Corporate Governance Policy
Odim ASA (ODIM) is committed to good corporate governance practices that will strengthen confidence in the company and thereby contribute to the greatest possible value creation over time to the benefit of shareholders, employees and other stakeholders. The objective of corporate governance is to regulate the division of roles between shareholders, the Board of Directors and executive management more comprehensively than is required by legislation.
The Norwegian Corporate Governance Board (NCGB) has issued the Norwegian Code of Practice for Corporate Governance (the Code). Adherence to the Code is based on the “comply or explain” principle, which means that a company must comply with the recommendations of the Code or explain why it has chosen an alternative approach to specific recommendations. The Oslo stock exchange (OSE) requires listed companies to publish an annual statement of their policy on corporate governance in accordance with the Code in force at the time.
ODIM’s corporate governance principles are based on the Code of 4 December, 2007. The Code can be found at www.nues.no.
1. Implementation and reporting on corporate governance
Implementation
ODIM’s Board of Directors (the Board) is responsible for implementation of sound corporate governance in ODIM. The Board and executive management carry out an annual review of corporate governance in the company.
ODIM provides information about corporate governance in the company’s annual report and the web site at www.odim.com.
Corporate values and ethical guidelines
Confidence in ODIM as a company and in its business activities as a whole is essential for the group’s continuing competitiveness. Openness about the systems and procedures for the management of the group strengthens value creation, builds internal and external confidence and promotes an ethical and sustainable approach to business. ODIM is a company that is experiencing strong growth. The company has not yet established formal ethical guidelines for all employees, as recommended by the Code, but this is a priority for the company going forward.
2. Business
ODIM ASA is a holding company and the business objective as defined in the company’s Articles of Association §3, states that the company’s business activities is related to being a holding company, including deliver services to the Group.
The articles of association in the subsidiaries of ODIM ASA, like ODIM AS, ODIM JMC, and ODIM ABAS include more spesific descriptions of the different company businesses.
A thorough description of ODIM’s business activities, as well as the company’s objectives and strategies are included in the annual report. The company’s Articles of Association are included on the Company’s website, as well as a further description of the business.
3. Equity and dividends
Equity
The Board considers the equity in ODIM to be satisfactory. The group’s capital adequacy is kept under constant review in relation to its objectives, strategy and risk profile. The book equity for the group at 31 December 2007 was NOK 450 million, corresponding to an equity ratio of 37 percent. ODIM regards the group’s present capital structure as appropriate and tailored to its goals, strategy and risk profile.
Dividend policy
The company’s objective is to provide its shareholders with a competitive return based on long-term growth in earnings. The company will pay dividend in relation to its earnings, financial position, liquidity requirements and other financial considerations.
Increases in share capital
At the Annual General Meeting (AGM) of 23 May, 2007, the Board was granted a mandate to increase the company’s share capital, in connection with the company’s option plan for employees. The purpose of the mandate is to secure that the company has sufficient funds to secure the expected substantial organic growth and opportunities for expansion through acquisitions and mergers. The authorisation remains in force for two years from the date of the resolution. This does not comply with the Code, which states that the mandate should not be for a period longer than until the next ordinary general meeting.
Purchases of the company’s own shares
At the AGM of 23 May, 2007, the Board was also given a mandate to acquire up to 4 475 764 of the company’s own shares. The resolution is in accordance with the rules in the Norwegian Public Limited Liability Companies Act (the Companies Act). The resolution does not comply with the Code, as the mandate is valid for 18 months, which is approximately 6 months longer than recommended by the Code.
4. Equal treatment of shareholders and transactions with close associates
Equal treatment
The Articles of Association do not impose any restrictions on voting rights. All shares have equal rights and there is only one class of shares in ODIM.
ODIM’s Board and executive management are committed to treating all the company’s shareholders equally and any transactions the company carries out in its own shares is carried out through the Oslo Stock Exchange.
Pre-emption rights
At the AGM on 23 May 2007, the Board was given a mandate to increase the company’s share capital through share issue(s). According to the resolution, the existing shareholder’s preferential rights to subscription of shares may be set aside. This is justified as the mandate to the share issue is related to the company’s option plan and/ or private placements of shares related to acquisition of – or mergers with other companies.
