Corporate Governance Statement

Corporate Governance

1. Implementation and reporting on corporate governance

Höegh Autoliners ASA (‘Höegh Autoliners or ‘the Company’) is a public limited company which complies with Norwegian law. The Company considers good corporate governance to be a prerequisite for value creation, trust from stakeholders and access to capital.

The Company wish to comply with the Norwegian legal framework applicable to companies listed on Euronext Growth Oslo, and the Company endorses the Norwegian Code of Practice for Corporate Governance (Nw.: Norsk anbefaling for eierstyring og selskapsledelse), issued by the Norwegian Corporate Governance Board, and most recently revised as of 14 October 2021 (the "Code").

The Company is not bound by the “comply or explain” principle under the Code but will annually report its corporate governance requirements and recommendations within the annual report, covering every section of the Code.

The Company's corporate governance policy regulates the division of roles between the Company's shareholders, board of directors, executive management and committees. The corporate governance policy also provides the structure through which the objectives of the Company are set, and the means of attaining those objectives and monitoring performance are determined.

The Company believes that good corporate governance involves transparent and effective cooperation between all parties involved with the Group and its business. This includes the Company's shareholders, board of directors and the Group's executive management team, employees, customers, suppliers, and other business partners, as well as public authorities and society at large.

2. The business

The Company's activities and operations is restricted to the business objective specified in Article 3.

The Company's business objective according to section 3 of the Articles of Association reads as follows: "Shipping and other economic activities, including participation and financing of other companies."

The Company’s Articles of Association can be found on the Company’s website www.hoeghautoliners.com/about-us/corporate-governance/articles-of-association.

3. Equity and dividends

Equity

As of 31 December 2021, the total equity amounted to USD 801 million, corresponding to 48%, up from 37% at the end of 2020. The liquidity position is good, with cash and cash equivalents of USD 228 million at year end 2021. The Group had net interest-bearing debt of USD 491 million at the end of 2021. The Group was in compliance with all loan covenants at year-end 2021.

The Board of Directors considers the Company’s capital structure as satisfactory.

Dividend policy

The Board of Directors has adopted the following dividend policy:

Höegh Autoliners targets to distribute dividends to shareholders of between 30-50% of annual net profit after tax, taking into consideration its outlook, investment opportunities and financial position. Any declaration of dividends will, however, be at the discretion of the Board of Directors. Dividends will be declared in USD.

The reason for any proposal to grant the board of directors an authorisation to approve distribution of dividends should be explained and the explanation should state to which extent the authorisation is based on the Company's dividend policy. An authorisation granted to the board of directors to approve distribution of dividends shall be limited in time and not be granted for a longer period than until the next annual general meeting.

The Company has not paid dividends for the financial years 2020 or 2019.

The board has decided to not propose distribution of a dividend for the financial year 2021, to the Annual General Meeting to be held in April 2022.

Authorisations to the Board of Directors

On 24 November 2021, the General Meeting resolved to grant the Board of Directors (i) an authorisation to increase the Company's share capital by up to NOK 560 033 983 in order to ensure flexibility for the Company going forward, related to financing of further growth, issuances of shares as consideration in connection with share incentive programs and to position the Company to being able to efficiently carry out mergers, acquisitions or investments in other companies, and (ii) an authorisation to increase the Company's share capital by up NOK 111 000 000 to be used to facilitate the Company's redelivery of shares to DNB in connection with stabilization measures taken in connection with the private placement completed on 24 November 2021. The board of directors resolved to increase the share capital pursuant to the second authorisation, by NOK 23 222 369.20 on 29 December 2021. The authorisations are valid until the Company's annual General Meeting in 2022, but no longer than to and including 30 June 2022.

4. Equal treatment of shareholders

Shareholders

As of 31 December 2021, the Company had 477 shareholders, of which 52 were foreign, and the remaining were Norwegian. The Norwegian shareholders account for 121 046 263 of the Company’s shares, or 63% of the total number of shares.

Pre-emptive rights

The Company has one class of shares in issue and, in accordance with the Norwegian Public Limited Companies Act, all shares in that class provide equal rights in the Company, including the right to any dividends. Each of the Shares carries one vote.

If the board of directors resolves to issue new shares and deviate from existing shareholders' pre-emptive rights pursuant to an authorization granted to the board of directors, the board will make sure to publicly disclose in a stock exchange announcement issued in connection with the share issue.

Transactions in treasury shares

The Company does not own any treasury shares 31 December 2021.

