Good foundation governance

2016

The Board of the Carlsberg Foundation wishes to exercise good foundation governance in accordance with principles that ensure the utmost professionalism, openness and transparency in relation to the Foundation’s governance and decision-making.

The Carlsberg Foundation has given consideration to the recommendations of the Committee on Foundation Governance and is following the majority of the recommendations. In the case of the few recommendations that we are not directly following, we have provided an explanation below. A comprehensive review of the recommendations can be found here.

There follows a review of aspects of the Carlsberg Foundation's Charter, the Board's rules of procedure and the annual reports. You can read about:

• the Board’s composition and elections

• the Board's work

• the Foundation’s awards

• exercise of ownership of Carlsberg A/S.

Board composition and elections

The Carlsberg Foundation is governed by a Board consisting of five members elected by and from among the Danish members of the Royal Danish Academy of Sciences and Letters. The Board consists of three members from the natural sciences class and two members from the humanities and social sciences class of the Royal Danish Academy. This composition ensures that the Board has the breadth of professional skills necessary to administer research applications in the various fields supported by the Foundation (natural sciences, humanities and social sciences).

Following each ordinary election, the Board elects a Chairman from among its members.

Board members are elected for a maximum period of five years. In accordance with the Foundation's Charter, board members elected after 25 April 2012 may be members for a maximum of 15 years and are required to stand down by the end of the calendar year in which they reach 70 years of age. The Board of the Carlsberg Foundation is thus not self-elective.

The Carlsberg Foundation is the principal shareholder in Carlsberg A/S. It is essential, particularly with respect to the active ownership of the Carlsberg Group, that the Foundation’s Board has a considerable degree of continuity. This is safeguarded by the election or re-election of a member of the Board of the Carlsberg Foundation each year.

Board members are independent in accordance with the Committee on Foundation Governance’s recommendations. The composition of the Board can be seen here.

The Board's work

The Board holds monthly meetings, including an annual awards meeting at which applications submitted by the annual deadline of 1 October are evaluated and processed by the board members. The outcome of this process is published shortly after the awards meeting in mid-November. Board meetings are convened and chaired by the Chairman. The agenda and electronic meeting materials on the individual items on the agenda are sent out a week before the Board meeting in order to ensure the effectiveness of the Board's work. The Board’s decisions at Board meetings are put into effect by the Foundation’s Secretariat. The Executive Secretary is the secretary of the Board.

In particularly urgent cases, the Board may choose to carry out written processing. Decisions taken in this manner are minuted at the next Board meeting.

In the processing of research applications, board members may consult external professional experts, typically members of the Royal Danish Academy of Sciences and Letters.

Members of the Board of the Carlsberg Foundation also sit on the Boards of the Foundation’s departments: the Carlsberg Research Laboratory, the Museum of National History at Frederiksborg Castle and the Tuborg Foundation. The Board is also represented on the Boards of Ny Carlsberg Glyptotek, Queen Ingrid’s Roman Foundation, Professor Johs. Pedersen’s Grant, Carlsberg’s J.C. Jacobsen Memorial Award and property companies affiliated to the Carlsberg Foundation

Three of the Foundation’s four departments receive funding from the Carlsberg Foundation according to a distribution model set out in the Charter. The fourth department, the Museum of National History at Frederiksborg Castle, receives funding according to budget. The board members’ governance tasks in the departments are not therefore considered to affect their independence. The Board of the Carlsberg Foundation also appoints the New Carlsberg Foundation’s Board and Chairman following consultation with the serving members of the New Carlsberg Foundation’s Board.

The Chairman of the Board holds annual evaluation meetings with the other members of the Board. The meetings form the basis for a written report on the evaluation of the Board's work, which is subsequently reviewed by the full Board. In this context, the other board members evaluate the Chairman’s governance of the Board and the Foundation’s work.

The Board routinely evaluates the work and results of the Secretariat.

The members of the Board of the Carlsberg Foundation receive a fixed fee. In accordance with the Foundation's Charter, this fee is determined by the Royal Danish Academy of Sciences and Letters, upon the recommendation of the Carlsberg Foundation’s Board, and approved by the Danish Business Authority. The Chairman is remunerated according to the Danish Ministry of Finance’s salary scale for civil servants, etc., minus any remuneration that he/she may receive in the event of continued university affiliation. Fees paid to the board members and the Chairman are set out in the annual report.

The Foundation’s awards

The general principles for the Foundation’s awards are set out in the Charter. The Foundation’s awards are effected through four departments: the Carlsberg Research Laboratory (Department A), free research funds (Department B), the Museum of National History at Frederiksborg Castle (Department C) and the Tuborg Foundation (Department D).

Each year, the Board determines the total level of awards based on expectations of the Foundation’s overall financial results. Allocations to Departments A and D are determined in accordance with the Charter. The allocation to Department C is determined according to budget. The allocation to Department B comprises the remaining funds after the allocations have been made to Departments A, C and D.

On an annual basis, the Board discusses the strategy for making research awards through Department B, adjusting the forms of award accordingly. Through its research awards, the Board wants to strengthen the growth layer and promote internationalisation in Danish research, and to support projects that provide opportunities for important scientific breakthroughs and groundbreaking results of major social relevance. This is achieved in part through the awarding of Danish and international  postdoc scholarships and through the larger, longer-term awards to Semper Ardens projects.

