The Norwegian Code of Practice for Corporate Governance - Statoil

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CommentaryComposition of the corporate assemblyA company with more than 200 employees is, as a general rule, requiredto have an elected corporate assembly with 12 members. Shareholders elect2/3 of the members of a corporate assembly through the general meeting,and 1/3 are elected by and from among the employees. The shareholderelectedrepresentatives on the corporate assembly represent the interestsof shareholders in the election of the board of directors. The corporateassembly is also charged with supervising the management of the companyby the board and the executive management. It is therefore importantthat the shareholder-elected members of the corporate assembly representa broad cross-section of shareholders in order to protect the interests ofshareholders in general. A company and its employees may enter into anagreement for the company not to have a corporate assembly. In suchcircumstances, the employees are given additional rights to elect membersof the board of directors. The majority of the duties of the corporateassembly are transferred to the board of directors, including the election ofthe chairman of the board.The Code of Practice does not make any recommendation on whethercompanies should have a corporate assembly. Companies that are notrequired have a corporate assembly pursuant to an agreement with theiremployees or a ruling by the Corporate Democracy Commission shouldprovide information in this respect.Composition of the board of directorsIn addition to having the appropriate expertise, it is important that the boardof directors has sufficient capacity to carry out its duties. In practice, thismeans that each member of the board must have sufficient time available todevote to his or her appointment as a director. Holding a large number of otherboard appointments, for example, may mean that a director does not have thecapacity necessary to carry out his or her duties in the particular company. Thecommitment involved in being a member of a board can vary from companyto company, and it is therefore not appropriate to set an absolute limit for thenumber of board appointments an individual should hold. However, directorswho hold a number of board appointments should at all times bear in mindthe risk of conflicts of interest between such appointments.The composition of the board of directors as a whole should representsufficient diversity of background and expertise to help ensure that the boardcarries out its work in a satisfactory manner. In this respect due attention32 CORPORATE GOVERNANCE
should be paid to the balance between male and female members of the board.The board is responsible as a collegiate body for balancing the interests ofvarious stakeholders in order to promote value creation by the company. Theboard should be made up of individuals who are willing and able to work asa team.Independence of the board of directorsIt is important that the board of directors, as required by the Public CompaniesAct, operates as a collegiate body when carrying out its duties. Members of theboard must not operate as individual representatives for specific shareholders,shareholder groups or other stakeholders. In order to support the stock market’sconfidence in the independence of the board, at least two of its membersshould be independent of the company’s main shareholder. This principle isparticularly important for companies where one or more controlling shareholderscould, in practice, decide the outcome of elections to the board.The majority of the members elected to the board of directors by shareholdersshould be independent of the company’s executive personnel and its main businessconnections. It is important that the composition of the board ensures thatit is able to evaluate the performance of the executive personnel and considermaterial agreements entered into by the company in an independent manner.Particular attention should be paid to ensuring that the board is capable ofindependently evaluating the company’s performance and specific matters putforward by the executive management.In general terms, a member of the board of directors may be defined as independentwhen the individual in question has no business, family or otherrelationships that might be assumed to affect his or her views and decisions.It is difficult to provide an exhaustive summary of all the matters that mightaffect the independence of a member of the board. When evaluating whether amember of the board is independent of the company’s executive managementor its main business connections, attention should be paid to ensuring, interalia, that the individual:• has not been employed by the company (or group where appropriate) ina senior position at any time in the last five years• does not receive any remuneration from the company other than the regularfee as a board member (does not apply to payments from a companypension)• does not have, or represent, business relationships with the company• is not entitled to any fees as a board member that are dependent on thecompany’s performance or to any share options33 CORPORATE GOVERNANCE
Page 1 and 2: THE NORWEGIAN CODE OF PRACTICE FORC
Page 3: Published 23 October 2012Seventh ed
Page 6 and 7: TABLE OF CONTENTSThe Norwegian Corp
Page 8 and 9: Unlisted companies with broadly hel
Page 10 and 11: Changes to the Code of Practice sin
Page 12 and 13: Section 14 ‘Take-overs’The reco
Page 14 and 15: However, the overview may refer to
Page 16 and 17: 3. Equity and dividendsThe company
Page 18 and 19: 4. Equal treatment of shareholders
Page 20 and 21: etc. where the value exceeds 1/20th
Page 22 and 23: 5. Freely negotiable sharesThe comp
Page 24 and 25: CommentaryNotice calling the annual
Page 26 and 27: The Public Companies Act requires t
Page 28 and 29: CommentaryThe use of a nomination c
Page 30 and 31: If the recommendation includes cand
Page 34 and 35: • does not have any cross-relatio
Page 36 and 37: company, and on any material appoin
Page 38 and 39: The board’s responsibility for th
Page 40 and 41: egulations for the entire board of
Page 42 and 43: The provisions on the duty of Norwe
Page 44 and 45: • contribute to ensuring that the
Page 46 and 47: 11. Remuneration of the board of di
Page 48 and 49: 12. Remuneration of executive perso
Page 50 and 51: The chief executive is appointed by
Page 52 and 53: When publishing annual and interim
Page 54 and 55: CommentaryFundamental consideration
Page 56 and 57: The board of directors and the exec
Page 58 and 59: appended thereto, it must be referr
Page 60 and 61: The knowledge and experience of the
Page 62: The Code of Practice is published b

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