Corporate Governance

Adopted by the Company’s Board of Directors on 20 April 2007. Updated: 22 January 2010, 4 April 2011, 22 March 2012, 22 March 2013, 1 April 2014 and 23 March 2015.

  1. INTRODUCTION.
    1.1         Presentation of Corporate Governance.
  2. OPERATIONS.
    2.1         Grieg Seafood ASA.
    2.2         Grieg Seafood ASA’s vision and overall objectives.
    2.3         Management of the Company.
  3. GROUP EQUITY AND DIVIDEND POLICY.
    3.1         Equity.
    3.2         Dividend.
    3.3         Board authorisation.
  4. EQUAL TREATMENT OF SHAREHOLDERS. TRANSACTIONS WITH RELATED PARTIES.
    4.1         Share class.
    4.2         Own shares.
    4.3         Approval of agreements with shareholders and other related parties.
    4.4         Capital increases.
  5. NEGOTIABILITY OF THE SHARES.
  6. GENERAL MEETING.
  7. NOMINATION COMMITTEE.
  8. COMPOSITION.
    8.1         Number of Board members.
    8.2         Election period.
    8.3         Independent Board members.
  9. BOARD OF DIRECTORS.
    9.1         Duties and work plan.
    9.2         Instructions.
    9.3         Annual assessment
    9.4         Audit Committee.
    9.5         Remuneration Committee.
  10. INTERNAL CONTROL AND RISK MANAGEMENT.
  11. BOARD REMUNERATION.
  12. REMUNERATION TO SENIOR EMPLOYEES.
    12.1      Senior employees.
    12.2      Severance pay. 
  13. INFORMATION AND COMMUNICATION.
    13.1      Financial information.
    13.2      Shareholder information.
  14. COMPANY TAKEOVER.
    14.1      Change of control and takeovers.
  15. AUDITOR.

1.        INTRODUCTION

1.1      Presentation of Corporate Governance

The Group’s Corporate Governance is based on the Norwegian Code of Practice for Corporate Governance (NUES) as recommended by the Norwegian Corporate Governance Board on 30 October 2014. The Grieg Seafood Group has updated the existing rules and defined values according to changes in NUES 2014.

2.        OPERATIONS

2.1      Grieg Seafood ASA

The Company is the parent company of a group where companies of this Group are engaged in the production and sale of seafood and naturally related activities.

The object of the Company is to engage in the production and sale of seafood and naturally related activities, including investment in companies engaged in the production and sale of seafood and other naturally related activities.

The Company is established and registered in Norway and is required to comply with Norwegian law, including laws and regulations pertaining to companies and securities.

2.2      Grieg Seafood ASA’s vision and overall objectives

The Group aims to comply with all relevant laws and regulations and with the Norwegian Code of Practice for Corporate Governance. This also applies to all companies which are controlled by the Group. In as far as it goes; this document of principle therefore applies to all companies of the Group.

The Group’s core values are to be open, respectful and ambitious.

The Group shall be managed applying the following principles:

  • We shall be open and honest.
  • We shall become better day by day.
  • We do what we say.
  • We are positive and enthusiastic.
  • We care.

The Group is committed to the sustainable use of natural resources and the development of the organisation based on high ethical standards. Targets and detailed plans have been adopted for the implementation of initiatives in these areas.

The fish farmer has overall responsibility for the wellbeing of the fish and for ensuring that at all times the fish can be kept in their natural surroundings under optimal conditions. The Group selects locations where the water is as deep as possible and with good currents.

The Group has drawn up a designated health plan which stipulates how all production operations are to be performed. The fish shall be systematically examined by a veterinarian. The Group attaches great importance to preventive measures and a rapid reaction in the event of disease or pollution. This is important not only to protect the environment and fish health, but also to safeguard the quality and profitability of production. The work shall be performed in accordance with the Group’s designated health plan. Measures have been implemented to prevent the escape of farmed fish. The objective is to conduct operations that do not cause any lasting damage to the environment.

As a user of natural resources such as clean water and feed from wild fish, the Group has a responsibility which extends beyond its own operations. The Group requires its feed suppliers to ensure that the feed is based on sustainable supplies of raw materials.

Starting with 2013, an own sustainability report has been prepared, pointing out eight areas defining Grieg Seafood´s highest priorities for sustainability and social responsibility. The priorities were conducted according to guidelines developed by GSI (Global Reporting Initiative) of which Grieg Seafood is a member.

