3.3 Corporate Governance

This chapter outlines Nedap's corporate governance practices. It provides an overview of the composition and structure of our Board of Directors and Supervisory Board, detailing their roles and responsibilities, and specifying their relationship with the annual general meeting. Our governance framework ensures a sound and transparent system of checks and balances.

Board of Directors

Composition 

The Board of Directors consists of three executive members: the CEO, the CFO and the CCO.

Details of the members of the Board of Directors

Responsibilities

The Board of Directors is responsible for governing the company and ensuring Nedap's continuity. The Board of Directors has therefore developed a vision and strategy for sustainable long-term value creation that takes into account an acceptable risk profile, the impact of the Nedap organization's actions on people and the environment and the interests of relevant stakeholders.

The Board of Directors is responsible for implementing this strategy and its results. In formulating the long-term sustainable value creation strategy, the Board of Directors liaises with the Supervisory Board, while also being accountable to shareholders. The Board of Directors is also responsible for compliance with applicable legislation and regulations and managing the risks involved in the company’s business activities by adequately structuring internal risk management and control systems. The Board of Directors renders account to the Supervisory Board regarding the effectiveness of the structuring and functioning of these risk management and control systems. Certain decisions by the Board of Directors require the Supervisory Board’s approval. Article 18 of the articles of association specifies what decisions are subject to Supervisory Board approval. In 2024, an Alignment Team was in place to take discussions on Nedap-wide topics and decision-making preparations to a higher level and bolster support across the organization for decisions by the Board of Directors. The Alignment Team consisted of the Board of Directors, the business unit leaders, the team lead Human Resources, team lead IT and the General Counsel. It held regular meetings and served as a sounding board for the Board of Directors. In 2024, some members of the Alignment Team formed a working group to explore ways to better align this function with Nedap's dynamic strategy. 

Appointment

Directors are appointed by the Supervisory Board. The Supervisory Board notifies the annual general meeting of the proposed appointment. The Supervisory Board will not dismiss a director until the annual general meeting has been able to decide on the proposed dismissal.

Remuneration and employment and management terms

Each individual director’s remuneration and employment terms are set by the Supervisory Board in compliance with the company’s remuneration policy as adopted by the general meeting. The aim of this remuneration policy is to have a compensation package for the Board of Directors that is adequate for attracting and retaining qualified and expert directors, while also ensuring and advancing the medium- and long-term interests of the company. More information about the remuneration policy is available at our Corporate Governance webpage. For more details on the implementation of the remuneration policy in the 2024 financial year, please refer to section 4.2 2024 Remuneration report.

A proposal for an amended remuneration policy will be submitted to the annual general meeting on 17 April 2025.

Supervisory Board

Composition

The Supervisory Board comprises five non-executive members. For more information about the members of the Supervisory Board and a skills matrix, we refer to section 4.1 Report of the Supervisory Board.

Per 1 January 2024, the Supervisory Board established two committees, the Audit & Risk Committee and the Remuneration Committee, to keep the execution of tasks, decision-making and meetings of the Supervisory Board efficient and effective, with the right focus. For more information on these committees, we refer to section 4.1 Report of the Supervisory Board.

Responsibilities

The Supervisory Board reviews the governance of the Board of Directors and supervises general operations within Nedap N.V. and affiliated companies. The Supervisory Board also supports the Board of Directors in an advisory capacity. In fulfilling their duties, the members of the Supervisory Board are always guided by the interests of Nedap N.V. and the affiliated companies. The Supervisory Board also assesses the effectiveness of internal risk management and control systems and the integrity and quality of the financial reporting. The profile for the size and composition of the Supervisory Board can be found on the company website. Membership of the Nedap Supervisory Board conforms to the profile described, and its members are independent of the company and of each other. The number of Supervisory Board memberships they hold at Dutch listed companies is within the limit on supervisory positions for Supervisory Board members.

Appointment

Supervisory Board members are appointed by the annual general meeting following a proposal by the Supervisory Board, as specified in the articles of association, generally for a period of four years. This proposal is made on the basis of a profile drawn up by the Supervisory Board. The annual general meeting and the works council may recommend candidates. The works council has an enhanced right of recommendation for a third of the Supervisory Board membership, as laid down in Article 23.5 of the articles of association.

Remuneration

The remuneration of individual members of the Supervisory Board is set by the annual general meeting in compliance with the company’s Supervisory Board remuneration policy, as adopted by the annual general meeting. A proposal for an amended remuneration policy will be submitted to the annual general meeting on 17 April 2025.

