Corporate governance

Corporate governance

The corporate governance principles of Comrod Communication ASA (Comrod) accord by and large with the Norwegian code of practice. Where the company’s practice diverges from the code, an explanation or comment will be given.
Core values and code of ethical conduct

The group works on the basis that all activity and all work by its employees are performed is accordance with a high ethical standard and common basic values.

CONFIDENCE AND CREDIBILITY

Government authorities, customers, business partners, owners and employees will have confidence in us, and we will be credible and compliant at all levels of the organisation. "We keep our promises" will be a fundamental obligation.

RESPONSIBILITY

Each of us has an obligation to work loyally to achieve the targets which we as a company have set for ourselves, and to support the adopted strategies and actions. Through our attitudes and actions, we will take responsibility for each other and for the continued growth of our company. This includes finding solutions which are sustainable for the organisation and for customers in a long-term perspective.

COMMITMENT AND INNOVATION

We will make room for innovation and focus continuously on improving our products and processes. We will facilitate personal development, and motivate and support our employees to accept responsibility. Personal commitment will also promote freedom and the confidence to disagree.

RESPECT

Respect for our customers, for laws and statutory regulations, for differences of opinion and for the environment. Loyalty towards and respect for our co-workers, regardless of their gender, opinions, beliefs, political stance or ethnicity. This also applies to management decisions and the laws which regulate our business.

BUSINESS ETHICS

All our business activities will be profitable. This is the key to creating secure and attractive jobs. Value creation will be achieved within legal and ethically-accepted norms.

The group’s corporate governance principles will be included in its annual report.

To ensure compliance with Norwegian legislation and the regulations of the Oslo Stock Exchange, rules have been drawn up on trading in the group’s shares by insiders, employees and union representatives.


Business

Comrod is a technology group committed to developing and commercialising communication and composite products based on innovative technology.

Its goal is to rank among the leading international players in selected markets, and to take market shares through innovative and competitive solutions in close cooperation with key customers.

Activities relating to communication products are defined as a priority area for the group in its articles of association.

The group’s articles of association will appear in the annual report.

Equal treatment

Comrod has only one class of shares.

In the event of capital increases, all shareholders will normally be treated equally. If this is not the case, the other shareholders will, as far as possible and through the adoption of subsequent measures, be restored to the position they would have held had they participated in the capital increase.

Transactions by the group in its own shares will normally be conducted through the stock exchange or at market prices.

Special care will be exercised over transactions with other parties in which the group’s shareholders, directors, management or closely related parties have a financial or personal interest.

Not insignificant transactions with other parties in which the group’s shareholders, directors, management or closely related parties have a financial or personal interest will be evaluated by an independent third party.

Free marketability

All shares in Comrod are freely marketable.

Equity

Comrod’s equity will be aligned with the group’s goals, strategy and risk profile.

The authority to issue shares is limited to special cases and is normally renewed at each annual general meeting.

Dividends
 
The group concentrates on growth opportunities, and Comrod will make the investments required to realise these. Opportunities for expansion will accordingly have priority over annual dividends.

The group’s shareholders will receive a competitive return on their shares, primarily through the rise in the price of these.

Annual general meeting

The final deadline for registering to attend the annual general meeting is three days in advance.

Shareholders who are unable to attend may vote by proxy.

All relevant documentation will be sent to shareholders no later than two weeks before the date of the AGM.

Declaration to the general meeting

Declaration to the general meeting of Comrod Communication ASA concerning the determination of pay and other remuneration for the chief executive and other senior executives

Pursuant to section 6-16a of the Norwegian Act on Public Limited Companies, the board is required to issue a declaration on the determination of pay and other remuneration for the chief executive and other senior executives.

This declaration must present the guidelines for determining pay and other remuneration, and hereunder specify the principles applied in the company’s compensation policy for senior executives.

Section 6-16a, paragraph 3, of the Act also requires the board to explain the compensation policy for senior executives applied in the previous fiscal year.

This declaration will be made for the first time to the company’s annual general meeting in 2007.

1. Main principles in the company’s compensation policy for senior executives

1.1 As a major international player in its business, Comrod Communication ASA is required, when determining the remuneration of senior executives in the company, to compete in a market which is international at the senior executive level.

As a leading player in its industry, Comrod Communication ASA is dependent on offering compensation terms which can recruit the ablest executives.

In order to secure the best possible executive management, the board’s policy is to offer compensation at the level which satisfies the individual recipient and which is competitive in an international market.

1.2 The level of compensation for senior executives must basically be relatively high in a national context (from time to time, this could mean that compensation for senior executives based abroad exceeds the level of compensation for corresponding positions in Norway, and vice versa).

2. Pay and other benefits
The company’s policy is that the pay of senior executives should find expression almost entirely in a fixed monthly salary which reflects a level appropriate to the position held by the person concerned and normal practice.

Pension schemes for senior executives will basically be the same as those provided generally for employees in the business.
 
Bonus schemes for the executive management team will be linked in part to the company’s performance and in part to an assessment based on the board’s judgement.

Such judgement will take account in part of the quality of work on health, safety and the environment in the company, and results measured by the company’s HSE statistics.

Bonus schemes for the executive management team will have a ceiling, estimated for 2007 to be 40 per cent of fixed salary per person.

The board is able to offer option schemes to members of the executive management team. These options can be awarded to the people regarded by the board as playing a key role in the development of the company’s value. The board has adopted an option programme for the group’s key executives in 2007.

Senior executives are offered a company car to the extent considered to accord with normal practice. This applies at present to four employees.

Agreement on early retirement can be reached with senior executives, with the mutual right to require such retirement when the person concerned reaches the age of 62.

