The Norwegian Code of Practice for Corporate Governance - Statoil

• does not have any cross-relationships with executive personnel, othermembers of the board of directors or other shareholder elected representatives• has not at any time in the last three years been a partner or employee ofthe accounting firm that currently audits the company.The criteria listed above may also be relevant to determining whether a memberof the board of directors is independent of the company’s main shareholder(s).Such evaluation should then be carried out on the basis of the board member’srelationship with the main shareholder(s) not the company. The rationalefor placing such emphasis on the independence of the board of directors is toensure that the interests of shareholders in general are properly represented.Where a company’s ownership is widely held, the independence of the boardis principally intended to ensure that the executive personnel do not play toodominant a role relative to the interests of shareholders. Where a company hascontrolling shareholders, the independence of the board is principally intendedto protect minority shareholders.Membership of the board of directors by the chief executiveThe Public Companies Act stipulates that the chief executive cannot be amember of the board of directors. This Code of Practice recommends thatneither the chief executive nor any other executive personnel should be amember of the board.Term of office and length of serviceWhile the legislation permits a term of office for members of the board ofdirectors of up to four years, this Code of Practice recommends that theterm of office should not exceed two years. The situation in respect of boththe company’s requirements and the demands of independence can changeover the course of a two-year period. Shareholders (and the corporateassembly where appropriate) should therefore be given the opportunity tore-evaluate each shareholder-elected member of the board at least everysecond year. When considering whether to re-elect members of the board,the value of continuity should be balanced against the need for renewal andindependence. Where a member of the board has served for a prolongedcontinuous period, consideration should be given to whether the individualin question is still considered to be independent of the company’s executivepersonnel. Recruitment of members of the board should be phased so thatthe entire board is not replaced at the same time.34 CORPORATE GOVERNANCE