Annual general meeting

The annual general meeting is held within six months of the end of the financial year. Items on the agenda for the annual general meeting include the annual report, adoption of the financial statements, the remuneration report, dividend payout, discharging the members of the Board of Directors and the Supervisory Board, any notices of proposed appointments of Board of Directors members and any appointments of Supervisory Board members. Key governance decisions that, by law and under the articles of association, must be submitted to the annual general meeting are also addressed, as are any other proposals submitted by the Supervisory Board or the Board of Directors. Shareholders representing at least 1% of the issued share capital may request in writing that an item of their choice be put on the agenda. Requests will be granted (i.e., the requested item will be put on the agenda) if the company has received the request no later than on the 60^th day before the day of the annual general meeting.

Extraordinary shareholders' meetings can be convened as often as deemed appropriate by a director or Supervisory Board member, if required by law or if one or multiple shareholders, who jointly represent at least 10% of the issued share capital, submit a timely request to this effect to the Board of Directors and the Supervisory Board. Their request must include a detailed breakdown of the items they want to address. The convocation procedure for an extraordinary shareholders' meeting is specified in Article 31 of the articles of association.

Convocation of an annual general meeting

Annual general meetings are convened either by the Supervisory Board or by the Board of Directors at least 42 days ahead of the meeting date. The convocation notice will be posted on the company’s website as per the procedure laid down in Article 46 of the articles of association.

Admission to annual and extraordinary general meetings and meeting rights

Nedap has only issued registered shares. Holders of one or multiple registered shares are authorized to attend the annual and extraordinary general meetings and to speak and vote at the meetings, provided that their entitlement to attend and vote dates back to at least 28 days before the meeting date (the record date) and they have been registered in a register designated by the Board of Directors, regardless of who the beneficiary of the shares is.

Shareholders wishing to attend the annual or an extraordinary general meeting are required to notify Nedap of their intention before a date set by Nedap's Board of Directors through their bank or broker where their shares are held in trust, and by including proof of receipt, which serves as their entrance ticket to the meeting. This date cannot be earlier than seven days ahead of the meeting date.

Voting rights

Every share comes with the entitlement to one vote and there are no restrictions on voting rights.

Independent external auditor

The annual general meeting appoints the independent auditor following nomination by the Supervisory Board. The Supervisory Board oversees the performance of the external auditor and evaluates the performance annually.

Internal auditor

The Board of Directors both appoints and dismisses the internal auditor, after approval by the Supervisory Board. The performance of the internal auditor is evaluated by the Board of Directors on an annual basis, after consultation with the Supervisory Board. An independent third party will assess the performance of the internal auditor at least every five years.

Diversity, Equity and Inclusion

Our policy is available on the website. Further information about DEI is also provided in section 1.4 Our people, in our stakeholder table in section 1.5 Sustainability, in the sections 2.2 Progress on our people, 2.3 Progress on our sustainable impact, 4.1 Report of the Supervisory Board and in section 4.2 2024 Remuneration report (Sustainable organizational and revenue model). Additional information can be found in chapter 5 Sustainability statement, section 5.4 Sustainability governance, subsection 5.4.1, section 5.7 Own workforce, subsections 5.7.1, 5.7.2, 5.7.4, 5.7.5 and 5.7.8.

The Dutch Corporate Governance Code

The Supervisory Board and the Board of Directors are responsible for Nedap's Corporate Governance, as well as for compliance with the 2022 Dutch Corporate Governance Code (Code). Please refer to https://www.mccg.nl/english (new window).

Deviations from the Dutch Corporate Governance Code

Principles and best practice provisions

Nedap largely endorses the Code’s basic and broadly supported principles. Nedap applies several of the Code’s provisions in a different way, for which we provide solid reasoning. In this report, we are rendering account on our compliance with this Code, which is based on the principle of apply or explain. 

3.2.3 Director severance pay

For directors under the articles of association appointed before 1 January 2015, severance pay shall be determined partly by their length of service and partly in light of the permanent nature of their appointment. Directors under the articles of association appointed after 1 January 2015 are subject to the severance pay cap of one annual salary, which is the fixed component of their pay. 

3.4.2 Director contract

The key elements of a director’s contract with the company are published in a list on the company’s website after the contract has been signed, and in all cases no later than the notice convening the annual (or extraordinary) general meeting, during which the appointment of the director will be proposed. For the provision of directors under the articles of association appointed after 1 January 2015, Nedap complies in the sense that members of the Board of Directors are appointed by the Supervisory Board after announcing the proposed decision to the annual general meeting.

