CORPORATE GOVERNANCE POLICY for Komplett ASA
Approved by the Board of Directors of KOMPLETT 23. February 20061 OVERALL
1.1 Introduction and purpose
This policy includes the measures implemented for the efficient management of and control over KOMPLETT's operations. The goal is to have systems that enhance and maximise corporate and shareholders' long-term values through the efficient use of the company's resources and strategic directions.
1.2 Regulatory framework
KOMPLETT ASA is a Norwegian public limited liability company listed on Oslo Børs (the Oslo Stock Exchange).
KOMPLETT is subject to the corporate governance requirements set out in the Norwegian Public Companies Act 1997 (the NCA) (allmennaksjeloven), the Norwegian Securities Trading Act (the STA) (verdipapirhandelloven) and the Norwegian Stock Exchange Regulations (the SER) (børsforskriften).
KOMPLETT has also adopted the Norwegian guidelines on Corporate Governance (Norsk anbefaling for eierstyring og selskapsledelse).
1.3 General Principles
It is essential to the KOMPLETT board of directors that all stakeholders have confidence in the Company based on strong governance practices. This includes treating all shareholders equally; having independent, competent people in the Company's governing bodies; ensuring that all financial accounts are audited by qualified, independent auditors; and that information provided by the Company provides an accurate picture of the underlying situation on an ongoing basis.
KOMPLETT's principles provide a foundation for sustainable value creation, to the benefit of shareholders, employees and other stakeholders. The board of directors is committed to protecting shareholder rights and interests by maximizing shareholder value. This includes measuring management performance with a transparent, open, and accountable mechanism.
KOMPLETT is incorporated in Norway with a governance structure built on Norwegian corporate law. The Company is organized as a traditional limited company, with a board of directors, a chief executive officer, and an external auditor. The annual general meeting is where the board formally ratifies major decisions affecting the Company's affairs.
2 THE BOARD OF DIRECTORS
2.1 Role and areas of responsibility
Komplett shall be headed by an involved board with collective responsibility for the success of the company.
The board of directors duties shall include the strategic guidance of Komplett in close cooperation with the management, an effective monitoring of the senior management, the control and monitoring of the financial situation of the company and the company's accountability towards and communication to its shareholders. The driving force in strategy processes shall be the managing director. Reviewing, approving and monitoring fundamental business and financial strategies and major corporate actions, as well as discussing, clarifying and deciding future direction of the company, will be the key issues during board meetings. See also some key areas described below.
The board shall ensure that the Company is well organised and that operations are carried out in accordance with applicable laws and regulations, in accordance with the objects of Komplett as specified its Articles of Association and guidelines given by the shareholders through resolutions in the general meetings.
The board shall select, hire and determine the compensation of the CEO, setting his/her goals and ensure his/her development.
To ensure that processes are in place for maintaining the integrity of the Company, the board has implemented an insider trading policy.
2.2 Board meetings
The board holds 6 to 9 regular meetings per year including a full day strategy meeting. Given the time required for KOMPLETT activities, and the logistics by coordinate all schedules, KOMPLETT board members are encouraged to restrict themselves to a maximum of four major board memberships.
2.3 Remuneration of the Board of Directors
Remuneration for board members is a fixed annual sum proposed by the nomination committee and approved at the annual general meeting. All remuneration to the board of directors is disclosed in a Note in the Annual Report. The remuneration is not linked to the Group's performance and no options are issued to the members of the board. It is KOMPLETT's policy that internal board members receive a fee in respect of the responsibility they assume by being a member of the board, but that no additional fees are paid in respect of the duties involved since these are considered to be covered by the salary paid to such internal board members.
2.4 Financial control
2.4.1 Supervision
The Board shall ensure that it is updated on the financial situation of the Company and has a duty to ensure that the Company's operations, accounting and asset management are subject to satisfactory control. The board shall ensure that the managing director reports monthly to the board on the financial situation of the company.
