CORPORATE GOVERNANCE
1. Statement
For Blom ASA it is important that investors, clients, partners and others who follow the company have confidence in the fact that the company's operations are managed properly in accordance with sound ethical guidelines. Reliability, honesty and integrity are key to the company's core values. These are values that are important for a good reputation and the realisation of Blom's business goals.
Blom is concerned about having an adequate level of independence between the company's bodies and confidence in the fact that the company is managed in accordance with principles that promote ethical and sustainable business practices.
Blom ASA, which is the parent company of the group, is the company in which the group's supervisory board and management functions are carried out. The group's management structure is based on Norwegian company law, the Articles of Association, the rules of procedure for the Board of Directors, and the instructions for the company's management adopted by the Board of Directors. The company has prepared its own ethical guidelines.
Non-conformance with the recommendation: None.
2. Operations
Blom is one of the leading pan-European geographic information players and among the largest companies in Europe in the collection and processing of map data. Blom possesses unique map data databases, and it has developed applications and services for navigation and location-based services. Blom has substantial expertise within its fields and delivers high-technology products to local and international public authorities and private enterprises. The object of the company is established in its Articles of the Association.
The Board of Directors views it as its duty to continuously adapt the company's strategy so as to optimise the shareholders' return, based on the resources represented by the company at any given time. The Board of Directors will continue to develop the company based on the resources represented by the competence of its employees and the recognition the company enjoys in the market. Blom will use the financial platform and instruments that are available to achieve this goal.
Non-conformance with the recommendation: None.
3. Share capital and dividends
Capital
The total assets at the end of the year 2008 were NOK 1,570 million, with an equity ratio of 56.5 per cent. The Board of Directors considers this to be satisfactory. The company’s need for equity is evaluated continuously in relation to the company’s goals, strategy and risk profile.
Dividends will be evaluated continuously as a result of the company's strategy and earnings. The Board of Directors’ proposal for the application of the net profit for 2008 for the group and parent company is to allocate the profit in its entirety to equity and utilise it for further growth.
Authorisation to increase capital
The Board of Directors' authorisation to increase the share capital by a maximum of 10,420,000 shares (25 per cent), which was granted at the General Meeting of 29 April 2008, is time-limited and valid until the Ordinary General Meeting in 2009. This authorisation is a continuation of the authorisation granted to be Board of Directors at the General Meeting in 2007, but it has been reduced to 25 per cent of the share capital. The object of this authorisation is to give the Board of Directors financial freedom in connection with any acquisitions or similar transactions, and to strengthen the company's equity and financial platform in general. This authorisation was not utilised in 2008.
Authorisation to acquire treasury shares
The Board of Directors was authorised to acquire the company's own shares for a maximum of 10 per cent of the share capital, which corresponds to 4,170,000 shares, at the General Meeting of 29 April 2008. This authorisation is time-limited and valid until the Annual General Meeting in 2009. The authorisation is a continuation of the authorisation granted to the Board of Directors by the Annual General Meeting in 2007. The object of this authorisation is part of the Board of Directors' efforts to create the best possible capital structure for the company. In January 2008 the Board of Directors implemented a buyback programme pursuant to this authorisation. A total of 1,100,000 treasury shares were purchased during the year. All the transactions have been executed on the Oslo Børs.
Non-conformance with the recommendation: None.
4. Equal treatment of shareholders and transactions with close associates
The Board of Directors of Blom ASA is concerned about equal treatment of the company's shareholders. This is done by informing the Oslo Stock Exchange, company's shareholders, securities firms and the rest of the market on a continuous basis about the company's performance, activities and special events that may affect the price of the company's shares. Blom ASA only has one class of shares. The liquidity of the share is good, and the share is listed under OB Match on the Oslo Stock Exchange.
If the Board of Directors proposes that the existing shareholders' pre-emptive rights be waived, the waiver will be based on the common interests of the company and the shareholders.
If any not immaterial transactions are conducted between the company and shareholders, key executives and their close associates, the board will ensure that an independent valuation of the transactions in question is performed by a third party as required.
Non-conformance with the recommendation: None.
5. Free negotiability
Shares in Blom ASA are freely negotiable. The Articles of Association do not restrict the negotiability of shares.
Non-conformance with the recommendation: None.
