Investor Relations

Corporate governance 2010

Proactive and transparent corporate governance is crucial for aligning the interests of shareholders, management, employees and other stakeholders. Yara believes that good corporate governance drives sustainable business conduct and long-term value creation.

Implementation and reporting of corporate governance

Yara exercises corporate governance in a manner representative of an ambitious and responsible multinational company. The company has established corporate governance practices tailored to the specific challenges it faces as the leading global fertilizer company. Yara’s Board of Directors has decided to comply with the latest version of Norwegian Code of Practice for corporate governance, dated Oct. 21, 2010. The Code has stricter requirements than mandated by law.

Yara currently complies with all but one of the Code’s recommendations. In order to reach full alignment with all the Code’s new recommendations, new guidelines for the Nomination Committee will be submitted for approval at the annual general meeting on May 10, 2011.

Yara’s compliance with the Code is detailed in this report, and section numbers refer to the Code’s articles.

Corporate citizenship is an integral part of Yara’s overall strategic direction and a driver for pursuing business opportunities. The company carries out its engagement in corporate citizenship directly through its core business and expertise. These efforts are framed within major global challenges, in particular climate change and food security, issues that shape the future of society and global business.

Yara participates in the UN Global Compact, committing itself to implementing the initiative’s ten principles, including respect for internationally proclaimed human rights and recognized labor standards. Furthermore, Yara’s focus on compliance has been reinforced through its code of conduct as well as establishment of a dedicated compliance unit and an ethics program developed in 2009–2010.


The scope of Yara’s business is defined in its Articles of Association, published in full on the company’s Website. Yara’s objectives and strategies are presented in the Report of the Board of Directors and Management Discussion and Analysis.

Equity and dividends

Yara’s strong balance sheet is closely linked to the company’s overall strategy, goals and risk position. The dividend policy, which is described in the Report of the Board of Directors and the article on the Yara share, aims to provide a predictable payout over the years.

New equity will be issued only when quantum leap defined opportunities arise. No mandate is granted to the Board of Directors to increase the company’s share capital. Yara executes share buy-back programs as an integral part of its shareholder policy. Mandates granted to the Board of Directors for the company to purchase its own shares are limited in time to the date of the next annual general meeting. The rationale behind the share buy-backs is further described in the Report of the Board of Directors.

Equal treatment of shareholders and transactions with close associates

All Yara shareholders have equal rights and the company has one class of shares. 

Transactions involving the company’s own shares, such as the share buy-back program, are normally executed via the stock exchange or at prevailing stock exchange prices if carried out in any other way. Shares redeemed from the Norwegian State are also priced at market value.

In 2010, there were no significant transactions between closely related parties, except for ordinary commercial transactions with subsidiaries and non-consolidated investees. In addition to the mandatory regulations in the Norwegian Public Limited Companies Act (§§ 3-8 and 3-9), Yara uses IFRS rules to define related parties. Related party transactions are disclosed in note 32 to the consolidated financial statements. The members of the Board of Directors and Management are required to disclose all entities that would be considered to be “related parties” under applicable laws and regulations. Transactions with such entities are subject to disclosure and special, independent approval requirements.

Freely negotiable shares

The company places no restrictions on the transferability of shares.

There are no restrictions on the purchase or sale of shares by directors and executives, as long as insider regulations are adhered to. Certain management compensation programs, including the so-called Long-Term Incentive scheme, mandate the use of a portion of the funds received by management for the purchase of Yara shares and restrict the sale of such shares for varying periods following such purchase.

General Meetings

The Company’s shareholders are primarily represented at the company’s Annual General Meeting. In accordance with Norwegian corporate law, shareholders registered in the Norwegian Central Securities Depository (Verdipapirsentralen) can vote in person or by proxy on each agenda item and candidate. Notice of the meeting and relevant documents, including the recommendations of the nomination committee, are made available on Yara’s website no later than three weeks in advance of the meeting. Notice of the meeting is sent to all shareholders individually, or to their depository banks, at least three weeks in advance of the meeting.

The chairperson of the Board and the CEO are present at the Annual General Meeting, normally along with the Board of Directors, the Nomination Committee and the Company Auditor. An independent, qualified person chairs the meeting. The protocol of the Annual General Meeting is published at Yara’s website.

Nomination committee

Yara’s Articles of Association state that the company shall have a Nomination Committee that consists of four members elected by the Annual General Meeting. The Nomination Committee nominates the chairperson of the board and shareholders' candidates to the Board of Directors presenting relevant information about the candidates and an evaluation of independence, and proposes the remuneration of the Directors to the Annual General Meeting.

