Norwegian annual report 2013

Corporate Governance

Norwegian’s objective for corporate governance is based on accountability, transparency, fairness and simplicity with the ultimate goal of maximizing shareholder value while creating added value for all stakeholders. The principles are designed in compliance with laws, regulations and ethical standards. Norwegian’s core values are simplicity, directness and relevance, but no business conduct within the Group should under any circumstance jeopardize safety and quality.

How we understand the concept
The Group's core values and corporate Code of Ethics are the fundamentals of Norwegian’s corporate governance. Corporate governance deals with issues and principles associated with the distribution of roles between the governing bodies of a company, and the responsibilities and authorities assigned to each body. Good corporate governance is distinguished by responsible interaction between the owners, the Board and the management in a long-term, productive and sustainable perspective. It calls for effective cooperation, which means a defined division of responsibilities and roles between the shareholders, the Board and the management, and also respect for the Group's other stakeholders as well as open and honest communication with the communities in which the Group operates.

Code of Ethics
Everyone has a joint responsibility to create a good working environment and develop a sound corporate culture marked by openness and tolerance. We promote an environment free from any discrimination, be it religion, skin colour, gender, sexual orientation, age, nationality, race or disability. The work environment shall be free from bullying, harassment or similar. We do not tolerate any behaviour that can be perceived as degrading or threatening.

When engaging in businesses with third party suppliers, Norwegian will, whenever possible, ensure that the suppliers adheres to international rules of ethical behaviour and trading standards.

Norwegian is firmly opposed to all forms of corruption. Norwegian is against any type of involvement in illegal influencing of decision makers, either directly or through middlemen.

Norwegian’s corporate responsibility strategy is primarily based on how Norwegian as an airline can contribute to less pollution and emissions by flying new and fuel efficient aircraft. Our Codes of Ethics provides the directions for a good working environment and highlights the Group’s guidelines for human rights, preventing corruption, employee rights and safety for all – both for our customers and employees. Norwegian has a dedicated corporate cooperation with the humanitarian organization; UNICEF.

Norwegian is committed to actively engage in and support a sustainable environmental policy, and to continue to reduce emissions from aviation.  By renewing the fleet, emissions are reduced and passengers are offered new and more comfortable aircraft. Norwegian has a clear goal of reducing emissions per flown passenger by 30 per cent in the period 2008 – 2015. Norwegian also undertakes a variety of other measures to minimize its environmental impact. All employees should focus on how they can contribute to a better environment in their daily work. Read more about our strategy here.

Human Worth
Everyone at Norwegian has a joint responsibility to create a good working environment and develop a sound corporate culture marked by openness and tolerance. Norwegian supports the international human rights as outlined by the UN declaration and conventions. No one shall in any way cause or contribute to the violation or circumvention of human rights. We place great importance on ensuring compliance with employees’ basic human rights as outlined in the International Labor Organization's core conventions. Equality must be guaranteed between men and women in terms of employment, working conditions, career opportunities and remuneration.


Partnership with UNICEF
Norwegian has decided to partner with humanitarian organization UNICEF through a Signature Partnership.



• A Signature Partnership is initiated by a company's top management
• A Signature Partnership is the highest form of partnership UNICEF Norway offers corporate clients
• Norwegian is dedicated to working with UNICEF because of its overall focus on children's rights


UNICEF is mandated by the United Nations General Assembly to advocate for the protection of children's rights, to help meet their basic needs and to expand their opportunities in order to reach their full potential. UNICEF insists that the survival, protection and development of children are universal development imperatives that are integral to human progress. Norwegian's support to UNICEF consists of travel fundings and fundraisers. In addition, all Norwegian employees donate their company Christmas presents to UNICEF.

In line with the Norwegian Code of Practice for Corporate Governance, a review of the major aspects of Norwegian Air Shuttle ASA’s governance structure follows below.

Norwegian’s business is clearly defined in paragraph 3 of its articles of association, which states that “The Group’s objective is to be engaged in aviation, other transport and travel-related business activities as well as activities connected therewith. The Group may also be engaged directly or indirectly in other forms of Internet-based provision of goods and services, including car rental, hotel booking, payment services, financial services and services related to credit cards. Participation in such activities as mentioned may take place through co-operation agreements, ownership interests or by any other means.”

The Group has clear goals and strategies for its business. These are discussed in the Group´s Quality Manual and are also made available to the public in the Annual Report and on the Group’s website

Equity and Dividends
The Group’s equity at year-end 2013 was MNOK 2,750 equivalent to an equity ratio of 19%. The Board deems this to be adequate considering the Group’s strategy and risk profile.

