Implementation and reporting
The Board is aware of its responsibility for implementation of internal procedures and regulations to ensure that the Company and its subsidiaries comply with applicable principles for good corporate governance in line with Norwegian and applicable international standards. Good corporate governance is an integral part of the decision-making process in matters dealt with by the Board. Governing structures and controls help to ensure that the policy is enacted upon. The work of the Board of Directors is based on defined division of roles and responsibilities between the shareholders, the Board and management. Solstad has implemented specific set of rules and procedures for the Board of Directors, constituting the governance structure and administrative procedures for their work.
According to Solstad’s own evaluation, the Company deviates from the Corporate Governance Code on the following points:
→ Section 6: Solstad deviates from the recommendation to have all Board members present at the General Meeting as the company deemed it satisfactory to require the presence of the chairperson of the Board, the chairperson of the nomination committee, the auditor, and the CEO. Solstad also deviates from the recommendation to establish routines for appointment of an independent person to chair the General Meeting, however the General Meeting’s agenda allows shareholders to nominate an independent chair.
→ Section 14: Due to the unpredictable nature of a take-over situation, the Company has decided not to implement detailed guidelines on take-over situations. In the event of a take-over, the board of directors will consider the relevant recommendations in the Corporate Governance Code and whether the situation entails that the recommendations in the Corporate Governance Code can be complied with or not. In a potential bid-situation, the Board of Directors will work to inform shareholders and allow time to decide on the offer. Furthermore, the Board of Directors will issue a statement to the shareholders with an assessment of the bid and a recommendation of whether to accept it or not.
Business
Solstad is a world leading owner and operator of offshore service vessels (OSVs), offering maritime services to the global offshore oil and gas and renewable energy industries. Solstad is a public limited liability company organized under the laws of Norway and subject to the provisions of the Norwegian Public Limited Liability Companies Act.
The Company’s objective, as defined in its Articles of Association, is shipping activities and any other associated business, including the ownership of shares and stakes in companies engaged in corresponding or related business activities.
Solstad’s operations are based on cross border trade, and interaction with people from many countries and different cultures. The Company aims to be a socially responsible operator and partner wherever it conducts its business. It has adopted guidelines for corporate social responsibility (“CSR”), based on the principles of the UN Global Compact about CSR related to human rights, labour rights, social concern, environment and climate issues, and anticorruption.
In addition, Solstad annually publishes a sustainability report where it presents the main environmental, social and societal (ESG), challenges the Company faces, and how it approaches them. The defined material topics and ESG priorities are integrated with the company’s business strategy, and specific goals have been identified to improve Solstad’s performance within these areas.
To discuss and evaluate goals, strategy and risk profile, the Board of Directors conducts an annual strategy meeting, where the main purpose is to set the long-term direction for the company.
A further description of Solstad’s operations, goals, strategy, and risk profile is provided in the Company’s annual report, which shows how its operations and strategies are aligned with objectives defined in the Articles of Association.
Equity and dividends
The Company’s solidity is continuously assessed. At year-end 2023, the Company’s equity amounted to MNOK 1,825 and total assets were MNOK 19,635 – providing an equity-to-asset ratio of 9.3 percent.
The Annual General Meeting determines the annual dividend, based on the Board of Directors’ proposal. The Company will not pay dividends for the 2023 financial year.
At the Annual General Meeting, held on 15 May 2023, no authorization was given to the Board of Directors to increase the Company’s share capital.
Equal treatment of shareholders
Equal treatment of all shareholders of Solstad Offshore ASA is a core governance principle. Solstad has one class of shares and is listed on Oslo Stock Exchange under the ticker “SOFF”. All shares have equal rights, and each share carries one vote at the General Meeting.
In situations where normal preferential rights shall be deviated from, the Company’s Board of Directors is proposed to prepare grounds for such a decision in accordance with the Norwegian Code of Practice for Corporate Governance and shall present these to the General Meeting.
An authorization to the Board of Directors to acquire treasury shares is normally contingent to take place at Oslo Stock Exchange.
Shares and negotiability
All shares in Solstad Offshore ASA are freely tradable. The Company’s Articles of Association set no limitations on transactions.
General meeting
The interest of the Company’s shareholders is exercised at the General Meetings. The Annual General Meeting is normally held in the month of May or June. The 2023 Annual General Meeting is scheduled for 30 May 2024. All shareholders with known address registered in the Norwegian Central Securities Depository (VPS) will receive an invitation to the General Meeting. According to the Articles of Association, the notice and related documents should be posted on the Company’s website and www. newsweb.no no later than three weeks in advance. The Company endeavours to ensure that the documents contain all necessary information to enable shareholders to vote on all matters. In line with article 7 of Solstad’s 32 SOLSTAD OFFSHORE ASA ANNUAL REPORT 2023 33 Articles of Association, shareholders should register their attendance at least two workdays prior to the General Meeting.
