Statoil is also registered as a foreign private issuer with the US Securities and Exchange Commission with American Depositary Shares representing its Ordinary Shares listed on the New York Stock Exchange (NYSE). Statoil is therefore also subject to the NYSE's listing rules (“NYSE rules”), but as a foreign private issuer, exempt from most of the NYSE corporate governance standards that domestic US companies must follow.
However, Statoil is required to disclose any significant ways in which its corporate governance practices differ from those applicable to domestic US companies under the NYSE rules. A statement of differences is set forth below:
Corporate governance guidelines
The NYSE rules require domestic US companies to adopt and disclose corporate governance guidelines. Statoil's corporate governance principles are developed by management and the board of directors. Oversight of the board of directors and management is exercised by the corporate assembly.
The NYSE rules require domestic US companies to have a majority of “independent directors”, as defined by the NYSE rules. The NYSE definition of an “independent director” sets out five specific independence tests and also requires an affirmative determination by the board of directors that the director has no material relationship with the company.
Pursuant to Norwegian company law, Statoil’s board of directors consists of members elected by shareholders and employees. Statoil's board of directors has determined that, in its judgement, all of the shareholder-elected directors are independent. In making its independence determinations, the board focuses on there not being any conflicts of interest between shareholders, the board of directors and the company's management but does not explicitly take into consideration the NYSE’s five specific tests.
The directors elected from among Statoil’s employees would not be considered independent under the NYSE rules because they are employees of Statoil. None of the employee-elected directors is an executive officer of the company.
Pursuant to Norwegian company law, managing the company is the responsibility of the board of directors. Statoil has an audit committee and a compensation committee that are responsible for preparing certain issues for the board of directors. The committees operate pursuant to charters that are broadly comparable to the form required by the NYSE rules. They report on a regular basis to, and are subject to, continuous oversight by the board of directors.
Statoil complies with the NYSE rule regarding the obligation to have an audit committee that meets the requirements of Rule 10A-3 of the US Securities Exchange Act of 1934.
As required by Norwegian company legislation, the members of Statoil's audit committee include an employee-elected director. Statoil relies on the exemption provided for in Rule 10A-3(b)(1)(iv)(C) from the independence requirements of the US Securities Exchange Act of 1934 with respect to the employee-elected director. Statoil does not believe that its reliance on this exemption will materially adversely affect the ability of the audit committee to act independently or to satisfy the other requirements of Rule 10A-3 relating to audit committees. The other members of the audit committee meet the independence requirements under Rule 10A-3.
Among other things, the audit committee evaluates the qualifications and independence of the company's external auditor. However, in accordance with Norwegian law, the auditor is elected by the annual general meeting of the company's shareholders.
The Statoil board of directors does not have a nominating/corporate governance board sub-committee. Instead, the roles prescribed for a nominating/corporate governance committee under the NYSE rules are principally carried out by the corporate assembly and the election committee.
Shareholder approval of equity compensation plans
NYSE rules require that, with limited exemptions, all equity compensation plans be subjected to a shareholder vote. Although the issuance of shares and authority to buy back company shares must be approved by Statoil's annual general meeting of shareholders under Norwegian company law, approval of equity compensation plans is normally reserved for the board of directors. See NYSE's listing rules for foreign private issuers.