Members of the committee are elected for two-year terms. All four members are independent of the Board and the Management. In 2010, the Nomination Committee had six meetings. Members of the Nomination Committee received a remuneration of NOK 4,500 per meeting in the first half of 2010 and thereafter NOK 4,700 per meeting.

The current guidelines for the duties of the nomination committee are approved by the shareholder-elected members of the Board of Directors. The new Code from Oct. 21, 2010, recommends that the general meeting shall stipulate the guidelines. New guidelines for the nomination committee in line with the Code’s recommendation will be submitted to the annual general meeting May 10, 2011, for approval. The current practices of the Nomination Committee are in line with the company’s new proposed guidelines.

Corporate assembly and board of directors: composition and independence

In accordance with an agreement between Yara and the employees, Yara does not have a corporate assembly. Yara believes this supports more direct communication between shareholders and management, increases accountability and improves the speed and quality of decision making in the company.

Yara’s Board of Directors consists of eight members. Five shareholder-elected board members including the chairman are elected for two-year terms by the general meeting. The remaining three employee-elected board members are also typically elected for two-year terms. Three of eight Directors are women.

The shareholder-elected members of the board are independent of the company’s management, main shareholders and material business contracts. The same is valid for the employee representative board members, other than their employee contracts. For more details on the Board members’ competence and independence, please see the consolidated financial statements in the download center.

The work of the board of directors

The Board’s work follows an annual plan and conducts an annual self-evaluation of its performance and expertise, which is presented to the Nomination Committee. 

The Board has established written instructions for its work and the work of the Audit Committee, Compensation Committee and Executive management. 

In 2010, the Board of Directors held 12 meetings. Frank Andersen was absent from three meetings and Leiv L. Nergaard, Lone Fønns Schrøder and Elisabeth Harstad were absent from one meeting. The other board members attended all board meetings during their board membership period in 2010.

In the case of the Chairperson’s absence, the Board elects a Board member to chair the meeting. If the chairman of the board is, or has been, personally involved, in matters of material significance to the Company, the board’s consideration of such matters will be chaired by some other member of the board.

All shareholder-elected members are independent of the Management and the main shareholders. Neither the President and CEO, nor other members of the Executive management, is a Director of the Board.

Compensation Committee

Yara’s Compensation Committee reviews the performance and proposes terms and compensation for the CEO to the Board of Directors. The committee also reviews and proposes guidelines for executive remuneration and material employment matters. Future policies for possible option arrangements or share incentive rights (SIRs) will be presented to the Annual General Meeting for approval. The Compensation Committee consists of three members elected by the Board from its own members. In 2010, the Compensation Committee held six meetings. 

Audit Committee

Yara’s Audit Committee assists the Board of Directors in assessing the integrity of the Company’s financial statements, financial reporting processes and internal controls, risk management and performance of the external auditor. The Committee conducts an annual self-evaluation according to its mandate. Yara’s Audit Committee consists of three members of the Board, all of whom are independent from the company. The Chairperson of the Audit Committee is not the Chairperson of the Board. In 2010, the Audit Committee held six meetings.

Risk management

The Yara Steering System is one of the pillars in Yara’s internal control system. The steering system provides all employees with an oversight of the prevailing policies and procedures for the group, including Yara’s corporate values, guidelines for corporate citizenship and Yara’s Code of Conduct. The Steering System aims to ensure that all Yara employees act in a consistent manner and in line with quality standards and business needs.

All Yara employees are encouraged to raise questions or issues about such matters with line management and through alternative channels, including a whistle-blowing system. Compliance with the steering system is monitored by monthly reviews of key performance indicators that cover both financial and operational activities, including health, environmental, safety and quality performance.

Yara Internal Audit is a unit that assists Yara Executive management by bringing a systematic, disciplined approach to evaluating and improving the effectiveness of risk management, controls and governance processes. The Chief Audit Executive reports functionally to the Board of Directors and administratively to the Chief Financial Officer. Yara Internal Audit has no direct operational responsibility or authority over any of the activities it reviews. The unit has unrestricted access to all functions, records, physical properties and personnel relevant to the performance of engagements. It also has full and free access to the Board of Directors, the Audit Committee and the Board of Directors.

The Board carries out annual reviews of the company’s most important areas of exposure to risk and its internal control arrangements.

Procedures and control mechanisms have been established to maintain the confidentiality of financial information and to ensure appropriate communication of financial information internally and externally to all shareholders at the same time.

