Annual Report 2005 (6 MB) - Lundin Petroleum

CORPORATE GOVERNANCE REPORT- Chairman’s introduction
In late 2004, the Code Group (appointed by the Swedish
government to develop a framework for good governance for
Swedish companies), issued the Code of Governance (the Code),
which came into eff ect on 1 July 2005. Lundin Petroleum’s Board
of Directors thoroughly analysed the Code to ascertain how it
should be adopted by Lundin Petroleum AB.
The conclusion reached by the Board was that the Code generally
refl ected Lundin Petroleum’s existing views and practice in this
fi eld, and that the Company should therefore adopt the Code and
make the necessary changes to conform in all relevant aspects to
the Code.
As a result of this decision, a number of concrete steps were taken
by Lundin Petroleum in 2005.
Firstly, the Code was reviewed by the management in the spring
of 2005 with a view to assess the formal changes which would
have to be made to conform to the Code.
Secondly, the Rules of Procedure for the Board were amended
to conform to the Code and adopted at a special Board meeting
organised for this purpose on 15 August 2005. These amendments
consisted of defi ning more clearly the primary duties and
responsibilities of the Board of Directors and the division of duties
within the Board of Directors, as well as the restructuring of Board
Committees.
Thirdly, as per the Code of Governance requirement and the
instruction of the 2005 AGM, an independent Nomination
Committee was created. The main functions of the Nomination
Committee are to assess the work of the Board and propose
candidates to the Board and the auditors at the AGM. As
Chairman of the Board, following the decision of the 2005
AGM, I invited a number of institutional shareholders to take
part in the new Nomination Committee to be made up of fi ve
members. As a result of this invitation three persons who do not
sit on the Board but represent some of the largest shareholders
External Audit Shareholders by the AGM
Board of Directors
CEO and Group Management
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agreed to join the Committee, namely, Magnus Bakke for Robur
Foundation, Ossian Ekdahl for Första AP Fonden and Björn Lind
for SEB Trygg-Liv. Myself, as representative of the two largest
shareholders (Lorito Holdings Ltd. and Landor Particpations Inc.).
and Magnus Unger, also a Director, are the two other members of
the Committee. The decision to have Magnus Unger as chairman
was taken unanimously as it was felt that he had the necessary
knowledge both of Swedish Corporate Governance and company
practice. The Committee members had several informal meetings
and discussions before meeting formally for the fi rst time on 15
December 2005.
As a result of the above changes the Finance Committee and
Governance/Nomination Committee (which previously reported
to the Board), were disbanded as their functions were essentially
those of the independent Nomination Committee. There are
now only two Committees that report directly to the Board (the
Compensation Committee and the Audit Committee).
Finally the instructions for the Chief Executive Offi cer (CEO) and
Executive Vice President have been elaborated and a review of
the performance of the CEO will be performed on annual basis.
With regard to the work of the Board during 2005, fi ve meetings
took place, including the statutory meeting. An executive session
whereby management could interact directly with the Board was
also held. A Board review was carried out and the results and
conclusions were presented to the Nomination Committee.
Corporate Governance at Lundin Petroleum is an evolving issue
primarily designed to protect shareholder rights. We will ensure
to remain true to its vocation.
Ian H. Lundin
Chairman of the Board
Nomination procedure (Nomination Committee)
Audit Committee
Renumeration Committee
Internal Audit