The Norwegian Code of Practice for Corporate Governance - Statoil
The Norwegian Code of Practice for Corporate Governance - Statoil
The Norwegian Code of Practice for Corporate Governance - Statoil
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12. Remuneration <strong>of</strong> executive personnel<strong>The</strong> board <strong>of</strong> directors is required by law to prepare guidelines <strong>for</strong>the remuneration <strong>of</strong> the executive personnel. <strong>The</strong>se guidelines arecommunicated to the annual general meeting.<strong>The</strong> guidelines <strong>for</strong> the remuneration <strong>of</strong> the executive personnel shouldset out the main principles applied in determining the salary and otherremuneration <strong>of</strong> the executive personnel. <strong>The</strong> guidelines should help toensure convergence <strong>of</strong> the financial interests <strong>of</strong> the executive personneland the shareholders.Per<strong>for</strong>mance-related remuneration <strong>of</strong> the executive personnel in the<strong>for</strong>m <strong>of</strong> share options, bonus programmes or the like should be linked tovalue creation <strong>for</strong> shareholders or the company's earnings per<strong>for</strong>manceover time. Such arrangements, including share option arrangements,should incentivise per<strong>for</strong>mance and be based on quantifiable factorsover which the employee in question can have influence. Per<strong>for</strong>mancerelatedremuneration should be subject to an absolute limit.CommentaryGuidelines<strong>The</strong> Public Companies Act includes rules on a statement in respect <strong>of</strong> theremuneration <strong>of</strong> executive personnel that is to be prepared by the board<strong>of</strong> directors and considered by the general meeting. <strong>The</strong> statement <strong>of</strong>policy on the remuneration <strong>of</strong> executive personnel should be clear, easilyunderstandable and specific.<strong>The</strong> statement <strong>of</strong> policy on the remuneration <strong>of</strong> executive personnel can,<strong>for</strong> example, include an explanation <strong>of</strong> how the choice <strong>of</strong> per<strong>for</strong>mancecriteria <strong>for</strong> per<strong>for</strong>mance-related remuneration contributes to the long-terminterests <strong>of</strong> the company, and <strong>of</strong> the methods applied in order to determinewhether per<strong>for</strong>mance criteria have been fulfilled. In addition, the statementcan include the guidelines applied in respect <strong>of</strong> vesting periods, allotmentdates, exercise dates and lock-up periods and compensation <strong>for</strong> loss <strong>of</strong><strong>of</strong>fice, as well as explaining the comparables or benchmark evidence thatthe company uses in determining its remuneration policy.48 CORPORATE GOVERNANCE