Hafslund s Corporate Governance policy March 2018 (Office translation)

Transcription

1 Hafslund s Corporate Governance policy March 2018 (Office translation) 1 Implementation and reporting on corporate governance Hafslund s corporate governance principles are intended to support the owner s performance goals and ensure sustainable value creation and to strengthen the owner s and other stakeholders confidence in the board of directors, the management and the company itself. The board of directors of Hafslund is complying with the regulations set out in The Norwegian Code of Practice for Corporate Governance of 30 October 2014 ( the Code of Practice ) and the City of Oslo s code of practice for good governance of limited liability companies (City Government proposition 273/11). The board of directors must according to section 3-3b of the Norwegian Accounting Act provide a report on the company's corporate governance in the board of director s report or in a document that is referred to in the board of director s report. The report on the company s corporate governance must cover every section of the Code of Practice. Hafslund is aiming to comply with all sections of the Code of Practice, but the fact that the company only has one shareholder and does not have shares listed on any regulated marketplace entails certain deviations. There are deviations from the Code of Practice on the following sections: Section 3: Equity and dividends Section 4: Equal treatment of shareholders and transactions with close associates. Section 6: General meetings Section 7: Nomination committee Section 12: Remuneration of executive personnel Section 13: Information and communications Section 14: Take-overs The deviations are explained more closely under each corresponding section in the following. Hafslund s core values are to be recognized for integrity, courage, and spirit in relations with colleagues, customers, suppliers, and cooperation partners: Integrity means that employees take responsibility and keep promises, show respect and confidence, welcome the success of others, and help each other to advance. Courage means that employees demonstrate initiative, dare to challenge and dare to fail. Spirit means that employees show involvement, exhibit pride and pleasure in their work, and value a sense of humor. Hafslund wants to maintain high ethical standards. This is set out through one of the core values; Integrity. All new employees sign Hafslund s ethical guidelines for employees before they take up their positions. 1

2 Hafslund s ethical guidelines for employees, applies to every employee of Hafslund AS and majority owned companies, trade union representatives, and members of the board of directors. The guidelines are based on the core values, and cover topics like personal conduct, conflicts of interest, bribery, corruption, competition and sanctions for breaching of the guidelines. The guidelines are considered minimum requirements, and all employees shall also follow the law and regulations, common ethical standards and rules in the business, and rules that apply to Hafslund s operations. In addition, there are more specific rules for employees involved in business negotiations, due to the more complex issues that can occur in negotiations. Hafslund must be conscious of its social responsibility and has guidelines for corporate social responsibility. All operations of the company are governed by policies for the physical environment and social responsibility. This is further specified through procedures for environmental management and through ethical guidelines for suppliers including procedure for ethical trading. The companies of the group follow a template in their work, and controls of compliance are performed. The objective of Hafslund s work with environmental and social responsibility is to act as a responsible corporate citizen, building trust and credibility to Hafslund s activities and to be attractive to its stakeholders. Corporate social responsibility should be an integral and natural part of the operational business and seen as part of the long-term value creation. It builds trust and credibility and makes Hafslund more attractive to its various interest groups. In addition, it reduces Hafslund s business risks. 2 Business Hafslund s object, as set forth in 3 of the company s articles of association, is as follows: 1) production, distribution, sale and utilisation of energy 2) industry, trading, consulting, contracting and financing operations 3) any other business related to the above, including the operation and management of the company s real property and other resources. Hafslund s vision is: Energy solutions for the future for you and the environment. Hafslund s goals and strategies shall be in in accordance with the framework provided by the company s articles of association. Goals and strategies are communicated in the company s financial reports and/or via stock-exchange releases. 3 Equity and dividends The equity shall at all times be tailored to the company s goals, strategy, and risk profile, and should not exceed what is required to ensure a sustainable development in the total values of the company. Providing the owner with a competitive yield on its investment compared with alternative investments with similar risk profiles is a goal. Such a yield is sought through a combination of value 2