2.3      Management of the Company

Control and management of the Company is divided between the shareholders, represented through the General Meeting, the Board of Directors and the CEO, and is exercised in accordance with prevailing company legislation.

Divergences from this Code of Practice: None.

3.        GROUP EQUITY AND DIVIDEND POLICY

3.1      Equity

At any given time the Group shall have a level of equity which is appropriate in relation to the Group’s cyclical activities. The Board aims to consistently keep the equity in accordance with current loan terms.

3.2      Dividend

The Group’s objective is to give the shareholders a competitive return on invested capital through dividend payments and value appreciation of the share, which is at least at the same level as other companies with comparable risk. The future dividend will depend on the Group’s future earnings, financial situation and cash flow. The Board believes that the dividend paid should develop in pace with the growth of the Group’s profits, while at the same time ensuring that equity is at a healthy and optimal level and that there are adequate financial resources to prepare the way for future growth and investment, and taking into account the wish to minimise capital costs. The Board believes it is natural that the average dividend, over a period of several years, should correspond to 25-35% of profit after tax, adjusted for the accounting effect of fair value adjustment of biological assets.

3.3      Board authorisation

The Board will request the AGM to grant a general mandate to pay out dividends in the period until the next AGM. The dividend will be based on the Group’s current policy in accordance with clause 3.2. Dividends should be awarded on the basis of the latest financial statements approved within the scope of the Public Companies Act. The Board determines from which date the shares are traded ex-dividend.

The Board has general authorisation to increase the Company’s share capital through share subscription for a total amount not exceeding NOK 44 664 800 divided into not more than 11 162 200 shares of nominal value NOK 4 each.

This authorisation remains in effect until 30 June 2015 and replaces the authorisation approved by the Annual General Meeting (AGM) on 11 June 2014.

The Board has general authorisation to acquire the Company’s own shares in accordance with the provisions of chapter 9 of the Norwegian Public Limited Companies Act for an aggregate nominal amount not exceeding NOK 44 664 800. The Company shall pay not less than NOK 4 per share and not more than NOK 40 per share when acquiring its own shares.

This authorisation remains in effect until the next AGM, but not later than 30 June 2015.

The Board will observe the Code of Practice in respect of new proposals to authorise the Board to implement capital increases and acquire the Company’s own shares.

Divergences from the Code of Practice: None.

4.        EQUAL TREATMENT OF SHAREHOLDERS. TRANSACTIONS WITH RELATED PARTIES

4.1      Share class

The Company has only one class of shares, and all shares carry the same rights. At 31 December 2014 the Company had 111 662 000 outstanding shares.

4.2      Own shares

If the Company trades in its own shares, the Code of Practice shall be observed.

At 31 December 2014 the Company owned 1 250 000 of its own shares.

4.3      Approval of agreements with shareholders and other related parties

All transactions of no lesser significance between the Company and a shareholder, Board member or a senior employee (or their related parties) shall be subject to a value assessment by an independent third party. If the consideration exceeds one twentieth of the Company’s share capital, transactions of this kind shall be approved by the General Meeting, in so far as this is required under Section 3-8 of the Norwegian Public Limited Companies Act.

Board members and senior employees shall inform the Board if they have any significant interest in a transaction to which the Company is a party.

Divergences from the Code of Practice: None.

4.4      Capital increases

In the event of a waiver of the shareholders’ preferential subscription right, the Code of Practice shall be observed.

5.        NEGOTIABILITY OF THE SHARES

The Company’s shares shall be freely negotiable.

Divergences from the Code of Practice: None.

6.        GENERAL MEETING

The shareholders represent the Company’s highest decision-making body through the General Meeting.

The Company’s AGM shall be held each year before the end of June. The AGM shall consider and adopt the annual financial statements, the annual report and the dividend, as well as deciding on other matters which under current laws and regulations pertain to the AGM.

The Board may convene an Extraordinary General Meeting (EGM) at whatever time it deems necessary or when such a meeting is required under current laws or regulations. The Company’s auditor and any shareholder or group of shareholders representing more than 5% of the Company’s share capital may require the Board to convene an EGM.

The Board convenes General Meetings at least 21 days before the date of the meeting. During the same period, the notice of meeting and the documents pertaining to matters to be considered at the General Meeting shall be accessible on the Company’s homepage. The same applies to the nomination committee’s recommendation. Shareholders who are unable to attend may vote by proxy. An authorisation form containing a vote option for each issue will be enclosed with the notice of meeting, and it will also be possible to give authorisation to the chairman of the Board or the CEO of the Company.

