Corporate governance to ensure maximum sustainable long-term value creation

Statkraft's corporate governance shall contribute to sustainable and permanent value creation in the Group. Efficient and transparent management and control of business will form the basis for creating long-term values for the owner, employees, other stakeholders and society in general, and shall help engender confidence among stakeholders through predictability and credibility. Open and accessible communications shall ensure that the company has a good relationship with society in general and the stakeholders who are affected by the company’s business in particular.

Statement concerning the Norwegian Code of Practice for Corporate Governance

Statkraft applies the Norwegian Code of Practice for Corporate Governance (NUES) within the framework established by the company's organisation and ownership. Non-compliances are attributable to the fact that Statkraft is not a publicly listed company and that the Norwegian state is the sole owner of the company, and restrictions contained in the Articles of Association. The non-compliances relate to non-discrimination of shareholders, tradability of shares, dividends and the annual general meeting. Statkraft also complies with the Norwegian state’s ten principles for efficient corporate governance. The principles are based on how the state will act as an owner as well as what the state expects from the companies it owns.

See illustration of corporate governance in Statkraft (pdf)

A statement concerning follow-up of the items in the Norwegian Code of Practice for Corporate Governance is given below. (click headings for more information).

Corporate governance statement

The basis for the board of Statkraft's corporate governance work is the Norwegian Code of Practice for Corporate Governance.

Business

Statkraft’s Articles of Association state that: “The object of the Company is, alone, or through participation in or cooperation with other companies, to plan, design, construct and operate energy production facilities, undertake financial and physical energy trading, and operate businesses which are naturally associated with the same”.

Share capital and dividend

Statkraft AS has a share capital of NOK 20 billion, divided among 200 000 000 shares, each with a face value of NOK 100.

Equal treatment of shareholders and transactions with related parties

All shares in Statkraft AS are owned by the state-owned enterprise Statkraft SF, which in turn is wholly owned by the Ministry of Trade and Industry.

Freely negotiable

Not relevant, only one owner, shares cannot be traded.

General meeting

The shareholder exercises supreme authority over Statkraft AS through the annual general meeting. In accordance with the Articles of Association the ordinary general meeting is held once a year by the end of June.

Election committee

The state is the sole owner and determines the composition of the board.

The corporate assembly and board of directors, composition and independence

Statkraft AS has entered into an agreement with its employees’ trade unions stipulating that the company will not have a corporate assembly, pursuant to the exception provisions of the Norwegian Companies’ Act.

The work of the board of directors

The board has established rules of procedure for the board of Statkraft AS that lay down guidelines for the board’s work and decision-making procedures. The board’s tasks are described in general by Norwegian company law and the company’s Articles of Association. The rules of procedure also define the tasks and obligations of the President and CEO in relation to the board. The board evaluates the work and expertise of the CEO annually. The board evaluates its own performance and expertise annually.

Risk management and internal control

Statkraft is exposed to risk in a number of areas and across its entire value chain. The management of risk is important for value creation and is an integrated part of all business activities and is followed up within the respective unit by means of procedures for the monitoring and mitigation of risk. Statkraft’s total risk is monitored at Group level and is incorporated in reporting to Group management and the board.

Board remuneration

The board's remuneration reflects the board's responsibilities, expertise, time spent and the complexity of the activities. The compensation is not related to the company's results.

Remuneration to executive employees

The board’s Compensation Committee evaluates the salary of the President and CEO and the rest of the company’s management. Each of the members of the Group management, except the President and CEO, has a bonus scheme which can give an annual disbursement up to NOK 500 000. The bonus is disbursed on the basis of attainment of individually specified objectives.

10 Principles for good ownership

Shareholders must be treated equally.
Matters relating to the state's ownership in the companies must be transparent.
The owner's decisions and resolutions must be made at the general meeting.
The state sets objectives for the companies, and the board is responsible for the realisation of the objectives.
The company's capital structure must be adapted to the purpose of the ownership and the company's situation.
The composition of the board must be characterised by expertise, capacity and diversity based on the individual nature of the company.
Wage and incentive schemes must be designed to promote creation of value in the companies and appear to be reasonable.
The board must fulfil an independent control role vis-à-vis the company's management for and on behalf of the owners.
The board should have a plan for its own work and work actively on developing its own expertise. The board's activities must be evaluated.
Companies must be conscious of their corporate responsibility.

Source: Storting report No. 22 (2001-2002)

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