Annual General Meeting Protocol Sheet no Minutes of the Annual General Meeting of TDC A/S on 16 March 2018

Transcription

1 Annual General Meeting Protocol Sheet no. 1 Minutes of the Annual General Meeting of TDC A/S on 16 March 2018 On 16 March 2018 at 10:00 hours, the Annual General Meeting of TDC A/S (CVR no ) was held at Kromann Reumert, Sundkrogsgade 5, 2100 Copenhagen 0. On behalf of the Board of Directors, the Chairman, Pierre Danon, bid the participants welcome to the ordinary Annual General Meeting of TDC A/S. Pierre Danon informed those present that the Board of Directors, in accordance with the company's Articles of Association, had appointed Anders Lavesen, lawyer, as chairman of the Annual General Meeting. The agenda: 1. The report of the Board of Directors on the Company's activities during the past year. 2. Presentation and adoption of the annual report. 3. Resolution to discharge the Board of Directors and the Executive Committee from liability. 4. Resolution on the distribution of profits. 5. Election of members and alternate members to the Board of Directors. 6. Election of auditor. 7. Proposals from the Board of Directors or the shareholders: a) Amendment of the Company's Remuneration policy for TDC's top management (Board of Directors and Executive Committee), including general guidelines for incentive pay to the Executive Committee, and amendment to Article 16a of the Articles of Association. b) Adoption of the Board of Directors' remuneration for c) Amendment of the Articles of Association regarding retirement age for members of the board of directors. d) Other amendments of the Articles of Association. 8. Any other business The chairman described some practical matters and the notice of the Annual General Meeting and noted that the Annual General Meeting had been lawfully convened in accordance with the company's Articles of Association and legislation, and that it formed a quorum. The chairman then reviewed the agenda and noted that the Board of Directors had decided to withdraw its proposal under item 7a, as the number of shareholders who had voted by proxy against the proposal had formally caused the proposal to fail. Re items 1-4 of the agenda: The report of the Board of Directors on the Company's activities during the past year; Presentation and adoption of the annual report; Resolution to discharge the Board of Directors and the Executive Committee from liability; Resolution on the distribution of profits Pierre Danon, Chairman of the Board of Directors, presented the Board of Directors' report on the Company's activities in 2017, and CEO Pernille Erenbjerg subsequently reviewed the Annual Report The chairman brought items 1-4 up for discussion. The first contribution was from Martin Felix Jørgensen, representing Dansk Aktionærforening (the Danish shareholders' association). Martin Felix Jørgensen thanked Pierre Danon for a good report and Pernille Erenbjerg for a fine review of the Annual Report 2017, and then explained that Dansk Aktionærforening promoted transparency, a good share culture and typically safeguarded the interests of small, private shareholders. Martin Felix Jørgensen mentioned a heading in the media, expressing that the scene was set for imminent trouble at TDC's Annual General Meeting on behalf of small shareholders. He wished to dismiss Minutes of the Annual General Meeting of TOe A/S on 16 March 2018

2 Annual General Meeting Protocol Sheet no. 2 this as being the case for Dansk Aktionærforening. Martin Felix Jørgensen believed that the critical questions he would submit today were all by the book, with no indication of trouble. Martin Felix Jørgensen congratulated TDC on achieving the expectations for EBITDA, and for having delivered on the expected dividend. Martin Felix Jørgensen then said that the baseline had shrunk in 2017 to almost half the level in 2016, which gave the impression that the Executive Committee had difficulty in earning money, or that the costs were too high, and pointed out that the profit for the year was the poorest since Martin Felix Jørgensen said that the media had reported that in the event of a voluntary resignation as president, CEO Pernille Erenbjerg would receive non-recurring remuneration of DKK 17.4m. In his opinion, it looked like a help-yourself table for members of the Executive Committee when the Board of Directors and managers negotiated employment contracts in the absence of a powerful majority shareholder to say stop. It was not Dansk Aktionærforening's attitude that a top manager should be able to resign and then qualify for non-recurring remuneration equalling 24 months' pay, especially considering the fact that TDC had not presented the shareholders with fantastic results in the last couple of years. Based on this, Martin Felix Jørgensen put his first question to the management as to why the remuneration was not to a higher degree based on clauses that provided higher