Corporate Governance Report 2024

The work of the Board in 2024

Every ordinary board meeting focusses on one principal topic of discussion

February – Year-end close  

The meeting in February considers the annual accounts of the preceding year. The company auditor presents his comments to the full Board of Directors on this occasion.

May – Inaugural meeting 

Following the AGM, the Board of Directors holds its inaugural meeting, at which the Board discusses the rules of procedure and determines who has authority to sign for the company.

August – Strategy  

In August, the Board holds strategic discussions over two working days.

November – Audit review  

In November, the company’s auditor reports on the review of the interim report for the period January to September and the status of the audit.

December -January – Budget 

At the end of the year, the Board discusses the Group’s budget for the coming year.

Corporate governance in NIBE Industrier AB (publ) (NIBE) is exercised through the Annual General Meeting, the Board of Directors and the CEO in accordance with the Swedish Companies Act (2005:551), the company’s Articles of Association, the Swedish Annual Accounts Act (1995:1554), Nasdaq Stockholm’s Rules for Issuers, and good practice on the stock market.

It is good practice for Swedish companies whose shares are traded on regulated markets to comply with the Swedish Corporate Governance Code (the Code). NIBE complies with the Code, and this corporate governance report has been drawn up in accordance with the Code. The current Code may be accessed on the Swedish Corporate Governance Board’s website, www.bolagsstyrning.se. In addition, NIBE also provides information on the company’s website in accordance with the Market Abuse Regulation and other legal requirements.

The corporate governance report is not part of the formal annual report documents. The company’s auditors have examined the corporate governance report, and it is their opinion that the corporate governance report has been properly drawn up and that the statutory information in the report is consistent with other parts of the annual report and consolidated financial statements.

Ownership

NIBE has its registered office in Markaryd, Sweden, and has been listed on Nasdaq Stockholm since 1997. 

NIBE class B shares have also had a secondary listing on the SIX Swiss Exchange since August 2011. On December 31, 2024, NIBE had 177,044 registered shareholders, excluding previous shareholders in Schulthess Group AG who have become shareholders in NIBE. As the Swiss authorities do not report any details relating to individual shareholders in Switzerland to NIBE, it is not possible to determine the total number of shareholders.

The ten largest shareholders comprise the constellations of “current and former board members and senior executives” with a total of 20.2% of the capital and 45.9% of voting rights, followed by the Schörling family, which holds 8% of the capital and 18.9% of the voting rights, and eight institutional investors with a total of 19.3% of the capital and 9.5% of the voting rights. Together these ten major shareholder groups hold a total of 47.5% of the capital in the company and 74.2% of the votes. No individual shareholder has a direct or indirect shareholding representing 10% or more of the number of votes of all shares in NIBE Industrier. 

Annual General Meeting

The Annual General Meeting (AGM) is NIBE’s highest decision-making body. The AGM determines the number of Board members and auditors, adopts the accounts, makes decisions on dividends and other appropriations of profit/loss, and discharges the Board of Directors and CEO from liability.

The most recent AGM on May 16, 2024 in Markaryd was attended by 1,739 shareholders, 601 of which attended in person, and 1,138 of which attended through proxies. 65% of the shares and 83% of the total number of votes in the company were represented. The AGM was attended by the Board of Directors, the CEO and the company’s auditors. The minutes of the AGM and the company’s Articles of Association are available on the Group’s website, www.nibegroup.com.

There are no limitations in the articles of association as to the number of votes a shareholder may hold at a general meeting of the company. Nor are there any provisions on the appointment or dismissal of directors of the company, or changes to the company’s articles of association.

The 2024 AGM gave the Board of Directors a mandate to issue new class B shares in the company, on one or more occasions and with or without derogation from the shareholders’ preferential rights, to be used to finance the acquisition of companies or businesses. This mandate is valid until the 2025 AGM and is restricted to a maximum of 10% of the number of shares issued at the time of the AGM. 

Communication with the stock market

The ambition is to maintain a high standard of information issued by the company to the stock market. Such information must be accurate and transparent to create long-term confidence in the company.

Earnings and the financial position are presented quarterly and, like the annual report, are issued to all shareholders who request a copy. All information that may have an effect on the company’s share price and information on all acquisitions is announced via press releases. All financial information is also available on the website, www.nibegroup.com. Press releases and reports are posted there at the same time as they are made public.

