Yara’s five shareholder-elected members of the Board of Directors were re-elected for two years in 2008. Upon his appointment as President and CEO, Jørgen Ole Haslestad resigned from the Board on 1 October 2008. The Board decided that Haslestad’s replacement should be elected at the next ordinary Annual General Meeting, in 2009. The four shareholder-elected members all have extensive line management experience from international industrial companies. The three employee-elected Board members were elected in January 2008 and have been Yara employees for between twenty-eight and thirty-five years. Two of the seven Board members are women, both elected by the shareholders. The Board held twelve meetings in 2008.
Yara has decided not to constitute a corporate assembly. Consequently, the Board of Directors is responsible directly to the General Meeting and the shareholders. A Compensation Committee was established in April 2004 and an Audit Committee was established in December 2006.
The Board of Directors wishes to express its gratitude to Thorleif Enger who retired from his position as President and CEO in September 2008, upon reaching his desired retirement age after 35 years with Yara and Hydro. Mr. Enger played a crucial role in the development of Yara, contributing strongly to the turnaround process leading up to the company’s success since the listing on Oslo Stock Exchange in 2004.
To succeed him, the Board welcomes Jørgen Ole Haslestad as the new President and CEO. With extensive experience from international industry, his prior background on the Yara Board – and being a farmer himself – we rest confident that Mr. Haslestad will contribute to the continued growth and success of Yara.
Yara believes good corporate governance drives sustainable business conduct and long-term value creation. Yara aims to exercise corporate governance in a manner representative of an ambitious and responsible multinational company, and has established practices adapted to the specific challenges facing it as the world’s largest global fertilizer company. The Board of Directors will comply with the Norwegian Code of Practice for corporate governance. This Code has stricter requirements than what is mandated by law.
The parent company, Yara International ASA, is primarily a holding company, with financial activities and only non-material operations. Yara International ASA had net income of NOK 206 million in 2008 after a currency loss of approximately NOK 3.2 billion related to USD denominated loans.
Yara expects to return 40–45 percent of net income to its shareholders, measured as the sum of dividends and share buy-backs, averaged over the business cycle. As long as Yara can maintain profitability at the attractive level it achieved over the past five years, a dividend level that restricts Yara’s growth will not be desirable.
Yara’s dividend policy is to pay out minimum 30 percent of net income as an average over the business cycle. Yara believes it will be beneficial for shareholders for the Company to strive for a gradual increase and predictability in the absolute dividend level over time, independent of the business cycle. Consequently, Yara expects to pay out somewhat more than 30 percent of net income in years with weaker-than-average cash flow from operations – and less than 30 percent in years with stronger-than-average cash flow from operations.
Current equity and credit markets, with more restricted access to long-term financing, may limit Yara’s growth opportunities in the short term. This supports a more conservative short-term dividend policy.
The Board proposes a dividend of NOK 4.50 per share, totaling a payment of NOK 1,304 million. Combined with the positive result in Yara International ASA, this results in an decrease of equity of NOK 1,098 million. Distributable equity in the parent company as of 31 December 2008 was NOK 282 million after proposed dividend.
Yara will use share buy-back programs when certain conditions are met. Share buy-backs are more flexible than dividends. For most shareholders, buy-backs also provide tax advantages compared to dividends. In 2008, Yara bought back 1,750,000 shares for a total of NOK 422 million.
In total Yara paid out NOK 1,588 millions in 2008 in dividends and share buy-backs, representing 26 percent of consolidated net income in 2007. The proposed 2008 dividend represents 16 percent of consolidated net income.