Corporate governance
Aker ASA’s objective is to create the greatest possible value for its shareholders over time. Good corporate governance is vital to the success of an industrial investment company such as Aker ASA. Thus, corporate governance is a key concern for Aker’s Board and employees, and a cornerstone in Aker’s relations with its underlying companies.
Aker believes in active ownership. Shareholders with clearly defined strategic goals for the company and who are involved through work in the boardroom and in direct dialogue with the company’s management, promote shareholder value. Active ownership provides direction and energy.
Aker’s main shareholder, TRG, through its main owner, Kjell Inge Røkke, is intensively involved in Aker. Similarly, Aker is closely involved in monitoring and follow-up of the underlying companies in which Aker is the main shareholder. Aker’s management model is discussed in greater detail on page 27 of the annual report.
Pursuant to the recommendations of the Norwegian Code of Practice for Corporate Governance, published in a revised version in October 2009, the Board has reviewed and updated the company’s corporate governance practice.
The Board’s overall presentation of Aker’s corporate governance policy is presented below, in the same order of topics as the fifteen items in the Code of Practice recommendations. There is a high degree of concurrence between the recommendations and Aker’s practice. Deviations from Code recommendations are discussed under the individual sections below.
| Code of Practise Chapters | Comment |
| 1. Implementation and reporting on corporate governance | Aker complies with the recommendations in the chapter |
| 2. Business | Aker complies with the recommendations in the chapter |
| 3. Equity and dividends | Aker complies with the recommendations in the chapter |
| 4. Equal treatment of shareholders and transactions with close associates | Aker complies with the recommendations in the chapter |
| 5. Freely negotiable shares | Aker complies with the recommendations in the chapter |
| 6. General meetings | With exception of three items, Aker complies with the recommendations in the chapter. The company aims to comply with the recommendation to publish the recommendation from the nomination committee 21 days prior to the annual general meeting, but does not succeed to comply in 2010. The general meeting in Aker ASA is typically requested to vote for a complete list of proposed Board members. The company does not appoint an independent chairman at the general meeting. The articles of association of the company states that the Chairman of the Board or a person designated by him chairs the general meeting |
| 7. Nomination committee | Aker complies with the recommendations in the chapter |
| 8. Corporate assembly and board of directors: composition and independence | Aker complies with the recommendations in the chapter |
| 9. The work of the board of directors | With exception of one item, Aker complies with the recommendations in the chapter. The company does not have a compensation committee. |
| 10. Risk management and internal control | Aker complies with the recommendations in the chapter |
| 11. Remuneration of the board of directors | Aker complies with the recommendations in the chapter |
| 12. Remuneration of executive personnel | Aker complies with the recommendations in the chapter |
| 13. Information and communication | Aker complies with the recommendations in the chapter |
| 14. Take-overs | Aker does not comply with the recommendations in the chapter. Aker has not adopted guidelines regarding how it would respond in the event it becomes subject to a takeover bid |
| 15. Auditor | Aker complies with the recommendations in the chapter |
1. Implementation and reporting on corporate governance
Aker ASA’s corporate governance principles are determined by the Board of Directors and are set forth in the company’s management documents. The purpose of Aker ASA’s Corporate Governance principles is to ensure an appropriate division of roles and responsibilities among the company’s owners, its Board of Directors, and its executive management and that the company’s activities are subject to satisfactory control. An appropriate division of roles and satisfactory control contribute to the greatest possible value creation over time, to the benefit of owners and other stakeholders.
Values and ethical guidelines
The Board has adopted the company’s corporate values and ethical guidelines. Aker ASA’s corporate values are presented in the annual report and in the "This is Aker" section. The ethical guidelines are available in-house, and are expressed through Aker’s exercise of active ownership.
Aker was among the first Norwegian companies to establish an International Framework Agreement with the Norwegian United Federation of Trade Unions and the International Metalworkers’ Federation. The agreement, which is available on myAker, commits Aker to promoting good working conditions at all companies in which Aker can exercise influence.
2. Business
Aker ASA’s business objectives, as presented in the company’s articles of association, are as follows:
“The objectives of the company are to own and carry out industrial and other associated businesses, capital management and other functions for the Group, as well as participation in or acquisition of other businesses.”
The business objective ensures that shareholders have control of the business and its risk profile, without limiting the Board or management’s ability to carry out strategic and financially viable decisions within the defined purpose.
The company’s objectives and main strategies are presented in this annual report and the Board of Directors’ report.