The Company will publish the Minutes of the General Meetings on its homepage and make them available for inspection at the Company’s registered office.

The Board shall not contact with the Company’s shareholders outside the General Meeting in a manner which could be deemed to constitute differential treatment of shareholders or which could be in conflict with current laws or regulations.

Divergences from the Code of Practice: None.

7.        NOMINATION COMMITTEE

On 13 February 2009 the AGM approved a resolution to establish a nomination committee. This is described in article 8 of the Article of Association. At the same time, the AGM adopted instructions for the nomination committee.

The present nomination committee was elected at the AGM on 11 June 2014 and comprises Marianne Johnsen (chair), Helge Nielsen and Tone Østensen. At least 2/3 of the members of the nominating committee shall be independent of the Board and may not be members of the Board. CEO cannot be a member of the nomination committee. The nomination committee shall have meetings with the directors, the CEO and relevant shareholders.

Divergences from the Code of Practice: None.

8.        COMPOSITION

8.1      Number of Board members

Under the Articles of Association the Board shall have up to seven members.

8.2      Election period

Board members are elected by the AGM for a period of two years.

8.3      Independent Board members

The Board members are presented in the Annual Report and on the Company’s homepage showing the Board members’ competence, relationship to main shareholders, and a description of Board members who are deemed to be independent. No overview of participation at Board meetings is included in the Annual Report. An overview of the Board members’ ownership of shares in the Company appears in the relevant note to the accounts in the Annual Report. The Company has no corporate assembly. The Company does not otherwise diverge from the Code of Practice.

There is compliance with the required number of independent Board members contained in the Code of Practice.

9.        BOARD OF DIRECTORS

9.1      Duties and work plan

The Company is managed by an effective Board of Directors (the Board) who has shared responsibility for the success of the Company. The Board represents and is accountable to the Company’s shareholders.

Each year the Board shall draw up a work plan for its activities.

The Board’s duties include drawing up the Group’s strategy and ensuring that the adopted strategy is implemented, effective supervision of the CEO, control and supervision of the Group’s financial situation, internal control and the Company’s responsibility to and communication with the shareholders.

The Board shall initiate any investigations it considers necessary at any given time to perform its duties. The Board shall also initiate such investigation that is requested by one or more Board members.

Divergences from the Code of Practice: None.

9.2      Instructions

The Board has drawn up instructions for its members and the Management which contain a more detailed description of the Board’s duties, meetings, the CEO’s duties in relation to the Board, the meeting schedule for the Board, participation, separate entries in the Minutes and duty of confidentiality.

The respective roles of the Board and the CEO are separate, and there is a clear division of responsibility between the two. Separate instructions have been drawn up for the group CEO. He/she is responsible for the Company’s senior employees. The Board underlines that special care must be exercised in matters relating to financial reporting and remuneration to senior employees.

In matters of importance where the chairman of the Board is or has been actively involved, Board discussions shall be chaired by the vice chairman.

The instructions for the Board and Management were last revised by the Board on 4 April 2011.

9.3      Annual assessment

Each year, in connection with the first Board meeting in the calendar year, the Board shall make an assessment of its work in the previous year.

9.4      Audit Committee

The Board has set up a sub-committee (audit committee) comprising a minimum of two and a maximum of three members elected from among the Board’s members, and has drawn up a mandate for its work.

The committee assists the Board in the work of exercising its supervisory responsibility by monitoring and controlling the financial reporting process, systems for internal control and financial risk management, external audits and procedures for ensuring that the Company complies with laws and statutory provisions, and with the Company’s own guidelines.

9.5      Remuneration Committee

The Board has set up a sub-committee (remuneration committee) comprising no less than two members. The committee shall hold discussions with the group managing director concerning his/her financial terms of employment. The committee shall submit a recommendation to the Board concerning all matters relating to the group CEO’s financial terms of employment.

The committee shall also keep itself updated on and propose guidelines for the determination of remuneration to senior employees in the Group. The committee is also the advisory body for the group CEO in relation to remuneration schemes which cover all employees to a significant extent, including the Group’s bonus system and pension scheme. Matters of an unusual nature relating to personnel policy or matters considered to entail an especially great or additional risk should be put before the committee.

The composition of the committee is subject to assessment each year.

Divergences from the Code of Practice: None.

10.      INTERNAL CONTROL AND RISK MANAGEMENT

By internal control is meant what is done by the Group to organise its business activities and procedures in order to safeguard its own values and those of its customers, and to realise adopted goals through appropriate operations. The achievement of these goals also requires systematic strategy work and planning, identification of risk, choice of risk profile, and the establishment and implementation of controls to ensure that the goals are achieved.