Transactions with close associates

Any transactions taking place between a principal shareholder or close associates and the Company will be conducted on arm’s length terms. In the event of non-immaterial transactions, the Company will seek independent valuation. Relevant transactions will be publicly disclosed to seek transparency. Pursuant to the instructions issued by, and for the board, Directors are required to inform the board if they have interests and/or relations, directly or indirectly, with other companies within the Höegh Autoliners group.

5. Freely transferable shares

The shares of the Company are freely transferable and there are no limitations on any party's ability to own or vote for shares in the Company. The Company’s shares are trading on Euronext Growth under the ticker “HAUTO”.

6. General meetings

The general meeting will be held in the second quarter of the year.

The board of directors will ensure that the Company's shareholders can participate and exercise their voting rights in the Company's general meeting.

The Board of Directors will further ensure that:  

  • the resolutions and any ancillary documentation are sufficiently detailed and comprehensive, thereby allowing shareholders to understand and make an opinion on all matters to be considered at the general meeting
  • the notice of the general meeting and any ancillary documents and background information on the resolutions to be considered at the general meeting will be available on the Company's website no later than 21 clear days prior to the date of the general meeting.
  • shareholders wishing to attend the general meeting must notify the Company at least two working days before the meeting takes place.
  • the board of directors and the chair of the general meeting will ensure that shareholders are able to vote separately on each matter and each candidate nominated for election to the Company's board of directors.
  • The chair of the board of directors and the CEO will be present at the general meeting.

Participation without being present

Shareholders who are unable to attend a general meeting will be given the opportunity to attend the general meeting electronically, be represented by proxy and to vote by proxy. The Company will in this respect provide information and procedure for electronic attendance and attendance by proxy, and prepare proxy forms or written voting forms, which will make it possible to vote separately on each individual matter on the agenda and for candidates nominated for election.  

7. Nomination committee

The Company currently has no nomination committee. The Company intends to establish a nomination committee. 

8. Board of directors: composition and independence

The Company’s board of directors is elected by the general meeting. The board shall consist of between six and twelve members. The Board of Directors currently comprises of seven members and one deputy board member.

Name

Function

 

 

Leif O. Høegh  

Chair

 

 

Morten W. Høegh         

Deputy chair

 

 

Jan B. Kjærvik

Director

 

 

Martine Vice Holter      

Director

 

 

Johanna Hagelberg      

Director

 

 

Kjersti Aass     

Director

 

 

Kasper Nilaus  

Director

 

 

Thor Jørgen Guttormsen          

Deputy for Morten W. Høegh

 

 

The composition of the board of directors meets the need for expertise, capacity and diversity to achieve the Company’s goals, handle its main challenges and promote the common interests of all shareholders.

The Board of directors is composed so that it can act independently of any special interests. Three of the directors are women, and the majority of the directors are independent of the Höegh Autoliners group’s executive management and material business connections. Two of the directors, Johanna Hagelberg and Kjersti Aass, are independent of the Company’s major shareholders. Information on the background and experience is available on the Company’s website.

9. The work of the board of directors

The Board of Directors has implemented instructions its own work, focusing on determining allocation of internal responsibilities and duties.   

The Board of Directors has the ultimate responsibility for the management of the company and must ensure that the activities are organised in a prudent manner.

The Board of Directors has implemented procedures so that the board of directors and executive management are aware of any material interests that they may have in matters to be considered by the board of directors, so that these can be considered on an unbiased and satisfactory manner.

The Board of Directors establishes an annual plan for its own work, with particular focus on objectives, strategy and implementation, and annually evaluates its performance.

Audit Committee

The Company’s Audit Committee currently consists of three members: Jan B. Kjærvik (Chair), Morten W. Høegh and Johanna Hagelberg. All members of the Audit Committee are independent of the Company’s executive personnel, and at least one member of the Audit Committee is competent in respect of finance and audit.

The Audit Committee’s objective is to act as a preparatory working committee and support the board’s supervisory roles with respect to financial reporting and the effectiveness of the Company’s internal control and risk management systems. The Audit Committee also monitors that the external auditor is independent in relation to services rendered and relationships that may impact objectivity and independence between the external auditor and the Company, including review and pre-approval of non-audit services provided by the external auditor.

Sustainability, Governance and Compensation Committee

The Company has established a Sustainability, Governance and Compensation committee consisting of Martine Vice Holter (Chair), Leif O. Høegh, Kjersti Aass and Kasper Friis Nilaus. The members are independent of the Company’s executive personnel.

The Sustainability, Governance and Compensation Committee’s objective is to ensure thorough and independent preparations of matters relating to governance and compensation of the Company’s executive management as well as to ensure focus on sustainability.  