3. Equity and dividends
Equity
The Group’s equity as of 31 December 2009 amounted to NOK 16 530 million, corresponding to an equity ratio of 39 percent. Aker ASA regards the Group’s current equity structure as appropriate and adapted to its objectives, strategy, and risk profile.
Dividends
Aker ASA’s dividend policy is presented on the dividend policy page and in the Company‘s annual report. The company’s dividend policy is among the factors considered as part of the Board’s proposal for allocation of profit each year.
Board authorizations
The Board’s proposals for future Board authorizations are in accordance with the recommendations of the Norwegian Code of Practice for Corporate Governance. Authorizations are to be limited to defined issues and presented as separate agenda items at shareholders’ meetings. Board authorizations are valid until the next annual shareholders’ meeting.
Current Board authorizations to increase share capital and acquire own (treasury) shares are presented in the section Shares and shareholder matters on page 114 of the annual report.
4. Equal treatment of shareholders and transactions with close associates
The company has a single class of shares, and all shares carry the same rights in the company. Equal treatment of all shareholders is crucial. Transactions in own (treasury) shares are executed on the Oslo Stock Exchange or by other means at the listed price.
In the period 2005-2008, several new companies and projects were established that featured interlocking ownership interests and transactions with close associates. Aker’s corporate strategy no longer encompasses such enterprise establishment activities. In 2009, the company streamlined its role as an industrial investment company. Aker’s primary concern, through active ownership, is to create shareholder value at each of its underlying companies.
In the event of material transactions between the company and a shareholder, Board member, member of executive management, or a party closely related to any of the aforementioned, the Board will ensure that independent valuations are available. Aker has developed principles and guidelines governing transaction agreements and other agreements that are not deemed part of ordinary operations among companies in which Aker has an active industrial role, and between Aker and such companies.
In 2009, Aker and Aker Solutions carried out several transactions that were material in nature and constituted transactions among close associates. In compliance with good corporate governance, valuations and fairness opinions were obtained from independent advisors prior to completing these transactions. In response to subsequent criticism, Aker Solutions obtained additional independent valuations that again confirmed the original agreement valuations.
Aker ASA has prepared guidelines designed to ensure that members of the Board of Directors and executive management notify the Board of any direct or indirect stake they may have in agreements entered into by Aker or companies owned by Aker.
5. Freely negotiable shares
Aker ASA’s shares are freely negotiable. No restrictions on transferability are found in the company’s articles of association.
6. General meetings
Meeting notification, registration, and participation
The company encourages shareholders to participate in general meetings. Holding the annual general meeting as soon as possible after the end of the accounting year is a priority. Notice of general meetings and comprehensive accompanying information are made available to shareholders in the investor relations section and sent to shareholders within deadlines as stated in the Norwegian Public Limited Liability Companies Act. The deadline for shareholders to register to attend a general meeting is set as close to the date of the meeting as possible, normally two or three days prior to the meeting.
The company is of the opinion that no adequate systems for handling electronic participation at general meetings are currently available. Thus, the Board has decided not to allow such participation at Aker ASA general meetings.
Proxy
Shareholders who are unable to attend a meeting may vote by proxy. The company has prepared proxy forms that enable shareholders to vote on individual issues. Procedures for using such proxies with or withour voting instructions are provided along with the attendance ballot, and are available in the Annual General Meetings section.
The company does not appoint an independent proxy to vote on behalf of shareholders. The company considers shareholders’ interests are adequately maintained by the option of participation via an appointed proxy or by shareholders authorizing the Chairman of the Board or a person designated by him to vote according to specific proxy instructions.
Procedures for attendance registration and granting proxy are presented in the notice of the Annual General Meeting, on the attendance and proxy ballot.
Meeting chair, voting, etc.
Pursuant to Aker ASA’s articles of association, the Chairman of the Board, or a person designated by him, chairs general meetings. To the extent possible, Board members, the chairman of the nomination committee, and the company’s auditor attend general meetings.
The nomination committee focuses on composing a board that works as a team, that meets legally established regulations as to equal gender representation on boards of directors, and whose members’ experience and qualifications complement each other. The general meeting is typically requested to vote for a complete list of proposed Board members. Thus, it is not possible to grant instructions in the proxy to vote for individual candidates.
The company facilitates shareholders presenting proposals for issues to be put before general meetings. Attendees are also given the opportunity to ask questions and present proposals for decision-making at general meetings. Information on procedures for presenting such proposals is published on the company’s website.
Minutes of general meetings are published as soon as practical via the Oslo Stock Exchange: www.newsweb.no (ticker: AKER) and in the investor relations and news sections.
