The Company is a SE company (Societas Europaea) subject to the Norwegian Act no. 14 of 1 April 2005 relating to European companies as well as the Norwegian Public Limited Liability Companies Act. The Company is listed on the Oslo Stock Exchange, and thus subject to Norwegian securities legislation and stock exchange regulations.
The Norwegian Public Limited Liability Companies Act section 5-6 (4) requires that the Annual General Meeting approves the statement of Corporate Governance. Consequently, this report will be presented to the Annual General Meeting.
In accordance with the Norwegian Accounting Act section 3-3 b, Odfjell is required to give a statement on our corporate governance. The information required by the Accounting Act is included below:
'An overview of the recommendations and regulations concerning corporate governance that the enterprise is subject to or otherwise choose to comply with' is included in section 1 below.
'Information on where the recommendations and regulations mentioned in no. 1 are available to the public' is included in section 1 below.
'Reasons for any non-conformance with the recommendations mentioned in no. 1' is covered under sections 4 and 7 below.
'A description of the main elements in the enterprises, and for entities that prepare consolidated financial statements, also the Group’s (if relevant) internal control and risk management system linked to the financial reporting process' is covered under section 10 below.
'Articles of Association which entirely or partly expand or depart from provisions of Chapter 5 of the Public Limited Liability Companies Act' is covered under section 6 below.
'The composition of the Board of Directors, the Corporate Assembly, the Committee of Shareholders’ Representatives and the Control Committee and any working committees related to these bodies, as well as a description of the main instructions and guidelines that apply to the work of the bodies and any committees' is covered under sections 8 and 9 below.
'Articles of Association governing the appointment and replacement of Directors' is covered under section 8 below.
'Articles of Association and authorisations empowering the Board of Directors to decide that the enterprise is to buy back or issue its own shares or equity certificates' is described in section 3 below.
The framework for corporate governance is the Norwegian Code of Practice for Corporate Governance was last updated 30 October 2014. The code can be found at Nues.no. The Code is based on a principle of 'comply or explain', implying that eventual deviations from the Code shall be explained.
Odfjell is committed to ethical business practices, honesty, fair dealing and compliance with all laws and regulations affecting our business. This includes adherence to high standards of corporate governance. The Board of Directors reviews on an annual basis the Company’s Corporate Governance Policy.
In addition to the Company’s Corporate Governance Policy, Odfjell has a Corporate Social Responsibility Policy encompassing a strong focus on quality, health, safety and care for the environment as well as human rights, non-discrimination and anti-corruption. The Company's Corporate Code of Conduct also addresses several of these issues. All Odfjell employees are obliged to comply with the Corporate Code of Conduct. The Company’s Corporate Governance Policy, Corporate Social Responsibility Policy and Corporate Code of Conduct can all be found on the Company’s website.
The statement below describes Odfjell's compliance in respect of each of the elements of the Norwegian Code of Practice for Corporate Governance, including explanation of any deviations.
Deviations from the Code: None
Odfjell is a leading company in the global market for transportation and storage of bulk liquid chemicals, acids, edible oils and other special products. Odfjell owns and operates chemical tankers and LPG/Ethylene carriers in global and regional trades as well as a joint venture network of tank terminals.
Article 3 of Odfjell's Articles of Association states: The object of the Company is to engage in shipping, ship agency, tank terminals, real estate, finance and trading activities, including the transportation of freight in the Company’s own vessels or chartered vessels, the conclusion of freight contracts, co-ownership agreements and cooperation agreements, ownership and operation of tank terminals, as well as investment and participation in other enterprises with a similar object and other activities related thereto.
The Article of Association can be found on the Company’s website: Odfjell.com/AboutOdfjell/CorporateGovernance. The Company's Mission Statement and strategy can be found on page 7 of this Annual Report.
The Company's strategy is to maintain its position as a leading logistics service provider for customers across the world through the safe and efficient operation of deep-sea and regional chemical tankers, LPG/Ethylene carriers and tank terminals worldwide.
Deviations from the Code: None
Odfjell shall maintain an equity base deemed sufficient to support the Company's objectives and strategy, and to be able to withstand a prolonged period of adverse market conditions. The normal target is that the equity ratio for the Group shall remain between 30% and 40% of total assets. The Group had book equity of USD 719 million as of 31 December 2016, corresponding to an equity ratio of 38.2% using the equity consolidation method.
