Hydro Annual Report 2011b

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122 CORPORATE GOVERNANCE Introduction Introduction Hydro is a public limited company organized under Norwegian law with a governance structure based on Norwegian corporate law. Our main share listing is on Oslo Børs, which subjects us to Norwegian securities legislation and stock exchange regulations. Hydro has a secondary listing on London Stock Exchange. We have developed our governance structure through cooperation between our corporate management board and our superior governance bodies to secure compliance with relevant laws and regulations and to reflect business needs. Further development is a continuous process. We follow the Norwegian Code of Practice for Corporate Governance of October 2010. A detailed description of our compliance is presented on page 132. Information regarding our shareholder policy can be found on page 115. Hydro has been listed on the Dow Jones Sustainability Indexes (DJSI) every year since the start of the indexes in 1999. We are also listed on the corresponding UK index, FTSE4Good. Hydro's strategic direction is described on page 11. More comprehensive information about our governance practices, policies and requirements can be found at www.hydro.com/governance General Meeting of Shareholders Nomination Committee Corporate Assembly Compensation Committee Board of Directors Audit Committee Internal Audit President and CEO Corporate Management Board
Corporate directives and code of conduct CORPORATE GOVERNANCE Corporate directives and code of conduct 123 The Hydro Way represents our framework for leadership, organization and culture and is the foundation of our governance system. See page 50 for further information. Our system is based on the delegation of responsibility to our business areas and to corporate functions whose duties include finance, tax and accounting. In order to maintain uniformly high standards, we set common requirements in the form of corporate directives that are mandatory for all parts of our organization. The directives address a number of areas, including health, security, safety and environment (HSE), ethics and social responsibility, strategy and business planning, finance, risk management, and organizational and employee development. This information is made available to all employees. Hydro's code of conduct, which is approved by the board of directors, applies to all employees throughout the world, as well as to board members of Hydro and its subsidiaries. See page 57 for more information about Hydro's code of conduct, whistle blowing procedure and integrity program, and www.hydro.com/principles for more information regarding our corporate directives. In Hydro, compliance is defined as adherence to applicable laws and regulations worldwide as well as Hydro's steering documents. Guidelines have been established to assist line management to adhere to Hydro's compliance requirements. Special emphasis is made on reducing the risk of non-compliance within finance, anti-corruption, competition, AnnuAl and report health, security, page Corporate governance 99 safety and environment. Business planning and risk management Mission Portfolio Strategy Hydro's overall goal is to create shareholder value through satisfied customers and motivated and competent employees. We and have environment defined two within main processes Hydro. We to ensure carry out that risk short assessments and long-term audit targets and non-audit are achieved. services to Hydro or any entity within the for defined exposure areas. Exposure to certain risks, particu- group. Under this pre-approval policy, the audit committee larly The portfolio, those threatening strategy and life business and health, planning has been process consistently involves strategic has defined and operative and pre-approved planning and subcategories results monitoring. of audit and The non- reduced planning, to which very low reflects levels. our See ambitions also page and 90 for values, a more is the detailed basis for audit the strategies services. and The measures audit that committee’s form the pre-approval business plans policy at all discussion levels of our of organization. Hydro’s financial We risk have management. defined key performance indicators includes for annual each unit, monetary including frames financial, for each human of the following resource, cat- ethical and HSE objectives, in addition to unit-specific operating egories targets. of services: • audit-related • tax • non-audit related Controls and procedures Our disclosure committee, comprised of senior managers, is responsible for reviewing financial and related information included in our reports. Hydro’s Internal Control over Financial Reporting (ICFR) framework is primarily designed to provide reasonable assurance to our management and the Board of Directors regarding the preparation and fair presentation of our Financial Statements. Hydro established its comprehensive ICFR framework in 2006 and continues to maintain it based on the principles established by “The Committee of Sponsoring Organizations of the Treadway Commission (COSO) internal control – integrated framework”. The five interrelated COSO principles are: 1) Control Environment, 2) Risk Assessment, 3) Control Activities, 4) Information and Communication, and 5) Monitoring. Hydro’s overall control environment relevant for financial reporting is covered by “Hydro-Wide Controls (HWC)”. HWC reflects the tone set by the top management, management’s and employees’ common attitudes, ethics, and values, Business Strategy Business Planning Performance Management Within the scope of the pre-approval policy, all services have been pre-approved and all amounts for audit-related, tax and other non-audit related services are within the monetary frames established by the audit committee. Employment of external auditor personnel Principles have been established to ensure that the independence of Hydro’s external auditor is not impaired by means of the recruitment of former or current external auditor personnel and their close family members. Our policy requires a “cooling-off period” before recruiting former employees from the current external auditor to defined positions within Hydro. Transparency and communication Hydro’s corporate culture embodies the principles of honesty and respect for others. Our ability to operate efficiently in the
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Annual Report - 2011
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Annual Report - 2011 HyDRO’S REPO
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Aluminium market price weakens LME
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cost renewable energy production, w
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Corporate Management Board AnnuAl r
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• Secure stable production and fi
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Key financial information NOK milli
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for foundry alloys continued to be
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• Using viable energy sources •
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Share of non-Norwegian leaders Perc
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Capital employed - - upstream focus
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petitive supply of standard alumini
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Further improved bauxite and alumin
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Alumina production Million mt 7 6 5
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and Hydro - but both have also rest
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Operations Hydro’s primary alumin
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Plant Country Employees (per Dec. 3
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Active risk management We have deve
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Contribution margin to profit EUR p
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Flat rolled products consumption We
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Build on the high performance of ou
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European extrusion consumption (tot
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Operations Hydro is a global energy
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expected remediation costs relating
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Direct greenhouse gas emissions fro
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The Qatalum aluminium plant, in whi
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postponed in 2011 due to the market
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Water management Enough clean water
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The annual business planning proces
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Total payments (taxes, fees, etc.)
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Qatalum, where Hydro holds a 50 per
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Effective organization Hydro had 22
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Cooperating for safety at Slovalco
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from a 10-year perspective, we redu
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In 2011, we established an electron
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Page 108 and 109: 108 RISK REVIEW Risk factors Risk f
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Page 131 and 132: Description Developments and events
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F56 Financial assets, classified as
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F64 FINANCIAL STATEMENTS Financial
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F66 FINANCIAL STATEMENTS Financial
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F68 FINANCIAL STATEMENTS Note 1 - S
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F70 FINANCIAL STATEMENTS Note 2 - E
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F74 FINANCIAL STATEMENTS Note 9 - R
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F76 FINANCIAL STATEMENTS Responsibi
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F78 FINANCIAL STATEMENTS Auditor's
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PENDIX A2 Appendix A1 APPENDIX Term
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Hydro is a global supplier of alumi
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Hydro Annual Report 2011b

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