The Chairperson of the Board of Directors and chairperson of the Nomination Committee take part in the General Meeting, as does the Company’s Auditor. Board members participate at the General Meetings when specifically required. Solstad has not deemed it necessary to require the presence of all members of the Board of Directors at the General Meeting.
The Chairperson of the Board opens the General Meeting. The General Meeting elects a person to chair the meeting. Normally the chairperson of Solstad Offshore ASA is nominated to chair the General Meeting, however the General Meeting’s agenda allows shareholders to nominate an independent chair. In case particular items on the agenda require such measures, the Board of Directors will also consider nominating an independent chairperson to lead the General Meeting.
Shareholders who cannot attend the General Meeting, may be represented by proxy and the procedures for voting by proxy are described in the notice. The proxy authorization form is designed to allow shareholders to vote on individual items and individual candidates for election or re-election. The agenda is determined by the Board of Directors, according to article 6 of Solstad’s Articles of Association. The minutes of the General Meeting are published as a Stock Exchange notice and on the Company’s website.
Nomination committee
The Articles of Associations states that the Company shall have a Nomination Committee of 2-3 members, the final number to be decided by the General Meeting.
The Nomination Committee shall propose candidates to the Board of Directors and to the Nomination Committee, and propose remuneration of the Board of Directors and members of the Nomination Committee. A justification for a new candidate up for election will include information on the candidate’s competence, capacity and independence.
As part of its nomination process, the Nomination Committee has contact with major shareholders, the Board of Directors and the Company’s executive management to ensure that the process takes both the Board of Directors’ and the Company’s needs into consideration.
The General Meeting will elect the members of the Nomination Committee, including the chairperson, set their remuneration, and set the guidelines for the committee’s work.
The guidelines for Solstad’s Nomination Committee stipulates that the majority of the committee should be independent of the Board of Directors and the Company’s executive personnel. None of the members of the Nomination Committee should simultaneously be a member of the Company’s day-to-day management or the Company’s Board of Directors.
The current members of the Nomination Committee are Rune Lande (chair), Toril Eidesvik and Owe Høines. The majority of the members are independent of the Board of Directors and the Company’s executive management.
The guidelines for the Nomination Committee, and its contact details, are available on Solstad’s website.
Board of Directors, composition and independence
Pursuant to Solstad’s Articles of Association, the company’s Board of Directors shall consist of three to seven members. The current Board of Directors consists of five members, who have been elected by the General Meeting.
Solstad strives to ensure that the Board of Directors has a composition necessary to safeguard the interest of the shareholders. The Board of Directors considers its composition to be diverse and competent with respect to expertise, capacity, gender and diversity adapted to the Company’s objectives, main challenges and the common interest of all shareholders. The Board of Directors emphasizes the importance of efficiency as a collegial body. The Board of Directors consists of three men and two women.
The Board should be composed of Directors who act independently of special interests, and the majority of the Directors should be independent of any major shareholder. As of 31 December 2023, Solstad’s Board of Directors consists of Harald Espedal (chair), Ingrid Kylstad, Frank O. Reite, Ellen Solstad and Peder Sortland. The majority of the members of the Board of Directors are independent of the Company’s executive personnel and material business contacts. Harald Espedal, Ingrid Kylstad and Peder Sortland are independent of the Company’s large shareholders.
The Board of Directors does not include executive personnel. The Chairperson of the Board of Directors is elected by the General Meeting.
Directors are elected for a two-year term. See the annual report for a presentation of the Directors.
As of 31 December 2023, three of the five Directors (Harald Espedal, indirectly, Ellen Solstad, indirectly and Frank O. Reite, indirectly) owns shares in Solstad.
Work of the Board of Directors
The Board of Director has the overall responsibility to oversee the organization, operation and management of Solstad, whilst the CEO is responsible for day-to-day management. Both the Board of Directors and the CEO conduct their work through established procedures where responsibilities and administrative procedures are outlined. The procedures also state how the Board of Directors and Executive Management shall handle agreements with related parties, including whether an independent valuation must be obtained. The Board of Directors should also present any such agreements in their annual directors’ report.
The rules and procedures describe how the board is responsible for reviewing and approving the organization’s purpose, value or mission statements, strategies, policies and goals related to sustainable development, and delegate implementation of such matters to the company’s management. The procedures also include stipulations to ensure that the company has the necessary due diligence and other processes in place to identify and manage its impacts on the economy, environment and people, and ensure that the management of the company engages with relevant stakeholders to support these processes. At least annually, the Board reviews the company’s sustainability performance, including key performance indicators and priorities going forward.
