As at 8 March 2017

The Board of Directors of DNB ASA is the Group’s supreme governing body. Through the group chief executive, the Board shall ensure a sound organisation of business activities. The Board has three sub-committees: the Risk Management Committee, the Audit Committee and the Compensation Committee.

Anne Carine Tanum

Born 1954

Role on the Board of Directors: Board chairman in DNB and DNB Bank since 2008 (board member since 1999) and chairman of the Compensation Committee.

Background: Law degree from the University of Oslo. Long-standing managing director and owner of Tanum AS. Former board member in DnB Holding, Den norske Bank and Vital Forsikring.

Other key positions of trust: Board chairman in the Norwegian National Opera and Ballet, E-CO Energi Holding AS, E-CO Energi AS and Nordisk Film Kino AS. Vice-chairman of the board of Oslo University Hospital. Board member in Cappelen Damm AS, Try AS, Europris AS and the Abel Prize. Former board chairman in the Norwegian Broadcasting Corporation, NRK.

Number of board meetings in 2016: 19 of 19

Number of shares 1): 400 000

Tore Olaf Rimmereid

Born 1962

Role on the Board of Directors: Board vice-chairman in DNB since 2012 (board member since 2009). Chairman of the Audit Committee and the Risk Management Committee and member of the Compensation Committee.

Background: Master’s degree in business administration and authorised financial analyst from the Norwegian School of Economics. President and CEO of E-CO Energi. Former head of the Finance and Administration Department in the Norwegian Broadcasting Corporation, NRK, and group executive vice president, Financial Reporting and Finance, in the SpareBank 1 Alliance. Experience from Kreditkassen.

Other key positions of trust: Board chairman in Oslo Lysverker and Opplandskraft DA. Former board chairman in Energy Norway and political adviser for the Conservative Party’s parliamentary group.

Number of board meetings in 2016: 19 of 19

Number of shares 1): 10 611

Jarle Bergo

Born 1945

Role on the Board of Directors: Board member in DNB and board vice-chairman in DNB Bank since 2011. Member of the Audit Committee and the Risk Management Committee.

Background: Economics degree from the University of Oslo. Held various positions in Norges Bank from the late 1960s, ending his career as deputy governor.

Other key positions of trust: Former alternate executive director of the International Monetary Fund, IMF, business manager for the Norwegian Banks’ Guarantee Fund and board member at Oslo Børs (the Oslo Stock Exchange). Former member of various committees and expert groups, including the Council of Ethics for the Government Pension Fund – Global in 2002.

Number of board meetings in 2016: 17 of 19

Number of shares 1): 225

Carl A. Løvvik

Born 1952

Role on the Board of Directors: Board employee representative in DNB since 2011.

Background: Employee representative in DNB. Employed as an insurance agent in 1988 and worked within marketing in DNB Livsforsikring and as a manager at DNB Livsforsikring’s Customer Service Centre.

Number of board meetings in 2016: 13 of 19

Number of shares 1): 1 191

Vigdis Mathisen

Born 1958

Role on the Board of Directors: Board employee representative in DNB and DNB Bank since 2012.

Background: Business graduate from and several courses in management at BI Norwegian Business School. Employed in DNB since 1983 and elected chief employee representative for the Group in the Finance Sector Union DNB in 2012.

Other key positions of trust: Previous board member for five years in Den norske Bank and DnB Holding.

Number of board meetings in 2016: 19 of 19

Number of shares 1): 481

Jaan Ivar Semlitsch

Born 1971

Role on the Board of Directors: Board member in DNB since June 2014. Member of the Audit Committee and the Risk Management Committee.

Background: Graduate of the Norwegian School of Economics. CEO in Elkjøp Nordic AS. Former Chief Operating Officer of Statoil – Retail Europe and CEO of Plantasjen ASA and Rema Industrier AS.

Other key positions of trust: Former and current board chairman and board member in several Norwegian enterprises. Chairman of the Board of Elkjøp Norge AS and Lefdal Elektromarked AS. Former chairman of the Board of Statoil Norge AS.

Number of board meetings in 2016: 19 of 19

Number of shares 1): 12 300

Berit Svendsen

Born 1963

Role on the Board of Directors: Board member in DNB since 2012 (former member of the Board in DNB Bank 2010-2012). Member of the Compensation Committee, the Audit Committee and the Risk Management Committee.

Background: Graduate engineer with a Master of Technology Management degree from the Norwegian University of Science and Technology (NTNU). Executive vice president in Telenor and Telenor Scandinavia and CEO of Telenor Norway. Former chief technology officer in Telenor and head of Telenor’s fixed network business in Norway, and CEO of Conax.

Other key positions of trust: Board member in SAS and Bisnode AB. Former board chairman in Data Respons and board member in EMGS and Ekornes, as well as a member of the European Commission Advisory Group on ICT matters.

Number of board meetings in 2016: 17 of 19

Number of shares 1): 0

1) Shareholdings in DNB ASA as at 31 December 2016. Shares held by the immediate family and companies in which the shareholder has decisive influence are also included.


DNB’s management and Board of Directors annually review the principles for corporate governance and how they are implemented in the Group. Pursuant to Section 3-3b of the Norwegian Accounting Act and the Norwegian Code of Practice for Corporate Governance, DNB hereby gives an account of the Group’s corporate governance principles and practice.

Changes and deviations

Changes from previous years

After the Panama Papers case, DNB will establish an external notification procedure in addition to the existing internal procedure, see Section 1.

Deviations from the Code of Practice / Section 3-3b, second subsection of the Norwegian Accounting Act
DNB deviates from the Code of Practice in the following way:

Section 14 Corporate take-overs
The Board of Directors has chosen not to determine explicit guiding principles on how to act in the event of a take-over bid. The background for this exception is that the Norwegian government owns 34 per cent of the shares in DNB ASA, making such principles not very relevant. The Board of Directors otherwise endorses the wording in this section of the Code.

Statement on corporate governance

The description below accounts for DNB’s compliance with Section 3-3b, second subsection of the Norwegian Accounting Act. The numbers refer to the section’s numerical order.

