The Norwegian Code of Practice for Corporate Governance - Statoil

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12. Remuneration of executive personnelThe board of directors is required by law to prepare guidelines forthe remuneration of the executive personnel. These guidelines arecommunicated to the annual general meeting.The guidelines for the remuneration of the executive personnel shouldset out the main principles applied in determining the salary and otherremuneration of the executive personnel. The guidelines should help toensure convergence of the financial interests of the executive personneland the shareholders.Performance-related remuneration of the executive personnel in theform of share options, bonus programmes or the like should be linked tovalue creation for shareholders or the company's earnings performanceover time. Such arrangements, including share option arrangements,should incentivise performance and be based on quantifiable factorsover which the employee in question can have influence. Performancerelatedremuneration should be subject to an absolute limit.CommentaryGuidelinesThe Public Companies Act includes rules on a statement in respect of theremuneration of executive personnel that is to be prepared by the boardof directors and considered by the general meeting. The statement ofpolicy on the remuneration of executive personnel should be clear, easilyunderstandable and specific.The statement of policy on the remuneration of executive personnel can,for example, include an explanation of how the choice of performancecriteria for performance-related remuneration contributes to the long-terminterests of the company, and of the methods applied in order to determinewhether performance criteria have been fulfilled. In addition, the statementcan include the guidelines applied in respect of vesting periods, allotmentdates, exercise dates and lock-up periods and compensation for loss ofoffice, as well as explaining the comparables or benchmark evidence thatthe company uses in determining its remuneration policy.48 CORPORATE GOVERNANCE
Performance-related remunerationPerformance-related remuneration should not be such as might encouragea short-term approach that could be damaging to the company’s long-terminterests.Where a company's earnings or share price are heavily influenced by externalforces, the board of directors should consider using other forms ofincentive arrangement where the incentive can be linked to quantifiable targetsover which the executive personnel has a greater degree of influence.Great care should be taken when awarding options or similar benefits toexecutive personnel.The board of directors should ensure that simulations are carried out of theeffects of the structure of performance-related remuneration as part of theevaluation of the possible outcome of the structure that is selected.Any share option schemes should be combined with direct ownership of theunderlying shares in order to make the interests of members of managementmore symmetrical with those of the company’s other shareholders. In orderto reduce the risk of an unrepresentative financial result, the dates of vesting,issue and exercise of options and other performance-based remunerationshould be spaced out over time, and any shares acquired through theexercise of options should be subject to a minimum period of ownership.Executive personnel should be encouraged to continue to hold a significantproportion of shares they receive beyond the expiry of the relevant lock-upperiods.The company should seek to ensure the right to demand the repayment ofany performance-related remuneration that has been paid on the basis offacts that were self-evidently incorrect, or as the result of misleading informationsupplied by the individual in question.ReportingThe company's report on corporate governance, cf. Section 1 of the Codeof Practice, should provide an account of all aspects of the individualremuneration of the chief executive and other executive personnel, cf. therequirements set out in the Public Companies Act and the Accounting Act.Alternatively, the corporate governance report may make a clear reference tothe sections of the accounts where the statement on executive remunerationand information on such remuneration is provided.49 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 32 and 33: CommentaryComposition of the corpor
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 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

The Norwegian Code of Practice for Corporate Governance - Statoil

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