4.1.3 Adding the dividend proposal to the agenda

Dividend payment is part of the company strategy and long-term policy. Dividend proposals will therefore not be addressed as an agenda item unless this payment is made partly or fully by drawing on the reserves. The dividend payment will, however, be explicitly included on the agenda as an item for discussion. 

4.2.3 Meetings and presentations

Given the company's scale and the limited international spread of Nedap's shareholders, the availability of webcasting, smartphones and other facilities for live viewing of meetings and presentations is restricted. Presentations are posted on the company's website immediately prior to the meeting at which they are given, so that all shareholders can read them. 

4.3 Casting votes

Shareholders can vote by proxy or directly by following voting instructions. Given the limited scale of the company and relatively limited spread of outstanding Nedap shares, facilities for communication between shareholders are not yet provided.

Stichting Preferente Aandelen Nedap

Based on best practice provision 4.2.6 of the Code, the Board of Directors must provide a summary of all protective measures that have been taken or could be taken to protect the company from a third party gaining control.

Since 1973, Nedap has been able to issue preference shares as a protective measure. This protection can be deployed if a third party intends to gain control of the company by acquiring a decisive interest or otherwise attempts to adversely affect Nedap, without consideration for its business interests and those of all stakeholders.

Stichting Preferente Aandelen Nedap (the Foundation) was founded for this purpose in 1983. It looks after the interests of Nedap N.V., its business and all stakeholders, providing defense wherever possible against influences that could threaten continuity and conflict with its interests. Nedap has granted the Foundation the right to acquire preference shares, through a call option, under which, on request, the Foundation can acquire preference shares up to a maximum equal to the number of ordinary outstanding shares, less one, at the time the option is exercised. The call option obliges Nedap to issue the number of preference shares requested by the Foundation whenever it makes that request. Consequently, no further decision by any corporate body of Nedap is required; the decision was made when the option was granted to the Foundation. If preference shares are issued, the Foundation must pay at least 25% of their nominal value in cash.

The board of the Foundation is made up of the following people:  

• Mr. N. W. Hoek, chairman

• Mr. A. C. Metzelaar  

• Ms. A. P. M. van der Veer-Vergeer  

• Mr. R. P. Voogd  

• Mr. G. van de Weerdhof  

The composition of the board is intended to ensure that the interests of all Nedap stakeholders are looked after in the decision-making process to the maximum degree. According to both the directors of this Foundation and those of Nedap, the Foundation is independent from Nedap, as specified in Article 5:71(1)(c) of the Dutch Financial Supervision Act ('Wet op het Financieel Toezicht'). Preference shares take precedence over ordinary shares when it comes to dividend payment or pay-out of capital paid up on shares, the latter occurring in the event of Nedap’s liquidation.

Other

Material transactions

To the best of Nedap's knowledge, there are no:

• material transactions between legal or natural persons who hold at least 10% of the shares in Nedap, as meant by provision 2.7.5 of the Code;

• material transactions of the company with a related party that are outside the framework of normal operations or not in line with normal market conditions (Article 2:167 Dutch Civil Code); and

• restrictive agreements with shareholders.

To the best of Nedap's knowledge, its shareholders are not a party to an agreement that could lead to restrictions on trading in Nedap shares or on voting rights.

Change of control

The standby roll-over credit agreement (€14 million) that Nedap has entered into with its bank includes a provision under which the bank can demand early repayment of the loan if there is a significant change in control over Nedap's activities. It is not unusual for other long-term alliances, in which Nedap is a party, to also include the possibility of terminating the agreement with immediate effect in the event of a change of control. A change of control, however, is not expected to have a significant impact on Nedap's financial performance. Nedap has not entered into agreements with directors or other employees under which personal rights to compensation can be derived upon termination of their employment after the settlement of a takeover bid for Nedap shares.

Issue of shares in the company

As per the articles of association, the Board of Directors is only authorized to issue shares if the annual general meeting designates it as the body authorized to issue shares. The annual general meeting of 11 April 2024 designated the Board of Directors as the body authorized to issue ordinary shares in the capital of Nedap and to grant rights to subscribe to shares in Nedap's capital. The Board of Directors' authority to issue shares is limited to a maximum of 10% of the total issued share capital at the time of issue. This requested designation has been granted for a period of 18 months. A resolution by the annual general meeting to issue shares, to designate the Board of Directors as the body authorized to issue shares or the withdrawal of a resolution to designate can only be passed on a proposal of the Board of Directors, with the prior approval of the Supervisory Board. A resolution to issue shares by the Board of Directors, provided that the Board of Directors has been designated as the body authorized to issue shares, is always subject to Supervisory Board approval in each specific case. Preferential rights can be limited or excluded by the body appointed to decide on share issues. The shareholders' decision to adopt the proposal to designate the Board of Directors has been published on our website.

