PGS is committed to maintaining high standards of corporate governance. We believe that effective corporate governance is essential to the well-being of our Company and establishes the framework by which we conduct ourselves in delivering services to our customers and value to our shareholders.
PGS is registered in Norway as a public limited liability company and our governance model is based on Norwegian corporate law and the Nor- wegian Code of Practice for Corporate Governance, as applicable at all times. We also adhere to requirements ap- plicable to foreign registrants in the U.S. where our American Depositary Shares (ADS) are publicly traded to the extent practicable. In addition, we implement corporate governance guidelines beneficial to our business.
Our corporate governance principles are adopted by our Board of Directors (Board). Below is a summary of our principles. Our Articles of Associa- tion, in addition to full versions of our corporate governance principles, our rules of procedures for our Board, our Audit Committee charter, our Remu- neration and Corporate Governance Committee charter and our Nomina- tion Committee charter are available on our website (www.pgs.com).
Code of Conduct and Core values We have adopted a Code of Conduct that reflects our commitment to our shareholders, customers and employ- ees to conduct our business with the utmost integrity. Our Code of Conduct and Core Values are available in full versions on www.pgs.com.
Business Our business is defined in our Articles of Association as:
“The business of the Company is to provide services to and participate and invest in energy related busi- nesses.”
The goals and strategies for our busi- ness areas are presented on page 7, 14, 15, 25 and page 42 of this annual review.
equity and dividends In general any future dividend will be subject to determination based on our results of operations and finan- cial condition, our future business prospects, any applicable legal or contractual restrictions and other fac- tors that the Board considers relevant. Our dividend policy is described on www.pgs.com.
equal treatment of Shareholders and transactions with Related Parties PGS has one class of shares. In our General Meetings each share has one vote. Our Board is committed to equal treatment of shareholders in all respects. When applicable, transac- tions by the Company in its own shares should be carried out through the stock exchange, or at prevailing stock exchange prices if carried out in any other way.
An owner with shares registered through a custodian has voting rights equivalent to the number of shares which are covered by the custodian arrangement, provided that the owner of the shares, within two working days before the General Meeting, pro- vides us with his name and address together with a confirmation from the custodian to the effect that he is the beneficial owner of the shares held in custody.
Transactions between us and related parties shall be conducted at market
values. Material transactions will be subject to independent valuation by third parties. According to our Code of Conduct, none of our employees shall have any personal or financial inter- est which might conflict with ours, or influence, or appear to influence, their judgment or actions in carry- ing out their responsibilities to PGS. According to our Rules of Procedures, a member of our Board may not par- ticipate in the discussion or decision of issues, where the director, or any person closely related to the director, has material personal or financial interest in the matter.
Freely transferable Shares Our shares are freely transferable.
General meetings Through the General Meetings, our shareholders exercise ultimate au- thority and elect the members of our Board and the Chairperson.
Notice of the General Meeting, includ- ing all pre-material, is generally given at least four weeks in advance to the shareholders or their depositary bank. For ADS holders, a record date is set approximately 5 weeks prior to the Annual General Meeting (AGM). A copy of the calling notice with appen- dices will be posted at our website, www.pgs.com.
The notice convening an Extraordi- nary General Meeting shall be given at least two weeks before the meeting if the holding of the meeting is de- manded in writing by the independent auditor or shareholders represent- ing at least 5% of the share capital.
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Shareowners who wish to take part in a General Meeting must give notice to PGS by the date stated in the calling notice, which date must be at least two working days before the General Meeting.
To vote at the General Meeting, in person or by proxy, a shareholder must be registered with the Norwe- gian Registry of Securities. Holders of ADS may vote the shares underlying the ADS by: (a) having the underlying shares transferred to an account with the Norwegian Registry of Securities in the name of the holder, (b) attend- ing the meeting as a shareholder by providing their name and address and a confirmation from Citibank, depositary for the ADS, to the effect that they are the beneficial owner of the underlying shares, or (c) author- izing Citibank to vote the ADS on their behalf.
