The group’s principles for corporate governance have been established by its Board of Directors, based on the Norwegian code of practice for corporate governance, dated 21 October 2009 (“the code”). There follows a description of how Aker Solutions has implemented the applicable sections of the code. This description is structured in the same way as the code, and each section covers any potential exceptions or deviations.
Section 1 – implementation and reporting on corporate governance
Good corporate governance should ensure that appropriate goals and strategies are established, that the strategies adopted are implemented, and that the results achieved are subject to measurement and follow-up. The principles will also help ensure that the group’s activities are subject to appropriate and effective control. An appropriate division of roles and satisfactory control will contribute to the greatest possible value creation over time, to the benefit of the shareholders and other stakeholders.
Corporate values and ethical guidelines
Aker Solutions wishes to contribute to sustainable social development through responsible business operations. To achieve this, the Board has adopted a set of values for the group. The ethical guidelines and other policy documents for Aker Solutions have been prepared in accordance with these values. An important goal for 2009 was to develop and implement a code of conduct for the group. The code of conduct summarises Aker Solutions’ principles for corporate responsibility (CR). It is based on material which already exists and is enshrined in the group’s policies, annual reports and reports on CR. Further coverage of the group’s corporate values and ethical guidelines can be found on the Aker Solutions website at www.akersolutions.com/CR.
Section 2 - business
The business activities clause in Aker Solutions’ articles of association reads as follows: “The objectives of the Company are to own or carry out industrial- and other associated businesses, management of capital and other functions for the Group, and to participate in or acquire other businesses.” The group’s main strategies are presented in the Directors’ report. The group’s strategy, goals and guidelines are assessed by the Board every year, through specific strategy processes. In connection with the group’s quarterly reporting and special market presentations, information is provided to the market about Aker Solutions’ financial position and main strategies as well as about possible changes to these.
Section 3 – equity and dividends
The group’s equity as of 31 December 2009 was NOK 9 123 million, which corresponds to an equity ratio of 22.8 percent. Aker Solutions’ dividend policy is discussed in the section concerning the share and shareholder information on page 116 of this annual report. The group’s dividend policy is one of the factors taken into account in connection with the Board’s proposal for the allocation of net profit for 2009.
Board mandates
Board proposals for future mandates will be limited to defined issues and apply for the period until the next Annual General Meeting. Existing mandates for acquiring the company’s own (treasury) shares are presented in the section concerning share and shareholder information on page 116 of this annual report. No mandates for the Board to increase the company’s share capital were in force as of 31 December.
Share purchase programme for employees
Aker Solutions wants its employees to have the opportunity to be shareholders in the company and to participate in its possible value development. This will contribute to an even closer relationship between the employees and the company as well as increasing interest in the development of the company’s value. A share purchase programme was accordingly introduced in 2009, and the decision has been taken to continue this in 2010. More details of the programme are provided in the section concerning the share and shareholder information on page 116 of this annual report and in note 9 on salaries, wages and social security costs to the annual accounts. The sale of shares to employees through the programme is achieved with the aid of the treasury shares held at any given time or through the purchase of additional treasury shares pursuant to existing Board mandates.
Section 4 – equal treatment of shareholders and transactions with related parties
Aker Solutions has a single class of shares, and all its shares confer the same rights. Existing shareholders have a preemptive right to subscribe to shares in the event of an increase in the share capital, unless special considerations dictate otherwise. The Board will justify any waiving of the pre-emptive right of existing shareholders to subscribe to shares. Transactions in the company’s own (treasury) shares are conducted on the Oslo Stock Exchange. In the event of not-immaterial transactions between the company and shareholders, Directors, senior executives or close associates of such parties, which do not form part of ongoing projects in the company’s ordinary business, the Board must obtain an independent valuation. A corresponding general principle also applies to the relationship between Aker Solutions and the Aker group. Possible collaboration projects with Aker Clean Carbon AS, which is owned 50 percent by Aker Solutions, and contracts in the company’s ordinary business with other listed companies in which Aker is a shareholder, will nevertheless normally be negotiated and entered into at arm’s length without an independent valuation necessarily being obtained. Aker Solutions has prepared guidelines designed to ensure that Directors and senior executives notify the Board of any direct or indirect material interest they may have in agreements entered into by the group. Pursuant to Aker Solutions’ instructions for the Board of Directors, neither the Directors nor the President & CEO will participate in the preparation, consideration or determination of issues where the person concerned or any related party of that person may be regarded as having a particular personal or financial interest in the issue. Each of the Directors and the President & CEO are personally responsible for declaring a conflict of interest wherever the possibility of such a conflict exists. Where other elected employee representatives and employees of Aker Solutions are concerned, the question of transactions with related parties is dealt with in detail and regulated by the group’s ethical guidelines.