incentive to perform in a way that benefited the company and thus the shareholders? As a suggestion, he mentioned a stay-on bonus that could be redeemed if the top executive was still holding the position after say five years. Martin Felix Jørgensen brought up the course of events concerning the MTG merger as presented in the media, and Martin Felix Jørgensen described it as ungainly. Martin Felix Jørgensen said that an experienced analyst had stated that such an experiment had not yet succeeded anywhere in Europa, and it could be discussed whether the price was too high, considering that the financing was to happen by increasing the share capital by 40%. Martin Felix Jørgensen also said that the TDC share price had fallen by 13% when the plans regarding the MTG merger had been disclosed. Martin Felix Jørgensen requested a detailed description of the course of events concerning the MTG merger and then posed his second question to the management as to why the Board of Directors had not informed the shareholders about the offer from the consortium when it was originally made, or at least faster than it was? Then, Martin Felix Jørgensen asked the management his third question, which was why had the Board of Directors not continued its negotiations with the consortium instead of publicly announcing the merger plans with MTG, especially in the light of the management's later U-turn? Martin Felix Jørgensen requested an explanation for that. Martin Felix Jørgensen said that the BoD Chairman had called it blackmail that the unpublished offer had been leaked to the press and thereby become known to the shareholders. Based on this, Martin Felix Jørgensen posed his fourth question to the management as to why the management regarded this as blackmail, and when would the shareholders have been told about the purchase offer, if ever? Martin Felix Jørgensen expressed concerns as to whether the management had displayed correct and reasonable judgement. From the purchase offer, Martin Felix Jørgensen pointed out that the intention was to achieve a twothird's majority with a view to delisting the Company from the stock exchange. Martin Felix Jørgensen drew parallels to a similar case with Mols-Linien, which has been delisted after an administrative decision from Nasdaq. Martin Felix Jørgensen believed that the risk of ending up with an unlisted share, which would most likely result in a considerable loss, would probably urge most shareholders to accept even a poor purchase offer. Based on this, Martin Felix Jørgensen posed his fifth question to the management as to whether these perspectives for the minority shareholders had been part of the management's considerations, and, if so, how? Martin Felix Jørgensen thanked the management for his allotted time to speak and encouraged other shareholders to take the floor and pose other questions.

3 Annual General Meeting Protocol Sheet no. 3 Pierre Danon thanked Martin Felix Jørgensen for his contribution and assurance of not wishing to cause trouble at the Annual General Meeting. Regarding Martin Felix Jørgensen's comment concerning the shrinking baseline, Pierre Danon said that the baseline fall from 2016 to 2017 resulted from the divestment of TDC Sweden in 2016, and as was well-known, you can only divest a company once. Pierre Danon admitted that historically the baseline had fallen, but the management had succeeded in stopping the decline. Anyone who had led an incumbent knew how difficult that is. Regarding Martin Felix Jørgensen's first question concerning remuneration for the Executive Committee, Pierre Danon said that the remuneration for the Board of Directors had not been changed since As for the remuneration for the Executive Committee, Pierre Danon, as chairman of the Compensation Committee, made a benchmark twice a year to ensure that the Executive Committee was not overpaid. The latest benchmark was made in December 2017, where the Company compared remuneration with both Danish and European telecommunications companies. Pierre Danon provided assurance that TDe's terms were less generous than the norm, whether compared with similar large companies in Denmark or with European telecommunications companies. As TDC recruited employees from European telecommunication companies, TDC had to be competitive. TDC had a reasonable level, but was definitely not more generous than other companies. As for the incentive programmes, Pierre Danon said that the Company's programmes usually cover a term of about three years, potentially up to five years for some programmes due to the time it took the Executive Committee to buy shares and the time they had to own them. Pierre Danon explained that the Board of Directors was satisfied with the terms of remuneration and that they were carefully compared with other companies. The only clause added was a change of control clause stating that the top executives were entitled to 24 months' remuneration