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Expert Corporate Governance Service (ECGS)
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Tomra Systems - AGM 06 May 2019

In general, Tomra Systems ("Tomra") is in compliance with the Norwegian regulations relating to the organisation and procedures of the Annual General Meeting.Under ITEM 7 and ITEM 8, shareholders are called to approve, respectively, the remuneration guidelines (advisory vote) and the long-term incentive scheme (binding vote). Even though beneficiaries are required to invest 25% of the long-term incentive in Tomra shares, the incentive is 100% paid in cash and it depends on only one absolute performance metric (EPS). ECGS is not in favour of "cash-based" long-term incentives, and it considers that variable remuneration schemes should be based on a variety of performance conditions. Therefore, ECGS recommends to vote OPPOSE.

Under ITEM 10, it is proposed to increase by approximately 10% the annual compensation of shareholder-elected Board members. As a matter of principle, ECGS believes that the fees of the Board of Directors should NOT increase year after year, and it also notes that the Company's non-executive fees are at the upper level of Norwegian market practice. Therefore, ECGS recommends to vote OPPOSE.

Under ITEM 14, the AGM is called to approve the auditor's remuneration. Although no concerns arise over the level of non-audit fees, ECGS notes that KPMG has been in office for at least 13 years and there is no disclosure to suggest that the current mandate has been tendered in the past. As such the current term in office is not in accordance with its guidelines, ECGS recommends to vote OPPOSE.

Under ITEM 15, The Board of Directors seeks authorization to repurchase up to maximum 500,000 own shares (0.3% of the share capital), to be exclusively used to cover long-term incentive schemes. Even though the terms of the authorization meet its guidelines, ECGS notes that the Company's long-term incentive exclusively depends on EPS. As concerns may arise over the possibility to use share buy-backs to increase EPS, and therefore the executive variable remuneration, ECGS recommends to vote OPPOSE.

Underlying
Tomra Systems ASA

Tomra Systems is a creator of sensor-based solutions for optimal resource productivity within the business streams of reverse vending, material recovery, compaction, recycling, mining, and food. Co.'s operating structure comprises two business areas and six business streams. The TOMRA Collection Solutions businesss area consists of three business streams: reverse vending, material recovery, as well as compaction. The TOMRA Sorting Solutions, business area consists of three business streams: food, recycling, and mining.

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Analysts
Expert Corporate Governance Service (ECGS)

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