Principal shareholder
Aker ASA owns 60 percent of the shares in Aker Holding AS, which owned 40.27 percent of the shares in Aker Solutions ASA as of 31 December 2009. Proposition no 88 (2006–2007) to the Norwegian Storting (parliament) contains further information on the creation of Aker Holding and the agreement between Aker ASA and the other shareholders in Aker Holding AS. The board considers it positive for Aker Solutions that Aker ASA accepts the role of an active owner and involves itself actively in issues of great significance for the group and the shareholders. The collaboration with Aker ASA gives Aker Solutions access, for instance, to special expertise and capacity in strategy, transactions and financing. In addition, Aker ASA contributes networks and negotiating resources which can benefit Aker Solutions in individual matters. This supplements and strengthens Aker Solutions without restricting the group’s autonomy. In connection with this collaboration, it may be necessary to give Aker ASA special insight into the business. Possible information given to Aker’s representatives in this context will be provided in accordance with the legal provisions and regulations which govern the Oslo Stock Exchange and securities market. Pursuant to the Norwegian Act on Public Limited Liability Companies, Aker Solutions is not regarded as a related party of Aker ASA or companies in which Aker ASA is a shareholder. Nevertheless, the Board and executive management of Aker Solutions are very conscious that all relations with other Aker companies must be conducted on commercial terms and in accordance with the arm’s length principle. Transactions are made public in accordance with the regulations governing companies listed on the Oslo Stock Exchange. Furthermore, transactions of a certain size between Aker Solutions and companies in the Aker group will be conducted in accordance with the procedures outlined in section 3-8 of the Norwegian Act on Public Limited Liability Companies. For further information, see note 7 to the consolidated accounts on related parties. During 2009, companies in the group have acquired companies and shareholdings in companies from the Aker group as described in more detail in note 7 to the consolidated accounts. Following these transactions, fewer commercial interfaces will exist in the future between business activities in the Aker group and in Aker Solutions. That should help to provide greater clarity and predictability in the market regarding the distinction between Aker’s management of the principal shareholder’s ownership interests in the group and its other commercial interests in relation to Aker Solutions.
Section 5 – freely negotiable shares
Aker Solutions shares are listed on the Oslo Stock Exchange and are freely negotiable. The company’s articles of association impose no restrictions on the transferability of its shares.
Section 6 – Annual General Meetings
Aker Solutions encourages shareholders to attend its Annual General Meetings. It gives priority to holding the Annual General Meeting as soon as possible after the end of the year. The notice of the Annual General Meeting with detailed supporting documentation — including the recommendations of the nomination committee — is posted to the company’s website no later than 21 days before the meeting is to take place. Corresponding documents have previously been mailed to shareholders by the deadlines specified at any given time pursuant to the Norwegian Act on Public Limited Liability Companies. In connection with the Annual General Meeting for 2010, the Board has proposed an amendment to the articles of association to ensure that the articles clearly reflect that deadlines and formal requirements for giving notice of an Annual General Meeting specified at any given time pursuant to the Act will apply, and that documents concerning items on the agenda for the Annual General Meeting which have been made available to shareholders on the company’s website will not normally be mailed to shareholders unless the Act provides otherwise. The deadline for shareholders to register their attendance is set as close to the date of the meeting as possible. Shareholders who are unable to attend the meeting in person may vote by proxy. Further information on procedures for registration and proxy voting is provided in the notice of the meeting and on the registration form. With effect from 2010, the company will also observe the code’s recommendation on appointing an independent party who can be nominated by shareholders to act as their proxy. The company’s goal is that the proxy form will be formulated, as far as is practicable, in such a way that the person giving the proxy can vote separately on each issue and for every candidate. Pursuant to the articles of association, the Chairman of the Board or the Board’s appointee chairs the Annual General Meeting. The intention is that Directors, the Chairman of the nomination committee and the company’s auditor will attend Annual General Meetings. The nomination committee gives weight in its work to assembling a board which functions as far as possible as a team, and to selecting Directors whose experience and qualifications complement each other. For that reason, although the company’s goal will be to give the Annual General Meeting the opportunity to vote on each candidate for board membership, the Annual General Meeting will nevertheless normally be invited to vote for the Board as a whole. From a desire for the Annual General Meeting to be conducted in an appropriate manner, and for shareholders to take their decisions as far as possible on the basis of the same information, the company has not so far found it advisable to recommend the adoption of an option to attend and vote electronically or to vote in advance. The company will constantly assess the introduction of such arrangements, in part with regard to the security offered by available systems and their ease of use. Minutes of Annual General Meetings are published as soon as is practicable via the Oslo Stock Exchange’s messaging service www.newsweb.no (ticker: AKSO) and on the company’s website www.akersolutions.com under the “Investors” tab.