There are currently no outstanding subscription rights as of 31 December 2016. The issuance of subscription rights must be approved by the General Meeting.
Odfjell aims to provide competitive long-term return on the investments for its shareholders. The Company embraces an investor-friendly dividend policy, and targets regular dividend payments at a sustainable level.
The Board of Directors may be authorized by the General Meeting to pay dividends based on the annual accounts.
According to the Norwegian Code of Practice for Corporate Governance, mandates granted to the Board of Directors to increase the Company’s share capital shall be restricted to defined purposes. Mandates granted to the Board shall be limited in time to no later than the date of the next Annual General Meeting.
Power of Attorney to the Board of Directors to increase the share capital
The Board has not been assigned authority to issue new shares. Any such mandate must be approved by the General Meeting and shall be limited in time until the next Annual General Meeting.
The Annual General Meeting on 9 May 2016 re-authorized the Board of Directors to acquire treasury shares limited to 17,353,788 shares with a total nominal value of NOK 43,384,474. However, the Company may not at any time own more than 10% own shares. The minimum and maximum price that is payable for the shares is respectively NOK 2.50 and NOK 250.
Within this mandate, the Board decides if and in what way the own shares shall be acquired and sold. New own shares can be acquired as compensation for own shares that are sold. Both the Company and its subsidiaries can acquire shares in the Company.
The present authorization is valid until the next ordinary General Meeting, but at any rate not longer than until 30 June 2017.
Deviation from the Code: None.
The Company’s share capital is NOK 216,922,370 , divided between 65,690,244 class A-shares each with a nominal value of NOK 2.50, and 21,078,704 class B-shares each with a nominal value of NOK 2.50. The Company’s shares shall be registered with the Norwegian Central Securities Depository (VPS).
Only holders of class A-shares shall have voting rights at Annual and Extraordinary General Meetings. In all other respects, the two classes of shares are equal, and have the same rights to dividends. In the event of issuance of bonus shares, holders of class A-shares shall be entitled to new class A-shares and holders of class B-shares shall be entitled to new class B-shares unless otherwise decided by the General Meeting.
The existence of two classes of shares is due to historical reasons. This is no longer a common practice on the Oslo Stock Exchange.
Any transactions carried out by the Company in own shares shall be conducted over the Oslo Stock Exchange or at prevailing arm's length prices if carried out in any other way. Such transactions will be reported to the Oslo Stock Exchange and to the wider market through immediate stock exchange releases and press releases.
Any not immaterial transaction between the Company and any shareholder, Board Member, member of Management or any related party of these shall be reviewed by an external third party before being concluded. Material agreements shall be approved by the General Meeting according to the Norwegian Public Limited Liability Companies Act. Independent valuations shall also be obtained in respect of transactions between companies in the same group where any of the companies involved have minority shareholders.
Members of the Board of Directors and Management shall in advance notify the Board if they have any material direct or indirect interest in any transaction entered into by the Company. In such cases they are deemed biased and not eligible to participate in the discussions or decisions.
The Board has established a policy in respect of share trading. The policy is in line with the Guidelines for Insiders issued by the Oslo Stock Exchange and applies to all employees who in connection with their work may gain access to price sensitive non-public information.
Deviation from the Code: Odfjell SE has two classes of shares due to historical reason
The Company’s shares are listed on the Oslo Stock Exchange and are freely negotiable. There is no form of restriction or pre-emptive rights affecting negotiability included in the Company’s Articles of Association. The Board is not aware of any agreements that may secure any shareholder beneficial rights to own or trade shares at the expense of other shareholders. The shares are registered in the Norwegian Central Securities Depository (VPS).
Odfjell has a self-declared trade-prohibition period for Primary Insiders starting the day the reporting period ends (31 March, 30 June, 30 September and 31 December) and lasting to the public release of the periodic report. This means that, during this trade-prohibition period, Primary Insiders are prohibited from trading in financial instruments issued by and/or relevant to Odfjell, or by companies in the same group.
Deviation from the Code: None.
Articles 7 and 8 of the Company’s Articles of Association regulates the agenda of the Annual General Meeting, notice period and attendance.