Transactions with close associates
In the event of any not immaterial transactions between the company and shareholders, members of the board of directors, members of the executive management or close associates of any such parties, the board will arrange for a valuation to be obtained from an independent third party. According to the instructions to the Board in ODIM, the company shall operate guidelines Corporate governance that ensure that members of the board of directors and the executive management notify the board if they have any material direct or indirect interest in any transaction entered into by the company.
5. Free negotiability
Shares in ODIM are freely negotiable. The Articles of Association do not impose any restrictions on transfers of shares. ODIM is listed on the Oslo stock exchange.
ODIM works actively to attract the interest of potential new shareholders and good liquidity in the company’s shares is essential if the company is to be seen as an attractive investment. Members of the executive management team meet regularly with current and potential shareholders in Norway, Europe and the USA. The company strives to ensure that the information provided in stock exchange announcements, meetings, reports and presentations gives a complete picture of the company’s strategy, business areas, operations and financial results.
6. General meeting
The Board of ODIM strives to ensure that General Meetings (GM) is effective forums for communication between shareholders and the Board.
Preparation for the AGM
The Annual GM (AGM) is normally held before June 1 each year and in any case not later than June 30. In 2008, the AGM is scheduled to be held on 20 May.
The notice calling the AGM is distributed to the shareholders and posted on the company’s website no later than two weeks before the AGM.
The notice includes all the necessary information for shareholders to form a view on the matters to be considered, including deadline for notice of intention to attend and a proxy form. The date of the company’s AGM is always included in the company’s financial calendar which is published on its web site.
The Board and the auditor are all present at the AGM. In addition, at least one member of the Board is present on any extraordinary GM.
Agenda and conduct of the AGM
The Board decides the agenda for the AGM. The main agenda items are determined by the requirements of the Public Limited Liability Companies Act and of the Articles of Association. Each AGM appoints a Chairperson for the meeting, thereby ensuring that the AGM has an independent chairman in accordance with the recommendations of the Code. The Chairperson is normally designated in advance and named in the notice of the meeting. The AGM minutes are published on the ODIM’s web site at www.odim. com and at the OSE’s website, www.newsweb.no.
7. Nomination committee
ODIM has a nomination committee of three members. The committee's members, including its chair, are elected by the general meeting for a two-year period.
8. Corporate assembly and board of directors: composition and independence
The Board of ODIM has 8 members. This is according to clause § 5 in the company’s articles of association, which states that the Board shall consist of from 7 to 9 board members. The Board consists of six men and two women and 3 of the members are employee representatives. Of the shareholder elected members, two are women, and thereby the requirement in the Companies Act section §6-11 a, of 40% female representation, is satisfied.
The composition of the Board meets the company’s need for expertise, capacity and diversity and the Board operates independently. The company’s website and annual report provide information to illustrate the expertise and capacity of the members of the Board and identify which members are considered to be independent. The Board does not include any representatives from the executive management team in ODIM.
The chairman of the board of directors is elected by the general meeting.
ODIM has no corporate assembly. In 2007, an agreement was reached between the companies in the group and the employees on not having a corporate assembly. Instead, the employees have the opportunity to be represented by three representatives on the Board. This arrangement has been accepted by the government-appointed Industrial Democracy Board.
The term of office is for two years at a time and members of the Board are encouraged to own shares in the company. An overview of the shares held by the members of the Board is included in the company’s annual report.
9. Work of the board of directors
The work of the Board
The Board is the company’s general management body and answers only to the general meeting. The Board has primary responsibility for planning and executing the company’s strategy and activities including organisation, remuneration and risk management. The Board is also primarily responsible for control and supervision.
The board’s duties and responsibilities follow from applicable legislation, the articles of association, authorisations and instructions given by the general meeting and instructions and resolutions adopted by the board itself.
The board’s duties and responsibilities may be divided into two main categories:
- The board’s management of the Company, cf the Norwegian Public Limited Liability Companies Act (the Companies Act) section 6-12.