Exercise of ownership of Carlsberg A/S

The Carlsberg Foundation was established by Brewer J.C. Jacobsen on 25 September 1876 by means of a Charter and Deed of Gift to the Royal Danish Academy of Sciences and Letters. The Foundation's Charter received royal confirmation on 18 October 1876.

Initially, the Foundation’s task was to run the Carlsberg Laboratory, which constitutes Department A of the Carlsberg Foundation. In 1878, the Museum of National History at Frederiksborg Castle was established, becoming Department C of the Carlsberg Foundation. Among other things, the museum houses Denmark's historical portrait collection.

Since the Carlsberg Foundation was established, its board members have been elected from among the Danish members of the Royal Danish Academy of Sciences and Letters.

When J.C. Jacobsen died in 1887, the Carlsberg Foundation became the sole owner of the Old Carlsberg brewery, making it one of the world's first commercial foundations.

In 1902, J.C. Jacobsen’s son, Carl Jacobsen, chose to follow his father's example; in a Deed of Gift of 20 January 1902, he transferred his New Carlsberg brewery to the Carlsberg Foundation, bringing the two breweries together under joint governance. At the same time, the New Carlsberg Foundation was established with the aim of supporting art and art history as well as undertaking the management of Ny Carlsberg Glyptotek. The New Carlsberg Foundation constitutes a separate foundation under the Carlsberg Foundation.

From 1902, the two breweries, Old Carlsberg and New Carlsberg, were run as an integral part of the Carlsberg Foundation through direct ownership up until 1970, when the two Carlsberg breweries merged with the Tuborg Breweries to become The United Breweries A/S. The Carlsberg Foundation subsequently became the principal shareholder in the merged listed brewery.

At the time of the merger in 1970, it was agreed that the Carlsberg Foundation should own at least 51% of the share capital of The United Breweries A/S. At the Annual General Meeting in 1987, it was decided to change the name from The United Breweries A/S to Carlsberg A/S. An amendment to the Charter in 2000 made it possible for the Carlsberg brewery business to become part of a subsidiary structure, if Carlsberg Foundation’s Board deemed it necessary in order to maintain and further develop Carlsberg A/S’s commercial and research activities. In this structure, the Carlsberg Foundation and Carlsberg A/S exercise a non-controlling yet significant influence on the subsidiaries, capable of ensuring both the maintenance of “Carlsberg” as a widely known and recognised brand of beer and the continuance of beer production in Denmark.

In 2007, the Charter was amended to the effect that the Carlsberg Foundation was now only obliged to own more than 25% of the share capital with an entitlement to at least 51% of the votes in Carlsberg A/S. This amendment was made to allow an opportunity for providing new equity to Carlsberg A/S by way of a share issue without obliging the Carlsberg Foundation to participate proportionately in the increase of the share capital.

In 2013, the Charter was again amended to the effect that the Carlsberg Foundation was now only obliged to own a shareholding that provides entitlement to at least 51% of the voting rights in Carlsberg A/S. This amendment was made to give Carlsberg A/S significantly improved financial resources through share issues while allowing the Carlsberg Foundation to retain the same controlling interest in Carlsberg A/S as before.

In 2015, the Charter was amended to the effect that the Carlsberg Laboratory and the Carlsberg Research Center became fully integrated under the name “the Carlsberg Research Laboratory”. The Carlsberg Foundation thus assumes ownership of the Carlsberg Academy.

The Carlsberg Foundation wants to be a dynamic and active principal shareholder in Carlsberg A/S, which is the main source of the Foundation's income and thus its greatest asset. At the same time, the Charter directs the Board of the Carlsberg Foundation to exercise its influence on Carlsberg A/S such that the "Golden words" of the Foundation's founder, J.C. Jacobsen, are upheld as far as possible:

“In working the breweries it shall be the constant purpose, regardless of immediate profit, to develop the art of making beer to the highest possible degree of perfection in order that these breweries and their products may ever stand as ideal models and so, by their examples, assist in keeping the brewing of beer in the country on a high and honourable level.” (Carlsberg Foundation Charter, § 7.1.6)

It is therefore important that the Carlsberg Foundation’s Board has extensive knowledge of the activities of Carlsberg A/S. All board members are consequently members of the Board of Carlsberg A/S. At the end of 2015, the Foundation owned 30.3% of the share capital with a corresponding voting share of 75.3%.

In addition to the five members who are also members of the Board of the Carlsberg Foundation, the Board of Directors of Carlsberg A/S consists of five independent members with international business and management experience of FMCG (Fast Moving Consumer Goods) companies and five members elected by and from among employees in the Carlsberg Group. When selecting new members for the Board of Directors of Carlsberg A/S, emphasis is placed on a number of professional and personal skills, including:

• Integrity and reliability

• Significant management experience from management positions in major international companies and knowledge-based institutions

• Analytical thinking and well-developed strategic understanding

• Good personal and social skills that can form the basis for the establishment and maintenance of good professional working relationships with the other board members, executive management and other management representatives