The Board is responsible for convening both Annual and Extraordinary General Meetings. The Company shall arrange for the Annual General Meeting to be held within six months of the end of each financial year. Extraordinary General Meetings may be called in accordance with the provision of the Norwegian Limited Liability Companies Act.
The General Meeting shall elect a Chairman of the Meeting.
The Chairman of the Board, representatives of the Board, the nomination committee, the Company's auditor and representatives from the Management shall participate in the Annual General Meeting.
The Annual General Meeting represents an important venue for the Board to meet and discuss with shareholders face-to-face and to decide on important issues such as dividend payments, election and re-election of Board Members and the appointment of the auditor.
The notice convening the meeting and other documents regarding the General Meeting shall be available on the Company's website no later than 21 days before the date of the General Meeting. The notice shall provide sufficient information on all resolutions to be considered by the General Meeting, voting instructions and how to vote by proxy.
When documents concerning matters that are to be considered by the General Meeting have been made available to the shareholders on the Company’s website, the requirement of the Norwegian Public Limited Liability Companies Act that the documents shall be sent to shareholders does not apply. This also applies to documents that are required by law to be included in or enclosed with the notice of the General Meeting. A shareholder may nonetheless ask to have documents sent that concern matters to be considered by the General Meeting. Shareholders who wish to attend the General Meeting must notify the Company no later than five days before the General Meeting. It is possible to register for the Annual General Meeting by mail, e-mail or fax.
Matters discussed at the General Meeting are restricted to those set forth in the agenda. The following matters shall be the business of the Annual General Meeting:
• Adoption of the annual accounts and the Board of Directors’ report
• Application of any profit for the year or coverage of any loss for the year in accordance with the adopted balance sheet, and the declaration of dividend
• Election of members of the Board of Directors
• Adoption of the remuneration of the Board of Directors
• Any other matters that by law or pursuant to the Company’s Articles of Association or as stated in the notice of the Annual General Meeting
The Board and the person that chairs the General Meeting shall organise the election of Board Members in such a manner that the shareholders can vote on each of the proposed candidates separately.
Proposals that shareholders wish the General Meeting to consider must be submitted in writing to the Board of Directors in sufficient time to be included in the notice of the General Meeting.
Deviations from the Code: None.
The Company has a Nomination Committee regulated by Article 9 of the Articles of Association. The General Meeting shall elect the Committee Chairman and members, determine their remuneration, and determine guidelines for the duties of the Nomination Committee.
According to Article 9, the Nomination Committee shall consist of three members, of which at least one member shall be independent of the Board and the Company’s senior management. According to the Code, the majority of the Nomination Committee shall be independent of the Board and Management. The Nomination Committee should be composed in a manner to safeguard the common interests of all the shareholders. The Nomination Committee shall propose candidates to the Board and also propose the remuneration to the Board Members. The Nomination Committee must justify its recommendations. The Nomination Committee shall aim to achieve a Board composition that takes sufficient consideration to the objective of generating shareholder results, independence and experience in the relevant sectors of the Group’s business activities.
The Nomination Committee currently consists of Arne Selvik (Chairman), Laurence Ward Odfjell and Christine Rødsæther.
In its work of suggesting new Board Members, the Nomination Committee should have contact with shareholders, members of the Board and the Company’s Management.
Deviation from the Code: The majority of the Nomination Committee is not independent of the Board.
The Board of Directors is regulated by Article 5 of the Company’s Articles of Association.
The Company’s Management is organised in accordance with a single-tier system and it shall have an administrative body (Board of Directors).
The Company’s Board of Directors shall consist of between five and seven members.
The Annual General Meeting shall elect the Board. According to Article 5 of the Articles of Association, the Chairman of the Board is elected by the Annual General Meeting for one year at a time. Board Members shall be elected for two years at a time.
The Company has no corporate assembly. The interests of the employees are safeguarded through an agreement between the employees and Odfjell, ensuring the involvement of employees. The employees have established a permanent Employee Representative Body. The Employee Representative Body consists of up to six representatives, partly from the tank terminal in Rotterdam, the main office in Bergen and the maritime Officers' Council.
Employee involvement at corporate level and in most subsidiaries abroad is also secured by various committees and councils, in which Management and employee representatives - both on shore personnel and seafarers - meet to discuss relevant issues.