Section 7 – nomination committee
The company has a nomination committee as specified in its articles of association. This committee comprises a minimum of three members, who normally serve for two years. The composition of the nomination committee takes account of the interests of the shareholders while also maintaining the independence of its members from the Board and executive management of Aker Solutions. The members and Chairman of the nomination committee are elected by the company’s Annual General Meeting, which also determines their remuneration and has the opportunity to adopt instructions for the committee’s work. The nomination committee had four members as of 31 December 2009, the majority of whom were independent of the Board and the executive management Pursuant to the articles of association, the nomination committee recommends candidates for election to the Board of Directors. The nomination committee also makes recommendations on the remuneration of Directors. The composition of the nomination committee is presented in the section concerning the share and shareholder information in this annual report. Information about the nomination committee and deadlines for suggesting or nominating candidates for directorships can be found under the ”Investors” tab on the group’s website at www.akersolutions.com.
Section 8 – corporate assembly and Board of Directors: composition and independence
Under an agreement with the employees, the company does not have a corporate assembly. Employee rights under Norwegian law to representation and participation in decision-making have been secured in part through extended representation on the Board of Directors. Pursuant to the company’s articles of association, the Board comprises six to ten Directors, of whom one-third are to be elected by and from among Aker Solutions’ employees. Furthermore, up to three alternate Directors may be elected by the shareholders. The nomination committee’s recommendations normally include a proposal on the choice of Chairman, who is elected by the shareholders at the Annual General Meeting. The Board elects its own Deputy Chairman. Directors are elected for twoyear terms. The Board had ten members as of 31 December 2009, including six elected by the shareholders and four by the employees. The present composition of the Board is described on page 130 of this annual report, together with further details of the background and affiliations of Directors. The company encourages its Directors to own shares in the company. Shares held by Directors as of 31 December 2009 are specified in note 9 to the consolidated annual accounts on salaries, wages and social security costs. The majority of shareholder-elected Directors are independent of the executive management and key business associates. No member of the executive management sits on the Board. At the request of the company’s largest shareholder, Aker Holding AS, the Board of Aker Solutions called an Extraordinary General Meeting on 8 June 2009. Items on the agenda included the election of a new Director to replace Heidi M. Petersen, who had resigned her post, and a new Director independent of Aker to replace Leif-Arne Langøy, who had tendered his resignation. Ida Helliesen and Mikael Lilius were elected to serve as Directors until the company’s Annual General Meeting in 2011. Following these changes, at least half of the shareholder-elected Directors are independent of the company’s largest shareholder. None of the shareholder-elected Directors are up for election in 2010. The nomination committee’s recommendations and accompanying justification are published on the company’s website and via the Oslo Stock Exchange’s messaging service www.newsweb.no as soon as they become available.