in case of a change of control. Pierre Danon explained that the Executive Committee of TDC had been difficult to put together, and that it had taken time. In his opinion, it was one of the best teams in Europe. The reason for the change of control clause was that the Executive Committee knew it could feel quite safe, no matter what happened to the Company. In reply to Martin Felix Jørgensen's three questions concerning MTG, Pierre Danon described the course of events regarding MTG and the rationale behind the Board of Directors' decisions during the process. It was correct that the Board of Directors rejected the consortium's offer both for the prices per share of 47 and 48, as the Board believed the Company's value at that time was 40, and with a view to the MTG deal, the Company's value was expected to be around 45. It was therefore not attractive to give up the Company at a price of 47 per share. What happened was that not only did TDe's share fall, but the entire market declined. Therefore, it appeared that a price of 37 would be the new value and then the price of began to seem attractive to many shareholders. Pierre Danon explained that he would have liked to carryon with the MTG deal, but his legal obligations towards the shareholders came first, and a vast number of shareholders wished to accept the offer for a price of 48 per share. So, Pierre Danon did not agree on the Board of Directors having taken a U-turn when all it had done was listen to the shareholders and followed their instructions. As for the publication of the MTG deal, Pierre Danon explained that the Board of Directors had followed the legislation, and that was very clear. A stock exchange announcement had to be issued before the shareholders could be informed. Subsequently, the shareholders were in a position to reject the actions of the Board of Directors at a general meeting. Pierre Danon explained that after TDC had published the MTG deal, he and Pernille Erenbjerg mounted a roadshow to present the deal. The deal was innovative and enterprising, it involved some risks, and it would take time to create value, but they were certain that they could convince the shareholders that it was the right plan. Then, Pierre Danon explained that during this process it became very clear that the shareholders wished to accept the offer of 48 instead, and therefore the Board of Directors worked on achieving the best possible price. This meant that during a weekend, the Board of Directors negotiated the price up to 50, which the Board of Directors believed to be the maximum obtainable price.

4 Annual General Meeting Protocol Sheet no. 4 Martin Felix Jørgensen took the floor and drew attention to his fifth question concerning the two-thirds majority. Pernille Erenbjerg took the floor and answered Martin Felix Jørgensen's fifth question. Pernille Erenbjerg started by drawing attention to the fact that, in fact, the potential new owner should answer the question about delisting. Then, Pernille Erenbjerg outlined briefly that the offer currently made for TDC was conditional upon the consortium achieving at least two thirds of the shares, i.e. approximately 66%. Two thirds also represented the majority generally required to carry out amendments to the Articles of Association in a company, including whether or not the company is listed on the stock exchange. As for Martin Felix Jørgensen's referral to a decision concerning Mols-Linien, Pernille Erenbjerg explained that this decision might result in a delisting of TDC with a two-thirds majority, but that was not for her to comment on further. Hardly anybody would at the present time. Pernille Erenbjerg said that the Danish Companies Act included rules to protect minority shareholders, and that these had to be followed no matter who owned TDC and irrespective of whether or not the company was listed. Pernille Erenbjerg then explained that whether TDC was listed or not was just a question of whether there was a public market for buying and selling the shares. The next speaker was Frank Aaen from Kritiske Aktionærer (Critical Shareholders). Frank Aaen took the floor with thanks and posed his first question to the Board of Directors as to how it could recommend a sale to a consortium that included a company like Macquarie that was based in a tax haven. Frank Aaen mentioned that TDC had bad experience with private equity funds that had withdrawn large sums from the Company in the form of dividend and interest payments to companies in tax havens. Frank Aaen mentioned a sum of DKK 50bn. Frank Aaen drew attention to a pending tax case between Macquarie and CPH Airport covering an amount of more than DKK 700m. Frank Aaen said that it had been estimated that Macquarie had gained DKK 12bn from owning a share of CPH Airport without paying tax, at least not in Denmark. Frank Aaen said further that Macquarie had no employees in Denmark, and that it was formally