The way the business is managed forms the basis for its financial progress and the development of the company’s branded products. Good management and control mechanisms, open and honest communication and equal treatment of all shareholders are important cornerstones for public trust, positive value creation and a good reputation.
Hurtigruten ASA has a responsibility to conduct its business in a way which protects the interests of its owners. At the same time, it must take account of other stakeholder groups. Employees as well as customers, suppliers, lenders and the authorities represent important stakeholders for Hurtigruten ASA. Its overall reputation and public trust in the company are influenced by the governance of its business and the way it communicates with these stakeholders.
1. Implementation and reporting
The board of directors of Hurtigruten ASA has adopted revised overarching management and control mechanisms for governance of the business, which will help to ensure that the company observes its ethical and quality obligations. These principles build on the Norwegian code of practice for corporate governance of 4 December 2007 (hereafter the code), developed by the Norwegian Corporate Governance Board. The company has incorporated the latest amendments to the code adopted on 20 October 2011. An overall account of the way Hurtigruten ASA has complied with each point in the code is provided below. Departures from the code are explained. The board and executive management will jointly ensure that the company’s attitudes and behaviour are in conformity by enforcing compliance with the principles in all parts of the business.
The company’s principles for corporate governance are published annually in its annual report.
The following aspects are fundamental to Hurtigruten ASA’s principles for corporate governance.
The company’s external communication will be based on openness about conditions of significance for assessing its operations.
The board of directors will be independent of the executive management. This will ensure that decisions are taken on a neutral basis and without conflicts of interest.
All shareholders will be treated equally.
Management and control
Good management and control mechanisms will contribute to predictability and reduce risk for owners and other stakeholder groups.
Hurtigruten ASA’s values base reflects its long history, its role as host for international guests, and the responsibility inherent in the social assignment performed by its ships along the Norwegian coast. The company’s internal guidelines reflect this values base, and provide guidance on the way the organisation and individual employees will behave towards the world at large. In accordance with the code, the company is considering the inclusion of specific guidelines for corporate social responsibility, which will also be related to its routines for internal control. See point 10.
The business purpose of Hurtigruten ASA is defined by its articles of association as the pursuit of all forms of transport and tourism activity, participation in businesses which relate naturally to these, engagement in shipping and offshore operations and participation in other companies. Following an extensive restructuring process, the company has defined its operations as concentrated on the Hurtigruten service along the Norwegian coast and explorer products, including Spitsbergen.
3. Equity and dividends
Consolidated equity at 31 December 2011 was NOK 1 564 million, or 26 per cent of total capital.
When it finds itself in a position where it would be appropriate to pay a dividend, Hurtigruten will seek to maintain a stable level of dividend. The company will focus on its ability to generate growth in value-adjusted equity per share.
At the annual general meeting in 2011, the board was mandated to buy the company’s own shares. The overall holding of own shares cannot exceed 10 per cent of the company’s share capital. The board is free to decide how the purchase or sale of the company’s own shares should be conducted. This authority runs until the annual general meeting in 2012, and replaces all existing mandates on the purchase of the company’s own shares. The board will request a corresponding mandate from the annual general meeting, which will run until the annual general meeting in 2013.
Should the board decide to waive the pre-emptive right of existing shareholders to subscribe to a capital increase, on the basis of a mandate from the general meeting, it will publish its reasons in a stock exchange announcement.
4. Equal treatment of shareholders and transactions with close associates
Hurtigruten ASA has one share class, and each share carries one vote at the general meeting.
The board’s mandate to purchase the company’s own shares leaves it free to decide how possible purchase or sale of such shares will be conducted. The board will ensure that possible purchases or sales are carried out in a way which takes account of the need for equal treatment.
In the event of not immaterial transactions between the company and shareholders, directors, senior executives or their close associates, the board will ensure that an independent valuation is made. This does not apply when the general meeting is to consider matters pursuant to the rules in Norway’s Public Limited Liability Companies Act. An independent valuation will also be secured when transactions are conducted between Hurtigruten ASA and subsidiaries which have minority interests.
The company has guidelines which ensure that directors and senior executives report to the board if they have significant interests, directly or indirectly, in a contract concluded by the company.
5. Freely negotiable shares
Pursuant to the articles of association, the company’s shares are freely negotiable.
6. General meetings
The financial calendar with the date of the annual general meeting will be published on Hurtigruten ASA’s website before the end of the preceding calendar year.