Meetings with investors, financial analysts and the media are held when quarterly reports are published. There is also continuous dialogue with Swedish and foreign investors and financial analysts, the media and Aktiespararna, the Swedish Shareholders’ Association. 

Board procedures

The NIBE Board of Directors consists of seven members, elected by the AGM. Directors and the Chairman of the Board are elected annually by the AGM to serve for the period until the next AGM. Company employees participate in Board meetings as required to submit reports or to contribute expert knowledge in individual matters.

The Board of Directors elected by the 2024 AGM comprised Hans Linnarson (Chairman), Anders Pålsson, Eva Karlsson, Eva Thunholm and Managing Director and CEO Gerteric Lindquist (all re-elected), as well as James Ahrgren and Camilla Ekdahl (newly elected). With the exception of the Managing Director & CEO, none of the directors is employed by the Company or has any operational responsibilities in the Company. However, Camilla Ekdahl has been a member of the Board for the business area NIBE Climate Solutions.

It is the opinion of NIBE’s Board of Directors that all directors are independent in relation to the Company, with the exception of the Managing Director and CEO. A presentation of the Board members can be found on page 192–193 of the Annual Report.

The work of the Board is governed by formal rules of procedure that are adopted annually and which regulate matters such as decision-making processes within the company, authority to sign for the company, meetings of the Board and duties of the Chairman of the Board.

The Board of Directors oversees the work of the CEO and is responsible for ensuring that the organization, management and administrative guidelines for the company’s funds are suitable for the purpose. The Board is also responsible for developing and monitoring the company’s strategies through plans and objectives, decisions on acquisitions, major investments, appointments to managerial positions and the continual supervision of operations during the year. In addition, the Board sets the budget and is responsible for the annual accounts.

The Chairman leads the work of the Board and ensures that it is carried out in accordance with the Swedish Companies Act and other relevant legislation. The Chairman follows the progress of operations through consultations with the CEO, and is responsible for ensuring that other members of the Board receive the information they need to hold discussions of a high quality and make the best possible decisions.

The Board of Directors evaluates its work every year. The evaluation is carried out by means of a survey of the directors. The results of the survey are then presented to the full Board, which uses them to make specific proposals on how its work can be developed, improved and made more efficient, where necessary. The Board evaluation for 2024 revealed an open, constructive climate with well-functioning control and decision-making processes. The areas covered by the evaluation included the composition, working methods, communication and internal control of the Board, the Board’s evaluation of the CEO and other company management, and the need for committees.

During 2024, the Board appointed an Audit Committee and a Remuneration Committee, which will prepare relevant matters and put forward proposals for decision by the Board. 

The Remuneration Committee consists of the Chairman of the Board and one other Board member nominated by the Board, and is independent of the company and company management. The Remuneration Committee is responsible for the preparation of decisions by the Board in matters relating to principles of remuneration, remuneration and other terms of employment of company management, the evaluation of variable remuneration schemes for company management and the evaluation of application of the guidelines for remuneration of senior executives and the current remuneration structures and remuneration levels in the company. The Remuneration Committee also puts forward proposals for salary and other remuneration of the CEO, as well as proposals for the principles regarding salary and other remuneration of senior executives in the company and the Group. The Remuneration Committee members in 2024 were Hans Linnarson (Chairman) and Eva Thunholm. 

The Audit Committee consists of two Board members who are independent of the company and company management and also independent in relation to the company’s major shareholders. The Audit Committee’s main tasks are to monitor the company’s financial reporting and sustainability reporting and to monitor the effectiveness of the company’s internal control, internal audit and risk management The Audit Committee members in 2024 were Anders Pålsson (Chairman) and Camilla Ekdahl. Previously, a group within the Board of Directors has held separate, more in-depth, meetings with Group management and auditors.

Nomination Committee

In connection with the 2024 AGM, the company’s board announced that a formal Nomination Committee would be established.   

The formal decision on establishing a Nomination Committee and its working methods is taken by the AGM. The formal decision on the Nomination Committee will be taken by the 2025 AGM, which is why the company has not formally had a Nomination Committee ahead of the 2025 AGM (Section III paragraph 2.1 of the Code). Previously, a group of shareholders, who own Class A shares and who together represent more than 60% of the voting rights in the company, put forward their proposals to the AGM. Ahead of the 2025 AGM, a group of representatives of the largest shareholders have put forward a proposal for the Nomination Committee and have also acted as an informal nomination group that has prepared the proposals that would normally be the responsibility of a nomination committee.  