registered at an address close by, in Harbour House. An address that according to the CVR register has 576 registered companies. Frank Aaen then asked Macquarie's representative, whom he was sure was present at the Annual General Meeting, to confirm that Macquarie had never paid tax in Denmark. Frank Aaen had sent an to Macquarie with the same question but the company had not replied. Frank Aaen posed his next question to the three pension funds ATP, PFA and PKA, who together with Macquarie had made an offer for TDC, as to how they could cooperate with an equity company that was known for using tax havens and its reluctance to pay tax. Frank Aaen said that Macquarie had said in advance that it wanted a two-digit return, and Frank Aaen assumed that that money would be sent out of Denmark without any payment of tax in Denmark. Frank Aaen said that he knew the pension funds' standard reply to the effect that they expected Macquarie to act in accordance with the law. However, considering the many pending court cases against Macquarie, he believed that one should not be so certain of that. Frank Aaen said that there was a big difference when the profit went to Danish pension funds who paid tax in Denmark and where it also benefited the pensioners, and when the profit went to an equity company that was known for not paying tax. Frank Aaen drew parallels to the case concerning DONG and Goldman Sachs. Frank Aaen did not believe that Macquarie knew anything about telecommunications companies and believed that it was all just a question of money. Frank Aaen encouraged the pension funds to drop the project with Macquarie and instead take over the project themselves, perhaps in collaboration with other pension funds. Frank Aaen asked the pension funds to comment on that. Finally, Frank Aaen encouraged all other shareholders not to sell their shares to a consortium that included a company registered in a tax haven. Pierre Danon thanked Frank Aaen for his contribution and expressed understanding for his worries. Pierre Danon explained that the Board of Directors was bound by its legal obligations towards the Company's shareholders. The Board could not disregard these obligations.

5 Annual General Meeting Protocol Sheet no. 5 Pierre Danon then mentioned that the Board of Directors was very pleased with the fact that the three pension funds were part of the consortium. If the Board of Directors in any way had had the impression of foul play legally or in relation to the consortium's intentions and strategy, it would have balanced its obligations towards the shareholders, the employees and the country, but there were no signs suggesting that. Pierre Danon said that the Board of Directors was certain that the three pension funds would secure the right management for the Company, and that the strategy was not just for their benefit, but also for the country. Pierre Danon explained that the Board of Directors had reviewed the very detailed offer document, and there were a number of very specific important commitments. As an example, Pierre Danon mentioned the consortium's statement that it wished to develop the infrastructure in Denmark by giving everyone in Denmark access to 1 GB. Pierre Danon said that the question was how this was to be achieved, but it was not a bad objective. As another example, Pierre Danon said the consortium had communicated that it did not want to make employees redundant. Pierre Danon summed up that the Board of Directors was bound by its legal obligations, and that nothing suggested any foul play. And at that time, there was no great support - neither from the media nor the Government - and the Board of Directors took on the responsibilities as required. The next contribution was from Finn Aage Nautrup. Finn Aage Nautrup had a clarifying question regarding the contribution from Dansk Aktionærforening concerning remuneration of the Executive Committee. As far as Finn Aage Nautrup could see, Dansk Aktionærforening had no objections to the level of the remuneration, but rather a wish to prioritise the incentive pay in a different way. Finn Aage Nautrup asked Dansk Aktionærforening and Pierre Danon to comment on this. Finn Aage Nautrup then requested a clear statement from Dansk Aktionærforening as to how the shareholders should act regarding the purchase offer, so as to obtain a better basis for decision. Martin Felix Jørgensen took the floor to answer Finn Aage Nautrup's questions. Martin Felix Jørgensen explained that Dansk Aktionærforening had not considered that question in detail and therefore currently was not clarified on the question. Martin Felix Jørgensen referred to the director of Dansk Aktionærforening, Leonhardt Pihl, who might make a statement on the issue at a later time. Pierre Danon took the floor to answer Finn Aage Nautrup's question concerning incentive pay. Pierre Danon explained that a lot of work had been put into the company's