Pay guarantee schemes agreed when senior executives leave the company will be viewed in relation to clauses related to confidentiality and restrictions on competing activities in the contract of employment with the person concerned. Such schemes can only compensate for such restrictions imposed on the person concerned in taking a new job. Pay guarantee schemes will basically require the deduction of income from other sources.

3. Compensation policy for the previous fiscal year (2006)
The compensation policy applied for senior executives in the previous fiscal year accorded with the principles which also apply for 2007. These are specified above.

4. Consideration of this declaration
This declaration will be issued together with the notice of the annual general meeting of the company and with the company’s annual accounts.

The declaration will be considered by the general meeting, and the meeting will hold an advisory vote to approve or reject the guidelines.

Guidelines on share and share-based remuneration (share/option programmes, etc, see section 6-16a, paragraph 1, clause 3 of the Act on Public Limited Companies) must be approved by the general meeting pursuant to section 5-6 (3) of the Act on Public Limited Companies.

Tau, 28 February 2007
The board of directors of Comrod Communication ASA


Composition and independence of the board

The main emphasis in the board’s composition will be to assemble sufficient expertise to make independent evaluations of the group’s operations and to act as a well-functioning collegial body.

At least half the shareholder-elected directors should be independent of the group’s management and principal business connections.

In this context, independent means:

o directors receive no remuneration other than their director’s fees

o director’s fees are not have bonus-linked

o directors have no close family ties to the chief executive

o directors do not have or represent any significant business relationships with the company.

At least two of the shareholder-elected directors should be independent of the company’s principal shareholder.[1]

The chief executive will not have a seat on the board.

A description of the expertise and independence of the directors will be included in the annual report.

The period of election for directors is two years.

Nomination committee

The group has a separate nomination committee elected by the AGM.

The nomination committee consists of three members, one of whom must be a director.

The nomination committee will evaluate the work and competence of the board, and propose candidates for election as directors.

The nomination committee will propose the fees to be paid to directors.

The nomination committee’s recommendations and relevant information on the candidates will be circulated with other documentation for the AGM.

Work of the board

Regulations have been drawn up to govern the work of the board.

The board organises its work on the basis of an annual schedule.

The board will ensure that the group is well managed, with a clear internal division of responsibility and tasks.

Regulations for the chief executive have been drawn up.

The board will work with the chief executive and the auditor to ensure that the group is run in accordance with its basic values and ethical guidelines.

An evaluation by the board of its own work will be submitted to the nomination committee.

Board committees for remuneration and financial reporting have not been established.

Remuneration of the board

Remuneration of the board will reflect its responsibilities, expertise and use of time, and the complexity of its activities.

Remuneration of the board will not be bonus-linked.

Directors may be included in any share option schemes for senior executives in the group.

Directors, or companies with which they are connected, will not normally undertake special tasks for the company in addition to their board duties.

In special cases, a director may be asked to assist the management team in particular matters. Such assignments must be approved by the chief executive, and the board will also be informed. Remuneration will reflect normal levels for the type of assignment involved. The position must be mentioned in the annual report.

Directors and closely related parties must obtain prior permission to deal in the company’s shares.

Directors and closely related parties are not permitted to engage in short-term dealing in the company’s shares.

Remuneration of senior executives

Guidelines have been drawn up for the remuneration of senior executives. The main points are listed in the annual report.

Salary and other remuneration for the chief executive are defined by the board at a meeting. The board is also informed of the remuneration of senior executives.

Remuneration will, in both form and size, encourage long-term value creation in the company.

The group believes that cautious use of share options and/or equivalent instruments and/or bonus schemes will encourage long-term value creation.

Prior authorisation must be obtained from the AGM for option schemes and other agreements relating to the allocation of shares.

All components in the remuneration of the chief executive and all remuneration of other senior executives will be described in the annual report.

Senior executives and closely related parties who deal in the company’s shares must obtain prior authorisation.

Senior executives and closely related parties are not permitted to engage in short-term dealing in the company’s shares.

Comrod’s information policy

The group’s information policy is based on openness and equal treatment of all shareholders.

All shareholders will receive correct, clear, relevant and up-to-date information.

The emphasis will be on producing and developing central value drivers and risk factors.

While the chief executive will be the company’s spokesperson in normal matters, the chairman of the board will also be involved in providing information on matters of a special character.

The group aims to comply with the Oslo Stock Exchange’s requirements concerning the availability of information.

The group will provide shareholders with the opportunity to put their views by holding regular presentations.

Takeover bids

In the event of a potential takeover or in restructuring processes, the holdings and interests of all shareholders will be safeguarded.

Unless special grounds exist for doing so, no attempt will be made to obstruct or impede the submission of a takeover bid.

If a takeover bid is submitted, the board will not use its authority or take other measures designed to impede the bid without the prior approval of the general meeting after the bid has been made known. The board will still be bound by resolutions passed by previous general meetings.

Transactions which would in reality involve disposal of the entire company’s operations will be submitted to the general meeting if this is deemed necessary.

Auditor

The auditor will provide annual written confirmation of their impartiality and objectivity.

The auditor will attend board meetings that deal with the annual accounts.

The auditor will also present a report giving their view of such items as accounting principles, risk areas, internal control procedures, etc, and plans for implementing their own work.

All important correspondence from the auditor will be presented to the board.

The auditor will not in principle be used for assignments other than audit work and matters naturally associated with auditing, such as clarification of accounting regulations, normal tax matters, etc.

The AGM will receive a report on the auditor’s fee, broken down into legally required auditing and remuneration relating to other assignments.

Resolved at the board meeting of 7 December 2006.





[1]) somebody who owns 10 per cent or more of the company’s shares.


We will facilitate personal development, and motivate and support our employees to accept responsibility.