Corporate governance

Norway Post’s declaration on corporate governance (ESL) Discussed by the Board of Directors on 24 June 2010

Introduction
Norway Post’s vision is to become the World’s most future-oriented mail and logistics group. Such a vision requires, among other things, good corporate governance.

To Norway Post, good corporate governance means the goals and main principles that provide guidance as to how the Group is to be controlled, as well as the structures which regulate interaction between the governing bodies and the Group’s other interested parties.

This document outlines the principles for good corporate governance in Norway Post. The document is assessed by management, the Board of Directors and the owner on an annual basis.

The goal of the declaration is to give those in Norway Post’s environment confidence in the Group’s leadership systems. Confidence is essential for good opinion and a competitive market value.

Norway Post’s activities are described in the Group’s regulations. Norway Post is managed in accordance with external regulations, company and accounting law (see under). In addition, the Group has also established internal directives with its own attendant management documentation.

Norway Post’s declaration on corporate governance follows the Norwegian Code of Practice for Corporate Governance, revised version of the 4th of December 2007, as far as this is valid.

 

This declaration is divided as follows:

1.  Statement on corporate governance

2.  Business

3.  Equity and profits

4.  General Assembly

5. Nomination committee and corporate assembly

6.  Board of Directors

7.  The Work of the Board of Directors

8.  Remuneration of the Board of Directors

9.  Remuneration of executive management etc.

10.  Information and communication

11.  Audit

 

1.  Statement on corporate governance

Norway Post follows the Norwegian code of practice on corporate governance as far as is relevant.

Because the Government, as sole owner of Norway Post and of the shares in Norway Post is not subject to regular trading, sections of the Code are not relevant, eg. the Code's recommendations on equal treatment of shareholders and free negotiability of shares. In certain other areas modified directives are necessary with regard to the Code, eg. reference to the shareholder’s meeting, nomination committee and corporate assembly.

The Group’s Board of Directors comments on corporate governance in the annual report, and those points in the Norwegian code of practice on corporate governance which are not followed are explained.

Norway Post has adopted common values, leadership principles and ethical guidelines for the Group.

Norway Post’s values are honesty, respect, cooperation, openness and courage. These values help build a common culture and guide the Group in all its decisions.

Norway Post's leadership principles dictate that managers shall be characterised by the fact that they are visible, clear, take and give responsibility and that they develop and inspire their employees.

Norway Post’s business ethics are outlined in "Ethical guidelines". These are in accordance with the Company’s core values and describe the frame of reference for Norway Post’s partners with respect to their behaviour towards competitors, suppliers and the market in general.

 

2. Business

Norway Post is a limited company wholly owned by the Government and represented by the Ministry of Transport and Communication.

§ 3 of Norway Post's regulations reads as follows:

"As a limited company wholly-owned by the Government, Norway Post shall contribute to fulfilling the purpose of the Norwegian Postal Service Act.

The Company's social responsibility is to ensure the nationwide operation of delivery services as well as ensuring that the Company delivers services in a proper and cost-effective manner. The Company's social responsibility is described in Norway Post's licence.

The Company shall run postal and logistic operations on a commercial basis as well as other activities directly related to this. Activities can be run by the Company itself, by wholly-owned subsidiaries or through other companies in which it has ownership interests or with which it cooperates.

The Company shall carry out the tasks imposed upon it through legislation and licence requirements or through decisions passed by the General Assembly.”

The Norwegian Post and Telecommunications supervises the Company and ensures that it meets the licence requirements.

 

3. Equity and profits

The Government’s underlying dividend policy is that it expects a dividend of 50% of Group post-tax profits. Before the annual dividend is determined an independent assessment of the Group's financial situation shall be carried out. This is stated in parliamentary bill no. 1 (2009-2010).

 

4. General Assembly

The Minister of Transport and Communication is the Company's General Assembly

 

5. Nomination committee and corporate assembly

Norway Post does not have a nomination committee or a corporate assembly. The owner designates members of the Board of Directors.

A Group-wide scheme has been established for the nomination of employee representatives to the Board of Directors of Norway Post. This entails that all employees in the Norwegian part of the Group can be nominated and have voting rights. Four members of the Board of Directors are chosen by and from the employees in Norway.

 

6. Board of Directors

In accordance with the regulations the Board of Directors shall consist of between seven to ten members. The election period for board members is limited to a maximum of two years at a time. Ideally the Board of Directors should be composed in such a way that it can protect the Group’s needs for competence, capacity and diversity and furthermore, that the members have time to sit on the Board, have relevant experience from work on other boards, and that the Board’s composition should ensure continuity. In order to attend to control tasks board members will be independent of the business administration.

To satisfy the need for independence, the following requirements apply to individual board members:

  • A board member must not have significant and personal business or other interests that conflict with Norway Post or its subsidiaries.
  • A board member must not have been employed in the Company/Group or been one of its auditors for the past five years. This does not apply to board members selected by and from the employees.
  • A board member must be independent of competitors, and not have any significant business relations, with Norway Post.

