The parent company in the Concordia Maritime Group is the Swedish public limited company Concordia Maritime AB (publ), corp. ID 556068-5819. In addition to the parent company, the Group consists of 16 wholly or part- owned subsidiaries. The registered office of the Board of Directors is in Gothenburg, The address of the Group’s head office is Concordia Maritime AB, 405 19 Gothenburg, Sweden. Information provided at www.concordiamaritime.com includes:
• More detailed information on internal control documentation, e.g. the articles of association.
• Information from Concordia Maritime’s annual general meetings, notices, minutes and financial reports.
We comply with the terms of the Swedish Code of Corporate Governance and The Swedish Annual Accounts Act and this corporate governance report has been drawn up as part of the application of the Code. The governance of Concordia Maritime is based on the Swedish Companies Act and Nasdaq OMX Stockholm’s regulations, including the Swedish Code of Corporate Governance (the Code) as well as other applicable Swedish and foreign laws and regulations. We report one deviation from the Code for the accounting year 2010. Certain information in accordance with The Swedish Annual Accounts Act, Chapter 6 § 6 Section 3 is included in the Board of Directors’ Report.
Deviations from the Code
The Swedish Code of Corporate Governance states that the company’s auditor should examine the interim reports for Q2 or Q3. The company has elected to have its auditor examine the interim report for Q4 since it is more effective.
VOTING RIGHT
The share capital consists of Series A shares and Series B shares, both of which entitle their holders to a share in the company’s assets and profit and an equally large dividend. The quota value is SEK 8 per share. Each Series A share represents ten votes and each Series B share one vote. At year-end all the Series A shares were controlled by the Stena Sphere. On 31 December 2010, the share capital amounted to SEK 381.8 million divided between 47.73 million shares, of which 43.73 million were Series B shares.
NOMINATION PROCESS
Concordia Maritime’s nomination process for the election of board members includes the appointment of a nomination committee consisting of three members. These members shall be the board’s Deputy Chairman and one representative of each of the two largest shareholders, in terms of votes, who wish to appoint a representative. The composition of the nomination committee is based on shareholder statistics as of the last banking day in August the year before the Annual General Meeting. The names of the representatives on the nomination committee and the shareholders they represent shall be made public as soon as they have been appointed, although no later than six months prior to the AG M. If the shareholdings of the major shareholders change during the nomination process, the composition of the nomination committee may be changed to reflect this. Shareholders who wish to submit a proposal, may do so via e-mail to arsstamma@ concordiamaritime.com. The guidelines for the largest shareholders’ choice of committee member are that the person shall have knowledge and experience relevant to Concordia Maritime. The rules in the Swedish Code of Corporate Governance applying to independent board members shall be observed. The task of the nomination committee is to submit proposals to the AG M concerning the following questions:
• Chairman of the AG M
• Board members • Chairman of the Board
• Remuneration of each board member
• Remuneration for work on committees
• The nomination committee for the following year
The nomination committee’s proposals together with a report on its work shall be published no later than in conjunction with the notice convening the AG M. Shareholders shall be given the opportunity to present nomination proposals to the nomination committee.
SHAREHOLDERS' MEETING
The shareholders’ meeting is the highest decision- making body at Concordia Maritime. The shareholders’ right to make decisions about Concordia Maritime’s business is exercised at the shareholders’ meeting. To participate in decisions, the shareholder must be present at the shareholders’ meeting, either in person or via a proxy. Additionally, the shareholder must be registered in the share register by a certain date prior to the AG M and the company must have been formally informed of his intention to attend the AG M. Decisions at shareholders’ meetings are normally taken by simple majority vote. In certain questions, however, the Swedish Companies Act stipulates that decisions be taken by a larger majority of the shares represented at the shareholders’ meeting and votes given. The Annual General Meeting is held in the Gothenburg region in the first half of every year. At the AG M, decisions are taken on questions concerning approval of the annual report, dividends, remuneration of the board and the auditors, the election of board members and, where appropriate, auditors, guidelines for remuneration of group management together with other important matters. Individual shareholders wishing to have a matter considered at the AGM can normally apply to the board in good time before the shareholders’ meeting via arsstamma@ concordiamaritime.com. An extraordinary AG M may be held if the board considers it necessary or if Concordia Maritime’s auditors or owners of at least 10 percent of the shares so request.