1-3
Specification of the recommendations complied with by DNB, information on where the recommendations are available and reasons for any non-conformance with the recommendations

The DNB Group’s corporate governance structure is based on Norwegian legislation. DNB complies with the Norwegian Code of Practice for Corporate Governance dated 30 October 2014 issued by the Norwegian Corporate Governance Board, NUES. The Code of Practice is available on nues.no. Any deviations from the Code of Practice are accounted for under the description of DNB’s compliance with the Code of Practice below.

4
A description of the main elements in the Group’s internal control and risk management systems linked to the financial reporting process

See section 10 B under the Norwegian Code of Practice for Corporate Governance below.

5
Articles of Association that completely or partially extend or depart from provisions stipulated in Chapter 5 of the Public Limited Companies Act

DNB ASA’s Articles of Association do not deviate from Chapter 5 of the Public Limited Companies Act, which governs general meetings.

6
The composition of governing bodies and a description of the main elements in prevailing instructions and guidelines for the work of these bodies and any committees

See sections 6, 7, 8 and 9 under the Norwegian Code of Practice for Corporate Governance below.

7
Articles of Association that regulate the appointment and replacement of members of the Board of Directors

See section 8 under the Norwegian Code of Practice for Corporate Governance below.

8
Articles of Association and authorisations that allow the board to decide that the enterprise is to repurchase or issue the enterprise’s own shares or equity certificates

See section 3 under the Norwegian Code of Practice for Corporate Governance below.

 

The Norwegian Code of Practice for Corporate Governance

The description below accounts for DNB’s compliance with the 15 sections in the Code of Practice.

– Section 1

IMPLEMENTATION OF AND REPORTING ON CORPORATE GOVERNANCE

There are no significant deviations between the Code of Practice and the way it is complied with in DNB. One deviation in section 14 has been accounted for below.

DNB’s vision is: Creating value through the art of serving the customer. The Group’s values, helpful, professional and show initiative, underlie the vision.

The vision and values form the basis for the Group’s rules governing ethics and corporate social responsibility.

The Board of Directors has approved policies and guidelines in the following areas to support corporate governance in the DNB Group:

  • corporate social responsibility
  • shareholder relations
  • ethics
  • effective development and operations
  • risk management 1)
  • compliance
  • communication
  • financial management 1)
  • people and organisation
  • security
1) See further description in Section 10.

 

More about the policy for corporate social responsibility

DNB is committed to take into account the climate and the environment, social conditions and corporate governance in all of its activities. This also applies in relation to the Group’s suppliers. DNB shall not contribute to the infringement of human or labour rights, corruption, serious environmental harm or other actions that could be regarded as grossly unethical. Read more about DNB’s corporate social responsibility in the chapter Responsible operations at dnb.no/en/about-us.

More about the policy for shareholder relations

Through open dialogue and regular contact and communication, DNB will ensure that the company’s share price at all times adequately reflects the underlying values of the company. The management of shareholder relations is largely based on the Norwegian Code of Practice for Corporate Governance, especially the part which refers to the equal treatment of shareholders. See also Section 13 below.

More about the policy for ethics

The DNB Group shall be characterised by high ethical standards and sound corporate governance. According to the Group’s code of ethics, its employees, members of governing bodies, temporary staff and consultants should act with respect and consideration, and communication should be open, truthful and unambiguous. DNB’s code of ethics also ideals with corruption, impartiality, the duty of confidentiality and the duty to notify, conflicts of interest, relations with customers and suppliers, media relations, securities trading, insider trading and relevant personal financial matters.

Violation of the code of ethics on the part of an employee could have consequences for his or her position in the Group. The complete code of ethics can be found on the Group´s website.

Notification

The Group’s code of ethics sets forth that employees must promptly inform their immediate superior or the group chief audit executive if they obtain knowledge about circumstances that are contrary to prevailing regulations issued by the authorities or represent major breaches of internal regulations. Employees who in a responsible manner notify reprehensible aspects pursuant to this item will be protected from any repercussions following such disclosure.

DNB is in the process of implementing a solution for anonymous electronic notification to an external party in addition to the existing procedure for notifying the group chief audit executive. The solution will be extended to include temporary employees. 

No deviations from the Code of Practice.

The Board of Directors actively followed up the Panama Papers case

The Panama Papers case put its mark on DNB in 2016. One of the prime concerns of the Board of Directors was to get the best possible insight into what had happened, and it was decided to initiate an independent investigation of all aspects of DNB’s involvement in the matter. The law firm Hjort delivered its final report to the Board of Directors in September. In its report, Hjort states that DNB Luxembourg facilitated the establishment of 42 companies in the Seychelles for customers during the period 2006 to 2008, and that all these companies are dissolved. The report concludes that no violations of the law associated with the establishment of this service offering were uncovered. However, it is pointed out that the establishment of the service offering was not approved in accordance with DNB’s internal standard procedure for new products. In addition, it is stressed that the code of ethics was not followed when the business area with responsibility for DNB Luxembourg did not stop the service offering pending an assessment of its reputational consequences. In consequence of the Panama Papers case, DNB’s Board of Directors has approved a number of measures, including the introduction of an external notification channel, several measures related to the management and control of subsidiaries, new and comprehensive guidelines for the approval of new products and a review of Group Audit´s competencies and resources. In addition, the implementation of a new IT tool has been approved as support for the operationalization of and compliance with external requirements and internal guidelines.

– Section 2

BUSINESS

The object of DNB is to engage in banking, insurance and financing and any related activities within the scope of Norwegian legislation in force at any time. The complete Articles of Association of DNB ASA can be found on the Group’s website, dnb.no/en/agm. The directors’ report describes the Group’s targets and strategies, and the market is kept updated through investor presentations in connection with quarterly financial reporting, capital markets days and presentations on special subjects.

In the strategy processes, the Board of Directors considers whether goals and guidelines are unambiguous, adequate, well operationalised and easily comprehensible for all employees. All key guidelines are available to the employees through DNB’s intranet or by other means.

No deviations from the Code of Practice.