Internal control is an on-going process that is initiated, implemented and monitored by the Company’s Board, management and other employees. Internal control is designed to provide reasonable assurance that the Company’s goals will be achieved in the following areas:

  • Targeted, efficient and appropriate operations.
  • Reliable internal and external reporting.
  • Compliance with laws and regulations, including internal guidelines.

The Company has established framework procedures to manage and eliminate most of the risk that could prevent a goal from being achieved. This includes a description of the Company’s risk management policy as well as all financial control processes. There is on-going risk assessment of the main transaction processes. Descriptions of the transaction processes are currently in preparation for each region, with the aim of clarifying key controls and ensuring that these controls are in place. This means assessing all processes to determine the probability of divergences arising, and how great the economic consequences would be of any such divergence. The establishment of controls in each region is aimed at reducing the likelihood of divergences arising with major economic consequences.

As part of the internal control system, an authorisation matrix has been drawn up which is linked to the Group’s organisational structure.

The Group’s core values, external guidelines and social corporate responsibility constitute the external outer framework of internal control. The Group is decentralised and considerable responsibility and authority are therefore delegated to the regional operating units. Risk management and internal control are designed to take account of this. The audit committee updates the Board after each meeting.

Each year the auditor carries out a review of internal control which is an element of financial reporting. The auditor’s review is submitted to the audit committee.

The Group’s activities entail various kinds of financial risk: Market risk (including foreign exchange risk, interest rate risk and price risk), credit risk and liquidity risk. The Group’s overall risk management plan focuses on the unpredictability of the capital markets and seeks to minimise the potential negative effects on the Group’s financial results. To some extent, the Group uses financial derivatives to hedge against some risks. Risk management is drawn up at Group level and involves identifying, evaluating and hedging financial risk in close cooperation with the Group’s operational units. The Board has established written principles for risk management related to foreign exchange and interest rate risk and the use of financial instruments.

The Board has established procedures for reporting within the Group:

  • At the start of each year the Board adopts a budget for the year. Divergences from the budget are reported on a monthly basis.
  • Forecasts are drawn up for the next three years and they are updated every month.
  • Every month, each region submits a report containing given Key Performance Indicators (KPI). The main KPIs are: EBIT/kg, feed factor, production, production cost, harvest volume and fish health. Analyses are made and measured against budget figures and KPIs. The information form of the regions is summarised in a report submitted to the Board.

Divergences from the Code of Practice: None.

11.      BOARD REMUNERATION

Proposals concerning Board remuneration are submitted by the nomination committee. Remuneration to Board members is not linked to the Company’s results. In 2014, the CEO chose to resign from his position in October 2014. In this regard, the chairman had a role as executive chairman. There has not been increased remuneration to the Chairman. None of the Board members have special duties in relation to the Company which are additional to those they have as Board members. Board remuneration shall be shown in the financial statements of both the Company and the Group.

Divergences from the Code of Practice: None.

12.      REMUNERATION TO SENIOR EMPLOYEES

12.1     Senior employees

The group management consists of the group CEO, COO and the CFO. The Group has an extended management group of ten comprising the group managing director, the director of operations, the financial director, the group head of accounting, four regional managers (the respective managers of fish farming activities in Rogaland, Finnmark, Shetland and British Columbia), and the two people responsible for feed/nutrition and biology, respectively.

The objective of the guidelines for determination of salary and other remuneration to senior employees within the Group is to attract people with the required competence and at the same time retain key personnel. The guidelines should also motivate the employees to work with a long-term perspective to enable the Group to achieve its goals.

The determination of salary and other remuneration to the Group’s senior employees is therefore based on the following guidelines:

Salary and other remuneration shall be competitive and motivating for each manager and for everyone in the senior management group.

  • Salary and other remuneration shall be linked to value creation generated by the Company for the shareholders.
  • The principles used to determine salary and other remuneration shall be simple and understandable to employees, the shareholders and the public at large.
  • The principles used to determine salary and other remuneration shall also be sufficiently flexible to allow adjustments to be made on an individual basis in the light of the results achieved and the contribution made by the individual to the development of the Group.

The salary paid to the members of the senior management group consists of a fixed and a variable element. Under the bonus scheme in force the variable salary under the scheme cannot exceed five times the monthly salary. Each year, information about the provisions of the bonus scheme is included in the Group declaration on the determination of salary to the senior management group, and appears in the financial statements for the Group, note 8.