AUDIT
The auditor provides an auditor’s report for C oncordia Maritime AB (publ)’s annual report and consolidated accounts, the administration by the board and the President of Concordia Maritime AB (publ) plus the annual reports for the subsidiaries. The audit is carried out in compliance with the Swedish Companies Act and audit standards in Sweden in accordance with FAR , which are based D AUDI T on international auditing standards according to the International Federation of Accountants (IFAC ). The audit of annual financial statements for legal entities outside Sweden is in accordance with legal requirements and other applicable regulations in the countries concerned and with generally accepted accounting standards as defined by IFAC for the issue of audit reports for the legal entities. An auditor is proposed by the principal owner and elected by the AG M for a period of four years. At the AG M in 2007, Johan Kratz was elected as the company’s external auditor until the AG M in 2011. The auditor’s fee is charged on an ongoing basis. In 2010, KPMG received fees totalling SEK 2.2 million.
THE GROUP
Management and corporate structure
The Group consists of the parent company C oncordia Maritime AB (publ) and a number of group companies that report to the President. The parent company’s organisation is limited and consists solely of senior management, other functions are purchased. At the end of 2010, the Group had 359 employees, 6 of whom are shorebased.
President and group management
Concordia Maritime’s group management consists of the CFO, a newbuilding manager and general managers of the subsidiaries in addition to the President. The President is appointed by and receives instructions from the board of directors. The President is responsible for the daily administration of the company in accordance with the board’s guidelines and directions, produces information and decision documentation prior to board meetings and acts as a rapporteur at these meetings. The President is also responsible for communication and ensuring the quality of contacts with the company’s cooperation partners.
Remuneration for group management
We endeavour to offer total remuneration that is both fair and competitive. All our employees receive remuneration in the form of a fixed salary and a possible bonus. Guidelines for remuneration for the group management are decided by the annual general meeting. Remuneration for the President is thereafter decided on by the salary compensation committee. Remuneration for other leading executives is prepared and decided on by the President. For further information on remuneration, long-term incentive programs and pension plans, see Note 4 in the financial report.
THE BOARD OF DIRECTORS
The tasks of the board of directors
The overall task of the board is to administer the business of the Group on behalf of the owners in such a way that the owners’ interest in a good return on capital in the long term is satisfied in the best possible way. The board’s work is regulated by, among other things, the Swedish Companies Act, the company’s articles of association, the Code and the rules of procedure established by the board for its work. The board makes decisions in questions concerning the Group’s overall objectives, strategic direction and more important policies as well as significant questions involving financing, investments, acquisitions and sales. The board monitors and considers, among other things, the follow-up and control of the activities in the Group, the Group’s external communications and organisational questions, including the evaluation of the Group’s operative management. The board’s responsibility includes appointing and, when appropriate, dismissing the company’s President. It also has the overall responsibility for establishing effective systems for internal controls and risk handling.
Rules of procedure and board meetings
Every year, the board establishes rules of procedure for its work. When necessary, these rules of procedure are revised. The chairman’s special role and tasks as well as the areas of responsibility for the committees appointed by the board are described in the rules of procedure. According to the rules of procedure, the chairman shall ensure that the board’s work is conducted in an effective way and that the board performs its tasks. The chairman shall also organize and distribute the board’s work among its members and ensure that the board’s decisions are implemented in an efficient manner and that the board carries out an evaluation of its work every year. The rules of procedure also include detailed instructions to the President and other corporate functions concerning what questions require the board’s approval. Among other things, the instructions specify the limit for different decision-making bodies in the Group in conjunction with credits, investments and other outlays. The rules of procedure stipulate that the statutory board meeting shall be held directly after the annual general meeting. At this meeting, decisions are taken on, for example, the election of the deputy chairman and who shall sign Concordia Maritime’s business name. In addition, the board holds six ordinary meetings per year. Four of these meetings are held in conjunction with the Group’s annual report and interim reports. These meetings are normally held in Gothenburg. Additional meetings, including teleconferences, are held when necessary.