7. Nomination committee
Aker ASA has a nomination committee, as set forth in the company’s articles of association. Pursuant to the articles of association, the nomination committee is to comprise no fewer than three members. Each member is normally elected for a two-year period. The composition of the nomination committee should reflect the interests of shareholders and independence from the Board and executive management.
Nomination committee members and its chairman are elected by the company’s general meeting, which also determines remuneration payable to committee members. Members of the nomination committee are presented on a separate page in the investor relations section.
Pursuant to Aker ASA’s articles of association, the nomination committee recommends candidates for election to the Board of Directors. The nomination committee also makes recommendations as to remuneration of Board members. The nomination committee is to justify its recommendations.
The deadline for submitting proposals for Board candidates will be announced The nomination committee normally begins its work for the upcoming general meeting on 31 October.
8. Corporate assembly and board of directors: composition and independence.
The company does not have a corporate assembly, which is provided for under Norwegian law. Employees’ right to representation and participation in decision-making is secured via extended employee representation on the Board of Directors, pursuant to rulings of the publicly appointed Industrial Democracy Board (Bedriftsdemokratinemda).
Pursuant to the company’s articles of association, the Board comprises between six and 12 members, of whom one-third are elected by and among company employees. Further, up to three shareholder-elected deputy Board members may be elected. The nomination committee’s recommendations propose an appointment for Chairman of the Board, which is subject to approval by the general meeting. The Board elects its own Deputy Board Chairman. Board members are elected for a period of two years.
Shareholder-elected Board members are independent of the company’s executive management and its significant business associates. Kjell Inge Røkke and Leif-Arne Langøy have personal economic interests as owners of the company’s main shareholder, TRG Holding.
No member of the company’s executive management is a Board member. President and CEO Øyvind Eriksen and interim CFO since September 2009, Olav Revhaug both have ownership interests in TRG Holding. Trond Brandsrud will take over as new CFO from Revhaug as of May 2010.
The current composition of the Board is presented in the "This is Aker" section and on page 122 of the annual report. Board members’ CV‘s and expertise are also presented. In 2009, the Board of Directors has had 13 meetings. Average participation at the meetings has been 91%. One of the board members has been absent from three meetings, two members have been absent from two meetings and six board members have been absent from one meeting.
Board members’ shareholdings are presented in Note 39 to the consolidated accounts in the Annual Report 2009. Board members are encouraged to invest in the company’s shares. Shareholder-elected Board members represent a combination of expertise and experience from finance, industry, government, and non-governmental organizations.
Five of the shareholder-elected Board members are up for election in 2010. The nomination committee’s recommendations are available on the AGM 2010 page and with the Oslo Stock Exchange via www.newsweb.no.
9. The work of the Board of Directors
The Board of Aker ASA annually adopts a plan for its work, emphasizing goals, strategies, and implementation. Also, the Board has adopted board instructions that regulate areas of responsibility, tasks, and division of roles of the Board, the Chairman of the Board, and the Managing Director. The Board instructions also feature rules governing Board schedules, notice and chairing of Board meetings, decision-making, the Managing Director’s duty and right to disclose information to the Board, professional secrecy, impartiality, and other issues.
To reinforce independent treatment of issues in which the Chairman of the Board has material interests, a practice has been established according to which the Deputy Chair or other Board member chairs the Board’s discussions of such issues.
The Board evaluates its own performance and expertise once a year.
Aker established an Audit Committee in February 2009. The Audit Committee reviewes the company’s in-house reporting systems and risk management, in-house audit, and other procedures. The committee keeps in contact with the company’s auditor regarding company audits and prepares the Board’s review of financial reporting.
The company does not have a compensation committee.
10. Risk management and internal control
The Board is to ensure that the company maintains solid in-house control practices and appropriate risk management systems tailored to the company’s business activities. The Board annually reviews the company’s most important risk areas and internal control systems and procedures, and the main elements of these assessments are presented in the Board of Directors’ report.
As becomes apparent from its balance sheet, Aker ASA and holding companies are exposed to share-price risk, currency and interest risk, market risk, credit risk, and operational risk at its underlying companies.
Aker is preparing financial guidelines that will further strengthen monitoring and follow-up of financial risk issues. Key performance targets have been identified and are monitored closely; these include the distribution of asset value per asset class, available liquidity as a proportion of total assets, liquidity relative to debt, and liquidity projections for the next four-year period.
Management of operational risk primarily takes place at each underlying operating company. Nevertheless, Aker acts as a driver through its work on their boards of directors. As a rule, all companies have established effective risk management procedures.