The Board of Directors recommend to not  distribute dividends as it is considered to be in the best interest of the shareholders to retain funds for investments in expansion and other investment opportunities as stated in the articles of association, thereby enhancing profitability and shareholder value. Dividends should under no circumstance be paid if equity is below what is considered to be an appropriate level. One Financial Covenant to the bond agreement entered into in April 2012; restrict dividend payments until maturity of the bond in April 2015, to 35% of the net profit after taxes (on a consolidated basis) of the Group based on the audited accounts for the previous accounting year.

Due to Norwegian’s high growth rate, competitive position and associated need for flexibility, the General Assembly has decided to deviate from the Norwegian code of practice for corporate governance’s recommendation with respect to capital increase. Mandate to increase the company’s share capital are granted to the Board of Director for a two year period and can be utilized for commercial possibilities and employee incentive program. The mandate granted to the Board is limited to a total of 3,516,213 shares.

The General Assembly has granted the Board of Directors a mandate to acquire treasury shares for a period of 18 months reckoned from the date of the General Meeting’s resolution. The mandate granted to the Board is limited to a total of 3,516,213 shares.  The Code of Practice recommends that a mandate granted to the Board of Directors to acquire treasury shares should be limited in time to not later than the date of the next General Assembly.

Equal Treatment of Shareholders and Transactions with Close Associates
Norwegian Air Shuttle ASA has only one class of shares.

Transactions are generally carried out through stock exchanges. Buy-backs of own shares are carried out at market prices. Employee share allocations are granted at a discount to market value.

Material transactions between the Group and key stakeholders, in particular the shareholders, the members of the Board and the Executive Management, are subject to the approval of the Board of Directors. Such transactions are duly noted in the minutes from the board meeting and are also explicitly stated in the notes to the consolidated accounts. At present, the Chairman is a partner of the law firm Simonsen VogtWiig, which is the legal advisor to Norwegian Air Shuttle ASA. Norwegian has leased its head office from Fornebu Næringsutvikling 1 AS which is controlled by the Chairman and the CEO. In cases where members of the Board of Directors or the Executive Management have other direct or indirect material interests in transactions entered by the Group, this is stated in the notes to the consolidated accounts.

Norwegian’s Codes of Ethics includes guidelines for handling possible conflicts of interest. The code applies to all board members and Norwegian employees. In addition the Board has drawn up specific procedures for handling of Conflicts of Interest for Board members and members of Corporate Management Board.

Freely Traded Shares
There are no restrictions on trading of the Company’s shares in the articles of association or elsewhere.

General Assembly
The Board of Directors has ensured that the shareholders may exercise their rights at the General Assembly, making the summons and related documentation available on the website. At least three weeks written notice must be given to call the Annul General Assembly. The relevant documents, including the Nominating Committee's justified slate of nominees when new members are up for election or existing ones are up for re-election, are available at the Group's website at least 21 days prior to the date of the General Meeting. The general meeting in May 2013 decided that “An Extraordinary General Meeting may be called with fourteen days’ notice if the Board decides that the shareholders may attend the General Meeting with the aid of electronic devices, cf. Section 5-8a of the public Limited Companies Act”. The shareholders’ deadline for the notice of their intended presence is three days before the General Assembly, and the shareholders may be present and vote by proxy. The Board of Directors, Election Committee and the auditor are required to be present. The management is represented by the Chief Executive Officer and the Chief Financial Officer and other key personnel on specific topics. The minutes of the General Assembly are available on the Group's website.

Election Committee
The Election Committee's task is to nominate candidates to the General Assembly for the shareholder-elected directors' seats. The articles of association state that the committee shall have four members, and the chairman of the committee is the Chairman of the Board. The remaining three members are elected by the General Assembly every second year. The next election is due in 2014.

The current Election Committee consists of the Chairman of the Board, one employee and two external members representing major shareholders in the Company.

The guideline for the Election Committee is included in the company’s Articles of Association and was last approved by the General Meeting in May 2011.The Board of Directors recommends deviating from the Code of Practice for Corporate Governance as the Chairman of the Board is a permanent member of the committee. This is to ensure that nominees meet the requirements for expertise, capacity and diversity set forth by the board members.

None of the Committee's members represents Norwegian's management. The majority of the members are considered independent of the management and the Board. The composition of the Election Committee is regarded as reflecting the common interests of the community of shareholders.

Corporate Assembly and Board of Directors, Composition and Independence
Norwegian Air Shuttle ASA has, in agreement with the employee unions and as warranted by Norwegian law, no corporate assembly. Instead, the Company has three employee representatives of the Board of Directors. According to the articles of association the Board must consist of between six and eight members. There are currently seven members.