6. General Meeting
All shareholders are entitled to put forward proposals for the agenda, appear, address the meeting, and vote at the General Meeting. In accordance with Norwegian law, the physical presence of shareholders or their proxies is required in order to vote. The shares must also be registered with the Norwegian Central Securities Depository (VPS).
• A complete notice and the necessary case documents will be available on Blom's website 21 days prior to the General Meeting, and it will be sent in writing to all the shareholders at least two weeks in advance.
• The registration deadline is normally the day prior to the meeting.
• Shareholders who cannot appear in person may vote by proxy.
• The Board of Directors and auditor are present at the general meeting.
• The Board of Directors will put forth a proposal for an independent chairperson if such a chairperson is required to ensure a proper execution of the General Meeting.
• The General Meeting is opened by the Board Chairman.
• The Ordinary General Meeting elects the Board of Directors, determines the directors' remuneration, approves the annual accounts and dividend proposed by the Board of Directors, elects the auditor and approves the auditor's remuneration, and deals with any other items stated in the notice of the meeting.
• The Board Chairman is elected by the General Meeting.
• Minutes of the General Meeting are available from the company’s website www.blomasa.com.
Non-conformance with the recommendation: None. See Item 7 with regard to nomination committee non-conformance.
7. Nomination Committee
Blom ASA does not have a nomination committee. The Board of Directors believes that the duties of the nomination committee can be performed satisfactorily by the Board of Directors in dialogue with various shareholder groups and the company's principal shareholders.
Non-conformance with the recommendation: One instance of non-conformance.
8. Composition and independence of the Board of Directors
The object of the Board of Director's work is to manage the shareholders' assets in the best possible manner and treat all shareholders equally. In electing Board Members, emphasis is, therefore, placed on having a Board of Directors that can safeguard the common interests of shareholders and the company’s need for competence, capacity and diversity. Board members are elected for a term of two years.
Board Member Bente Loe was up for election at the Annual General Meeting of 29 April 2008. She was re-elected for a new two-year term. Dirk Blaauw was elected as the new Board Chairman by the General Meeting.
The Board of Directors consists of Dirk Blaauw as the Board Chairman, in addition to Gunnar Hirsti, Per Kyllingstad, Bente Loe and Brita Eilertsen as board members.
The majority of the board members are independent of the company's management and principal shareholders. The Board Chairman is elected by the General Meeting. The Board of Directors will elect a deputy chairman if it is appropriate for the proper performance of the Board of Directors.
Non-conformance with the recommendation: None.
9. Work of the Board of Directors
In accordance with Norwegian law the Board of Directors is responsible for the supervisory management of the company, while the CEO is responsible for the day-to-day management. The Board Chairman shall follow the development of the operations in close cooperation with the CEO, plan the board meetings and ensure that the Board Members receive the information that is required so that they can perform their functions properly in accordance with the legislation.
The Board Chairman chairs the board meetings. The CEO participates at board meetings. Other members of the management ordinarily participate whenever appropriate. The Board of Directors held a total 13 meetings in 2008.
In accordance with the rules of procedure, the Board of Directors shall have an annual plan for its work with emphasis on goals, strategy and execution. The Board of Directors will consider the use of board committees if it is appropriate to ensure that the Board of Directors performs its work in an independent manner. The Board of Directors has not made use of such board committees in 2008.
Non-conformance with the recommendation: None.
10. Risk management and internal control
The Board of Directors is concerned about the company having sound internal control and an appropriate system for risk management. This includes elements such as risk management of significant business risks, execution of significant management controls, and control of financial reporting and monitoring mechanisms.
Significant risks include strategic risks, financial risks, liquidity risks and operational risks. The company's significant risks are assessed on an ongoing basis and at least once a year, and they are included in the company's annual report.
Blom’s internal control of financial reporting encompasses guidelines and procedures to ensure that the accounts are prepared in accordance with IFRS and provide a true picture of the company’s operations and financial position.
Management controls are performed at a senior level in the company. In 2008 Blom has had a management structure with a Business Board, which includes all the subsidiaries and business areas in the group. Together with the company's authority structure and other management instructions, the Business Board represented the core of the management control.
As part of the Business Board structure, a monthly reporting system was established where all the significant key figures and discrepancies are gathered together. The quality of the financial reporting was ensured together with full monthly reporting and monitoring by the group's management.