- The board’s supervisory responsibility, cf the the Companies Act section 6-13. The board shall discuss all matters relating to the Company’s activities that are of major importance or an extraordinary nature.
The Board will produce an annual plan for its work, focusing on its main duties; to develop the company’s strategy and monitor its implementation. In addition, the Board exercises supervision responsibilities to ensure that the company manages its business and assets and carries out risk management in a prudent and satisfactory manner. The Board is responsible for the appointment of the CEO.
Mandate for the Board
In accordance with the provisions of the Companies Act, the terms of reference for the Board are set out in a formal mandate that includes specific rules and guidelines on the work of the Board and decision making. In addition to this, ODIM has developed specific instructions for the work of the Board, including rules of procedure, the requirements relating to the board’s discussions and duties and responsibilities in relation to the chief executive officer (CEO). These instructions were adopted by the Board on 27 September 2005 and are included on ODIM’s website www.odim.com.
The Chairman of the Board is responsible for ensuring that the work of the Board is carried out in an effective and proper manner in accordance with legislation. Currently, the Board has not appointed a deputy chairman, as recommended by the Code. The Board will however continuously consider appointing a deputy chairman. If the chairman is not present on any board meetings, a chairperson will be appointed.
Committees
The Board has appointed a remuneration committee which consists of the following three members of the Board; Bjarte Bruheim, Njål Sævik and Nils Are Karstad Lysø. The Board is constantly reviewing the need for further committees.
Mandate for the CEO
The Board issues a mandate for the work of the CEO and the instructions for the work of the Board also include instructions to the CEO, including the CEO’s duties and responsibilities to the Board. There is a clear division of responsibilities between the Board and executive management. The CEO is responsible for the day-to-day management of the Company’s activities pursuant to the strategy and guidelines adopted by the board.
Financial reporting
The Board receives periodical reports on the company’s commercial and financial status. The company follows the timetable laid down by the Oslo Stock Exchange for the publication of interim and annual reports.
Board meetings
The Board shall meet for discussion as decided by the chairman of the board, or when one of the board members so requires. The meetings shall take place at the company’s registered office, unless otherwise specified in the notice of discussions.
The Board’s evaluation of its own work
The Board carries out an annual evaluation of its own performance, working arrangements and competence. The Board also carries out a similar evaluation of the CEO.
10. Risk management and internal control
ODIM has established an extensive set of internal procedures and systems to ensure unified and reliable financial reporting. Monthly reports are prepared to present financial results from all the companies in the group.
For a group like ODIM, the greatest risk factors will always be related to project execution and the ability to deliver the final products to the customers in a timely manner and with expected quality. On the background of this, advanced control systems has been established, that continously evaluates all larger projects on financial estimates, progress, deviations, cost control, forecasts and cash flow. A detailed report called “Project Management Report (PMR) is developed and this gives a thorough update on all larger projects that are handled in the organisation.
In addition to this, ODIM has a strong focus on dedicating sufficient resources and control systems to handle the logistics in the group.
ODIM has established guidelines and management routines that secures an overall good internal control in the group. It is established guidelines for both internal and external reporting, to secure a common understanding of details reported from the subsidiaries in the group.
A financial strategy that includes considerations with regards to interest – and currency risk, cash management and warrants is developed and communicated.
11. Remuneration of the board of directors
The remuneration paid to the members of the Board is decided by the AGM. ODIM’s annual report provides information on all remuneration paid to each member of the Board. The remuneration is based on a fixed annual fee and is not linked to the company’s performance.
The Group has an option plan for the Board members and as per 31 December 2007 one of the members of the Board has a holding of 1,800 options.
12. Remuneration of the executive management
The Board decides the terms and conditions and remuneration of the CEO. The Board also sets the overall scope for the remuneration of other senior executives. The CEO determines the remuneration of individual members of the executive management team in collaboration with the Chairman of the Board.
Details of the remuneration paid to senior executives and the guidelines for remuneration of the CEO and other senior executives are included in the notes to the annual accounts in the annual report.