The shareholder-elected members of the Board of Directors have been nominated by the Election Committee to ensure that the Board of Directors possesses the necessary expertise, capacity and diversity. The Board members have competencies in and experiences from the transport sector and other competitive consumer sectors, relevant network connections and experiences from businesses, finance, capital markets and marketing. The Chairman and Deputy Chairman are elected by the Board. The Board members are elected for a period of two years.

The majority of the shareholder-elected members of the Board are considered autonomous and independent of the Company’s executive personnel, and material business contacts. At least two of the members of the Board which are elected by shareholders, are considered autonomous and independent of the Company’s main shareholder(s). Among the shareholder-elected directors, there are two men and two women which is a 50% gender share.

The CEO is not a member of the Board of Director.

The Work of the Board of Directors
The Board of Directors’ work is in accordance with the rules of the Norwegian law. The Board has an annual plan for its work which particularly emphasizes objectives, strategies and implementations. The Board holds annual strategy seminars in which issues such as objectives, strategies and implementations are addressed.

The Board of Directors issues instructions for its own work.
There is a clear division of responsibilities between the Board and the Executive Management. The Chairman is responsible for ensuring the Board's work is conducted in an efficient, correct manner and in accordance with the Board's terms of reference. The CEO is responsible for the Group's operational management. The Board has drawn up special instructions for the CEO.

If the chairperson of the Board of Directors is or has been actively engaged in a given case, another board member will normally led discussions concerning that particular case.

The Audit Committee was established by the General Assembly in 2010. The Board of Directors recommends deviating from the Code of Practice for Corporate Governance as the Board of Directors acts as the Company’s audit committee. This is to ensure that nominees meet the requirements of expertise, capacity and diversity set forth by the Board members.

The Board of Directors conducts an annual self-assessment of its work competence and cooperation with management and a separate assessment of the Chairman.

Risk Management and Internal Control
The management draws up monthly performance reports that are sent to and reviewed by the Board of Directors. Moreover, financial reports, risk reports and safety reports are drawn up, all of which are subject to review at Board meetings.

The Board ensures sound internal controls and systems for risk management through, for example, annual Board reviews of the most important risk factors and internal controls.

Remuneration of the Board of Directors
Based on the consent of the General Assembly, it is assumed that the remuneration of Board members reflects the respective members’ responsibilities, expertise, time commitments and the complexities of the Group’s activities.

Comprehensive information on remuneration and incentive programs is available in the notes of the consolidated accounts.

In cases where Board members take on specific assignments for the Group which are not taken on as part of their office, the other Board members must be notified immediately and if the transaction is of a substantial nature this is explicitly stated in the notes to the consolidated accounts.

Details of the remuneration of individual Board members are available in the notes to the consolidated accounts.

Information and Communications
Norwegian has established guidelines for the company’s reporting of financial and other information based on transparency and with regard to the requirement of equal treatment of all parties in the securities market.

A financial calendar is prepared and published on the Group’s website and is also distributed in accordance with the rules of the Public Companies Act and the rules applicable to companies listed on the Oslo Stock Exchange.

Information distributed to the shareholders is also published on the Group’s website. The Group holds regular investor meetings and public interim results presentations, and has an investor relations department.

Norwegian has separate instructions for investor relations on communication with investors and how price-sensitive information shall be treated. The Board of Directors has prepared guidelines for the Group’s contact with shareholders outside the General Meeting.

The Board considers that these measures enable and ensure continuous informative interactions between the Company and the shareholders.

There are no limitations with respect to the purchases of shares in the Company. In the event of a take-over bid the Board of Directors will act in the best interest of the shareholders and in compliance with all the rules and regulations applicable of such an event. In the case of a take-over bid the Board will refrain from taking any obstructive action unless agreed upon by the General Assembly. The Company’s bond issue has a change of control clause that allows bondholders to call for redemption of the bonds at 101% of par in the event of a change of control.

The Auditor annually submits the main features of the audit plan for the Group to the Audit Committee.

The Auditor participates in the meetings of the Board of Directors that deal with the annual accounts. At these meetings the Auditor reviews any material changes in the Group’s accounting principles, comments on any material estimated accounting figures and reports all material matters on which the auditor and management may disagree, and identify weaknesses in and suggest improvements to the company’s internal controls.

The CEO and the CFO are present at all meetings with the Board of Directors and the Auditor. At least one meeting a year will be held between the auditor and the Board without the presence of the CEO or other members of executive management. The management and the Board of Directors evaluate the use of the Auditor for services other than auditing.

The Board receives annual confirmation from the Auditor that the Auditor continues to meet the requirement of independence.

The Board of Directors reports the remuneration paid to the Auditor at the Annual General Assembly, including details of the fee paid for audit work and any fees paid for other specific services.