In accordance with our Articles of Association, the Chairperson of the Board chairs the General Meeting.
nomination Committee According to our Articles of Associa- tion we shall have a Nomination Com- mittee consisting of three members to be elected by our shareholders at the AGM.The General Meeting also elects the chairperson of the Nomina- tion Committee.The majority of the members of the Nomination Com- mittee shall qualify as independent pursuant to the Norwegian principles of corporate governance.The term of service shall be two years unless the General Meeting determines that the period shall be shorter.The Nomination Committee’s main duties are to propose nominees for election as members and chairperson to the Board and the Nomination Commit- tee, and to propose the fees to be paid to the members of the Board and the Nomination Committee.The Gen- eral Meeting approves the fees.The Nomination Committee shall provide a report to our shareholders prior to the AGM.
the Current nomination Committee The current members of the Nomi- nation Committee consist of Roger O’Neil (chairperson), Hanne Harlem and C. Maury Devine.They were all re-elected in the AGM held May
7, 2008 for a new service period of one year. Shareholders who wish to propose new board members to PGS may do so by submitting a proposal of a candidate to the administration on www.pgs.com, “Nominate a Board Member”. None of the members of our Nomination Committee are employed by us or are members of our Board. In 2008, our Nomination Committee had 2 meetings. A report regarding the work of our Nomination Commit- tee will be distributed with the calling notice for our AGM.
Board of directors – Composition and independence According to our Articles of Associa- tion our Board shall have from three to thirteen directors. No member of the Board is elected for a period exceeding two years for each elected period.The Board has adopted inter- nal rules of procedures that establish in more detail its role and responsibili- ties, including:
Qualification of a majority of the Board and all of the members of the Audit and Remuneration Commit- tees as “independent directors”; and
Annual review and determination of the independence of each director.
All directors are independent from our management and major business relations, as defined in the Norwegian principles for corporate governance. Five of our seven current shareholder appointed directors are independent from our largest shareholders, as defined in the Norwegian principles for corporate governance. Our chair- person, Mr. Jens Ulltveit-Moe controls the Umoe Group, whereas Harald Norvik is a member of the board of directors in Umoe. At December 31, 2008 the Umoe Group owned 9.27 percent of the shares in PGS. No member of our Board shall be an executive of PGS. Directors cannot perform paid consultancy work for us. Three of the board members, directly or indirectly, own shares in PGS.
Shareholders and other interested parties may communicate directly with our independent directors by sending a written letter in an envelope addressed to Petroleum Geo-Services “Board of Directors (Independent
Members)”, General Counsel Espen Sandvik, P.O. Box 89, 1325 Lysaker, Norway.
the Current Board of directors As of December 31, 2008, the Board consisted of seven shareholder repre- sentatives. Neither the Chief Executive Officer (CEO) nor any other member of the executive management in PGS is a director of the Board.The current members of the Board are presented on www.pgs.com.
the work of the Board of directors In accordance with Norwegian corporate law, our Board has overall responsibility for management of our Company, while our CEO is responsi- ble for day-to-day management. Our Board supervises our CEO’s day-to- day management and our activities in general. It is also responsible for ensuring that appropriate steering and control systems are in place. Our CEO shall, in agreement with the chairperson of the Board, annually present a meeting calendar covering the next calendar year to the Board for approval. In 2008 our Board had 9 meetings.
Our Board has adopted internal rules of procedures, which establish in more detail its role and responsibili- ties in relation to the management and supervision of the Company.The rules emphasize, among other things, our Board’s responsibility to decide our financial targets and determine our overriding strategy in collabora- tion with our CEO and our executive committees and to approve our busi- ness plans, budgets and frameworks. In its supervision of our business activities, our Board will seek to en- sure that satisfactory routines exist for follow-up of principles and guidelines required by our Board in relation to ethical behaviour, conformity to law, health, safety and environment and social responsibility.The rules also require provision for an annual self- evaluation of our Board to determine whether our Board and its commit- tees are functioning effectively.The tasks and duties of our CEO vis-à-vis our Board are outlined in the rules, along with the tasks and duties of the chairperson of our Board.The CEO participates in all Board meetings, except exclusive sessions. Our Board
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