The Board shall be composed in a manner to safeguard the joint interests of the shareholders while taking into account the Company’s need for expertise, capacity and diversity. It must be taken into consideration that the Board is able to function like a collegiate body.
The Board shall also be composed such that it can act independently of special interests. The majority of the Board Members shall be independent of the Management and important business connections, and no member of Management shall be a Board Member. In addition, at least two of the Board Members shall be independent of the Company’s principal shareholders, i.e. shareholders owning more than 10% of the Company’s shares or votes.
Since 9 May 2016 the Board has comprised Laurence Ward Odfjell (Chairman), Christine Rødsæther, Åke Gregertsen, Annette Malm Justad, Jannicke Nilsson, Klaus Nyborg and Hans Smits. Laurence Ward Odfjell and related parties control a significant shareholding in Odfjell SE. Åke Gregertsen, Christine Rødsæther, Klaus Nyborg, Annette Malm Justad, Jannicke Nilsson and Hans Smits are independent Board Members. Even though Åke Gregertsen does not meet all the requirements for independence in the Norwegian Corporate Governance Board (NUES), he performs his duties independently as Board Member. The Company believes that the Board is well positioned to act independently of the Company’s Management and exercise proper supervision of the Management and its operations.
The annual report and the Company’s home page contain a presentation of the Board of Directors and details of the shareholdings of all Directors, as well as information on the experience, expertise and capacity of the Board Members.
Two of the existing Board Members, Åke Gregertsen and Klaus Nyborg, are up for election at the 2017 Annual General Meeting.
The proportionate representation of gender of the Board is within the legislated target.
Deviation from the Code: None
The Board of Directors shall produce an annual plan for its work, with particular emphasis on objectives, strategy and implementation.
The Company shall be led by an effective Board with collective responsibility for the success of the Company. The Board represents and is responsible to the Company’s shareholders.
The Board’s obligations include strategic management of the Company, effective monitoring of the Management, control and monitoring of the Company’s financial situation and the Company’s responsibility to, and communication with, the shareholders. The Board is ultimately responsible for determining the Company's objectives, and for ensuring that necessary means for achieving them are in place. The Board of Directors determines the Company’s strategic direction and decides on matters of significant nature in relation to the Company's overall activities. Such matters include strategic guidelines and possible changes to the strategic business model, approval of the budgets as well as decisions on major investments and divestments. Furthermore, the Board ensures a correct capital structure and defines the dividend policy. The Board also appoints the CEO and determines his/her remuneration.
The Board shall ensure that the Company is well organised and that activities are managed in accordance with relevant laws and regulations, the Company’s objectives pursuant to the Articles of Association and the applicable guidelines set by the shareholders through the General Meeting.
It is the responsibility of the Board to ensure that the Company, its management and employees operate in a safe, legal, ethically and socially responsible manner. To emphasize the importance of these issues, a company specific Corporate Social Responsibility Policy and a Corporate Code of Conduct have been decided and implemented and apply to all throughout the organisation. The Corporate Code of Conduct focuses on aspects of ethical behavior in day-to-day business activities. The Company also adheres to the UN Global Compact and reports its Corporate Social Responsibility performance accordingly.
The Board shall perform such reviews which it deems necessary to fulfill its tasks. The Board shall also perform reviews requested by one or more Board Members.
Members of the Board of Directors shall notify the Board in advance if they have any direct or indirect not immaterial interest in any transaction planned to be entered into by the Company. In this case they are biased and not eligible to participate in the discussions. A deputy Chairman shall be elected to function as Chairman of the Board when the Chairman of the Board for such or other reasons cannot or should not lead the Board’s work.
The Board shall plan its work as well as the work of the Management through the integrated management cycle. The roles of the Board and the CEO are separate and the allocation of responsibilities specified in writing through existing chart of authorities and job descriptions.
Each year the Board shall evaluate its performance over the previous year. The Board shall evaluate its own efforts, the performance of the Committees and the individual Board Members. In order for the evaluation to be effective, the Board shall set objectives at both collective and individual levels which the performances shall be measured against. The results from the evaluation will not be made public, but shall be available to the Nomination Committee.
The Board held eight ordinary meetings and 12 extraordinary meetings in 2016, with 90% Director attendance. The Board carried out a self-assessment of its work.