Section 9 – the work of the Board of Directors
The Board adopts an annual plan for its work, emphasising goals, strategy, and execution. Furthermore, there exists instructions for the Board of Directors adopted to regulate the areas of responsibility, tasks and division of roles between the Board, the Chairman and the President & CEO. The instructions also contain provisions on the Board’s schedule, notice and chairing of board meetings, decision-making, the President & CEO’s right and duty to keep the Board informed, the duty of confidentiality, conflicts of interest and other matters. The Board held nine ordinary meetings during 2009, with an average attendance of 9.4 Directors (95 percent) and full attendance on six occasions (67 percent). Twelve extraordinary meetings were also held, with an average attendance of nine Directors (92 percent) and full attendance on six occasions (50 percent). Extraordinary meetings were largely occasioned by the need, pursuant to the company’s authorisation matrix, for advance Board consideration and approval of significant tenders due to be submitted by the group. An overview of attendance by the present Directors at ordinary and extraordinary board meetings during 2009 is provided in note 9 to the consolidated annual accounts on salaries, wages and social security costs. Matters to be considered by the Board are prepared by the President & CEO in consultation with the Chairman. Weight is given to preparing and presenting these matters in such a way that the Board has a satisfactory basis for considering them. The Board has overall responsibility for managing Aker Solutions and is charged with ensuring an acceptable organisation of the business through the President & CEO. Among its other duties, the Board will determine plans and budgets for the business and keep itself informed of the financial position and development of Aker Solutions. That includes the annual planning process in Aker Solutions, with the determination of overall goals and strategic choices for the group as well as financial plans, budgets and forecasts for the group and its business areas. Pursuant to its instructions, the Board conducts an annual evaluation of its own performance and expertise.
Audit committee
The Board of Aker Solutions resolved in December 2009 to establish an audit committee, which will comprise up to four Directors and normally meet at least four times a year. At least one of the committee’s members must have relevant accounting or auditing expertise. The audit committee’s mandate and mode of working comply with legal requirements. On behalf of the Board, the committee will participate in quality assurance of guidelines, policies and other governing documents for Aker Solutions ASA. It undertakes a qualitative review of the company’s interim and annual reports, which includes corporate reporting. In its review of the accounts, the committee holds discussions with the management, the corporate audit function and the external auditor.
Compensation committee
The Board of Aker Solutions has a compensation committee comprising three Directors, which normally meets at least four times a year. This committee prepares and recommends proposals to the Board concerning the pay and conditions of the President & CEO and the guidelines and principles in force at any given time for remuneration of senior executives in the group. Based on recommendations from the President & CEO, the committee also approves the pay and conditions of personnel who report directly to the President & CEO.
Section 10 – risk management and internal control
Aker Solutions has established a comprehensive set of internal control procedures and systems to ensure uniform and reliable financial reporting. Each of the group’s business units is required to conduct an annual evaluation of its internal financial reporting control systems. The group also conducts regular audits of individual units’ compliance with systems and procedures. The Board receives monthly reports on the company’s financial performance and the status of its most important individual projects. The business areas are responsible for monthly financial follow-up and reporting. Work on overall risk management is conducted mainly by the following corporate functions, in close cooperation with the business areas:
- the enterprise risk function coordinates risk management outside the traditional project and financial areas, and monitors the company’s values and ethical guidelines
- the internal control function monitors that the units have established and implemented the necessary systems and routines for ensuring compliance with both financial and operational procedures and systems within the group, and conducts regular visits to and checks of units with consequent reporting of possible improvement measures
- the project and operational support function provides support for project assessments in the tendering and execution phases, and chairs the group’s corporate risk committee
- the corporate treasury function is responsible for financial market risk and the group’s exposure to financial markets, and is a permanent member of the group’s investment committee
- the corporate insurance function handles the purchase of the group’s insurance programme and provides insurance-related support for projects, as well as operating as the group’s captive underwriter
- the corporate legal function supports all the above-mentioned functions in their management of risk, in part through permanent membership of the corporate risk and investment committees, and is also responsible for contractual and legal follow-up of projects, partners, contracts, disputes and relations with the public authorities
- the corporate tax function deals with tax-related transaction, operation, tax return and accounting risks.
