairman of the Board is entitled to speak on behalf of the Foundation and the Board. The Administration ­Manager of the Foundation can also carry out this task by prior agreement with the Chairman.

 

Meetings, committees, and remuneration

The Board of Trustees generally holds 5 to 6 all-day ­meetings a year. Two of these meetings take place as soon as possible after the completion of half-yearly and ­annual financial statements for the Foundation. The Board of Trustees has a continuing involvement in Group operations on an overall strategic level, with a view to maintaining the required degree of consultation and consensus between the two entities.

The Investment Committee usually holds 5-6 meetings a year with each of the Foundation's four different portfolio managers as well as meetings on strategic investment issues. The Donations Committee generally holds four meetings each year.

Members of the Board of Trustees are paid a fixed ­annual remuneration that must not be above what is deemed to be usual in relation to the workload, nature of the job and ­competences involved. As is customary, a higher level of ­remuneration is received by the Chairman (+200%) and Deputy Chairman (+50%). Except for the Chairman, ­members of the Investment Committee and the ­Donations Committee receive a fixed annual remuneration for ­committee work. Trustees serving on the boards of the Hempel Employee Foundation or Hempel Cultural Foundation do not receive remuneration for these services.

Remuneration is decided by the Board of Trustees on an annual basis in a structured process taking into account the amount of working hours spent by the Trustees, the overall responsibilities for the Trustees and activities carried out by the Trustees, the purpose of the Foundation as well as the total activities of the Foundation, the leading role of the Trustees and the major responsibility of the Trustees in relation to the overall leadership of the Hempel Group and their participation in all major and strategic decisions in the Hempel Group as well as income derived by the Trustees from other positions in the Group.

To further support the correct handling of the decisions on these remuneration issues, the Trustees additionally and from a critical standpoint make sure that the suggested remuneration is reasonable in relation to the overall ­interest of the Foundation as well as comparable to the level of ­remuneration in other commercial foundations of some similarity. This work includes benchmarking with a peer-group carried out by an independent external consultancy company.

It is the firm commitment and aim of the Trustees at all times that the Foundation and the Group will not accept costs and remunerations to management, Board members, Trustees and other kinds of administrative cost that are not directly supporting and strengthening the purpose of the Foundation as well as the charitable donations and the Trustees will at all times seek to limit the mentioned costs and ­remunerations etc. as much as possible in a responsible way.

The total remuneration paid to the Board in 2016 ­including remuneration for work on Board Committees, was EUR 425,400. The base remuneration paid to Board members in 2016 was EUR 33,500.

 

Conflict of interest

The Foundation is committed to ensuring that all ­persons involved in its investment and donation processes possess the requisite skills. The Foundation makes sure to avoid any potential conflict of interest. The aim is to ensure the integrity of decisions made on investment proposals and donation applications.

All decisions are made in accordance with common conflict of interest principles. In practice this means that no Board members or Foundation employees can take part in any decisions in which they may be deemed to have a material personal interest. When the Foundation uses the services of advisors, they too are expressly requested to provide ­details of any personal links to applicants that might ­influence their recommendations.

 

Statutory report on foundation governance

The statutory report on foundation governance is available in Danish at our Danish website. Click here.