Normally, the annual general meeting will be held by the end of May at the latest. Notice of the meeting with supporting documentation must be available on www.hurtigruten.no no later than 21 days in advance. Weight is given to ensuring that accompanying documents, including the nomination committee’s recommendations with reasons, contain all the information required for shareholders to form a view concerning every item on the agenda. According to the company’s articles of association, the board can specify in the notice that shareholders wishing to attend the general meeting must notify this to the company by a deadline which cannot be earlier than five days before the general meeting.
Notification of attendance can be made in writing, by fax or over the internet. The board wishes to facilitate the attendance of as many shareholders as possible. Shareholders unable to attend are encouraged to appoint a proxy. The general meeting will be attended by the directors, the members of the nomination committee and the auditor. The articles of association specify that the general meeting is chaired by the chair of the corporate assembly or, in their absence, by the deputy chair. No routines have therefore been established to ensure an independent chair of the meeting.
The board and the chair of the general meeting will make arrangements which give the general meeting the opportunity to vote on each individual candidate for office on the company’s bodies.
7. Nomination committee
The articles of association specify that the company will have a nomination committee of three members, comprising a chair and two others elected by the general meeting. Members serve for two years at a time.
The nomination committee comprises the following members: Karen M Kuvaas (chair), Westye Høegh and Jon Tenden. The committee’s composition is intended to represent the interests of shareholders in general. All its members are independent of the board and the executive management.
The nomination committee makes recommendations on shareholder-elected members and alternates of the corporate assembly, on remuneration for members of the corporate assembly, on shareholder-elected directors and alternate directors, and on remuneration for directors. Reasons for these recommendations must be provided to the general meeting and corporate assembly, including relevant information on the candidates and an assessment of their independence.
Remuneration for members of the nomination committee is determined by the general meeting.
8. Corporate assembly and board of directors: composition and independence
Hurtigruten ASA has a corporate assembly of 12 members, eight of whom are elected together with up to four alternates by the general meeting for a two-year period. Four members with the number of alternates specified by the regulations are elected by and from among the employees. Broad representation of the company’s shareholders will be sought in the corporate assembly. The corporate assembly elects its own chair and deputy chair.
The corporate assembly of Hurtigruten ASA comprised the following members and alternates in 2011:
Karen M Kuvaas, chair
Bjørn Dahle, member
Svein Otto Garberg, member
Nina Hjort, member
Westye Høegh, member
Ingolf Marifjæren, member
Jon Tenden, member
Fay Hege Fredriksen, member
Sissel Kinn Berg, employee-elected
Haldor Moen, employee-elected
Regina-Mari Aasli, employee-elected
Randi Heggelund, employee-elected
Marlen Hauge, employee-elected
Mette Fredrikke Indrevik, employee-elected
Tommy Sivertsen, alternate
Sølvi Øgsnes, alternate
Tor Zachariassen, alternate
Rigmor Sand, employee-elected
Jon Are Huseby, employee-elected
Jørn Lorentsen, employee-elected
Roar Mathisen, employee-elected
The board of directors comprises eight members, including two with the number of alternates specified by the regulations elected from among the employees. Directors, including the chair and deputy chair, are elected by the corporate assembly. Up to eight alternates are chosen for those directors not elected from among the employees. Directors are elected for two-year terms.
The board has the following members:
• Trygve Hegnar, chair
• Helene Jebsen Anker, deputy chair
• Petter A Stordalen, director
• Mai Elmar, director
• Arve Giske, director
• Per Helge Isaksen, worker director
• Berit Kjøll, director
• Tone Mohn-Haukland, worker director
All the shareholder-elected directors are independent of the company’s executive management and significant business partners. The board accordingly fulfils the requirements for independence.
The expertise and capacity of the directors is described in more detail in this annual report.
Through companies they respectively own, the chair and deputy chair are substantial shareholders in the company. Shares owned by directors are specified in a note to the accounts.
Three of the directors are members of the company’s audit committee. These are Helene Jebsen Anker (chair), Arve Giske and Tone Mohn-Haukland.
9. The work of the board of directors
The duties of the board are determined by Norwegian law and embrace the overall direction and control of the company. At regular intervals, the board discusses and adapts the organisation and execution of its work. It also adopts a specific meeting and work plan every year. This plan covers strategy work, other development issues and the exercise of control. The board plans to hold six-eight meetings per year. It appoints the president and CEO.
Rules of procedure for the board and instructions for the chief executive have been adopted, with particular emphasis on the internal division of responsibilities and duties. The board makes an annual assessment of its work. Similarly, the executive management will be assessed annually.
When dealing with significant issues where the chair personally is or has been actively involved, another director is elected to chair the discussion. This is intended to ensure a more independent consideration of such issues.
The board acts as a single body.