 

– Section 3

EQUITY AND DIVIDENDS

The Board of Directors continually reviews the capital situation in light of the company’s targets, strategies and intended risk profile. See the Group’s report on risk and capital management (Pillar 3) for a further description of the rules on capital adequacy, the principles applied by DNB to estimate capital requirements, as well as a further specification of the Group’s capital adequacy ratio. The report is available on the Group’s website, dnb.no/investor-relations.

The EU capital requirements directive CRD IV introduces requirements for both equity, long-term funding and liquidity reserves. See the chapter on the new regulatory framework for a further description of the regulations and how they have been implemented in Norway.

The Board of Directors considers the Group to be well capitalised in relation to current regulatory requirements. DNB is continuing its adaptations to the new liquidity and capital requirements which have already been introduced or are expected to be introduced over the next few years.

Dividends

DNB’s primary objective is to create long-term value for shareholders, partly through a positive share price development and partly through a predictable dividend policy. The Group’s long-term dividend policy is to have a payout ratio of more than 50 per cent of profits, which will be a combination of a cash dividend and a share buy-back programme.

Repurchase of shares

To ensure flexibility in the Group’s capital management, the Board of Directors has on previous occasions asked the annual general meeting for an authorisation to repurchase own shares. An agreement has previously been signed with the Norwegian government, represented by the Ministry of Trade, Industry and Fisheries, for the redemption of a proportional share of government holdings to ensure that the government’s percentage ownership remains unchanged. In order to ensure an optimal level of capital in the company, on 26 April 2016, the general meeting authorised the Board of Directors to acquire own shares for a total face value of up to NOK 325 759 772, corresponding to 2 per cent of the company’s share capital. The shares shall be purchased in a regulated market. Each share may be purchased at a price between NOK 10 and NOK 200. Acquired shares shall be sold in accordance with regulations on the reduction of capital in the Public Limited Companies Act. The authorisation will be valid for a period of 12 months from the date the resolution was passed at the general meeting.

Increases in share capital

At the present time, no authorisation had been granted to the Board of Directors for an increase in the share capital of DNB ASA.

No deviations from the Code of Practice.

 

– Section 4

EQUAL TREATMENT OF SHAREHOLDERS AND TRANSACTIONS WITH CLOSE ASSOCIATES

DNB ASA has one class of shares. In the Articles of Association and in the work carried out by the Board of Directors and group management, the strong protection of minority shareholders is emphasised in the form of equal treatment, requirements for majority votes and the obligation to disclose transactions with close associates. All shares carry equal voting rights. In connection with increases in share capital, existing shareholders will be given pre-emptive rights, unless such rights are derogated from due to special circumstances. In such case, the reasons for such a derogation will be specified. In cases when the Board of Directors asks the Annual General Meeting for an authorisation to repurchase own shares, shares will be purchased through the stock market at market price.

Largest shareholder

The Norwegian government, represented by the Ministry of Trade, Industry and Fisheries, is DNB ASA’s largest shareholder, owning 34 per cent of the shares. According to the State Ownership Report (White Paper no. 27 2013-2014 Diverse and value-generating ownership), the purpose of the government’s ownership in DNB ASA is to retain a large and highly competent financial services group headquartered in Norway. The company is to be run on commercial terms, with an aim to generate a competitive return. The government points out that a holding that gives negative control contributes to this end. The government will thus maintain its holding in DNB ASA and has come to the conclusion that the holding will not be reduced below 34 per cent. 

The shares held by the Ministry are managed by the Department of Ownership, subject to special management guidelines which among other things stipulate that the Norwegian government cannot have representatives on the boards of directors of financial institutions, but that the government, through participation in election committees, must ensure that the governing bodies include representatives from all shareholder groups. The guidelines require that the Ministry act in a manner conducive to equal treatment of DNB’s shareholders.

Second largest shareholder

Sparebankstiftelsen DNB (the DNB Savings Bank Foundation) is the second largest shareholder, owning 9 per cent of the shares at end-December 2016. According to Norwegian law, the foundation is required to be a stable, long-term owner in the Group. In order to ensure funds for its operations, the foundation aims to achieve the highest possible risk-adjusted return on capital under management. More information is available on sparebankstiftelsen.no

According to the Articles of Association of DNB ASA, as long as Sparebankstiftelsen DNB owns 10 per cent or more of the shares in DNB ASA, the question of sale or other disposal of shares in DNB Bank ASA shall be considered by the general meeting in DNB ASA. The same applies to questions concerning a merger or demerger of the bank, disposal of a material portion of the bank’s business or the issuing of shares in the bank to parties other than DNB ASA.

Transactions with close associates

Instructions for the Board of Directors of DNB ASA state that a board member cannot participate in deliberations or decisions on issues where he or she personally or his or her close associates would be seen as having a direct or indirect personal or financial interest in the matter. The same principle is embodied in the Group’s code of ethics. It is the duty of each board member to ensure that he or she is without prejudice in deliberations of specific matters. The Board of Directors must approve agreements between the company and a board member or the group chief executive. The Board must also approve agreements between the company and third parties where a board member or the group chief executive can be perceived to have a significant interest in the matter.

Board members must inform the Board of Directors if they have a direct, significant interest in an agreement entered into by the company or another company in the DNB Group. The same applies if such agreement is signed by a company outside the DNB Group in which the board member either has an ownership interest, serves on the board or has a senior management position. A notification should be sent to the board chairman, with a copy to the Group Secretariat.

Board members, or companies with which they are associated, should not take on special assignments for companies in the DNB Group other than their board membership. If this occurs, however, the entire Board of Directors must be informed. Remuneration for such assignments is subject to approval by the Board of Directors.

With respect to the Group’s other employees and elected officers, the Group’s code of ethics lays down detailed rules regulating transactions with close associates. As a general rule, an employee or elected officer will be considered disqualified if circumstances exist that may lead others to believe that he or she promotes interests other than those of the DNB Group. Employees must be aware of potential conflicts of interest if they combine positions of trust with other roles in the Group.

Where a transaction is not immaterial for either the DNB Group or the close associate involved, unless it is a matter for consideration by the general meeting according to stipulations in the Public Limited Companies Act, the Board of Directors will ensure that a valuation is made by an independent third party. This also applies to any transactions between companies in the DNB Group where minority shareholders are involved. Not immaterial transactions with close associates are described in a separate note to the annual accounts.

