Corporate Governance

REPORT ON CORPORATE GOVERNANCE

Monberg & Thorsen A/S has a clear division of authority and independence between the Supervisory Board and the Executive Board. Duties and responsibilities are determined at overall level through rules of procedure for the Supervisory Board.

The Executive Board is in charge of the day-to-day management of the company, and the Supervisory Board oversees the Executive Board and takes care of overall strategic management tasks. The chairman is the Supervisory Board’s principal contact with the Executive Board.

The Monberg & Thorsen Group’s activities essentially comprise the activities of MT Højgaard, and as part of the management of the Group's activities, representatives of both Monberg & Thorsen’s Supervisory Board and Executive Board are members of the Supervisory Boards.

Supervisory Board

Composition of the Supervisory Board
The Supervisory Board is elected by the shareholders in general meeting, apart from the Supervisory Board members that are elected pursuant to the Danish Companies Act’s rules on Group representation. The members elected by the shareholders in general meeting comprise not less than four and not more than six members, currently six members. To these should be added three Group representatives.

In elections to the Supervisory Board in both the parent company and the consolidated enterprises efforts are made to ensure a professional composition of the Supervisory Board, so that, collectively, the board possesses the necessary knowledge and experience of board work as well as knowledge of social, commercial and cultural factors in the markets in which the Group has its primary business activities. Efforts are also made to achieve a satisfactory composition for the board.

Overall, the existing Supervisory Board satisfies the criteria concerning independence.

In connection with the election of a new member to the Supervisory Board, the chairman of the Supervisory Board interviews the selectively chosen candidate in order to ensure that his or her profile suits the vacant seat.

In connection with the notice convening the general meeting a description of the background of the nominated candidates for the Supervisory Board is given, along with information on other Executive Board or Supervisory Board memberships held by them in both Danish and foreign companies as well as any demanding organisational posts. A description is also provided of the candidates' educational background, professional qualifications and the skills that are deemed to be relevant to the Supervisory Board’s work.

All members of the Supervisory Board retire by rotation each year. This provides the company’s shareholders with an opportunity to discuss the recruitment criteria and the composition and diversity of the Supervisory Board at the annual general meeting.

There are no formal requirements with respect to the number of other Supervisory Board seats the individual board members may hold, but on election it is pointed out to new board members that it is important for them to ensure that they have sufficient time for their duties and that they perform them diligently and conscientiously. In Monberg & Thorsen’s experience, board members are rarely absent from board meetings. An annual self-evaluation procedure has been established for the Supervisory Board.

According to the Supervisory Board’s rules of procedure, Supervisory Board members must retire not later than at the first general meeting following their 72nd birthday, except where special circumstances apply.

The Supervisory Board met a total of eight times in 2009 and, at the present time, expects to meet seven times in 2010. In accordance with the board’s rules of procedure, the Supervisory Board must meet at least six times between Annual General Meetings.

Audit Committee
The full Supervisory Board functions as Audit Committee. No other permanent Supervisory Board committees have been appointed at the present time.

Supervisory Board remuneration
Monberg & Thorsen has not introduced incentive pay for the Supervisory Board. Supervisory Board remuneration remained unchanged at DKK 200,000 for ordinary members of the Supervisory Board, with a supplement for the chairman and the deputy chairman. Besides their normal remuneration, the chairman or members may be paid remuneration for special tasks undertaken by them, although the total remuneration received by a Supervisory Board member may not exceed twice the chairman’s ordinary remuneration. Details concerning total remuneration paid to the Supervisory Board is disclosed in note 10 to the consolidated financial statements.

Executive Board
The Executive Board consists of the President and CEO, whose background and practical experience match the Group's current needs.

Executive Board remuneration
The Executive Board receives a fixed fee plus any bonus in accordance with the guidelines for incentive pay. The pensionable age for members of the Executive Board is 65, and no special retirement benefit plan has been agreed. Details concerning total remuneration paid to the Executive Board is disclosed in note 10 to the consolidated financial statements.

Corporate governance recommendations
Monberg & Thorsen’s B shares are listed on Nasdaq OMX Copenhagen, and Monberg & Thorsen in principle complies with the corporate governance recommendations as set out at www.corporategovernance.dk.

Monberg & Thorsen has taken a position on all recommendations based on the "comply-or-explain" principle, which is described in further detail on www.monthor.dk, to which reference is made.

The Supervisory Board is of the opinion that all the recommendations are being practised in the management of Monberg & Thorsen.

Financial reporting process
The Group’s accounting and control systems are designed to ensure that internal and external financial reporting gives a true and fair view without material misstatement and that appropriate accounting policies are defined and applied.

The Supervisory Board and Executive Board regularly evaluate material risks and internal controls in connection with the Group’s activities and their potential impact on the financial reporting process.

As a consequence of the Group’s structure, policies, procedures and controls have been prepared in key areas related to the financial reporting processes of MT Højgaard and the parent company.

The responsibility for maintaining adequate and effective internal controls and risk management in connection with the financial reporting lies with the Executive Board.

The Supervisory Board monitors the financial reporting process on an ongoing basis, including that applicable legislation is being complied with, that the accounting policies are relevant, including the manner in which material and/or exceptional items and accounting estimates are accounted for, and the overall disclosure level in Monberg & Thorsen’s financial reporting.

The annual report of MT Højgaard include detailed description of the financial reporting processes in this company.