The management structure is being modified, and there will be closer financial and operative follow-up of the subsidiaries in 2009. The Business Board structure is no longer operative, but a monthly reporting system will be maintained. All of the Country Managing Directors (CMDs) in the group report now directly to the Chief Executive Office (CEO). The CEO holds monthly meetings with each individual CMD.
The company is working on adaptation of the internal control and risk management to the company’s management structure, as well as clarification and documentation of the systems based on criteria in “Internal Control – Integrated Framework issued by the Committee of Sponsoring Organisations of the Treadway Commission (COSO)”.
Non-conformance with the recommendation: At present there are no separate routines for the follow-up of the company’s core values and ethical guidelines. We are working on full documentation of the company’s risk management and internal control.
11. Remuneration of the Board of Directors
The General Meeting determines the remuneration for the Board of Directors. Remuneration of NOK 1,800,000 was paid to the Board of Directors for the period from 12 April 2007 to 29 April 2008, NOK 450,000 of which was for the Board of Directors of Scan Subsea ASA, which was sold in November 2007.
Provisions totalling NOK 1,350,000 have been allocated in the accounts for the remuneration of the Board of Directors for the period from 29 April 2008 to 30 April 2009. The remuneration breaks down into NOK 450,000 for the Board Chairman and NOK 225,000 for other board members.
No options have issued or any other performance-linked remuneration given to members of the Board of Directors. For special tasks that are carried out by the members of the Board of Directors, the Board of Directors can approve separate remuneration for these services.
Non-conformance with the recommendation: None.
12. Remuneration of executive management
The Board of Directors has prepared separate guidelines for remuneration of the executive management in accordance with the Limited Liability Companies Act. The guidelines will be presented to the General Meeting.
Special instructions have been prepared for the Chief Executive Office. Reference is also made to his responsibilities and duties in the company’s rules of procedure for the Board of Directors. The remuneration for the Chief Executive Officer is set by the Board of Directors.
The company's key executives are paid a fixed salary that reflects the employee's education, experience and professional qualifications. It is important that the remuneration is at a level that makes it possible to attract the best qualified persons to the company's key positions.
A bonus can be agreed on in addition to the base salary. The size of the bonus paid to the individual employees will be dependent in part on the achievement of individual targets and in part on the performance of the group. Key executives receive free telephone, mobile phone, Internet, newspapers and canteen as benefits in kind. Key executives are members of the company's defined contribution scheme in the same manner as other employees. Blom believes that the company's performance-based bonus agreements with key executives have a motivating effect and are in the best interest of the company and its shareholders.
The company does not currently have any agreements with key executives concerning the allocation of shares, subscription rights, options and other forms of remuneration linked to shares or the performance of the company's share or shares of other companies within the group.
The Board of Directors will, however, continuously consider incentive schemes that are appropriate to secure a qualified management for the company, including the use of various share option schemes.
Non-conformance with the recommendation: None.
13. Information and communication
Blom ASA seeks to maintain an open information policy in relation to shareholders, the media and other interested parties within the bounds of the securities legislation, accounting law and stock exchange regulations. The group has its own website (www.blomasa.com), which contains IR information and other information that is useful for understanding the group's overall operations and development. Open presentations with webcasts are held in connection with the reporting of interim results.
The Board Chairman and CEO or CFO are authorised to speak on behalf of the company.
Non-conformance with the recommendation: None.
14. Takeovers
The Board of Directors will not attempt to influence, hinder or complicate the submission of bids for the acquisition of the company's operations or shares, or prevent the execution thereof. The Board of Directors will help ensure that shareholders are treated equally. In the event of a bid for the company’s shares, the Board of Directors will issue a statement of its assessment of the bid or state why it does not find it proper to issue a statement.
Non-conformance with the recommendation: None.
15. Auditor
The company's auditor prepares an annual plan for the performance of audit work and participates at the board meeting that reviews the annual accounts. The auditor performs otherwise the activities he is required to perform in accordance with Norwegian law and the generally accepted auditing standards. The Board of Directors has given the management access to use the auditor, to a limited extent, for the performance of services for the company other than pure auditing. This applies in particular to matters of a particularly complicated nature such as tax issues, acquisitions and mergers/demergers. The Board of Directors feels that such consulting does not affect the auditor's independence in relation to the company.
Non-conformance with the recommendation: None