bonus and incentive schemes. Pierre Danon described that, put simply, the short-term bonus aimed at generating EBITDA and customer satisfaction, and the objectives the Board of Directors had set out were quite aggressive and ambitious. As an example, Pierre Danon mentioned that to achieve a short-term bonus, the Executive Committee had to reach a higher goal than the one the Company had told the shareholders in the form of expectations. As for the long-term bonus, Pierre Danon explained that every year the Board of Directors prepared a three-year plan and the Executive Committee committed to a specific delivery of free cash flows over three years, and that was compared with the development in the share price. Quite often over the past few years, the Executive Committee had not received a bonus on the long-term incentive programmes because the share price was not satisfactory. Pierre Danon said that such rules were quite normal for the market and the Board of Directors was satisfied with the rules. The next contribution came from Fleming Grunnet. Fleming Grunnet took the floor with thanks and had an additional comment on the two-thirds delisting. Fleming Grunnet said that it was for Nasdaq Copenhagen to make such a decision, and that Mols-Linien was a small company. Fleming Grunnet did not personally believe that Nasdaq Copenhagen would delist TDC with a two-thirds majority. Fleming Grunnet expressed his support for the BoD Chairman and the Company now that support from others in the process had appeared to be scarce. Regarding the sale of shares, Fleming Grunnet explained that he did not intend to sell his shares.

6 Annual General Meeting Protocol Sheet no. 6 Frank Aaen took the floor and said that a compulsory redemption of TDe's shares had previously been prevented, i.a. because Kritiske Aktionærer and ATP had withdrawn, so he hoped that it could also be prevented this time. Frank Aaen thanked the BoD Chairman for his clarifying explanation and said that he understood the problem. Then Frank Aaen repeated his request that those who intended to take over the ownership of TDC should take the floor and address the questions put forward. At the request of the BoD Chairman, Pernille Erenbjerg clarified the Board of Director's decision not to payout dividends. Pernille Erenbjerg explained that some of the expectations for 2017 were that the Company would pay out dividends, and the Company was fully able to do so. That also appeared from the Annual Report 2017, which was sent out at the beginning of February Pernille Erenbjerg then explained that from the Company's dialogue with many of the shareholders since the purchase offer for TDC had been made, there was a clear preference for not being paid dividends, but rather getting a higher price for the share when it was bought. Pernille explained that if TDC decided to payout dividends now, the TDC share price in the offer made for TDC would be reduced by exactly the same amount so that overall a shareholder would obtain the same value. The price of stated in the offer would therefore be intact as the price for the TDC share if the offer was settled. After the debate, and with the approval of the General Meeting, the chairman of the meeting concluded that the report had been noted with the supplementary remarks made by the shareholders and the management (item 1 on the agenda). The chairman of the meeting ascertained - on the basis of the postal votes cast and the proxies issued - that items 2 and 3 on the agenda had been adopted and subsequently concluded that Annual Report 2017 had been approved and that the General Meeting discharged the Board of Directors and the Executive Committee from liability. Finally, the chairman noted - based on the submitted postal votes and instruments of proxy - that the Annual General Meeting approved the Board of Director's proposal not to payout dividends and instead to carry forward the profit to next year. The chairman noted that the Annual General Meeting could not decide on dividend without the acceptance of the Board of Directors (item 4 on the agenda). Re item S of the agenda: Election of members and alternates to the Board of Directors The chairman explained that the Board of Directors proposed re-election of the following members of the Board: Pierre Danon Lene Skole Stine Bosse Angus Porter Pieter Knaak Benoit Scheen Marianne Rørslev Back The chairman announced that no proposal had been made concerning election of alternates. The chairman showed some slides with information on management duties for the candidates, cf. Section 120 (3) of the Danish Companies Act. As there were no other proposals for election of Board Members, the chairman noted that the seven proposed candidates were elected by the Annual General Meeting. Then the chairman announced that the employee representatives were: Mogens Jensen