Share buybacks

Nedap may only acquire its own fully paid-up shares for no consideration. An acquisition, other than for no consideration, is only possible if:

1. shareholders' equity, less the purchase price, is not less than the paid-up and called-up part of the capital, plus the reserves that must be maintained by law and/or under the articles of association; and

2. the nominal amount of the company’s own shares is no more than 50% of the issued share capital; and

3. the annual general meeting has appropriately authorized the Board of Directors. This authorization is not required to acquire the company’s own shares or depository receipts in order to transfer them to employees under an applicable plan.

In accordance with Article 13 of the company’s articles of association and without prejudice to the provisions of Article 2:98 of the Dutch Civil Code, the annual general meeting of 11 April 2024 authorized the Board of Directors to acquire ordinary shares up to a maximum of 10% of the total issued share capital of Nedap N.V. After such an acquisition, Nedap N.V. or one or several of its subsidiaries, can never hold more than 10% of the total issued share capital of ordinary shares in Nedap N.V. for their own account. The ordinary shares can be acquired through purchase on the stock market or otherwise at a price that lies between the nominal value of the ordinary shares and 110% of the average closing price of the ordinary shares on the Euronext Amsterdam N.V. stock exchange over the five consecutive trading days prior to the day of purchase.

The requested authorization will be valid for a period of 18 months, starting from 11 April 2024. The decision by the shareholders has been published on our webpage.

Amendment of the articles of association
Nedap's articles of association may be amended by a resolution of the annual general meeting after approval by the Board of Directors and Supervisory Board. 

Consolidated non-financial statement

With the adoption of the European Sustainability Reporting Standards (ESRS), Nedap also ensures compliance with the reporting requirements related to sustainability information as described in the Non Financial Reporting Directive (NFRD).

Corporate Governance statement

The Corporate Governance Statement specified in the Decree on the content of the Directors' Report is part of this Directors' Report. The required information can be found in this chapter, Governance & risk. Additional information can be found in chapter 4 Report of the Supervisory Board. Regarding DEI, please refer to section 1.4 Our people, in our stakeholder table in section 1.5 Sustainability, in the sections 2.2 Progress on our people, 2.3 Progress on our sustainable impact, 4.1 Report of the Supervisory Board and in section 4.2 2024 Remuneration report (Sustainable organizational and revenue model). Additional information can be found in chapter 5 Sustainability statement, section 5.4 Sustainability governance, subsection 5.4.1, section 5.7 Own workforce, subsections 5.7.1, 5.7.2, 5.7.4, 5.7.5 and 5.7.8.

The Directors' Report also includes information required under the Decree ratifying Article 10 of the Takeover Directive to the extent that it applies to Nedap N.V.

Directors' statement

In line with best practice provision 1.4.3 of the Code, the Board of Directors states to the best of its knowledge that:

1. the Directors' Report (the complete annual report without chapter 5 Financial statements) as included in this report offers an adequate level of insight into the shortcomings in the operation of Nedap's internal risk management and control systems;

2. the aforementioned systems provide reasonable assurance that Nedap's financial reporting is free from material misstatement;

3. the aforementioned systems provide limited assurance that Nedap's sustainability statement is free from material misstatement;

4. the report reflects the status of Nedap's current operations and the fact that financial reporting has been prepared on a going concern basis; and

5. the Directors' Report contains material risks and uncertainties that are relevant in the formulation of expectations as to Nedap's continuity. 

Despite the internal risk management and control systems, material errors, fraud and unlawful actions can still take place. The systems therefore do not provide absolute assurance that targets will be achieved. They have been developed to obtain reasonable assurance as to the effectiveness of controls implemented to mitigate the financial and operational risks related to organizational objectives.

Additionally, the Board of Directors states, in compliance with Article 5:25(c) of the Dutch Financial Supervision Act and to the best of its knowledge, that:

1. the financial statements provide a faithful representation of the assets, liabilities, financial position and profit/loss of the issuing entity and the companies included in the consolidation; and

2. the Directors' Report provides a faithful representation of the position of the company and consolidated businesses on 31 December 2024 and of Nedap's development and performance during the 2024 financial year and describes the significant risks the company is facing.

Groenlo, the Netherlands, 3 March 2025  

Board of Directors  
Mr. R. M. Wegman, CEO  
Ms. D. van der Sluijs, CFO  
Mr. R. Schuurman, CCO