The company established an audit committee in the spring of 2010. The board has otherwise assessed the use of sub-committees, but has not found these to be appropriate.
10. Risk management and internal control
The board ensures that the company has a good system of internal control in relation to the provisions which apply to the business. A review of the company’s most important risk areas and its internal control is conducted annually by the board. The board and the executive management have focused on developing internal control related to financial reporting, including the control environment, risk assessment, control activities, information and communication, and follow-up.
In following up the company’s risks, a process was implemented in 2010 to structure these risks as strategic, operational, financial, compliance and system-based respectively, and has established targets for evaluating and monitoring these.
11. Remuneration of the board of directors
The corporate assembly determines directors’ fees annually on the basis of a recommendation from the nomination committee. This remuneration will reflect the responsibilities of directors, their expertise, the resources they devote to the work and the complexity of the business.
Directors do not receive performance-related remuneration or options. Directors or companies with which they have a relationship will not normally undertake special assignments for the company in addition to their board appointment. Should they nevertheless do so, the whole board must be notified and must approve the remuneration involved. All remuneration to each director must be specified in the annual report.
Fees paid to each director in 2011 are specified in a note to the accounts.
12. Remuneration of executive personnel
The remuneration of the CEO is determined by the board at a meeting.
Guidelines for the remuneration of other senior executives in the company were approved by the annual general meeting on 14 April 2011.
Certain executive personnel have a bonus scheme which depends on the results achieved in relation to predefined thresholds. In accordance with the code, a ceiling has been set on the level of profit-related bonus that each individual can receive.
The company established an incentive scheme in the autumn of 2010 for the years 2011-13 covering all employees and based on synthetic options, where the future development of the company’s share price in relation to the average share price for the second half of 2010 determines the outcome for each participant. Further details of the incentive programme are provided in a note to the accounts.
Remuneration of the chief executive and other senior executives in 2011 is specified in a note to the accounts.
13. Information and communications
Guidelines for reporting financial and other information from Hurtigruten ASA are specified by the company’s information policy. Hurtigruten ASA will have an information policy which helps to build and maintain trust among important stakeholder groups. This policy will be based on openness and equal treatment of all shareholders. For the share price to reflect the underlying value of the company, all price-relevant information must be made available to the market. Hurtigruten ASA will accordingly give weight to keeping shareholders informed about the development of its financial results, its prospects and other conditions relevant to judging the company’s position and to a correct market pricing of the share. Weight is given to providing information equally and simultaneously to all players in the securities market.
A continually updated financial calendar, providing the dates of important events such as the annual general meeting, publication of interim reports, possible dividend payment and so forth, will be available to shareholders at www.oslobors.no and on Hurtigruten’s website.
Open investor presentations are held over the internet in connection with the publication of annual and interim results for the company. These presentations are available on the website. An on-going dialogue is also maintained with analysts and investors, and presentations are provided for them.
In the event of a possible takeover bid for the company, the guiding principle for the board’s response will be equal treatment of the shareholders.
The articles of association make no provision for defence mechanisms against share purchases, nor have other measures been adopted which restrict the opportunity to buy shares in the company. Nor will the board seek, without particular grounds, to prevent or hamper anyone who wishes to present a bid for the company’s business or shares. Possible use of share issue mandates or the implementation of other measures to prevent or hamper a bid must be approved by the general meeting after the bid has been announced.
In the event of a takeover bid, the board will issue a recommendation with reasons to the shareholders. The board will normally obtain an external valuation from independent experts before recommending whether the shareholders should accept or reject the offer.
Transactions which in reality involve the disposal of the business will be submitted to the corporate assembly for its decision.
The auditor will present an annual audit plan to the board.
The auditor always attends during the board’s consideration of the annual accounts, and briefs it on the accounts and on any issues which particularly concern the auditor, including possible disagreements with the executive management. The board meets annually with the auditor to review a report from the latter on the company’s accounting principles, risk areas and internal control routines. At least once a year, a meeting will be held between the auditor and the board without the presence of the chief executive or other members of the executive management. In addition, the company’s audit committee will have a dialogue with the auditor as required.
Written confirmation of his/her independence and neutrality must be submitted by the auditor to the board every year.
No special guidelines have been established concerning the executive management’s opportunities to use the auditor for services other than legally-required audit work. Nor has the board found it necessary to ask the auditor to produce an annual overview which specifies which services have been delivered in addition to legally-required auditing. Efforts will be made to establish such guidelines.
The board will account to the general meeting on the auditor’s remuneration, broken down between legally-required audit work and other specific assignments. Remuneration for the auditor in 2011 is specified in a note to the accounts.