Management team

In 2021, the executive management team at Höegh Autoliners ASA consists of a Chief Executive Officer (CEO) and six other team members:

    • Chief Financial Officer (CFO)
    • Chief Operations Officer (COO)
    • Chief Strategy and Analytics Officer
    • Chief Trade and Capacity Officer
    • Chief Sales Officer
    • Chief HR and Communications Officer

The executive management team discusses and coordinates all main business and management issues relevant for the Company.

An overview of the background and expertise of the executive management team is available on the Company’s website.

10. Risk management and internal control

The board of directors has the responsibility to ensure that the Company has sound internal control and risk management systems and believes the systems are appropriate in relation to the scope and nature of the Company’s activities. Risk management is integral to all of the Company’s activities, and risks within each business area are continuously monitored and managed.

The Company has a global management system where governing documents, code of conduct, policies, guidelines are available to the employees of the Company. Various internal control activities ensure that the financial systems are working adequately and according to management’s expectations.

The board of directors regularly reviews the Company’s risk matrix and internal control arrangements.

11. Remuneration of the Board of Directors

The remuneration of the Board of Directors is determined by the shareholders at the Company's Annual General Meeting and shall reflect the Board of Directors’ expertise, the complexity of the Company and its business, time spent, and the level of activity performed. The remuneration is not linked to the Company’s performance and share options are not granted to the directors.

12. Remuneration of executive management

The Company’s remuneration approach is to ensure the compensation of the Executive management complies with relevant regulatory requirements, is aligned with the Company’s values and reward policies. A prerequisite for the successful implementation of the Company’s strategy and safeguarding of its long-term interests, including sustainability, is that the Company can recruit and retain qualified people.

The board determines the CEO’s remuneration and establishes the framework for salary increases and bonus payments for other employees including the rest of the executive team effective 1 January each year. An overview of the executive management remuneration packages is detailed in Note 5 in the Company’s accounts.

The compensation package consists of three main elements:

  1. Base salary – benchmarked using external providers
  2. Variable pay including short- and long-term incentives
  3. Benefits including insurances, pension and other non-financial elements

Short-term variable remuneration

To encourage a strong team performance culture, the executive management have an annual variable pay rewarding the team and individuals achieving short-term business objectives toward strategic company objectives. The board sets goals and targets for the respective performance year for the CEO which are cascaded to the rest of the executive management. The board also determines the extent to which they have been achieved. By ensuring that strategic objectives are properly reflected in stretched yet achievable goals, the realization of strategic business objectives is addressed. There is a weighting of goals including both financial and non-financial objectives.

Long-term variable remuneration

In addition to short-term variable remuneration, a long-term incentive plan for the executive management was introduced in 2021. The aim of the plan is to strengthen the alignment of the Executive management’ and shareholders’ long-term value creation and to foster an owner like behaviour and decision making.

It is an annual plan where award shares are assigned annually at the board’s discretion. An award share is an artificial share which only purpose is to simulate the fair market value of a share. The award share is used in the award calculation method for determining the amount of bonus shares which shall be granted to the employee after the award shares have vested. The award shares are automatically vested three (3) years after the award date with a two year lock up.

13. Information and communications

Höegh Autoliners´ investor relations policy describes our guidelines for communication with shareholders and the financial market. We seek to conduct an open and continuous dialogue to ensure good basis for the financial market in evaluating trade in the Höegh Autoliners’ share.

Communication

Our main communication channels for share relevant information are stock exchange notices, the Company´s web site, quarterly reports and presentations and direct dialogue conducted by designated employees.

Höegh Autoliners publishes financial results on quarterly basis in accordance with its financial calendar. The financial calendar is published annually and updated when needed.

Silent period

Höegh Autoliners will not participate in meetings, conferences nor direct dialogue regarding financial results thirty (30) days prior to publishing of the quarterly results.

14. Takeovers

The Board of Directors has established principles for its actions in the event of a takeover offer in accordance with the principles of the Code.

In a takeover process, the board of directors and the executive management each have independent responsibilities to ensure that the Company's shareholders are treated equally and that there are no unnecessary interruptions to the Company's business activities. The Board of Directors has a particular responsibility to ensure that the shareholders are given sufficient information and time to assess the offer.

15. Auditor

Höegh Autoliners’ external auditor is elected at the AGM, which also approves the auditor’s fees for the parent company. The Company's auditor, PwC, attends all Audit Committee meetings and participates in any meeting regarding the annual accounts or assessment of important accounting estimates. The auditor annually presents an audit plan to the audit committee.

Information about the auditor’s fees, including a breakdown of audit related fees and fees for other services, is included in the notes to the financial statements.

For the financial year 2021, Bjørn Rydland was the Company’s engagement partner from PwC.