7 Annual General Meeting Protocol Sheet no. 7 Zanne Stensballe John Schwarzbach Gert Winkelmann Re item 6 of the agenda: Election of auditor The chairman explained that the Board of Directors, in accordance with the recommendation of the Audit Committee, proposed re-election of PricewaterhouseCoopers Statsautoriseret Revisionspartnerselskab as the Company auditor. As there were no other proposals for the election of the Company auditor, the chairman noted that PricewaterhouseCoopers had been re-elected. Re item 7 of the agenda: Other proposals from the Board of Directors or shareholders The chairman informed those present that due to the Board of Directors' withdrawal of proposal 7a, three proposals from the Board of Directors remained. Re item 7b of the agenda: Adoption of the Board of Directors' remuneration for 2018 The chairman reviewed the Board of Directors' proposal concerning the Annual General Meeting's approval of the cash remuneration of the Board of Directors for board work, including work in board committees in 2018, shown below. The chairman said that the cash remuneration for the Vice Chairman and ordinary board members had not been adjusted since 2010, and that the cash remuneration for the BoD Chairman had not been adjusted since a time prior to Type of fee Cash remuneration 2018 Ordinary board member DKK Vice Chairman DKK Chairman DKK Audit Committee, member DKK Audit Committee chairman DKK Compensation Committee, member DKK 100,000 Compensation Committee chairman DKK Nomination Committee member DKK Nomination Committee, chairman DKK 50,000 No one wished to take the floor. The chairman announced that the proposal could be approved with a simple majority. The chairman noted - based on the submitted postal votes and instruments of proxy - that the proposal had been approved. Re item 7c of the agenda: Amendment of the Articles of Association regarding retirement age for members of the board of directors The chairman explained that the proposed amendment of the Articles of Association was based on an update of the recommendations on corporate governance, including a discontinuation of the recommendation on inclusion of an age limit for board members in the Articles of Association. Based on that, the Board of Directors proposed that the last full stop of Article 14(2) be deleted, so that the requirement that board members must resign no later than at the first Annual General Meeting after reaching the age of 70 be deleted from the Articles of Association.

8 Annual General Meeting Protocol Sheet no. 8 The chairman announced that the Board of Directors had asked him to say that the Board will continue to consider age when assessing the qualifications of board members, but in the Board's opinion, age alone could not form the basis for election or rejection of a board member. No one wished to take the floor. The chairman explained that the proposal required that at least two thirds of both votes given and the share capital of TDC represented at the Annual General Meeting approved the proposal. The chairman noted - based on the submitted postal votes and instruments of proxy - that the proposal had been approved. Re item 7d of the agenda: Other amendments to the Articles of Association The chairman informed the meeting that the proposed amendment of the Articles of Association was due to a change of address for the Company's website, which required an update of the Articles of Association. The Board of Directors proposed that Articles 6, 8, 10 16a and 22 of the Company's Articles of Association be changed so that the reference to the Company's website was changed to No one wished to take the floor. The chairman explained that the proposal required that at least two thirds of both votes given and the share capital of TDC represented at the Annual General Meeting approved the proposal. Based on the submitted postal votes and instruments of proxy, the chairman noted that the proposal had been approved. Re item 8 of the agenda: Any other business Frank Aaen wished to take the floor and wanted to know who had submitted instruments of proxy, as two thirds represented quite a large amount. Stig Pastwa, Group Chief Financial officer, explained that the instruments of proxy received were handled by Computershare to ensure that everything had been carefully collected and checked against the registers forming the relevant basis. The instruments of proxy received were a collection from many shareholders as there were no individual majority shareholders. The chairman added that the current tendency was that the vast majority of votes were cast in advance by post, and especially by providing an instrument of proxy. Pernille Erenbjerg added that the Company's current situation probably had contributed towards an increase in that percentage, as for some shareholders it was possibly less interesting to appear in person and take part in a debate and a dialogue when the Company's future, at least in some respects, seemed relatively determined