Group management

The Managing Director and CEO, who is also appointed by the Board of Directors as Managing Director of the parent, exercises day-to-day control of the Group, and the three heads of the Group’s business areas report to him.

The CEO leads operations in accordance with the instructions adopted by the Board in respect of the division of duties between the Board and the CEO. The work of the CEO and of Group management is evaluated annually.

Financing, currency management, corporate acquisitions, new establishments, financial control, financial information, human resources policy, sustainability and other overall policy matters are coordinated at Group level.

Governance of business areas

NIBE consists of three business areas. 

Each business area has its own operational management with profit responsibility. Each business area has a Business Area Board chaired by the Managing Director & CEO.

Each Business Area Board, in addition to responsibility for day-to-day operations, is also responsible to the NIBE Board of Directors for the strategic development of its respective business area. Each Business Area Board meets once per quarter.

Governance of the Group’s sustainability management

The Group’s sustainability workgroup reports to the Sustainability Council which, in addition to the workgroup, consists of the CEO, CFO and heads of business areas.

Much of the work is regulated in national legislation, such as environmental laws and labor law, but NIBE is also obliged to comply with regional and international law. In addition, NIBE is governed by voluntary commitments such as the UN Global Compact.

In 2024, the company began the process of aligning its reporting to meet the requirements of the Corporate Sustainability Reporting Directive (CSRD). As a consequence of this substantial and comprehensive reporting, the company has ceased reporting according to GRI and SDG.

NIBE’s Board has the ultimate responsibility for ensuring that risks are managed and that sustainability initiatives comply with the requirements of authorities, shareholders and other stakeholders. The CEO reports to the Board. The heads of the business areas are responsible for communicating and implementing their strategic work at the local board level.

The management of each company is responsible for local operational sustainability work and for compliance with Group guidelines. These managers report to the heads of the business areas in each area.

The sustainability workgroup regularly visits companies in the Group to monitor compliance with common policies and guidelines. The workgroup also works strategically and reports on sustainability issues to the Boards at Group and business area level.

Any need for improvement or nonconformities are documented and reported to the individual company, heads of business areas and Group management. Each business area head is responsible for ensuring that measures proposed are taken.

Code of Conduct

NIBE has a code of conduct that reflects the NIBE culture and the ten principles of the UN Global Compact.

The Code of Conduct is reflected in NIBE’s documents on business principles, values and working methods and the content of these is based on a long tradition of honest and sincere business practices. The information can be found on pages 20–23.

All employees receive the printed version in their local language. When a new company joins the Group, its management is obliged to communicate and implement the Code of Conduct in the entire organization.

The Code of Conduct is available to external parties and stakeholders on the Group’s website nibegroup.com.

All businesses comply with national legislation regarding financial, environmental and labor legislation, and are also obliged to comply with regional and international law and voluntary commitments such as the UN Global Compact. Management is responsible for seeking advice on ethical and legal behavior according to established escalation procedures when their knowledge or mandate is insufficient.

NIBE has a whistleblower function through which all Group employees and others can confidentially report suspicions of serious irregularities without risk of retaliation. To ensure the anonymity of the whistleblower and the proper, secure handling of submissions, whistleblower cases go directly to an external recipient who also leads the investigation of the case.

Policy for composition of Board of Directors/diversity policy

NIBE has adopted a diversity policy for the Board.

NIBE’s Board of Directors must have overall expertise and experience that is appropriate to its work and the business that is conducted, as well as to be able to identify and analyze opportunities for and risks to the Group. When new directors are nominated and elected, it is necessary to consider each director’s suitability to obtain a Board of Directors with the overall expertise required for appropriate governance of the Group. The composition of the Board of Directors must be characterized by versatility and breadth in terms of the expertise, experience, gender, age, education and professional background of the directors elected. The objective of the policy is to achieve an appropriate composition of the Board as regards the company’s operations and relationships in general.

In 2024, the composition of the Board was evaluated within the framework of the Board’s own annual evaluation (presented above under ‘Board procedures’) and taking into account the diversity policy for the Board. The result of the evaluation is that the composition of the Board is deemed compliant with the policy.