The Audit Committee is elected by the Board and consists of minimum two Board Members; currently Åke Gregertsen (Chairman), Jannicke Nilsson and Klaus Nyborg. The Audit Committee reports to, and acts as a preparatory and advisory working committee for the Board. The Audit Committee acts according to an audit charter.
The Company’s auditor, CFO/SVP Finance, VP Financial Control, Chief of Staff and Business Controller usually attend the committee’s meetings.
The establishment of the Committee does not alter the Board's legal responsibilities or tasks.
Deviation from the Code: None.
The Board shall ensure that the Company has sound internal control and systems for risk management that are appropriate in relation to the extent and nature of the Company’s activities. Internal controls and the systems should also encompass the Company’s corporate values and ethical guidelines.
The Board shall carry out an annual review of the Company’s most important areas of exposure to risk and its internal control arrangements. The risk management process and the system of internal control of Odfjell shall be sufficient to ensure safe, controlled, legal and ethical business conduct and operations in all its activities around the world.
Business strategies are prepared at regional level and approved by the Board. In addition, the Board attends annual budgeting and strategic planning processes. Financial forecasts are prepared every quarter. Actual performance is compared to budget, latest forecast and prior year on a monthly basis. Significant variances are investigated and explained through normal monthly reporting channels.
The Company has established an organisational structure supporting clear lines of communication and accountability, and rules for delegation of authority that specify responsibility.
The Company focuses strongly on regular and relevant management reporting of both operational and financial matters, both in order to ensure adequate information for decision-making and to quickly respond to changing conditions. Evaluation and approval procedures for major capital expenditure and significant treasury transactions are established.
The Board receives monthly reports on the Company’s financial performance and status reports on the Group’s key individual
projects. The Group also regularly conducts internal audits of individual units’ adherence to systems and procedures.
Financial performance is also reported on a quarterly basis to the Board and to the Oslo Stock Exchange.
The Company's Board is kept updated on Management and Company activities through reporting systems, including the monthly reports. A safety (QHSE) update is normally the first item on the agenda of all ordinary meetings of the Board of Directors.
Odfjell’s Compliance Officer monitors that the Company and its employees act in accordance with applicable laws and regulations, the Company's Code of Conduct, and ensures that the Company acts in an ethical and socially responsible way. Particular focus shall be applied to competition law compliance, environmental licenses to operate, anti-corruption measures, and regular updates on new rules and regulations are issued to all relevant personnel in order to ensure continuous compliance. The Compliance Officer reports directly to the CEO.
The Company also regularly conducts internal audits of individual units’ adherence to systems and procedures. The internal audit department provides additional assurance to the Board and the Audit Committee that key controls are operating as intended. The Company is also subject to external control functions, including auditors, ship classification societies, customer vettings, port and flag state control, and other regulatory bodies including the IMO.
Deviation from the Code: None.
The remuneration of the Board shall reflect the Board’s responsibilities, expertise, time commitment and the complexity of the Company’s activities.
Remuneration to Board Members shall be determined by the shareholders at the General Meeting. The Nomination Committee shall provide recommendations and give its reasons therefore to the General Meeting for annual remuneration to all Board Members.
Board Members are encouraged to own shares in the Company, and can be paid part of their remuneration in shares.
Members of the Board do not take part in any incentive or share option schemes. The remuneration of the Board of Directors is not linked to the Company's performance. Board Members should not take on assignments for the Company.
Information regarding all remuneration to the individual Board Members shall be provided in the annual report. If remuneration has been paid in addition to normal directors’ fees, this shall be specifically identified.
Deviation from the Code: None.
Pursuant to Section 6–16 a) of the Norwegian Public Limited Companies Act, the Board of Directors has issued a statement regarding the determination of salaries and other remuneration for the Management. The statement is disclosed in note 22 to the annual accounts and as a separate document presented to the Annual General Meeting.
Management shall be offered competitive terms of employment in order to ensure continuity in the Management and to enable the Company to recruit suitably qualified personnel. The remuneration shall not be of such a nature or magnitude that it may impair the Company’s interest or reputation.