The basis for remunerating the chief executive and other senior executives has been developed to create a performance-based system rooted in the group’s values. The reward system has been created to contribute to the achievement of good financial results and an increase in shareholder value.
Each member of the executive management team receives a basic salary subject to annual adjustment. In addition, they receive a variable pay element, based on the achievement of both financial and personal targets.
The system provides a potential for earning a supplementary remuneration of up to 30 per cent of basic salary, depending on the attainment of defined goals.
13. Information and communication
ODIM maintains regular dialogue with analysts and investors. The company considers it very important to inform shareholders and investors about the company’s commercial and financial performance. ODIM is committed to ensuring that the participants in the stock market receive the same information at the same time.
ODIM strives to continously disclose all relevant information to the market in a timely, efficient and a non-discriminatory manner. All notifications made by the company will be available on the company’s website, as well as the OSE’s website www.newsweb.no and through news agencies (Cision).
Financial reports and events
ODIM normally publishes its provisional annual accounts at the end of February. The complete annual report and accounts are distributed to shareholders no later than two weeks prior to the AGM. Quarterly interim reports are normally published within six weeks following the end of the quarter.
ODIM publishes an annual financial calendar including the dates the company plans to publish the quarterly results and the date for the AGM. The calendar can be found on the company’s website, www.odim.com and will also be distributed as a stock exchange notification and updated on Oslo Stock Exchange’s website www.oslobors.no. The calendar is normally published at the beginning of a fiscal year.
ODIM holds quarterly presentations open for the public. These presentations give a financial and operational review of the closed quarter, as well as a review of the market conditions and the company’s outlook.
The presentations are given by the CEO, and are distributed by webcast so that anyone unable to attend can follow the presentation in real time or view it at a later time via internet. Following each quarterly presentation the CEO hold further presentations for investors at various locations. Quarterly interim reports, presentation material and webcasts are all available on the ODIM’s website at www.odim.com.
ODIM takes a cautious approach in its contacts with individual stakeholders. The company does not participate in any meetings with investors or analysts for the two weeks prior to the publishing of each quarterly results.
14. Takeovers
Fundamental commitments and guidelines
The Board of ODIM is committed to equal treatment of shareholders, and will ensure openness in respect of any takeover of the company.
The Board has however not drawn up formal guidelines for its conduct in the event that any bid is made for the company, as recommended by the Code.
Evaluation of a bid
If a formal bid is made for ODIM, the Board will normally seek to attract competing bids. This will not apply if the Board is able to unequivocally recommend a bid received, or if the process of seeking to attract a competing bid would cause a bid already made to be withdrawn or expire.
If a bid is received for the company’s shares, the Board will issue a statement evaluating the bid together with a recommendation on whether shareholders should or should not accept the bid. If the Board finds that it is unable to recommend whether or not shareholders should accept the bid, it will explain its reasons for not making a recommendation. If the Board’s statement is not the unanimous view of the Board, this will be explained.
The board will consider whether to arrange a valuation from an independent expert.
15. Auditor
Election of the auditor
ODIM is audited by KPMG AS.
Auditor’s relationship with the Board
The auditor discloses the plan for the audit to the Board annually. The Board has not had any meetings with the auditor without the company’s management present, as this has not been required. The Board is however aware that this is recommended by the Code and is therefore continously considering the need to implement such a practice.
The auditor participates at meetings of the Board that consider the annual accounts. At these meetings the auditor comments on any material changes in the company’s accounting principles, accounting figures and reports all material matters on which there has been disagreement between the auditor and the executive management of the company.
Also, the auditor once a year presents to the Board a review of the company’s internal control procedures, including proposals for improvement.
Also, the auditor participates at the annual general meeting.
ODIM has established an audit committee that assists the Board by reviewing, evaluating and where necessary proposing appropriate measures in respect of the group’s internal and external auditing.
Auditor’s relationship with executive management
The company has not established spesific guidelines for the conduct of the relationship between the auditor and the company. The Board regularly reviews this relationship to ensure that the auditor is fulfilling a sufficiently independent and satisfactory control function.
An overview of the remuneration paid to the auditor is presented at the AGM.