Annual Report 2017

NSB Group’s main ambition is to create value for owner and society through effective, accessible, safe and environmentally friendly transport of people and goods.
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1. Reporting on corporate governance
This statement follows the chapters in the Norwegian Code of Practice for Corporate Governance. NSB AS and the NSB Group adheres to the Code but with notable exceptions as the Group is not listed on a stock exchange, is owned 100 % by the Norwegian State and has certain restrictions in its articles of association. The Code is designed to ensure that companies listed on the stock exchange have ownership control and a corporate governance that clarifies the roles between shareholders, the board of directors and management in addition to basic legal requirements.

The Code is intended to strengthen confidence in listed companies among shareholders, the capital market and other interested parties.

The board of directors has adopted a set of Group values including both ethical- and social responsibility guidelines and which are published on our homepage

2. Nature of business
NSB is a transport group with activities in both Norway and other Nordic countries. The parent company, NSB AS, is owned by the Norwegian Government through the Ministry of Transport and Communications. The Group’s headquarters are in Oslo.

The group’s business is as stated in the articles of association:
// The company’s social mission is to provide efficient, accessible, secure and environment-friendly passenger and freight transport.
// The company’s business is the carriage of passengers by rail in Norway, transport of passengers and goods in Norway and other Nordic countries as well as other related business.
// The business may be run by the company itself, by wholly owned subsidiaries, through other part-owned companies or by collaboration with other companies. The company may do business in other Nordic countries as far as this helps to strengthen company effectiveness in the Norwegian market and/or helps the company to cover its social duties mandated by state ownership.

3. Equity and dividends
NSB AS is a State Limited Liability company, ie a limited liability company where the state owns 100 % of the shares. The Minister of Transport or he/she to whom he delegates authority safeguards the rights of shareholders at the annual general meeting.

Important rules made specifically for such companies are as follows:
// The annual general meeting is not bound by the dividend recommendation agreed by the board of directors.
// The Office of the Auditor General of Norway who audits the management of all state ownership has a right to demand information from the CEO, the board and the external auditor.

The government expects an annual dividend equal to 50 % of Group profit after tax, but the actual level is decided annually. The board does not have a mandate to apportion dividends or to increase the number of shares.

4. Equal treatment of shareholders and transactions with close associates
The company has only one class of shares. They are not listed on a stock exchange and there are no share transactions. NSB AS has a contract with the Ministry of Transport and Communications concerning the public purchase of passenger traffic services on non-profitable railway lines. A similar contract applies to NSB’s subsidiary NSB Gjøvikbanen AS regarding operation of the Gjøvik line.

Guidelines appertaining to material transactions between the company and members of the board of directors or management are given in the Group’s ethical guidelines and specified in instructions to the board and the CEO.

5. Freely negotiable shares
The company’s articles of association are without any form of restrictions on the negotiability of its shares.

6. General meeting
The general meeting consists of the government represented by the Ministry of Transport and Communications. The Ministry calls the meeting. An annual general meeting is to be held before the end of June.

The members of the board, the CEO and the auditor have the right to attend the general meetings.

7. Nominating committee
The general meeting consists of the government represented by the Ministry of Transport and Communications. The general assembly does not appoint a nominating committee.

8. Corporate assembly and board of directors: composition and independence
The company does not have a corporate assembly. The board is elected by the general meeting. Two or three board members with deputies are elected by and among the employees. By agreement and in lieu of a corporate assembly, the employees elect a board member and deputy in addition to the above representatives.

The members of the board of directors are chosen based on experience, competence, diversity and ability to contribute to the development of the company. A company manager cannot be a member of the board of directors or own shares in the company. Information on board members is published on the NSB AS homepage

9. The work of the board of directors
The board’s work is governed by the Norwegian Companies Act, ie to manage company value on behalf of the owners. This is specified in separate instructions. The board follows a formal work plan on an annual basis. The plan regulates the board’s main tasks which are to oversee the goal, strategy, organization and control of operations. The board of directors’ work is evaluated annually by the board itself. The board has established a separate set of instructions for the CEO. The board of directors must ensure that the company has effective systems for internal control and risk management that are commensurate with the extent and nature of the company’s activities. The board, according to the principles of association, shall ensure that the company acts in a socially responsible manner. The board has established audit and remunerations committees.

10. Risk management and internal control
To ensure the quality of internal control, a separate governing system has been implemented. This includes leadership instructions, preparedness plans, safety procedures and processes to govern and control operations. Guidelines, routines, handbooks and authorization matrices are in place to ensure the quality of the company’s economics, financial reporting and financing.

Risk analysis of all the various activities of the Group are evaluated on an annual basis, and measures are taken to control risks. The board reviews company risk management and internal control annually.

11. Remuneration of the board of directors
Information about the compensation of the board and key management is included in notes to the financial statement. The remuneration of the board is not linked to the company´s performance. The shareholder-elected members of the board of directors do not normally take on specific assignments for the company.

12. Remuneration of executive personnel
The board of directors hires the CEO and decides his/her remuneration. The board evaluates the CEO’s performance and salary parameters on an annual basis, and reviews the compensation of key management. The board has established guidelines for remuneration of members of key management. The CEO has been given authority to determine remuneration for key management within the above mentioned guidelines and adhering to the principles of remuneration for management in state owned companies. Remuneration guidelines for management are discussed at the annual general meeting. Information on the compensation of the board and key management is included in notes to the financial statement.

13. Information and communications
Public information is communicated by the senior management of the Group. Financial information and the publication dates are to be found on the company’s homepage.

Paragraph 10 in the articles of association state that NSB has a specific duty to inform the shareholder about the Group’s operations. Matters of principle or social significance should be communicated to the Minister of Transport and Communications by the board of directors before they make any final decision.

Every year the board of directors is obliged to present to the Minister of Transport and Communications a plan for the operations of the NSB Group that includes the following aspects:
1. An assessment of the market in which the NSB Group operates, including developments since the previous plan.
2. The Group’s main activities for the next few years, including plans for major restructuring, further development, the winding up of existing operations and the establishment of new ones.
3. The level of investment, new major investments and their financing.
4. The Group’s economic development.
5. A report on measures and results regarding the company’s social mission and corporate responsibility.

The board of directors has also to submit information regarding any material change to plans previously communicated to the Minister of Transport and Communications.

14. Take-overs
State ownership precludes take-overs and is not relevant here.

15. Auditor
The auditor is elected by the annual general meeting. The auditor submits annually a Management Letter to the board of directors, reporting the main findings from the audit of the company and status regarding management and internal control. The board of directors hosts an annual meeting with the auditor where the CEO is not present. The auditor attends the annual general meeting and some board meetings where relevant.

The auditor’s remuneration is reported in notes to the financial statement.