Corporate Governance
Odfjell strives to protect and enhance shareholders’ equity through long-term profitable business activities. Sound corporate governance is a central element of our strategy. Odfjell aims to create sustainable values for shareholders and stakeholders alike. The Company is a SE (Societas Europea) company subject to Act no. 14 of 1 April 2005 relating to European companies, and is listed on the Oslo Stock Exchange,thus subject to Norwegian securities legislation and stock exchange regulations.
Corporate Governance in Odfjell
According to decision made by the Board, the framework for Corporate Governance is the Norwegian Code of Practice for Corporate Governance of 21 October 2010. The code builds on a “comply or explain” principle, which means that possible deviations from the code shall be explained. Odfjell’s shareholder structure, where the founder’s family controls about 45% of the votes at the general shareholders' meeting, is such that some of the code's provisions may be less relevant. Odfjell is still committed to ethical business practices, honesty, fair dealing and full compliance with all laws affecting our business. This includes adherence to high standards of Corporate Governance. Odfjell's corporate social responsibility policy also encompasses high focus on quality, health, safety and care for the environment as well as human rights, non-dicrimination and anti-corruption. The Company has its own corporate Code of Conduct, that addresses several of these issues.All Odfjell employees are obliged to comply with the Code of Conduct.The following describes Odfjell's compliance with respect to each of the elements of the Norwegian Code of Practice for Corporate Governance, including explanation for deviationns where applicable.
Business
Article 1 of Odfjell’s Articles of Association states: The object of the Company is to engage in shipowning and related activities, including the transportation of freight on the Company’s own vessels or chartered vessels, the conclusion of freight contracts, co-ownership agreements and cooperation agreements, as well as taking part in share subscriptions and making partnership contributions, or in any other way establish or participating in other enterprises which may be significant to the development of the Company.
Equity and dividends
Equity:
Odfjell shall maintain an equity base deemed sufficient to support the Company’s objectives and strategy, and shall be enough to withstand a prolonged period of adverse conditions in our markets. The target is that the equity shall remain between 30 and 35% of total assets.
Dividend policy:
Odfjell aims at providing competitive long-term return on the investments for its shareholders. The Company emphasises an investor friendly dividend policy based upon financial performance, current capital expenditure programmes and tax positions. The Company's goal is to be able to provide for semi-annual dividend payments.
Capital increase:
The Board has not been assigned authority to issue new shares.
Purchase of treasury shares:
The Annual General Meeting on 4 May 2010 authorized the Board of Directors to acquire treasury shares of up to 10% of the Company's outstanding shares, at a minimum price of NOK 2.50 (par value) and a maximum price of NOK 250 per share. This authorization expires 4 November 2011. A renewal of the authorization for another 18 months will be recommended to the shareholders at the Annual General Meeting in May 2011.
Equal treatment of shareholders and transactions with close associates
Class of shares:
Odfjell has two classes of shares. The A-shares each carry one vote at the Company’s general meetings. Owners of B-shares have no voting rights. In all other respects, the two classes of shares have equal rights. The shares are registered with the Norwegian Registry of Securities.
Trading in treasury shares:
Treasury shares are acquired in the market, and all transactions are reported to the Oslo Stock Exchange.
Transactions with close associates:
Certain transactions are entered into with close associates. Such transactions are carried out as part of the ordinary course of business; at commercially reasonable market terms.
Guidelines for Directors and Corporate Management:
The Board has established a policy in respect of share trading. The policy is in line with the Guidelines for Insiders issued by the Oslo Stock Exchange and applies to the Board, The President/CEO, the Senior Management and other employees who in connection with their work may gain access to price sensitive and non-public information.
Freely negotiable shares
The shares are freely negotiable. The Articles of Association place no restrictions on negotiability.
General meetings
The Board is responsible for calling both annual and extraordinary general meetings. The Annual General Meeting is held in May each year, and 14 days written notice is given. A notice is also published on the Oslo Stock Exchange and on the Company’s website at least 21 days ahead of the General Meeting. Shareholders who wish to attend the General Meeting must notify the Company no later than five days before the General Meeting. It is possible to register for the Annual General Meeting by mail and telefax.