In addition to the above-mentioned corporate functions, the business areas have their own management teams, accounting and staff functions tailored to their organisations and businesses. Each business area and unit is responsible for ensuring compliance at all times with the group’s procedures and systems and with all other applicable regulations and legal requirements. The corporate staff and the business areas accordingly collaborate closely in order to be able to identify, monitor, report on and manage risk for the whole group in line both with the requirements of the audit committee and Board and with internal and external frame conditions and regulations. In accordance with the company’s management model and organisation, each corporate function has a global responsibility for following up its respective area and associated framework. That applies regardless of the approach adopted for organising the business, and is pursued in part through a close dialogue with the company’s corporate risk and investment committees and through monthly meetings related to financial and operational reporting by the business areas. Each corporate function will also follow up its area of responsibility outside these fora in direct dialogue with the businesses, both in relation to specific projects and as part of expertise development for good risk management. All parts of the group conduct an annual evaluation of the extent to which the established control activities function appropriately. The Board’s audit committee will assist the Board in checking that the company has internal procedures and systems which ensure good corporate governance, effective internal control and good risk management – particularly in relation to financial reporting. Page 34 of the Directors’ report provides a more detailed description of the company’s management of business related operational and financial risk.
Section 11 – remuneration of the Board of Directors Remuneration paid to Aker Solutions’ Directors reflects the Board’s responsibilities, expertise, time spent and the complexity of the business. Remuneration is recommended by the nomination committee and is not profit dependent or related to options in Aker Solutions. Additional information about the remuneration paid to Directors in 2009 is presented in note 9 to the consolidated annual accounts on salaries, wages and social security costs. Directors or companies with whom they are affiliated should not undertake specially remunerated assignments for Aker Solutions over and above their directorship. Should they nevertheless do so, the Board must be informed and must approve the remuneration. No remuneration related to such assignments must be accepted from anyone other than the company or the relevant group company.
Section 12 - remuneration of executive management
The Board has adopted guidelines for the remuneration of Aker Solutions’ executive management pursuant to section 6-16a of the Norwegian Act on Public Limited Liability Companies. Aker Solutions ASA does not have stock option schemes or other arrangements for awarding shares to employees for 2010, but a share purchase programme initiated in 2009 will be extended to 2010. Further details are available in the section on page 116 concerning the share and shareholder information. Further details on the remuneration of individual members of Aker Solutions’ executive management are provided in note 9 to the consolidated annual accounts on salaries, wages and social security costs. The company’s guidelines for remunerating executive management are presented in note 9 and are accordingly submitted to the Annual General Meeting.
Section 13 – information and communications
Aker Solutions has established an investor relations (IR) policy which can be found on the group’s website. The group’s reporting of financial and other information is based on openness and on equal treatment of participants in the securities market. The long-term objective of the IR function is to secure access to capital for the company on competitive terms while ensuring the most accurate possible pricing of the share for shareholders. These goals will be accomplished through correct and timely distribution of information which could affect the company’s share price, while ensuring that the company complies with applicable regulations and market practice. See also the description above about the flow of information between Aker Solutions and Aker ASA in connection with their collaboration in such areas as strategy, transactions and financing. All stock exchange notices and press releases are made available on the company’s website at www.akersolutions. com, while stock exchange notices are also available from www.newsweb.no. All information distributed to shareholders is published simultaneously on the Aker Solutions website. The company holds open presentations in connection with its financial reporting, and these presentations are broadcast directly via the internet. Aker Solutions’ financial calendar can be found on page 118 of this annual report and on the company’s website.
Section 14 – takeovers
Aker ASA has undertaken to maintain its control of Aker Holding AS for a minimum of ten years from June 2007. As long as the shareholder collaboration in Aker Holding AS persists, the Board has not considered it appropriate to prepare special guidelines for possible takeovers.
Section 15 – auditor
The auditor presents an annual plan to the audit committee for the conduct of auditing work. Furthermore, the auditor has provided the Board with written confirmation that the requirement for independence has been fulfilled. The auditor attends the Board meeting that deals with the annual accounts, and has reviewed possible significant changes to the company’s accounting principles and internal controls with the Board. The Board of Directors is given opportunity to meet the auditor without the President & CEO or other members of the executive management being present. Moreover, with effect from 2010, the audit committee will hold at least one meeting a year with the auditor but without the President & CEO or other members of the executive management being present. The Board establishes guidelines on using the auditor for services other than auditing. A recommendation on the choice of external auditor and approval of the auditor’s fee is submitted to the Board by the audit committee. The auditor’s fee, broken down between auditing and other services, is presented in note 11 to the consolidated annual accounts under other operating expenses. This information is also submitted to the Annual General Meeting.
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