The principles for the composition of the board and the role of the general meeting and corporate assembly in the corporate governance structure of Norwegian listed companies differ somewhat from practice in other countries. We will therefore try to explain these matters more extensively and describe how StatoilHydro has arranged its affairs in relation to international principles for good corporate governance over and above the requirements that follow from the Norwegian guidelines.
Although non-US companies like StatoilHydro are exempt from most of the corporate governance rules of the NYSE as a "foreign private issuer", pursuant to Rule 303A.11 of the NYSE Listed Company Manual, we are required to disclose any significant differences between our corporate governance practices and the corporate governance standards applicable to US companies listed on the NYSE.
Committees
NYSE rules applicable of US companies require that there be certain board committees composed of independent directors with responsibility for certain matters.
In accordance with Norwegian law, managing the company is the responsibility of the board of directors.
StatoilHydro has an audit committee and a compensation committee (called remuneration committee), which are responsible for preparing certain issues for the board of directors.
The committees operate pursuant to charters that are broadly comparable to the form required by the NYSE rules.
The committees report on a regular basis to and are subject to continuous oversight by the board of directors.
The membership of StatoilHydro's audit committee includes one employee-elected director, who meets the requirements for independence under Rule 10A-3(b)(1) of the US securities Exchange Act of 1934, but would not be considered independent for purposes of the NYSE rules.
Among other things, the audit committee evaluated the qualifications and independence of the company's external auditor.
However, in accordance with Norwegian law, the auditor is elected by the annual general meeting of the company's shareholders.
StatoilHydro does not have a nominating/corporate governance committee.
Instead, the roles prescribed for a nominating/corporate governance committee under the NYSE rules are principally carried out by the corporate assembly and the election committee.
StatoilHydro's corporate governance principles are developed by management and the board of directors.
Oversight of the board of directors and management is carried out by the corporate assembly.
Independence
StatoilHydro's board of directors consists of members elected by shareholders and employees, none of whom are executive officers of the company.
the directors elected among StatoilHydro's employees would not be considered "independent", as defined under NYSE Rule 303A.02, but are independent for the purposes of Rule 10A-3(b)(1) of the US securities Exchange Act of 1934, which applies to members of the company's audit committee.
The NYSE rules require that the board of directors must affirmatively determine that each "director has no material relationship with the listed company."
StatoilHydro's board of directors has determined that, in its judgement, all of the shareholder - elected directors are independent.
Shareholder approval of equity compensation plans
The NYSE rules require that all equity compensation plans, with limited exemptions, must be subject to shareholder vote.
Although issuance of shares and authority to buy back company shares must be approved by StatoilHydro's annual general meeting of shareholders under Norwegian company law, approval of equity compensation plans is reserved for the board of directors.