Remuneration 2024

The 2024 AGM resolved that fees to the Board of Directors and fees to the auditors would be paid according to approved invoice.

At the same time, policies for the remuneration of the CEO and other senior executives were detailed and approved. Further information about the principles that apply can be found in Note 6 to the annual report and on NIBE’s website at www.nibegroup.com.

Remuneration of the CEO is a matter decided by the Board, but the preparatory work for this decision is undertaken by Remuneration Committee. Remuneration of other senior executives is determined by the CEO in consultation with the Remuneration Committee and in accordance with the guidelines adopted by the AGM. Decisions in this regard are reported to the Board of Directors.

Information on Board fees and salaries and other remuneration paid to the CEO and other senior executives can be found in Note 6 to the annual report.

Incentive program

Under an incentive program, certain key employees are paid variable remuneration if set targets are met.  

The variable remuneration is limited to a maximum of four months’ salary. It is also possible for an additional month’s salary to be paid on condition that this additional payment plus another monthly salary paid as a variable bonus or part of a variable bonus is used to purchase NIBE shares on the stock market. The additional remuneration is conditional on the employee retaining the annually acquired NIBE shares for at least three years. Under normal circumstances, the acquisition of NIBE shares by the employees concerned shall take place once a year in February/March and shall be subject to the applicable market abuse regulations. No incentive program is offered to the CEO. Certain key individuals in the foreign companies acquired in recent years have incentive programs that deviate from NIBE Group’s remuneration principles set out above. Further information about the principles that apply for remuneration of senior executives can be found in Note 6 to the annual report.

Severance pay

No severance pay or other benefits apply to the Chairman of the Board or to the directors, apart from the CEO. 

The period of notice for the CEO is six months for termination of employment by the company. In addition to salary during the period of notice, the CEO is entitled to severance pay equal to 12 months’ salary. Other senior executives are entitled to receive their salaries during a period of notice which varies between 6 and 12 months.

Pensions

The Chairman of the Board and directors do not receive any retirement benefits for their work on the Board. 

No special agreements have been reached that entitle senior executives to retire before the official retirement age while still retaining part of their salary in the interim.

Information on the retirement benefits of the CEO and other senior executives can be found in Note 6 to the annual report.

Under the Group’s policy, no further pension premium payments are made if employment continues after the age of 65.

Internal control over financial reporting in 2024

Under the Swedish Companies Act and the Code, the Board of Directors is responsible for internal control.    

This report on internal control and risk management as regards financial reporting complies with the requirements in Chapter 6, Section 6, of the Annual Accounts Act.

NIBE is characterized by simplicity in its legal and operational structure, transparency in its organization, clear divisions of responsibility, and an efficient management and control system.

NIBE complies not only with laws and regulations in respect of financial reporting, but also with internal instructions and policies set out in, e.g., the company’s Finance Handbook and NICS (NIBE Internal Control Standard). These are applied by all companies in the Group, along with systems aimed at ensuring effective internal controls in financial reporting.

Consolidated financial statements containing comprehensive analyses and comments are prepared each month for the Group and its business areas. Monitoring also takes place monthly.

There are finance functions and controllers with responsibility for accounting, reporting and the analysis of financial trends at Group level, business area level and unit level.

In addition to the statutory audit of the annual report and statutory audit of the parent and all of its subsidiaries, the Board also has the option of requesting a special audit of a selected business during the year if the Board deems it necessary. A summary of the auditors’ review of selected controls is presented each year as part of the Board meeting that deals with the year-end financial statements.

Against the backdrop of the Group’s continuous work on internal control through the Group-wide framework NICS, NIBE Internal Control Standard, it is the Board’s assessment that there is no need for any separate internal audit function (Section III, item 8.1, of the Code).

External auditors

NIBE’s auditors were elected at the AGM to serve for a period of one year.

The registered public accounting firm KPMG AB has held the position of the company’s auditors since the AGM in 2013. Jonas Nihlberg has been auditor in charge since the AGM in 2021.

The auditor in charge has continual access to the approved minutes of company Board meetings and the monthly reports that the Board receives.

The company’s auditor in charge reports his observations from the audit and his assessment of the company’s internal controls to the full Board.

Over and above normal auditing duties, KPMG assists in particular with consulting services in accounting and tax matters. Information on the remuneration of auditors is given in Note 9 to the annual report.