Aker’s management holds regular review meetings with its investment directors to evaluate current status and plans for each investment. These meetings generate valuable information and create a solid foundation for Aker’s assessment of its overall financial and operational risk.
In addition to the above, clearing meetings held with management related to the annual closing of accounts of underlying companies enhance the quality of financial reporting.
Converto Capital Fund’s operating companies and investments are monitored and followed-up according to the same principles by the management company Converto Capital Management.
Management of financial market exposure, including currency, interest, and counterparty risk, is presented in greater detail in Note 35 to Aker’s consolidated accounts and Note 14 to the parent company accounts in the Annual Report 2009.
11. Remuneration of the board of directors
Board remuneration reflects the Board’s responsibility, expertise, time spent, and the complexity of the business. Remuneration does not depend on Aker’s financial performance. There are no option programs for any Board members. The annual general meeting determines Board remuneration following recommendations by the company’s nomination committee.
Board members and companies with whom they are associated are not to take on special tasks for the company beyond their Board appointments. An exception to this rule has been made for Kristin Krohn Devold, who has been appointed by Aker ASA as a board member of Aker Holding AS. Leif-Arne Langøy receives remuneration as a member of the nomination committee in addition to his Board remuneration. Board members elected by and among Group employees and employees of associated companies receive Board remuneration according to established rules in addition to their ordinary salaries from their respective employers.
Kjell Inge Røkke, Lone Fønss Schrøder, Bjørn Flatgård, and Leif-Arne Langøy are board members of companies owned by Aker, but do not receive board remuneration from Aker ASA for service on these boards.
Additional information on remuneration paid to Board members for 2009 is presented in Note 38 to the consolidated accounts in the Annual Report 2009.
12. Remuneration of executive personnel
The Board has adopted guidelines for remuneration of executive management in accordance with section 6-16a of the Norwegian Public Limited Liability Companies Act. The Chairman of the Board determines the remuneration of the President and CEO. Before the employment contract and remuneration of the President and CEO take effect, they must be presented to the Board of Directors.
Aker ASA does not have stock option plans or other such share award programs for employees. Further information on remuneration for 2009 for members of Aker’s executive management is presented in Note 38 to the consolidated accounts in the Annual Report 2009. The company’s guidelines for remuneration to executive management are discussed in Note 38 to the consolidated accounts in the Annual Report and will be presented to shareholders at the annual general meeting.
Some members of Aker’s executive management team maintain the company’s interests as board members of other Aker companies. They do not personally receive board remuneration for these memberships.
13. Information and communication
The company has prepared an investor relations (IR) policy. The company’s reporting of financial information and other information is based on transparency and equal treatment of shareholders, the financial community, and other interested parties.
The long-term purpose of Aker’s IR activities is to ensure access to capital at competitive terms for the company and correct pricing of shares for shareholders. These goals are to be accomplished through accurate and timely distribution of information that can affect the company’s share price; the company is also to comply with current rules, regulations, and market practices, including the requirement of equal treatment.
All stock exchange notices and press releases are published in the news section and in the investor relations section, and stock exchange notices are also available at: www.newsweb.no. All information that is distributed to shareholders is simultaneously published on Aker’s website. The company endeavors to hold public presentations of its financial reporting; these meetings are often broadcast simultaneously via the Internet.
The company’s financial calendar is available in the investor relations section.
14. Take-overs
The company has not adopted guidelines regarding how it would respond in the event it becomes subject to a takeover bid.
Through his privately held TRG holding companies, Kjell Inge Røkke controls a total of 67.8 percent of Aker ASA stock. Mr. Røkke has committed himself to retaining control of Aker for a minimum of 10 years from June 2007.
15. Auditor
The auditor makes an annual presentation of its auditing plan to the Board. Further, the auditor has provided the Board with written confirmation that the requirement of independence is met.
The auditor participates in the Board meeting that deals with the annual accounts, and the auditor has reviewed any material changes in the company’s accounting principles and assessments of material accounting estimates. There have been no disagreements between the auditor and management on any material issues. The auditor also reviews the company’s internal control with the audit committee. The outcome of this review is presented to the Board.
The Board and the audit committee meet with the auditor without the presence of representatives of executive management. The audit committee determines guidelines for executive management’s access to use the auditor for services other than auditing and receives an overview of services rendered by the auditor to the company.
Remuneration for auditors, presented in Note 2 to the Aker ASA accounts in the Annual Report 2009, is stated for the two categories of auditing and other services. Such details are presented to the annual general meeting.
2Q 2010 Report