No deviations from the Code of Practice.

 

– Section 5

FREELY NEGOTIABLE SHARES

The shares in DNB ASA are listed on Oslo Børs (the Oslo Stock Exchange) and are freely negotiable. The Articles of Association include no form of restriction on negotiability.

No deviations from the Code of Practice.

 

– Section 6

GENERAL MEETING

The general meeting exercises the highest authority in DNB and represents the company’s shareholders. According to the Articles of Association, the annual general meeting shall be held before the end of April each year. The notice and the registration form will be sent to shareholders and be published on the Group’s website no later than 21 days prior to the date of the general meeting. The procedure for voting and for proposing resolutions is described in the notice of the general meeting. 

According to the Articles of Association, the general meeting shall be convened by the Board of Directors. The chairman of the Board of Directors, at least one representative from the Election Committee and the statutory auditor will attend general meetings. Other board members may also attend the meetings. Representatives from group management will include the group chief executive, the chief financial officer, the group chief audit executive and specialists in certain fields. The minutes of general meetings are available on dnb.no/en/agm.

The general meeting elects shareholder representatives on the Board of Directors and members of the Election Committee. The voting procedure gives shareholders the opportunity to vote separately for each individual candidate nominated for election to the various governing bodies. The general meeting also selects the statutory auditor. The Election Committee consists of up to five members elected by the general meeting for a term of up to two years.

Decisions are generally made by simple majority. Decisions concerning the disposal of shares, mergers, demergers, the sale of a material part of DNB Bank ASA’s business or the issuing of shares in the bank to parties other than DNB ASA, require the approval of at least two-thirds of the votes cast and of the share capital represented at the general meeting. 

No deviations from the Code of Practice.

– Section 7

ELECTION COMMITTEE

In accordance with DNB ASA’s Articles of Association, the general meeting has established an Election Committee consisting of four members. The general meeting has laid down instructions for how the Election Committee should carry out its duties. The members of the Election Committee shall be shareholders or representatives for shareholders and shall, as far as possible, represent all shareholders. No member of the Board of Directors or representative from group management is a member of the Election Committee.

According to instructions for the Election Committee, there should be rotation among the committee members.

The Election Committee submits justified recommendations to the general meeting for the election of members to the Board or Directors and the Election Committee. The recommendation should include relevant information on each candidate’s background and independence. Furthermore, the committee proposes remunerations to members of the aforementioned bodies. The remuneration of the Election Committee is determined by the general meeting. Information about the Election Committee and closing dates for proposing candidates can be found on dnb.no/en/agm

The Election Committee held 14 meetings during 2016. The Committee proposed candidates for election to the Board of Directors and the Election Committee and also carried out preparatory work related to issues to be considered in 2017.

No deviations from the Code of Practice.

– Section 8

BOARD OF DIRECTORS, COMPOSITION AND INDEPENDENCE

The governance and management of the company will be undertaken by the Board of Directors and the general meeting.

The Board of Directors has up to seven members, up to five of whom are elected by the shareholders and two are representatives for the employees. No member of the group management team is a member of the Board of Directors. When electing members to the Board of Directors, the need for both continuity and independence should be met, while ensuring a balanced board composition. No one may be a member or chairman of the Board of Directors for a consecutive period of more than 12 years. A new 12-year period will start if an ordinary board member is elected board chairman or vice versa. No one may hold a position as an ordinary board member and/or board chairman for a total period exceeding 20 years. Members are elected for terms of up to two years. As at 31 December 2016, the Board had seven members, five of whom were elected by the shareholders and two were representatives for the employees. Three of the members were women, two of whom were elected by the shareholders and one represented the employees.

The curricula vitae of the individual board members and board meeting attendance in 2016 are found in the presentation of the board members in this chapter and on the Group’s website. The Board of Directors will consider the independence of its members, and their conclusion is presented in the listing of governing bodies. When new board members are nominated, their suitability is assessed, including their independence. The assessment is followed up on an annual basis by requesting a written confirmation from the board members. The Group has initiated processes to continually monitor which other assignments are held by the board members. See also the description under section 4 above, Transactions with close associates. The presentation of the Board of Directors lists any assignments for the Group and any significant appointments or assignments in other companies and organisations held by the members of the Board.

Board members are encouraged to hold shares in the company. The presentation of governing bodies specifies the number of DNB shares held by members of governing bodies and their close associates as at 31 December 2016.

No deviations from the Code of Practice.

– Section 9

THE WORK OF THE BOARD OF DIRECTORS
The duties of the Board of Directors

The Board of Directors has approved instructions governing its work and administrative procedures, including matters to be considered by the Board, the group chief executive’s tasks and obligations towards the Board and rules on convening and conducting meetings. Instructions for the Board of Directors are available at dnb.no/en. The Board of Directors draws up an annual plan for its activities, covering duties stipulated in laws, regulations, resolutions passed by the authorities, the Articles of Association and decisions made by the general meeting. The Board of Directors also issues instructions for the group chief executive.

"The Group’s strategy, financial performance, capitalisation and digitalisation were high on the agenda in 2016."

The Board evaluates its own work and work methods annually, and the evaluation forms the basis for adjustments and measures. In addition, the Board’s competencies, overall and those of each board member, are evaluated.

The Board of Directors has the ultimate responsibility for the management of DNB. Through the group chief executive, the Board shall ensure a sound organisation of business activities. The Board determines principal goals and strategic choices for the Group, as well as financial three-year plans for the Group and the business areas. The Board is continually updated on DNB’s financial position and development by approving quarterly and annual reports and through a monthly review of the Group’s financial position and development. Furthermore, the Board shall ensure that operations are subject to adequate control and that the Group’s capital position is satisfactory relative to the risk and scale of operations. The Board of Directors’ responsibilities and implementation and monitoring of risk management and internal control are described in section 10 below. The Board also presents a statement to the general meeting proposing guidelines for remunerations to senior executives. See section 12 below. See the illustration of matters considered by the Board of Directors in 2016 on the next page.

Meetings of the Board of Directors are chaired by the board chairman. The vice-chairman may chair the meetings in the event that the chairman cannot or should not lead the work of the Board. If neither the board chairman nor the vice-chairman participates, the Board must select a member to chair the meeting. 