A basic, fixed salary is the main component of the remuneration. However, in addition to the basic salary other supplementary benefits may be provided, including, but not limited to, payments in kind, incentive/recognition pay, termination payments and pension and insurance schemes.
Deviation from the Code: None.
Through its Corporate Governance Policy, the Board has implemented guidelines for disclosure of Company information. Reporting of financial and other information shall be based on openness and equal treatment of all interested parties. The Company provides shareholders and the market as a whole with information about the Company. Such information takes the form of annual reports, quarterly reports, stock exchange bulletins, press releases, information on the Company website and investor presentations when appropriate. The Company seeks to treat all shareholders equally in line with applicable regulations. Information distributed through the Oslo Stock Exchange, or otherwise in press releases, is published simultaneously on the Company’s website, Odfjell.com. The Company aims to hold regular presentations. The financial calendar is available through stock exchange announcements and on the Company’s website.
Open investor presentations are held at least twice a year in connection with Odfjell's quarterly reports. The CEO reviews and makes comments on results, market developments and prospects. Odfjell's Senior Vice President Finance/CFO also participates in these presentations.
The presentations of the annual and quarterly reports are published via Oslo Stock Exchange and posted on the corporate website at the same time as presented. The annual and mid-year results are presented via a live presentation, whereas reports following publication of first and third quarter results are made available through webcasts. Odfjell also maintains an ongoing dialogue with, and make presentations to, selected analysts and investors. Care is taken to secure impartial distribution of information when dealing with shareholders, investors and analysts.
The Board shall ensure that the Company’s quarterly and annual financial statements provide a correct and complete picture of the Group’s financial and business position, including the extent to which operational and strategic goals have been achieved.
The Chairman of the Board shall ensure that the views of the shareholders are communicated to the entire Board.
Deviation from the Code: None.
During the course of any take-over process, the Board and Management shall use their best efforts to ensure that all the shareholders of the Company are treated equally. The Board shall also use its best efforts to ensure that sufficient information to assess the takeover bid is provided to the shareholders.
In the event of a take-over bid for the shares in the Company, the Board shall not seek to prevent or obstruct take-over bids for the Company’s activities or shares, unless there are particular reasons for such actions. The Board shall not exercise mandates or pass any resolutions with the intention of obstructing the take-over bid unless this is approved by the General Meeting following announcement of the bid. In particular, the Board shall in such circumstances not without the prior approval of the General Meeting (i) issue shares or any other equity instruments in the Company, (ii) resolve to merge the Company with any other entity, (iii) resolve on any transaction that has a material effect on the Company’s activities, or (iv) purchase or sell any shares in the Company.
If an offer is made for the shares in the Company, the Board shall issue a statement evaluating the offer and make a recommendation as to whether the shareholders should accept the offer. If the Board finds itself unable to provide such a recommendation, it shall explain and state the reasons why. The Board’s statement on a take-over bid shall state whether the Board's view is unanimous, and if not, the statement shall explain the basis on which members of the Board have a deviating view. The Board shall consider whether to engage financial advisors in this respect and whether to have a valuation from an independent expert. If any member of the Board or the Management, or close associates of such persons, or anyone who has recently held such a position, is either the bidder or has a similar particular interest in the bid, the Board shall in any case arrange an independent valuation. This shall also apply if the bidder is a major shareholder in the Company. Any such valuation should be either attached to the Board’s statement, be reproduced in the statement or be referred to in the statement.
Deviation from the Code: None.
The Company emphasises on keeping a close and open relationship with the Company’s auditor. The auditor participates in Board meetings for approval of the annual accounts. The Company’s auditor shall present an annual plan for its audit work to the Audit Committee. In addition the auditor shall review and report on the Company’s internal control procedures, including identify weaknesses and propose improvements. The Board shall at least once a year meet with the auditor without the Management’s presence. The auditor’s fees for auditing and other services are presented to the Annual General Meeting and included in the notes to the annual accounts. The Board continuously evaluates the need for written guidelines concerning the employment of the auditor for other services than audit. The Board believes that the auditor’s independence of the Company’s Management is assured. The auditor shall issue a written annual declaration confirming the auditor’s independence.
In order to secure consistency in control and audits of the Group, Odfjell generally uses the same audit firm for all subsidiaries worldwide, and currently engages EY as the Company's independent auditor.
Deviation from the Code: None.