3 growth and dividend payments. The long-term dividend policy for Hafslund is to pay stable dividends adapted to the company's performance targets, capital structure and strategy. The Code of Practice stating that The background to any proposal for the board of directors to be given a mandate to approve the distribution of dividends should be explained. is regarded to be less relevant to a company with only one shareholder. The same applies to the recommendation that Mandates granted to the board of directors to increase the company s share capital should be restricted to defined purposes. which aims at equal treatment of shareholders. 4 Equal treatment of shareholders and transactions with close associates All shares in Hafslund are owned by the City of Oslo and are not traded on a regulated marketplace. The part of the Code of Practice stating: Any decision to waive the pre-emption rights of existing shareholders to subscribe for shares in the event of an increase in share capital should be justified (and) Any transactions the company carries out in its own shares should be carried out either through the stock exchange is therefore not relevant. In the event of any not immaterial transactions between Hafslund and the shareholder, members of the board of directors, executive personnel or close associates of any such parties, the board should arrange for a valuation to be obtained from an independent third party. Independent valuations should also be arranged in respect of transactions between companies in the same group where any of the companies involved have minority shareholders. Board members and executive personnel are to notify the board of directors if they have any material direct or indirect interest in any transaction entered into by Hafslund or its subsidiaries. 5 Freely negotiable shares All shares in Hafslund are owned by the City of Oslo. Subject to the restrictions provided for by law, Hafslund s shares can be transferred and acquired freely. 6 General meetings General meetings are held according to chapter 5 of the Limited Liability Companies act. Owner s decisions and resolutions shall be made at the general meetings. The Code of Practice regarding general meetings apply to companies with several shareholders and are as such not relevant for Hafslund. 7 Nomination committee Hafslund does not have a nomination committee. Board members are appointed by the City of Oslo, hence the Code of Practice is not relevant. 3

4 8 Corporate assembly and board of directors: composition and independence Pursuant to an agreement entered into between Hafslund and employee unions (see Section 6-35, (2), of the Limited Liability Companies Act), Hafslund does not have a corporate assembly. Hafslund s board of directors is to comprise between three to twelve members. Three to eight of these members must to be elected by the company s general meetings. Members elected by the general meetings serve for two-year periods. Insofar as possible, the service term for half of these members should expire each year. At least two board members must be elected by and among employees; alternatively, the minimum number of board members to be elected by and among employees is the number demanded by employees (plus observers and deputy members) pursuant to the Limited Liability Companies Act and its regulations, applicable when the company does not have a corporate assembly. Employee-elected board members serve for periods of two years. The CVs of members of the board of directors are available on Hafslund s website The owner and the company are concerned that candidates to the board of directors possess the necessary industry acumen, in addition to having the business, managerial, and financial expertise as well as capacity necessary to fulfill the role of visionary, strategist, and result-seeking dialogue partner for the company s management. Further, the board s composition should be such that it can both maintain the interests of the owner, reflect diversity based on the company's distinctive character and function as a collegial body. Board members elected by the owner and parties closely related to them may not perform advisory or consulting services for the company; nor may they be Hafslund employees or be parties to agreements of material value with the company. Members of the board of directors of Hafslund may not, as a main rule, participate in the treatment of cases related to purchase of or follow-up of advisory or consulting services from a company that a board member either owns or is employed by. Any exemptions from these principles must be handled by the board on a case-by-case basis. Board members may not be closely related to other board members, nor to leading company personnel. Pursuant to the board instructions, a board member may not participate in discussions or voting on issues of which the member or any closely related party has a stake in the outcome, or in which the member must be regarded as having a prominent personal or financial interest. The same principle applies to the CEO of Hafslund AS. A board member may not participate in discussions or in voting on issues, if he or she has a position of influence in a company that has a possible conflict of interest with Hafslund or any other subsidiary of Hafslund on this issue. The majority of the elected board members should be independent of the company s executive management and/or significant business associates. Representatives of executive management are not to be board members. The board of directors should itself elect its chairman, as the company does not have a corporate assembly. 4

5 The annual report should provide information on attendance at board meetings, and which board members who are considered independent. The Code of Practice recommendation that board members should be encouraged to own shares is not considered relevant because the City of Oslo is the only shareholder and the shares are not traded freely. 9 The work of the board of directors The board is responsible for the management of the company and for supervising its day-to-day management and activities in general. Once a year, pursuant to the board instructions, the CEO of Hafslund AS shall propose an annual agenda in consultation with the board chairman, with particular emphasis on goals, strategies, and execution. Normally, eight board meetings are to be held each year, although no fewer than four meetings may be held. The CEO, along with the board chairman, are responsible for preparation and documentation of issues that will come before the board. Hafslund must have a set of board instructions. The purpose of Hafslund s board instructions is to establish guidelines for the board s work and the processing of issues, including the salient rules applicable to the responsibilities of the CEO and the latter s obligations vis-à-vis the board, as well as the board s authority and competence in accordance with applicable law. The board is to elect a deputy chairman, who is to serve as an alternate board chairman and an effective dialogue partner for the board chairman. The board chairman should strive to have all board negotiations take place with the full board present and that all significant decisions are made by the full board. In order to ensure a more independent consideration of matters of a material character in which the chairman of the board is, or has been personally involved (e.g. in negotiations regarding mergers or acquisitions), the board s consideration of such matters should be chaired by some other member of the board. Hafslund must have an audit committee elected by and among the members of the board. The board has established a board committee for the purpose of advising it on all matters concerning the company s remuneration to senior executives, to ensure thorough and independent treatment. Information about board committees and their responsibilities shall be provided in the company s annual report. The board's work must be structured, competent and evaluated regularly. The board evaluates its own performance once a year. The owner is to be kept current as to this work, and will be notified of the findings of the evaluation. 5