The Company maintains rules to ensure that the Board of Directors and Executive Management report to the Board in case of any direct or indirect material interest in any contract signed by the Company. If the chairman of the Board of Directors is, or has been, personally involved in matters of a material character, the Board’s consideration of such matters will be chaired by another member of the board.
In accordance with the Public Companies Act, Solstad has an Audit Committee that is elected by the Board of Directors. As of 31 December 2023, Solstad’s Audit Committee consists of Frank O. Reite (chair), Ingrid Kylstad and Peder Sortland. All Audit Committee members are considered independent of the Company.
The Board of Directors has considered but not established a remuneration committee. Instead, the Board of Directors resolves matters relating to compensation paid to the executive personnel. As a large majority of the Board members are independent of the Company’s executive personnel, it is the Board of Directors’ view that it is a suitable body to help ensure a thorough and independent preparation of matters relating to compensation paid to the executive personnel.
The Board of Directors evaluates its own performance and expertise on an annual basis, including its performance in overseeing the management of the organization’s impacts on the economy, environment and people. The evaluation is submitted to the Nomination Committee.
Risk management and internal control
The Board of Directors seeks through its work to ensure that the Company maintains good standards and further improvements of internal control and appropriate systems of risk management, considering the scope and nature of the Company’s business, and the provisions that govern the business. The Company has established a system of operation and administration that relies on work procedures and job descriptions. The system also covers social responsibility and ethical guidelines. There is a commitment to quality assurance. The Board of Directors receives information about operational, administrative, and financial developments in monthly reports. The Board reviews the corporate strategy and the business plan annually, including analysis of the Company’s risk exposure. Exposure is monitored monthly through the reports from the Administration. Procedures for internal control is exercised according to the adopted guidelines and reviewed with the auditor and Board of Directors on an annual basis.
Remuneration of Directors
The remuneration of the Board of Directors is determined by the General Meeting, based on recommendation from the Nomination Committee. The recommendation is normally linked to the directors’ responsibilities, competence and time commitment, taking the company’s size and complexity into consideration.
The remuneration is in line with comparable companies in the industry. The amounts involved are reported in the annual report. The remuneration of the Board of Directors is not linked to the Company’s performance. The directors do not have share options.
In cases where directors of the Board should undertake significant additional work for the Company, all directors will be informed and fees shall be approved by the Board of Directors. The fees are reported in the financial statements. All transactions between directors or employees (or companies that they represent or are associated with) on the one hand, and the Company on the other, are implemented in accordance with the arm’s length doctrine.
Remuneration to Executive Management
The remuneration of the CEO is determined by the Board of Directors. The guidelines for remuneration of the Executive Management are presented to the General Meeting and remuneration guidelines can be found on the Company website. A Remuneration Report, which details remuneration figures and principles for the Company’s Executive Management, is published on Solstad’s website annually. Executive Management remuneration consists of three elements: Base salary, pension contribution, and variable pay – bonus.
The company’s executive bonus system is designed to promote performance in line with the company’s strategy. The variable salary is determined by the Company’s performance on a pre-defined set of key performance indicators and is linked to the Company’s priorities, defining clear deliverables that are critical for the company’s future success. The final executive bonus outcome is specifically reserved as a matter for the Board of Directors. The variable salary is limited to a specific percentage share of the base salary
Information and communications
The Company has a policy of treating all shareholders and other market participants equally, communicating relevant information on significant developments of the Company´s business and standing in a timely manner.
All information distributed to the Company’s shareholders, including financial reports, is published on Oslo Stock Exchange’s website (www.newsweb.no) and the Company’s website simultaneously. A financial calendar and other shareholder information is available on the Company’s website.
The Board of Directors has established guidelines for the Company’s contact with shareholders other than through general meetings. These guidelines – the “IR policy” – is available at Solstad’s website.
The Company seeks to adhere to the Oslo Børs Code of Practice for Investor Relations.
Take-overs
The shares in the Company are freely tradable, and the Articles of Association do not hold specific defense mechanisms against take-over situations. In a potential bid-situation, the Board will work to inform Shareholders and allow time to decide on the offer. Furthermore, the Board will issue a statement to the shareholders with an assessment of the bid and a recommendation of whether to accept it or not.
Auditor
The Auditor of the Company is elected at the Annual General Meeting, which also approves the Auditor’s remuneration. The Auditor sets out the highlights of the audit plan to the audit committee annually. The auditor also presents a report with its views and observations regarding the accounting principles, risk areas, internal control routines, and other aspects. Furthermore, the Auditor will each year deliver a written report to affirm its compliance with certain impartiality and objectivity standards. The Auditor attends Board Meetings to discuss the financial statements for the year and attends the Annual General Meeting.
Important consultancy work performed by the Auditor requires prior approval by the Board of Directors. The remuneration to the auditor is reported in the financial statements. Once a year, the Board of Directors meets with the Auditor for discussions without the CEO or other representatives from the administration present.