2.4.2 Adequate capitalisation
The Board shall evaluate whether the Company's capital and liquidity are adequate in relation to the risks, scope and opportunities of the Company's operations, and whether it fulfils the minimum requirements established by law or regulation. The Board shall immediately take adequate steps should it be apparent at any time that the company's capital or liquidity is less than adequate.
2.5 Composition
2.5.1 Number of directors
The board of directors shall have from 4 to 7 directors, including the employee representative(s). Two board members are elected from and among KOMPLETT employees in compliance with Norwegian regulations.
2.5.2 Independent directors
The directors elected by the general meeting should be independent from the company.
Independence shall for these purposes mean that there are no circumstances or relationships that are likely to affect or could appear to affect the director's independent judgement to the best of all shareholders.
Please be aware that according to the NCA, the managing director cannot also be chairman of the company.
2.6 Appointment and termination of Nomination, Compensation and Auditing Committee
The directors are elected by the shareholders in a general meeting for a period of 1 year. The shareholders in a general meeting can remove directors. The employee representative is elected by and among the employees for a period of 2 years.
KOMPLETT operates a Nomination Committee, which consists of three members out of which 1 shall be the chairman of the board and 2 shall be independent of the company (i.e. not be a director or employee and otherwise fulfil the criteria of independence set out above). The members of the committee are elected by the shareholders in a general meeting. The Nomination committee makes recommendations to the general meeting on the appointment and termination of directors and the compensation of the directors. A list of board nominees shall be given to the shareholders with at least two weeks notice of voting.
The Compensation Committee and the Auditing Committee, which consists of 2 shareholders elected board members and with CEO and the CFO respectively as secretaries, will propose and report to the board of directors.
2.7 Annual self-evaluation of the Board of Directors (Board Assessment)
The board will annually evaluate its performance in the previous year. The Board will conduct an annual self-performance evaluation to determine whether the Board and each of its committees are functioning effectively. The review will be discussed in the full Board once a year. The results of the evaluation shall be made available to and discussed in the Nomination Committee.
3 INFORMATION AND COMMUNICATIONS
3.1 General
KOMPLETT shall provide its shareholders, Oslo Børs and the financial markets generally (through Oslo Børs' information system) with timely and accurate information. Such information will take the form of annual reports, quarterly interim reports, press releases, stock exchange notifications and investor presentations, as applicable. It shall seek to clarify its long-term potential, including its strategy, value drivers and risk factors. The company shall maintain an open and proactive investor relations policy, a high standard website and shall give presentations regularly in connection with annual and interim results.
Communication with shareholders is a high priority. During the announcement of quarterly and annual financial results, there is opportunity for management to answer questions from the Company's shareholders and the financial market in general. The Company has adopted a policy of not giving quantitative guidance to the financial community. General market outlook and qualitative statements will be given. KOMPLETT continually seeks ways to communicate more effectively with its shareholders.
4 EQUAL TREATMENT OF SHAREHOLDERS AND TRANSACTIONS WITH CLOSE ASSOCIATES
4.1 General
The board shall take into account the interest of all the shareholders of the company and treat all shareholders fairly. KOMPLETT has one class of shares and each share entitles the holder to one vote at the General Meetings.
The KOMPLETT Web site (www.komplett.com) provides shareholders with information about the Company including annual and quarterly reports, financial presentations, share price information, articles of association, protocols from general meetings, key contact information, financial calendar as well as other relevant shareholder information.
4.2 Integrity - Approval of agreements with shareholders and other related parties
All transactions that are not immaterial between the Company and a shareholder, a director or senior manager of the company (or related parties to such persons) will be subject to a valuation from an independent third party. Strict guidelines regarding transactions between the Company and shareholders, members of the board of directors, executive management and close associates of any such parties have prevented any unfortunate situations. If confronted with such situations, the Company will adhere to the principles laid down in the Norwegian Code of Practice for Corporate Governance.
The directors and senior management shall notify the board if they have any material direct of indirect interest in any transaction entered into by KOMPLETT.
The Company has an established and closely monitored insider trading policy.