6 10 Risk management and internal control The board shall maintain an independent control function vis-à-vis the company's management on behalf of the owner. The board must ensure that the company has good internal control and adequate systems for risk management of Hafslund s enterprise. Risk management and internal control will reflect the art and scope of the enterprise, as well as the scope of values, ethical guidelines and guidelines for corporate social responsibility. The board annually revises Hafslund s most important risk areas and its internal control. The board will furthermore give a description of the key elements of the company s internal control and risk management systems, related to the financial reporting of Hafslund s annual report. 11 Remuneration of the board of directors Remuneration for board members must be reasonable in light of the tasks and responsibilities they are charged with as well as promoting value creation in the company. Remuneration of board members is determined retroactively by the general meeting. In the twelve month-period before the general meeting s determination, the board members will receive payment on account. The remuneration paid to the board of directors does not depend on Hafslund s financial performance, and board members have not been awarded options. As a general rule, board members or companies they are associated with may not take on specific assignments for the company in addition to their appointment as a member of the board. If they do nonetheless take on such assignments this is to be disclosed to the full board and remuneration for such additional duties should be approved by the board. Notification will be provided in Hafslund s annual reports of all remuneration paid to individual board members, including any remuneration paid for specific assignements. 12 Remuneration of executive personnel The board decides on guidelines for determining remuneration of the CEO of Hafslund AS and executive personnel. The guidelines are presented at Hafslund s general meeting. The guidelines shall set out the main principles applied in determining the salary and other remuneration of the executive personnel. The guidelines shall also help to ensure convergence of the financial interests of the executive personnel and the owner. Performance-related remuneration of the executive management in the form of share options, bonus programs or the like should be linked to value creation for the owner or the company s earnings performance over time. Such arrangements should be based on quantifiable factors over which the employee in question can have influence. Performance-related remuneration should be subject to an absolute limit. The part of this section s Code of Practice regarding two separate votes at the general meeting on the guidelines for remuneration of executive personnel are not followed. This is because the Limited 6

7 Liability Companies Act does not require any resolutions from the general meeting. Furthermore, this is not appropriate as long as the company only has one owner. 13 Information and communications The information and communications policy of Hafslund features openness and equal treatment of all participants in the securities market as overarching goals. According to the Bond Rules issued by Oslo Børs, a financial calendar is published annually. Information about Hafslund is published on the company s web-pages when notices to the stock exchange are released. Hafslund follows the information-requirements for companies with bonds listed at Oslo Børs. Parts of this section s Code of Practice is not complied with as it is intended for companies with several shareholders and regularly traded shares. Because the company is solely owned by the City of Oslo, it will in some cases be natural to have dialogue with the owner without disclosing it. Because Hafslund has bonds listed on Oslo Børs, the board must be aware that information to the owner in some cases may represent inside information that must be disclosed. Inside information means precise information about bonds, issuers or other factors that are likely to affect the price of bonds or affiliated financial instruments markedly and which are not publicly available or generally known in the market. 14 Take-overs The board should not, without special reasons, seek to hinder or obstruct take-over bids for the company s business activities or shares. The remaining part of the Code of Practice regarding take-overs is intended for companies with several shareholders and is therefore not relevant to Hafslund with the City of Oslo as sole owner. 15 Auditor The auditor should submit the main features of the plan for the audit of the company to the audit committee annually. The auditor should participate in board meetings that deal with the annual accounts. At these meetings the auditor should review any material changes in the company s accounting principles, comment on any material estimated accounting figures and report all material matters on which there has been disagreement between the auditor and the executive management of the company. The auditor should at least once a year present to the audit committee a review of the company s internal control procedures, including identified weaknesses and proposals for improvement. The 7

8 board of directors should hold a meeting with the auditor at least once a year at which neither the CEO nor any other member of the executive management is present. The board should establish guidelines in respect of the use of the auditor by the executive management for services other than the audit. At annual general meetings, the board should report the remuneration paid to the auditor, including details of the fee paid for audit work and any fees paid for other specific assignments. Hafslund s Corporate Governance policy was approved by the board of directors of Hafslund AS on 21 March