Yara also has procedures on responding to accidents and other unexpected events such as natural disasters. Practice drills are conducted regularly, to ensure that procedures are operational.

Remuneration of the Board of Directors

The remuneration of the Board of Directors is not linked to the company’s performance.

The Chairperson of the Board of Directors received a fixed compensation of NOK 420,000 in 2010, while each of the other board members received NOK 241,000.

The Chairperson of the Audit Committee received a fixed compensation of NOK 87,500 in 2010, while each of the other two committee members received NOK 72,000.

Members of the Compensation Committee received a remuneration of NOK 5,500 per meeting in the first half of 2010 and thereafter NOK 5,800 per meeting.

The actual compensation to the board members in 2010 is disclosed in note 32 in the consolidated financial statements.

Remuneration of executive personnel

The Board of Directors prepares guidelines for the remuneration of executive personnel which is communicated to the annual general meeting. The guidelines to be presented at the annual general meeting on May 10, 2011, are disclosed in note 32 in the consolidated financial statements.

The Board of Directors determines the remuneration of the President and CEO based on a proposal from the Compensation Committee and decides on the general terms of the company’s incentive plans for officers and certain key employees. The President and CEO decides on the compensation to other members of Yara’s Executive management. Performance-related remunerations are subject to absolute limits.

The actual compensation to executive personnel in 2010 is disclosed in note 32 in the consolidated financial statements.

Information and communication

Communication with the financial markets is based on the principles of openness and equal treatment of all shareholders. Yara’s website ( contains an updated financial calendar, financial reports and other investor-related information. Yara holds the information and English certificates of the Oslo Stock Exchange testifying that Yara complies with a set of information requirements going beyond defined minimum standards. Yara’s Board of Directors receives regular updates from the Management detailing the manner in which the company is perceived by the financial markets. Yara has received several awards for its investor communication and financial reporting.


The Board of Directors will not seek to hinder or obstruct take-over bids, unless there are specific reasons for doing so. The board will ensure that shareholders are given sufficient information and time to form an opinion on the offer. If a take-over offer is made, the board will issue a statement making a recommendation as to whether shareholders should or should not accept the offer. The board will arrange a valuation from an independent expert that shall be made public no later than the disclosure of the board’s recommendation.

The Norwegian Securities Act regulates take-over attempts. Shareholders at the Annual General Meeting will, according to law, make the decision on a potential take-over bid.

External audit

The external auditor participates in the meetings of the Audit Committee and in the Board meeting that approves the financial statements. In addition, the external auditor meets with the Board, without Yara Executive management being present, a minimum of once per year. Norwegian laws and regulations stipulate the type of non-audit services that external auditors can perform for Yara. Remuneration to Yara’s external auditor is disclosed in note 33 to the consolidated financial statements.

General meeting

The Annual General Meeting of shareholders
• elects the Nomination Committee and shareholders’ representatives to the Board of Directors;
• elects the external auditor based on the Board of Directors’ proposal, and approves the remuneration to be paid to the external auditor of the parent company;
• approves the remuneration to the Board of Directors, the financial statements and any proposed dividend payment.

Board of Directors

According to Norwegian corporate law, the (non-executive) Board of Directors assumes the overall responsibility for the company, reviews the company’s strategy on regular basis, ensures that appropriate steering and control systems are in place and supervises day-to-day management as carried out by the President and CEO.

President and CEO

The President and Chief Executive Officer (CEO) constitutes a formal corporate body according to Norwegian corporate law. The CEO is responsible for the day-to-day management of the company. Yara’s division of functions and responsibilities are defined in more detail in the Rules of Procedures established by the Board.

Executive management

Yara’s Executive management is appointed by the President and CEO to assist in his or her stewardship duties delegated by the Board and in the day-to-day management of the company.

The President and CEO determines the instructions for the Executive management after prior discussion with the Board. Management instructions, function descriptions and the authority delegated to each member of the Executive management all reflect a joint obligation for these officers to safeguard Yara’s overall interests and to protect the company’s financial position.

Corporate directives

Yara’s corporate directives encompass:
• Articles of Association
• Instructions for the Nomination Committee
• Rules of Procedure for the Board
• Internal Audit Charter and Mandate for the Management Supervisory Committee
• Mandate for the Board’s Compensation Committee
• Mandate of the Board’s Audit Committee
• Insider Regulations
• Code of Conduct

For more detailed information, please see the “About Yara/Corporate Governance” section 

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