The Notices shall provide sufficient information on all matters to be considered at the General Meeting, voting instructions and opportunity to vote by proxy. Matters at the General Meeting are restricted to those set forth in the agenda.
Each A-share carries one vote. All resolutions are adopted by simple majority vote unless otherwise decided.
Representatives of the Board and the auditor participate in the Annual General Meeting. Management is represented by the President /CEO and the Chief Financial Officer. The Chairman of the Board chairs the Annual General Meeting. Minutes of General Annual Meetings are made available on this website.
The financial calendar is published to Oslo Stock Exchange, on www.odfjell.com and in the Annual Report.
The following matters shall be the business of the Annual General Meeting:
- Adoption of annual accounts and the balance sheet.
- Application of the year’s profit or coverage of the year’s
loss in accordance with the adopted balance sheet, and the
declaration of dividend.
- Adoption of the remuneration of the Board of Directors.
- Statement on salary and other benefits to the Management.
Other issues which shareholders want considered at the General Meeting, must be submitted in writing to the Board of Directors in time to be included in the notice of the General Meeting. Extraordinary general meetings may be called in accordance with the provision of the Limited Liability Companies Act.
NOMINATION COMMITTEE
Odfjell SE does not have a Nomination Committee. The Board has evaluated the possibility of establishing a Nomination Committee, but concluded thatit will hardly bring about added quality or value.
Corporate Assembly and Board of Directors
The Company has no Corporate Assembly. The Annual General Meeting elects the Board. The interests of the employees are being met by an agreement between the employees and Odfjell concerning the involvement of employees. The employees have established a permanent Employee Representatives Body (ERB). The ERB consists of up to six representatives, partly from our tank terminal in Rotterdam, the head office in Bergen and the Officers’ Council. The scope of information and consulting procedures shall be on transnational issues, which concerns a group of employees either in the Company directly or in one or more of the subsidiaries.
Additionally, employee involvement at corporate level and in most subsidiaries abroad is secured by various committees and councils, in which management and representatives from the employees, both onshore and seafarers, meet to discuss relevant issues.
According to the Articles of Association the Company shall have a Board consisting of a minimum of five and a maximum of seven members. The members are elected by the shareholders at the Annual General Meeting.
Laurence W. Odfjell is the Chairman of the Board. The Chairman has been delegated additional tasks by the Board, and consequently acts as Executive Chairman. Laurence Odfjell represents the Odfjell family, the largest shareholder of Odfjell SE. Board member Bernt Daniel Odfjell also represent the Odfjell family. Terje Storeng, Christine Rødsæther and Irene Waage Basili are independent Board members. Great caution is taken to avoid any conflict of interest in issues with related parties. In this connection the independent board members represent valuable external viewpoints.
The Work of the Board
Ultimately the Board is responsible for determination of the Company’s objectives, and for ensuring that necessary means for achieving them are in place. Thus, the Board of Directors also determines the strategic direction of the Company and decides on matters, which in relation to the Company’s overall activities are of significant nature. Such matters include confirmation of the strategic guidelines including any changes to the strategic business model, approval of the budgets as well as decisions on major investments and divestments. Furthermore, the Board ensures a correct capital structure and defines the dividend policy. The Board also appoints and determines the remuneration of the President/CEO.
It is the responsibility of the Board to ensure that the Company, its management and employees operate in a safe, legal, ethically and socially responsible manner. To emphasise the importance of these issues, a company specific corporate social responsibility policy and a Code of Conduct is in place and is known throughout the organisation. The Code focuses on aspects of ethical behaviour in everyday business activities. All issues are dealt with in plenary meetings.
An Audit Committee was established in May 2010. The Audit Committee is elected by the Board and consists of two board members; Terje Storeng and Irene Waage Basili. The Audit Committee reports to the Board, and acts as a preparatory and advisory working committee for the Board. The establishment of the Audit Committee does not alter the Board’s legal responsibilities or tasks.
The Board held seven regular meetings in 2010. Apart from ongoing business, four of the meetings dealt with the quarterly financial reports, one covered strategic matters and one meeting reviewed and approved next year’s budget. The auditor participated in the meeting of the Board of Directors that dealt with the annual accounts. One meeting is always held in May, in connection with the Annual General Meeting. The Annual General Meeting represents an occasion for the Board to meet and discuss with shareholders face-to-face and to decide on important issues such as the appointment of the auditors, dividend payments, and the election or re-election of board members.