The group chief executive will prepare matters to be considered by the Board of Directors in consultation with the chairman of the Board. Each matter must be prepared and presented in a manner which provides a satisfactory basis for discussion.

THE WORK OF THE BOARD OF DIRECTORS IN 2016

Audit Committee and Risk Management Committee

In 2016, the Audit Committee and the Risk Management Committee consisted of four of the independent board members.       

The committees are working committees for the Board of Directors, preparing matters and acting in an advisory capacity. Members are elected for a term of up to two years among the external members of the Board of Directors, and the chairman is appointed for a term of one year at a time. The committee members must have the overall competence required to fulfil their duties based on the organisation and operations of the Group. At least one of the members of the Audit Committee must have accounting and/or auditing expertise. At least one of the members of the Risk Management Committee must have experience from identifying, assessing and managing risk exposures in large, complex companies. The members of the committees are included in the presentation of the Group’s governing bodies. The objectives, responsibilities and functions of the committees are in compliance with international rules and standards and are described in group standard procedures. The committees normally have seven to eight meetings each year. See section 10 Risk management and internal control for a further description of the committees’ duties.

Compensation Committee

The Board of Directors of DNB ASA has a Compensation Committee consisting of four members of the company’s Board of Directors. The committee normally meets six to seven times a year. The committee puts forth a recommendation for the Board of Directors’ guidelines for remuneration to senior executives in accordance with Section 6-16a in the Public Limited Companies Act. The committee draws up proposals and issues recommendations to the Board of Directors regarding the remuneration awarded to the group chief executive and acts in an advisory capacity to the group chief executive with respect to the remuneration and other important personnel-related matters concerning members of the group management team and any others reporting to the group chief executive.

No deviations from the Code of Practice.

 

– Section 10

RISK MANAGEMENT AND INTERNAL CONTROL

All of the Group’s operations entail risk. The ability to manage risk is the core of financial activity and a prerequisite for long-term value generation. The Group aspires to have a low risk profile and will only assume risk which is understood and can be followed up. DNB shall not be associated with activities that can harm its reputation.

Risk management and internal control shall help ensure effective operations and prudent management of significant risks. The work on risk management in DNB is characterised by individual responsibility, transparent methods and processes that support sound risk management. Risk management shall be of good quality and have high information value.

Item 10 A below describes how the work on risk management and internal control in the Group is organised, implemented and followed up. The Board of Directors’ reporting of the main features of internal control relating to financial reporting is described in item 10 B.

The Group’s report on capital adequacy requirements and risk management, the Pillar 3 report, includes a description of risk management and framework structure, capital management and capital calculations, in addition to the assessment and monitoring of various types of risk. In addition, DNB’s adaptations to and compliance with the capital adequacy requirements are described. The report is available on the Group’s website dnb.no/investor-relations.

No deviations from the Code of Practice.

10 A) Organisation, implementation and monitoring

Risk management and internal control in DNB are based on the framework from the Committee of Sponsoring Organizations of the Treadway Commission, COSO. COSO is a framework consisting of five components:

  1. Control environment
  2. Risk assessment: assessment of internal and external factors which affect target attainment
  3. Control activities: policies and procedures to mitigate risk and ensure that risk responses are effectively carried out
  4. Information and communication: processes to ensure that relevant information is identified and communicated in a timely manner
  5. Monitoring: processes to ensure that the internal control is appropriately defined, implemented, effective and flexible

These five components should help the Group reach its targets relating to operational efficiency, reliable financial reporting and compliance with laws and regulations.

The COSO framework

Governing bodies in the DNB Group

Governing bodies and lines of defence in the DNB Group, risk management and internal control are illustrated on the next page.

Responsibility for risk management and internal control is divided between three lines of defence:

  • The first line of defence is the operational management’s governance and internal control, including processes and activities to reach defined goals relating to operational efficiency, reliable financial reporting and compliance with laws and regulations. The operational management is responsible for all risk associated with the unit’s activities and processes.
  • The second line of defence is an independent function which monitors and follows up the operational management’s governance and internal control. The second line of defence is responsible for setting the premises for risk management, coordination across organisational units and risk reporting.
  • The third line of defence is Group Audit, which reviews and evaluates group management’s overall governance and internal control. Group Audit is independent of the Group’s executive management and reports to the Board of Directors of DNB ASA.

 

BOARDS OF DIRECTORS
Organisation and responsibilities

The Board of Directors of DNB ASA has principal responsibility for the Group’s business operations, which includes ensuring that operations, financial reporting and asset management are subject to adequate control. Separate instructions have been established for the Board of Directors and the board committees.

More about the policy for risk management

The group policy for risk management serves as a guide for all work on risk in DNB. It describes the ambitions and attitudes which should form the basis for the work on risk in the DNB Group.

The Board of Directors of DNB ASA sets long-term targets for the Group’s risk profile through the risk appetite framework. The risk appetite framework represents an operationalisation of the Group’s current risk policy and guidelines and shall ensure that risk is integrated with the Group’s steering processes. The risk appetite framework shall provide a holistic and balanced view of the risk in the business and consists of 17 statements that define risk types and measurement parameters. To support the framework, governance principles have been established and operational procedures and responsibilities within the DNB Group defined. The targeted risk profile will also be reflected in other parts of the risk management framework, including the establishment of authorisations and business limits. The risk appetite framework will be reviewed at least once a year. The Board of Directors also regularly reviews risk levels, the framework structure and reporting for relevant risk categories.

Risk management is an integral part of corporate governance in DNB and includes the assessment, monitoring, reporting and follow-up of risk in the Group.

The Board of Directors of DNB ASA carries responsibility for ensuring that the Group is adequately capitalised relative to the risk and scope of operations and that capital requirements stipulated in laws and regulations are met. The Group’s capitalisation guidelines shall ensure that the Group’s equity is adapted to the scope and risk profile of operations, based on the authorities’ capital adequacy requirements and DNB’s internal estimated capital requirements. The Board of Directors continually monitors the Group’s capital situation, see further information under Implementation and monitoring below. DNB Bank ASA aims to maintain an AA level international rating for ordinary long-term debt.

