Corporate Governance
Corporate Governance principles and review
As a Norwegian public limited liability company, Algeta is subject to the regulation of the Public Limited Liability Companies Act of 1997, as amended (the “Act”). The Company complies with the Act.
The Board of Algeta has resolved as a main principle to follow the recommendations of the Norwegian Corporate Governance Code to the extent not considered unreasonable due to the size or situation of Algeta. If not fully implemented Algeta will provide explanations of non-compliance to the market.
Algeta will include a Corporate Governance review in its annual report, starting with the annual report for 2006. The Company was listed in March 2007, but prior to being listed, the Company did not issue public annual reports.
Algeta has implemented a set of ethical guidelines, Code of Ethics.
Business
The Company’s business objective is to develop and commercialize pharmaceuticals against cancer as stated in the Articles of Association. The Company’s Corporate Strategy is further described on the web site.
Equity and dividends
As Algeta is a development stage company, the Company is equity financed. The Company does not expect to pay any dividends in the short or medium term as outlined in Algeta’s Dividend Policy.
In connection with Algeta’s Employee Stock Option Plan (”ESOP”), the board has been granted authorizations to issue shares. In the opinion of the Company, it is reasonable to grant such an authorization for the maximum term under the current legislation as the ESOP is valid for several years. The Board as of now does not have an option to acquire own (Company) shares, but this may be possible in future in order to avoid share emissions at four yearly option exercise windows.
Equal treatment of shareholders and transactions with related parties
Algeta has from the time of listing only one class of shares (Ordinary Shares). All shares hold equal rights.
The Company does not trade in its own shares. The Company currently has not entered into significant transactions or agreements with close associates. Should such agreements be entered into, the Board will ensure that an independent third-party evaluation is obtained.
Employees and Board members should inform the Board if involved in transactions with the Company. The Company has resolved formal board instructions and instructions to the CEO, which obligates them to report of such interest to the Chairman of the Board.
Freely negotiable shares
The shares of the company are freely negotiable and there are no restrictions in the Articles of Association.
General meeting
The Board ensures participation by the shareholders in the General meetings by sending notice of a General meeting to all shareholders registered in the VPS no later than two weeks prior to the meeting. The notice is accompanied by explanatory statements in respect of the suggested resolutions. To participate, a shareholder is normally requested to notify the Company one to two working days prior to the meeting. Shareholders may participate in person or through a representative.
The Board is always represented in a General meeting, but due to the residency of the Board members the whole Board is normally not present. The Auditor is present when the annual accounts are resolved.
The Company does not have formal routines that ensure independent chairing of the General meeting. However, the Board has on an ad hoc basis evaluated independent chairing and in the past ensured such if considered necessary.
Nomination Committee
Algeta has appointed a Nomination Committee as a sub-committee of the Board of Directors, comprising three to four persons who are not board member. The four members of the nomination committee are chosen by the four largest shareholders per 1 September.
Board of Directors – composition and independence
The Board comprises eight members and the composition should ensure that the shareholders interests are maintained, and that the Company’s need for a diversified and experienced Board with sufficient capacity is complied with. Both genders are represented with at least three Board members.
All Board members are fully considered unrelated to the management and main business associations of Algeta. Per January 2010 all Board members except Joe Anderson and Per Samuelson are independent of shareholders holding more than 10% of Algeta shares. None of Algeta’s executives is elected to the Board.
The Board members are elected for one-year terms. The Company expresses a positive attitude toward shareholding by its directors.
The work of the Board
The Board is actively supervising the activities of the Company through frequent board meetings and meetings with the management. The Board has adopted an annual plan for its work. The Board has furthermore resolved board instructions and instructions for the CEO detailing the work and responsibilities of the Board and the CEO, respectively.
The Board has elected a Deputy Chairman who functions as Chairman if the Chairman is unable to function in his capacity. The Board continuously evaluates the need for sub-committees. Currently the Board has established a Remuneration Committee and an audit commitee as sub-committees of the Board.
The Board has conducts annual formal self-evaluations.
Risk management and internal control
Algeta has a limited number of employees dedicated to the development of novel pharmaceutical products. The Board ensures that the level of internal control and risk management reflects the size and the nature of the activities of the Company. Development of pharmaceutical products must comply with extensive government regulations, and Algeta has in this respect implemented a quality assurance system. The system includes audits of critical activities, including activities performed by suppliers of services to Algeta. Invoice and bank account approval mandates and professional management of the Company’s liquid funds are also important parts of Algeta’s internal control and risk management.
Internal control and risk management is continuously evaluated. It includes but is not limited to an annual review.
Board members’ remuneration
The remuneration of the Board reflects the competence, time spent by and the responsibilities of the Board members. The following compensation was resolved:
- Board members received NOK 30,000 per year
- The Deputy Chairman received NOK 50,000
- The Chairman received NOK 100,000. [os1]
The previous Chairman of the Board, now board member, has been allotted share options due to his previous role as a consultant to the company.
Management remuneration
The Board resolves the remuneration of the CEO in a Board meeting and the remuneration to the CEO is communicated to the shareholders through the annual financial accounts. The Board further provides the guidelines for the remuneration of other employees through the budgets, and specifically approves the remuneration to management.
The Company has implemented an Employee Stock Option Plan in which all employees participate. The ultimate limits of the plan have been resolved by the shareholders through provision of an authorization to issue shares to the recipients of share options under the plan. The shareholders did not however resolve the details of the program and distribution of the share options.
The Company will comply with the new regulations in the Act §6-16a in providing information to the general meeting about remuneration of management.
Information and communication
The Board has established guidelines for Algeta’s financial reporting and other information to the financial market in its Investor Relations Policy. Algeta will provide the financial markets equally with sufficient information, enabling a fair market valuation of the share.
A financial calendar is available on the Company’s web-site.
Information sent to the shareholders is simultaneously posted on the Company’s web-site.
Take-overs
The Board has not implemented any defence-mechanisms against take-overs. Should the Company be subjected to take-over bids the Board intends to comply with the applicable statutory regulation and the guidelines of the Corporate Governance Code with an over-all objective to treat all shareholders equally and maintain the best interests of the Company.
Auditor
The auditor has presented an annual plan for his work to the Board, and the Auditor participates in the Board meeting approving the annual financial accounts. Due to the nature of the activities of the Company the Board has not implemented guidelines for the management’s use of the auditor’s services outside the statutory audit.
The auditor has reviewed the internal control and met with the Board. The management has been present in the Board meetings with the Auditor, but from the time of listing the Company has ensured that at least once a year the Board also meets with the Auditor without the presence of the management.
The remuneration of the Auditor is included in the annual accounts, specifying auditor services and other services.