Ensuring the quality of financial reporting
Concordia Maritime is a company with a limited number of customers and a limited number of employees. There is no specific function for internal controls in the Group as relatively few transactions take place every year and, as a result, the financial reporting at the company is relatively easy to verify. The President bears the ultimate responsibility for ensuring that internal controls function satisfactorily. Day-to-day work, however, is delegated to the business administration and finance function. The rules of procedure decided on by the board every year include detailed instructions concerning what financial reports and other financial information shall be submitted to the board. In addition to the interim reports and the annual report, other financial information relating to the company and its areas of activity are examined and evaluated on an ongoing basis.
Control environment
The core of the internal control of the financial reporting is based on the Group’s directives, guidelines and instructions as well as a structure of responsibility and authority that has been adapted to the Group’s organisation in order to create and maintain a satisfactory control environment. The principles for internal controls and directives and guidelines for financial reporting are collected in the Group’s financial policy. A fundamental component of our control environment is the corporate culture existing in the Group in which management and employees work. We work actively with communication and training/education as regards the basic values, which are described in an internal document that ties all the business areas together and constitutes an important part of the common culture in the Stena Sphere.
Risk assessment
Risks related to the financial reporting are assessed and monitored by the board. There is no separate audit committee; instead, audit matters are considered by the whole board. Prior to examining interim reports and the annual report, the board members are given access to relevant information in good time before publication in conjunction with the following board meeting. The reports are then discussed in detail at a board meeting. A few days before publication, Concordia Maritime’s CFO reserves time to answer any questions that may be asked by the board members. The board also examines the most important accounting principles applied in the Group with respect to the financial reporting as well as significant changes in these principles. The external auditors report to the board when necessary but at least once a year.
Financial reporting and information
Concordia Maritime’s routines and systems for external communication are intended to provide the market with relevant, reliable, correct and current information about the Group’s development and financial position. Concordia Maritime has an information policy that satisfies the demands made on a listed company. Financial information is provided regularly in the form of:
• Interim reports, which are published as press releases
• Annual reports
• Press releases regarding important news that could have a significant impact on the share price
• Presentations and teleconferences for financial analysts, investors and media
• Meetings with financial analysts and investors
All reports, presentations and press releases are published at the same time on the Group’s website www.concordiamaritime.com
Evaluation of the work of the Board of Directors
Led by the Deputy Chairman, the Board of Directors carries out an annual evaluation of its work. The evaluation covers working methods and work climate, the direction of the board’s work and access to and the need of special competence on the board. The evaluation is used as an aid in developing the board’s work and also forms a basis of the nomination committee’s work.
Remuneration committee
There is a remuneration committee, the main task of which is to propose principles for the remuneration of members of group management. The committee presents proposals for remuneration guidelines regarding:
• Objectives of and reasons for calculating variable compensation
• The relation between fixed salary and variable compensation
•Changes in fixed salaries or variable compensation
•Criteria for the evaluation of variable compensation, long-term incentives, pensions and other benefits
The committee also decides on salaries and other terms of employment for the President. The committee consists of the Chairman and the Deputy Chairman of the board. In 2010, the committee met twice.
Board members’ presence and remuneration
1) Independent is defined as independent of the company, its management or its major shareholders.
2) Remuneration for the board of directors is decided by the AGM and is paid to the members who are not employed by Concordia Maritime.
For information on board members, see www.concordiamaritime.com