More about the policy for compliance

DNB shall comply with all laws and regulations that apply to the Group’s business activities, hereinafter referred to as compliance. The compliance policy describes the main principles for compliance and how the compliance function is organised. Group guidelines have also been established for operational risk management.

Implementation and monitoring

The Board of Directors of DNB ASA annually reviews the Group’s principal risk areas and internal control. The review, which is based on reporting from the group chief executive, aims to document the quality of the work performed in key risk areas and to identify any weaknesses and needs for improvement. The review should ensure that changes in the risk situation are identified, so that the necessary improvement measures can be implemented.

The Risk Management Committee gives the Board of Directors advice with regard to the Group’s risk profile, monitors the Group’s internal control and risk management systems and makes sure that they function effectively. In addition, the committee advises the Board of Directors with respect to the Group’s risk profile, including the Group’s current and future risk appetite and strategy. The Risk Management Committee and the Boards of Directors of DNB ASA and DNB Bank ASA receive a quarterly risk report for the Group, accounting for the current risk situation, reviewed relative to the risk appetite framework. The report includes the utilisation of limits approved by the Boards of Directors of DNB ASA, DNB Bank ASA and DNB Livsforsikring ASA. The Board of Directors of DNB Livsforsikring AS receives periodic reports analysing the company’s risk situation.

Every year, the Risk Management Committee and the Boards of Directors of DNB ASA and DNB Bank ASA consider the Group’s ICAAP report (Internal Capital Adequacy Assessment Process), which includes a self-assessment of the DNB Group’s risk and capital situation. Group Audit reviews DNB’s ICAAP process, and a report containing its summary is considered at the same board meeting as the self-assessment.

The Risk Management Committee and the Boards of Directors of DNB ASA and DNB Bank ASA review the Group’s recovery plan. The plan is an integral part of the Group’s risk and capital management framework. An important part of the recovery plan is a description of various identified measures to improve the Group’s capital adequacy and liquidity situation during a potential crisis. The plan is updated each year. The recovery plan is part of the new crisis management regulations for banks. See further description in the chapter on the new regulatory framework.    

Each year, the Risk Management Committee and the Board of Directors of DNB Bank ASA consider the Group’s compliance report, which gives a description of the Group’s overall compliance risk and the measures required to mitigate such risk.

Each year, the Risk Management Committee and the Board of Directors of DNB Bank ASA review the Group’s validation report. Validation plays a key role in quality assurance of the IRB system. Group Audit prepares an annual IRB compliance report which shows compliance with the IRB requirements. The report is considered parallel to the validation report by the bank’s Board of Directors. 

Information about the Group’s risk situation is made available to the market, shareholders and the authorities through quarterly reports. See further description of the Group’s risk management in the Pillar 3 report on dnb.no/investor-relations.

The Audit Committee evaluates the quality of the work performed by Group Audit and the statutory auditors. The Boards of Directors of DNB Bank ASA, DNB Boligkreditt AS, DNB Livsforsikring AS and other significant subsidiaries annually evaluate the companies’ key risk areas and internal control.

GROUP CHIEF EXECUTIVE AND EXECUTIVE BODIES
Organisation and responsibilities

The group chief executive is responsible for implementing risk management measures that help achieve targets for operations set by the Board of Directors of DNB ASA, including the development of effective management systems and internal control.

The group management meeting is the group chief executive’s collegiate body for management at group level. All important decisions concerning risk and capital management will generally be made in consultation with the group management team. Authorisations must be in place for the extension of credit and for position and trading limits in all critical financial areas. All authorisations are personal. Authorisations are determined by the Boards of Directors of DNB ASA and DNB Bank ASA, along with overall limits, and can be delegated in the organisation, though any further delegation must be approved and followed up by the relevant person’s immediate superior.

The group management meetings are attended by the group executive vice presidents in charge of the business areas and staff and support units. A number of advisory bodies have been established to assist in preparing documentation and implementing monitoring and control within various specialist areas:

  • The Asset and Liability Committee ALCO, is an advisory body for the chief financial officer and the chief risk officer and handles matters relating to the management of market and funding risk, risk , capital structure and return targets.
  • The Group has three central credit committees: the Group Advisory Credit Committee, the Advisory Credit Committee for Large Corporates and International, and the Advisory Credit Committee for Corporate Banking.            The committees act in an advisory capacity to decision-makers in the business areas and in Group Credit Risk Management, who endorse credits on the basis of personal authorisations after consideration in the respective committees. The Group Advisory Credit Committee approves large credits to selected borrowers that are customers of the various business areas and advises the group chief executive and the Board of Directors in connection with large individual credit proposals . The committee plays a key role in formulating the Group’s credit policy and in following up credit strategies, credit regulations and portfolio risk. The Credit Committees for Large Corporates and International and for Corporate Banking approve credits according to assigned authorisations for the respective business areas. The Credit Committees are chaired by the group chief credit officer.
  • Advisory Group Operational Risk AGOR, is an advisory committee for the Group’s chief risk officer and helps develop the Group’s solutions within operational risk management and internal control to ensure effective and consistent monitoring and reporting throughout the Group.
  • The Forum for AML and International Sanctions is an advisory body for the Group’s chief risk officer and will help ensure the correct prioritisation of resources and follow-up of various areas, which includes monitoring DNB’s compliance with international sanctions and the Group’s anti-money laundering and counter-terrorism financing work.
  • The IT Group Council is an advisory body for the head of IT and Operations in connection with prioritisation, decision making and follow-up of the bank’s IT development projects with an aim to ensure that all IT investments support the bank’s strategic goals.
  • The Ethical Investment Committee manages and follows up the guidelines for ethical investments, collects information about companies and ensures that matters have been adequately examined before the committee recommends any exclusion of companies. The committee presents its recommendations to the heads of DNB Asset Management Holding AS, Group Investments and DNB Livsforsikring ASA, who act as decision makers for their respective units. 

The operative business areas and staff and support units must have dedicated employees who are responsible for operational risk management and compliance in their respective units. These functions must be organised separately from other business operations to ensure that independence is safeguarded.