In addition to the regular board meetings, the Board have meetings, either by telephone conference or by written resolution at the request of the Chairman, the President/CEO or by any two board members.
The Board has not made any formal evaluation of its work.
Risk management and internal control
The Board of Odfjell is kept updated on management and company activities through reporting systems, including monthly financial statements. A safety update is the first item on the agenda in all meetings of the Board of Directors. The Company is also subject to external control functions such as by auditors, ship classification societies, port and flag state control, and other regulatory bodies such as IMO, ISM Codes, etc.
The Compliance Officer of Odfjell monitors that the Company acts in accordance with applicable law and regulations, the Company’s Code of Conduct and that it is ethical and social responsible. Particular focus has been applied to competition law compliance, and regular updates are given to all relevant personnel.
Remuneration of the board members
Remuneration of the board members is decided by the Annual General Meeting. Members of the Board do not take part in any incentive or share option programmes. The remuneration of the Board of Directors is not linked to the Company’s performance. The members of the Board or the companies they represent are not supposed to take on assignments for the Company.
Remuneration of the Management
The President/CEO and managers reporting directly to him is included in the Company’s defined benefit pension plan. The Company also has unfunded pension obligations related to Senior Management for salaries exceeding 12G, up to 66% of 18G.
The Management shall be offered competitive terms of employment in order to ensure continuity in the Management and to make the Company able to recruit qualified personnel. The remuneration shall not be of such kind, nor of such a magnitude, that it may impair the public reputation of the Company.
A basic, straigth salary is the main component of the remuneration. However, in addition to a basic salary there may also be other supplementary benefits, hereunder but not limited to payment in kind, incentive/recognition pay, termination payments and pension,and insurance schemes.
The Company does not run any share option schemes, nor other benefit programmes as mentioned in the Public Limited Companies Act, section 6-16 subsection 1 no 3. As the Company has no such arrangements, no specific limits regulation the different categories of benefits or the total remuneration of Management have been defined. The Board may on a discretionary basis grant recognition payments to certain employees including Management. In 2010 the maximum amount set aside for this type of payment was USD 2 million for the Odfjell group as a whole. The Board is evaluating a performance-related incentive scheme that will be linked to the Company's earnings performance and operational defined goals over time. Members of Management have no defined agreement with regards to severance payments. Remuneration to Management in 2010 was in compliance with the above guidelines.
Information and communication
Odfjell presents preliminary annual accounts by early February. The complete accounts, the Directors’Report and the Annual Report are available on the Company's website:www.odfjell.com by late March every year. Odfjell presents its accounts on a quarterly basis. The financial calendar is published via the Oslo Stock Exchange, on the corporate website and in the Annual Report. All shareholders are treated equally with regard to information.
Open investor presentations are conducted at least two times per year in connection with Odfjell’s Quarterly Reports. The President/CEO reviews and comments results on markets and prospects. Odfjell’s CFO also participates in these presentations. The presentations of the annual and quarterly reports are published on the Oslo Stock Exchange and posted on the corporate website at the same time as they are presented. The annual and mid-year results are presented in a live presentation in Oslo, whereas reports from first and third quarters are made available through webcasts. Odfjell also maintains an ongoing dialog with, and make presentations for certain analysts and investors. Care is taken to maintain an impartial submittance of information when dealing with shareholders and analysts.
Take-overs
There are no defence mechanisms in Ofjell's Articles of Association to prevent ,take-over bids, nor have other measures been implemented to limit opportunities to acquire shares in the Company.
Auditor
The Auditor prepares an annual plan for the audit. The auditor is present during the Board’s review and evaluation of the annual financial statements. At the meeting, the Board is presented a brief concerning the annual accounts and any other issues of particular concern to the Auditor and Management. The Board has a special session with the Auditor without the presence of the Management. The Auditor submits to the Board a written statement on fulfilment of the Statutory Audit Independence and Objectivity requirement in accordance with the Auditing and Auditors Act.
In order to secure consistency in control and audits of the Group, Odfjell generally uses the same audit firm for all subsidiaries worldwide, and has hired Ernst & Young as the Company’s independent auditor.