Corporate Governance

Park Street A/S is covered by the corporate governance recommendations, which are part of the listing rules on NASDAQ Copenhagen. The rules include the company’s communication and interaction with the company’s investors and other stakeholders, the tasks and responsibilities of the board, the composition and organization of the board of directors, the remuneration of the Board of Directors and the Executive Board, as well as the presentation of financial statements, risk management and auditing. The recommendations for corporate governance are publicly available on the website: www.corporategovernance.dk.

Park Street’s Board of Directors and Executive Management constantly seek to ensure that management structure and control systems are appropriate and functioning satisfactorily. A number of internal procedures and controls have been implemented and are assessed on an ongoing basis.

As a listed company, Park Street must follow the recommendations or explain if a recommendation is not followed and why the company has chosen differently. Park Street has chosen to deviate from the following points:

 Paragraph 1.1.3:

The committee recommends that the company publish quarterly reports.

Variation:

In the period between the publication of full and half-yearly reports, Park Street has chosen not to publish quarterly interim reports. Management believes that quarterly interim reports in addition to the half-yearly report will not contribute to a better understanding of the company’s activities.

Publishing half-yearly and yearly reports.

 Paragraph 1.3.1

The committee recommends that the company has a contingency procedure for takeover attempts, which contains a “roadmap” for the matters that the board of directors should consider and decide on if a takeover bid has been made, or the board of directors receives a reasoned presumption that a takeover bid can be made. In addition, it is recommended that it appears from the procedure that the Board of Directors refrains, without the approval of the general meeting, from counteracting a takeover attempt by making dispositions that seek to prevent the shareholders from taking a position on the takeover bid.

Variation:

Significant majority of the company (over 93%) is controlled by the parent company (Park Street Asset Management). Any takeover possibilities do not exist without direct involvement of the parent company acting through the AGM or EGM.

 Paragraph 1.4.2

The committee recommends that the board of directors approve a tax policy that is made available on the company’s website.

Variation:

The audit committee reviews all financials and tax obligations of the company are complied with. The policy however is not published on the website.

The company will publish on the website in the current calendar year

 Paragraph 2.2.1.

The committee recommends that the board of directors, in addition to a chairman, has a deputy chairman who can step in when the chairman is absent and otherwise be a closer sparring partner for the chairman.

Variation:

Management does not deem necessary to appoint a vice chairman given that the board of directors act as effective sparring partners for the chairman and can take over its responsibilities in case of absence.

 Paragraph 3.1.2:

The committee recommends that the Board of Directors annually discuss the company’s activities to ensure a relevant diversity in the company’s management levels and approve a diversity policy, which is available in the management’s report and / or on the company’s website.

Variation:

Park Street has not set specific targets for diversity in the company’s management levels, other than what is required in accordance with Company Law, as this is not considered relevant considering the size of the company.

 Paragraph 3.2.2:

The Committee recommends that members of the company’s executive board be not members of the board of directors and that a resigning chief executive officer be not directly elected as chairman or vice chairman for the same company.

Variation:

Park Street has deviated partially given the shareholder structure and size of the company, Park Street considers adequate that the only member of the executive board to be also part of the board of directors.

 Paragraph 3.4.4:

The committee recommends that the board of directors set up a nomination committee, which has at least the following preparatory tasks:
• Describe the required qualifications for a given position on the Board of Directors and the Executive Board, the estimated time consumption for the various positions on the Board of Directors as well as competencies, knowledge and experience that are / should be in the two management bodies,
• Annually assess the structure, size, composition and results of the Board of Directors and the Executive Board and prepare recommendations to the Board of Directors on any changes,
• In collaboration with the chairman, conduct the annual board evaluation and assess the individual management members’ competencies, knowledge, experience and succession and report to the board on this,
• Undertake the recruitment of new members of the Board of Directors and the Executive Board and nominate candidates for approval by the Board of Directors,
• Ensure that there is a succession plan for the Executive Board,
• Monitor the Executive Board’s policy for hiring senior executives, and
• Monitor the preparation of a diversity policy for approval by the Board of Directors.

Variation:

The Board of Directors believes that the tasks of describing the qualifications required by the Board of Directors and the Executive Board, and evaluating the structure, size, composition, results and management’s governing bodies, are best carried out by the Board of Directors.

 Paragraph 3.4.5:

The committee recommends that the board of directors set up a remuneration committee which has at least the following preparatory tasks:
• Prepare a draft of the remuneration policy for the approval of the Board of Directors prior to the recommendation for approval by the general meeting
• Submit a presentation to the Board of Directors on remuneration to members of the Executive Board,
• Submit a presentation to the Board of Directors on remuneration to members of the Board of Directors with a view to nominating them to the general meeting,
• Ensure that the management’s remuneration follows the company’s remuneration policy and the assessment of the individual’s efforts, and
• Assist in preparing the annual remuneration report for approval by the Board of Directors prior to the recommendation for the general meeting’s indicative vote.

Variation:

The Board of Directors has not considered it appropriate to set up a separate remuneration committee. The Board of Directors believes that the tasks of assessing management’s remuneration are best taken care of by the entire Board.

 Paragraph 4.1.6:

The Committee recommends that the company has the option of claiming full or partial reimbursement of variable remuneration for both the Executive Board and the Board of Directors if the remuneration has been granted, earned or paid on the basis of information that subsequently proves to be incorrect or if the recipient was think about other factors that have led to the payment of an excessively variable remuneration.

Variation:

Park Street has chosen to deviate from this point partially. Variable pay shares are based on specific objectives determined by the Board of Directors, which the Board uses as the basis for determining the amount of the variable salary component, which may not exceed 20% of the fixed annual salary.

Accordingly, Park Street finds it relevant only to demand repayment of variable parts of wages in cases where Park Street has a claim for repayment under Danish law.

In view of the company’s situation, it is considered inappropriate to have vesting periods extending over more than one year.