Implementation and monitoring

The basis for risk management in DNB is that individual managers in the Group are responsible for risk within their own area of responsibility and must therefore have the necessary insight into and understanding of the relevant unit’s risk situation, thus ensuring that the management of such risk is financially and administratively sound.

All units in the Group carry out an annual review which includes:

  • a self-assessment of the unit’s work on risk management and internal control
  • the unit’s risk assessments
  • an evaluation of compliance with external and internal regulations
  • planned improvement measures

Reporting takes place minimum at division level and forms the basis for aggregate reports for business areas and support units, which in turn are included in the group chief executive’s reports to the Board of Directors of DNB ASA. Where assessments identify particularly serious risks, there must also be concrete plans for improvement measures.

Each month, the group management meeting will receive a status report on the risk situation, measured relative to the defined risk appetite targets.

GROUP RISK MANAGEMENT
Organisation and responsibilities

Group Risk Management is headed by the Group’s chief risk officer, CRO, who reports directly to the group chief executive. The CRO sets the premises for risk management and internal control and assesses and reports the Group’s risk situation. The majority of the Group’s risk entities are organised in Group Risk Management, though parts of operative risk management are organised in the business areas. Due to the independence requirement, appointments, dismissals and changes in conditions for key persons in the second line of defence in operative units are subject to approval by Group Risk Management based on a recommendation from the relevant operative unit.

Implementation and monitoring

Group Risk Management prepares a quarterly risk report to the Boards of Directors of DNB ASA and DNB Bank AS. In addition, Group Risk Management is responsible for preparing the Group’s ICAAP report, recovery plan, validation report and status report on management and control of operational risk. 

Risk reporting in the Group aims to ensure that all executives have the necessary information about current risk levels and future developments. To ensure high-quality, independent risk reports, responsibility for reporting is assigned to units that are independent of the operative units. The Group’s risk is measured in the form of economic capital. Return on economic capital is a factor in product pricing, profit calculations and performance monitoring.

COMPLIANCE
Organisation and responsibilities

The compliance function is an independent function which identifies, evaluates, gives advice on, monitors and reports on the Group’s compliance risk. The function is headed by the group compliance officer, GCO. The GCO is organised in Group Risk Management and reports to the Board of Directors through the group chief executive. All business areas and support units, as well as large subsidiaries and international entities, have a compliance function with responsibility for ensuring compliance with relevant regulations. The compliance functions in international entities and the Group’s operations in the Baltics and Poland report directly to the GCO.

The Group’s anti-money laundering monitoring function, the Group AML officer, reports directly to the CRO.

Implementation and monitoring

The GCO is responsible for the reporting of compliance risk and any breaches of laws and regulations pertaining to the Group. A compliance report is prepared once a year. The compliance functions in the business areas and support units issue periodic reports on the current status and on any violations of regulations to the GCO and to the heads of their respective units. The identification, assessment and monitoring of the Group’s risk of errors in financial reporting are carried out by Group Financial Reporting on behalf of the chief financial officer.

INTERNAL AUDIT
Organisation and responsibilities

Independent and effective audits will help ensure satisfactory risk management and internal control, as well as reliable risk and financial reporting. Group Audit receives its mandate from the Board of Directors of DNB ASA, which also approves the department’s annual plans and budgets.

Group Audit’s responsibilities can broadly be divided in two:

  • On behalf of DNB ASA, the group chief executive and the Boards of Directors of the companies in the Group, verify that adequate and effective risk management and internal control are in place
  • Assess whether risk identification, established management processes and control measures effectively contribute to strengthening the Group’s ability to reach its targets

The work of Group Audit is described in further detail below. Information about the statutory auditor can be found in section 15 below.

Implementation and monitoring

Group Audit carries out audits of units in the DNB Group. An audit plan is prepared, which is discussed with group management, reviewed by the Audit Committee and approved by the Board of Directors. Group Audit’s risk assessments form the basis for determining which units should be given priority in the auditing process. After the audits have been completed, audit reports are prepared, which include the results of the audit, a description of any identified weaknesses or deficiencies and proposed measures, specifying responsible persons and deadlines for implementation of the measures. The audit reports are sent to the heads of the relevant audited units. An audit summary, reviewing all of the units in the DNB Group, is presented to The Boards of Directors of DNB ASA and DNB Bank ASA once every six months. The Boards of Directors also receive a monthly summary of the audit reports for all units in the Group. The Boards of Directors of DNB Boligkreditt AS, DNB Næringskreditt AS, DNB Livsforsikring AS and DNB Asset Management Holding AS receive all audit reports for their respective units. Semi-annual and monthly reports from Group Audit are also sent to the statutory auditor.

SUPERVISORY AUTHORITIES
Implementation and monitoring

The operations of the DNB Group are supervised by Finanstilsynet (the Financial Supervisory Authority of Norway). Among other things, Finanstilsynet reviews annual and interim reports and the Group’s Internal Capital Adequacy Assessment Process, ICAAP. Finanstilsynet reviews the Group’s recovery plan. The Board of Directors aims to have an open and constructive dialogue with Finanstilsynet.

10 B) The Board of Directors’ reporting of the key components of internal control over financial reporting

Financial reporting in the Group shall be in compliance with relevant laws and regulations and internal guidelines for operations. DNB aims to have low operational risk, and the group guidelines for internal control over financial reporting set explicit requirements for processes and procedures to ensure high-quality reporting.

More about the policy for financial management

DNB’s financial management shall ensure long-term value creation for shareholders.

Ongoing risk assessments are made of processes that entail a risk of errors in financial reporting. The assessments include an end-to-end process mapping that clarifies roles and responsibilities in the entire financial value chain. Key controls are established to ensure that all aspects that imply a risk of serious errors are given special attention. These controls are subject to special documentation requirements. Risk-mitigating measures are established for all processes that continue to involve high or medium risk after the key controls have been implemented.

The results of the internal control over financial reporting are reported to Group Financial Reporting each quarter and followed up on an ongoing basis. The group management team and the Audit Committee receive annual updates.