 

7. The work of the Board of directors

Instructions for the Board of Directors and evaluation of its own work
Instructions for the Board of Directors are in place in Norway Post. They provide more detail concerning the rules about the Board's work and case-handling within the framework of relevant legislation, the Company’s regulations and general assembly’s decisions. The instructions for the Board of Directors stipulate that the Board evaluates its work and the content of the instructions on an annual basis, together with the Company's principles for corporate governance.

The work of the Board of Directors
The Board is the Company’s highest authority and is duty bound to protect the interests of the Company in the execution of its mission. This means the Board surely ensure the appropriate organisation of the Company, institute plans and budgets and ensure that the Company’s, accounting and financial administration are subject to satisfactory controls. They also supervise the day to day management of the Company’s operations.

The main mission of the Board is further described in the instructions for Norway Post’s Board of Directors. Detailed guidance is also provided in the instructions for the Board of Directors concerning the Board’s case-handling, quorum and majority requirements and confidentiality.

A remuneration committee has been established to ensure a thorough and independent handling of cases which require financial reporting to, and approval by, executive management. The committee consists of four board members and is led by the Chairman of the Board. An audit committee has also been established to ensure the thorough and independent handling of cases concerning financial reporting including the supervision of internal control procedures. The audit committee consists of two board members. 

Authorities

External authorities
In accordance with the Company’s regulations and Company registration the Chairman of the Board and one board member together are the joint formal signatories of the Company. The CEO has power of attorney.

Internal authorities
A document describing the relevant internal authorities within the Company has been prepared. This document identifies the budgetary limits for various operational situations together with those levels of the organisation that may formally approve a proposed action which will incur an obligation to the Company.

CEO’s responsibilities and duties
The CEO, as leader of Norway Post, represents the day to day leadership of the Company’s operations and by law must follow the guidance and duties imposed by the Board. These guidelines for the CEO’s work form part of the instructions for the Board of Directors of Norway Post. 

Risk management and internal control
The Board and Group management ensure that all necessary controls of the Company’s business are in place.

This is accomplished through the execution of processes, including:

  • Ongoing internal controls, external audit, quarterly strategic assessment, quarterly business assessment by division
  • Annual assessment of the Company’s management resources.

These processes will ensure that operative activities are thoroughly assessed and controlled so that the responsibilities of the Board and Group management with regard to the relevant regulations and principles for good corporate governance are met.

An annual risk assessment is carried out for the Group which investigates the strategic, financial and operational risks. The risk analysis is presented to the Board of Directors.

 

8.  Remuneration of the Board of Directors

Remuneration for the Board of Directors is decided on an annual basis by the General assembly. Remuneration is detailed as a note in the annual report.

 

9.  Remuneration of executive management etc.

The Board establishes guidelines for remuneration of executive management. These guidelines are presented at the annual General assembley.

Norway Post considers incentive systems as an important tool to focus management on increasing Group profitability, in line with the owner’s interests. To this end, a bonus scheme has been established for individuals who hold key positions within the Group.

Payment under these schemes presupposes that they will be covered by the Group's business.

Routines have been established which ensure that it is not only immediate superiors who are involved in the decision making process concerning employment, pay and bonuses. In such cases the current decision maker/ manager will also involve their own immediate superior.

 

10. Information and communication

Internal and external communication
Relevant and reliable internal and external information about all essential situations is vital to how the Group functions and how it is judged by outsiders.

This is described in more detail in Norway Post’s is Communication Policy.

Communication with the owner
In accordance with § 10 of the regulations the Board of Directors shall present cases of social importance or matters of principle to the Minister for Transport and Communication, and is obliged to provide written information about measures and results concerning the Company's social mission and social responsibility.

Norway Post also has a specific duty to provide information about the Group’s activities and provide a written report concerning the overall plans for the Group’s business, including economic development in recent years and an assessment of economic development for the duration of the plan. The owner uses this document as a basis for the biannual Governmental owner’s report to Parliament.  

In addition, quarterly meetings with the Ministry for Transport and Communications (as owner) are held, where the following themes are discussed:

  • Results for the previous period compared with budgets and expectations, quality target achievements, other relevant issues.

Financial information
Norway Post falls under Company Law and Accountancy law requirements for annual and quarterly reports. The Company strives to comply with the rules, requirements and standards of good information that apply for listed companies in Norway, including the use of accounting standards and generally accepted accounting practices. Information is made available via the internet in both Norwegian and English. Detailed requirements concerning the content and structure of annual and quarterly reports follow the above-named regulations and the Group’s accounting and reporting manual.

Annual report
Norway Post publishes its annual report in line with the guidance policy of the Oslo Stock Exchange, included in which is a general description of the Company's views on good corporate governance. An explanation is provided of those points in the Norwegian code of practice on corporate governance which are not followed.

 

11. Audit
Norway Post has an independent external auditor appointed by the General Assembly on recommendation of the Board of Directors.

The auditor takes part in board meetings concerning the annual report. In the same or a separate meeting the auditor clarifies revisions, its views of the Group’s accounting principles, risk areas, internal control routines and the Group’s bookkeeping. The conclusions are presented in an annual, numbered letter to the Board. 

In addition to the mandatory audit the auditor is used for normal audit-related duties. The Board informs the General assembly of the auditor’s remuneration divided between the audit and other services.

Norway Post has a policy of using the same auditing firm for all the Group's companies.