The board of directors is of the opinion that the Company periodically could be confronted with situations where the Company can grow further by making use of rights issues to one or several strategic partners as well as through mergers and acquisitions with shares or cash if the Company quickly can get in position to effectuate the necessary liquidity and/or shares. In addition, situations could occur where the Company's equity needs strengthening in order to ensure future conditions of operations. For the current mandate to increase the Company's share capital, the pre-emption rights of existing shareholders are therefore waived.
Any transactions the Company carries out in its own shares take place in accordance with established practice and guidelines from the Oslo Stock Exchange.
4.3 Take-overs
The board endorses the recommendation of the Norwegian Code of Practice for Corporate Governance, and KOMPLETT has no active anti-takeover devices or "poison-pills". The board will not seek to hinder or obstruct take-over bids for the Company's activities or shares unless there are particular reasons for this. In potential take-over situations the board have to act with extensive concern regarding representing all shareholders.
5 AUDIT
Under Norwegian law the auditor is elected by the shareholders in a general meeting.
The board shall make recommendations to the general meeting on the auditor's appointment, removal and remuneration and shall also monitor the auditor's independence, including the performance by the auditor of non-audit services.
The auditor participates in meetings of the board of directors that deal with the annual accounts, and upon special request. Every year, the auditor presents to the board a report outlining the audit activities in the previous fiscal year and highlights the areas that caused the most attention or discussions with management, as well as a review of the Company's internal control procedures, including identified weaknesses and proposals for improvement. The auditor will be available upon request for meetings with the board at which no member of the executive management is present, as will the board upon auditor's request. It is policy not to give substantial consultancy contracts to the Company's auditor. The General Meeting is informed about the company's use and remuneration of the auditor, and details are given in a Note in the Annual Report.
6 DIVIDEND POLICY
6.1.1 Dividend Policy
KOMPLETT's objective is to yield a competitive return of invested capital to the shareholders through a combination of share price development and dividends. In evaluating the dividend amount, the Board of Directors emphasises stable development, the Company's dividend capacity, and the requirements for sound equity capital as well as for adequate financial resources to enable future growth.
To achieve its long-term growth targets, it is KOMPLETTs policy to maintain a high equity ratio; however, the Company has a business model that allows for strong cash flow generation. Consequently, KOMPLETT's needs for growth can be met while also maintaining a dividend distribution as long as the Company is reaching targeted growth levels.
7 SHAREHOLDER MEETINGS
The shareholders exercise the highest authority in KOMPLETT through the general meetings.
The annual general meeting of KOMPLETT will be held each year in March/April. The AGM shall approve the annual accounts and the board report and the distribution of dividend, and otherwise make such resolutions as required under applicable law.
The board will send notices of general meetings no later than two weeks prior to the meeting and will observe that the notice and any supporting material be sufficiently detailed and comprehensive. The shareholders may be asked to notify their attendance prior to the meeting. Shareholders who are unable to attend may vote by proxy. A proxy form will be attached to the notification and it will also be possible to give proxy to the chairman of the board or the company's managing director. KOMPLETT will publish the minutes from general meetings by OSE's information system and on its web-site, as well as keeping them available for inspection in the company's offices.
7.1 Freely negotiable shares
KOMPLETT has no limitations on the transferability of shares and each share has equal rights.
8 REMUNERATION AND ETHICS OF EMPLOYEES
8.1 Remuneration of the Executive Management
The Compensation Committee is reviewing policy regarding remuneration and working conditions for KOMPLETT's management group. Details concerning remuneration of the executive management, including all details regarding the CEO's remuneration, are given in the Annual Report, in a note. The board assesses the CEO and his terms and conditions once a year.
8.2 Ethics and Conflicts of Interest
The Board expects KOMPLETT Directors, as well as officers and employees, to act ethically at all times and to acknowledge their adherence to the Insider Trading Policy, The company's core values and the reporting of related parties. If an actual or a potential conflict of interest arises for a Director, the Director shall promptly inform the Chairman of the board or the CEO. If a significant conflict exist and cannot be resolved, the Director should resign.