On 20 April 2007, 6 May 2009, 27 March 2012, 22 March 2013 and 17 December 2013 the Board approved a share and cash options programme for the Group’s senior employees. The last approval from the AGM was on 11 June 2014.The group CEO, the CFO, the COO and the four regional managers are included in the share options programme. The options agreements have been entered into within the scope of the resolution adopted by the AGM. Minutes of this AGM can be accessed on the Company’s homepage.

This has been followed by the establishment of a synthetic options programme. Options agreements with members of the senior management group have been entered into within the framework of the adopted resolution.

Remuneration to the group CEO is determined at a meeting of the Board. The salary payable to the other members of the senior management group is determined by the group managing director. The group CEO shall discuss the remuneration which he/she proposes with the chairman of the Board before the amount of remuneration is determined.

General schemes for the allocation of variable benefits, including bonus schemes and options programmes, are determined by the Board. Schemes which entail an allotment of shares, subscription rights, options and other forms of remuneration which are related to shares or the development of the Company’s share price are determined by the AGM.

The Company has no divergences from the Code of Practice.

12.2     Severance pay

Outgoing CEO is entitled to 18 months’ severance pay after dismissal or changes in the position of group managing director or in the terms and conditions of employment, and 12 months salary during illness. A severance pay agreement has also been established for the CFO and COO providing for 12 months’ severance pay after dismissal. Newly appointed CEO is entitled to 12months’ severance pay after dismissal and 12 months’ salary during illness.

Divergences from the Code of Practice: None.

13.      INFORMATION AND COMMUNICATION

13.1     Financial information

The Company shall at all times provide its shareholders, the Oslo Stock Exchange and the finance market in general (through the Oslo Stock Exchange information system) with timely and accurate information. The Board shall ensure that the quarterly reports from the Company give a correct and complete picture of the Group’s financial and commercial position, and whether the Group’s operational and strategic objectives are being reached. Financial reporting shall also contain the Group’s realistic expectations of its commercial and performance-related development.

The Company publishes all information on its own homepage and in press releases. Quarterly reports, annual reports and press releases are presented as they arise on the Company’s homepage in accordance with the Company’s financial calendar.

The Company shall have an open and active policy in relation to investor relations and shall hold regular presentations in connection with the annual and interim results.

13.2     Shareholder information

The Board shall ensure that information is provided on matters of importance for the shareholders and for the stock market’s assessment of the Company, its activities and results, and that such information is made publicly available without undue delay. Publication shall take place in a reliable and comprehensive manner and by using information channels which ensure that everyone has equal access to the information.

All information shall be provided in both Norwegian and English. The Company has procedures to ensure that this is done. The chairman of the Board shall ensure that the shareholders’ views are communicated to the entire Board.

Divergences from the Code of Practice: None.

14.      COMPANY TAKEOVER

14.1     Change of control and takeovers

The Company has no established mechanisms which can prevent or act as a deterrent to takeover bids, unless this has been resolved by the AGM a majority of two thirds (of the votes cast and of the share capital represented). The Board will not use its authorisation to prevent a takeover bid without the approval of the AGM after the takeover bid has become known. If a takeover bid is received, the management and the Board will ensure that all shareholders are treated equally. The Board will obtain a value assessment from a competent independent party and advise the shareholders whether to accept or reject the bid. The shareholders will be advised of any difference of views among the Board members in the Board’s statement on the takeover bid.

Divergences from the Code of Practice: None.

15.      AUDITOR

The Board seeks to have close and open cooperation with the Company’s auditor. Each year the audit committee obtains confirmation that the auditor meets the requirements of the Act on auditing and auditors concerning the independence and objectivity of the auditor.

The auditor’s schedule of audit work is submitted to the audit committee once a year. In particular, the audit committee considers whether, to a satisfactory extent, the auditor is performing a satisfactory control function.

Both the Company management and the auditor comply with guidelines issued by the Ministry of Finance concerning the extent to which the auditor can provide advisory services.

The auditor attends Board meetings which deal with the annual financial statements. The Board also has a meeting with the auditor at least once a year to review the auditor’s report on the auditor’s view of the Group’s accounting principles, risk areas and internal control procedures. Moreover, each year the Board has a meeting with the auditor when neither the CEO nor anyone else from the management is present.

The auditor also attends meetings of the audit committee to consider relevant matters. The auditor’s fee appears in the relevant note in the annual report showing the division of the fee between audit and other services.

Divergences from the Code of Practice: None.

* * *

Bergen, 23 March 2015

GSF sign 2014 eng