Process for internal control over financial reporting in the DNB Group

BOARDS OF DIRECTORS
Organisation and responsibilities

The Board of Directors of DNB ASA, represented by the Audit Committee, reviews the financial reporting process. The Board of Directors has prepared guidelines to ensure reliable, relevant, timely and uniform reporting to shareholders and other capital market participants. The guidelines also cover internal needs. Together, these are called guidelines for financial reporting. The guidelines set quality assurance requirements for the financial reporting process applying to all units in the Group, including requirements to avoid any manipulation of the accounts.

The Audit Committee will supervise the financial reporting process and ensure that the Group’s internal control, including the internal audit and risk management systems, functions effectively. In addition, the committee shall ensure that the Group has independent and effective external audit procedures.

Implementation and monitoring

The Audit Committee reviews quarterly financial reporting for the DNB Group. The Committee makes a thorough review of discretionary assessments and estimates in addition to any changes in accounting practice.

The Committee monitors the Group’s internal control systems and the internal audit, making sure that they function effectively, and considers changes in systems and procedures which are presented to the Board of Directors for approval.

In connection with its review, the Committee has discussions with management, Group Audit and the statutory auditor. The statutory auditor provides a report to the Committee on the main features of the audit carried out in the previous accounting year, including a special review of any material weaknesses identified in internal control relating to the financial reporting process.

The Committee considers group management’s annual self-assessment of the level of and effectiveness of the internal control over financial reporting.

At least once each quarter, the Committee has separate meetings with the statutory auditors on behalf of the Board of Directors without any representatives from management present. In addition, the Committee has meetings with the group chief audit executive at least once a year without any representatives from management present.

The Audit Committee considers the quarterly accounts and the proposed annual accounts for DNB ASA and the DNB Group. After the quarterly accounts and proposed annual accounts for the respective companies have been reviewed by the executive management and the Audit Committee, they are considered by the Boards of Directors of DNB ASA and DNB Bank ASA. The annual accounts are approved by the general meeting.

The Audit Committee also considers the proposed statutory and consolidated accounts of DNB Bank ASA and DNB Livsforsikring AS and the statutory accounts of DNB Boligkreditt AS. The Board of Directors of DNB Livsforsikring AS considers the quarterly accounts and the proposed annual accounts. The annual accounts are approved by the respective companies’ general meetings.

GROUP CHIEF EXECUTIVE AND EXECUTIVE BODIES
Organisation and responsibilities

Group Finance is headed by the chief financial officer, CFO, and is organised outside the business areas. The head of Group Financial Reporting reports to the chief financial officer and is responsible for matters such as financial management and reporting, financial follow-ups, direct and indirect taxes and the internal control over financial reporting in the Group.   

The heads of reporting units are responsible for ongoing financial monitoring and reporting. All these units have management teams and accounting units adapted to their organisation and operations. Managers must ensure that adequate and effective internal control is implemented in accordance with established requirements, and are responsible for complying with these requirements.

Implementation and monitoring
Reporting units

The heads of the business areas and staff and support units are responsible for implementing adequate and effective internal control in accordance with established requirements, as well as for ensuring compliance with these requirements. The units will assess internal control of financial reporting each quarter and report the results of their assessment to the head of Group Financial Reporting. Every year, a comprehensive evaluation of compliance with external and internal regulations concerning internal control over financial reporting is made. The results, along with planned improvement measures, are reported to the head of Group Financial Reporting.

Group Finance

On behalf of the chief financial officer, the head of Group Financial Reporting identifies, assesses and monitors the risk of errors in the Group’s financial reporting in cooperation with the heads of the reporting units. The risk assessment is considered by the Group’s Audit Committee.   

Group Finance prepares financial reports for the DNB Group and ensures that such reporting is in line with prevailing legislation, accounting standards, current accounting principles and guidelines from the Board of Directors. The head of Group Financial Reporting prepares guidelines which explain the requirements to be fulfilled by the local units. Processes and a number of control measures have been prepared to ensure that financial reporting is of high quality. The measures include rules concerning authorisations, the division of responsibilities, reconciliation, change management, IT controls and management reviews. 

Group management team

The group chief executive and the chief financial officer will continually consider the financial results and target attainment of the business areas as well as critical aspects and events which will affect their future performance and optimal resource utilisation. A review covering, inter alia, these subjects will be made in cooperation with the individual business areas at least on a quarterly basis. If required, the risks associated with financial reporting, both in the short and the long term, are assessed at the meetings. The group chief executive, the chief financial officer, managers in the relevant unit and relevant experts participate in the meetings, which are chaired by the group chief executive. The chief financial officer reviews such matters with the support units in special meetings.

The group management team will review monthly financial reporting and risk appetite, including trends in profit and loss and balance sheet items, the current status relative to statutory enactments, results for legal units and analyses of and comments to the financial performance of business areas and support units.

Compliance
Organisation and responsibilities

On behalf of the chief financial officer, the head of Group Financial Reporting identifies, assesses and monitors the risk of errors in the Group’s financial reporting in cooperation with the heads of the reporting units.   

Implementation and monitoring

A process has been established for self-assessments of the level of and effectiveness of the internal control over financial reporting. The units’ quarterly assessment of internal control over financial reporting is discussed with the head of Group Financial Reporting in special meetings when and as required, and a summary is presented to the chief financial officer, group management, the Audit Committee and the Board of Directors of DNB ASA if required in connection with their review of the Group’s quarterly and annual accounts.

Audit
Organisation and responsibilities

See description of the internal audit under A) Organisation, implementation and monitoring

Implementation and monitoring

The annual accounts of all the companies in the DNB Group are audited by the statutory auditors, who, within the limits stipulated in international standards on auditing and quality control, ISA, cooperate with Group Audit.

As part of the audit, Group Audit assesses the established internal control over financial reporting in selected processes. Every year, the statutory auditor prepares a report which summarises the results of the financial audit. The report accounts for any weaknesses and deficiencies in the internal control over financial reporting. The report is sent to those who are responsible for financial reporting in the audited units and companies for comment before being considered by the Audit Committee and the Board of Directors of DNB ASA. The results of the audit of financial reporting are described in Group Audit’s semi-annual report to the Boards of Directors of DNB ASA and DNB Bank ASA and the Audit Committee.

– Section 11

REMUNERATION OF THE BOARD OF DIRECTORS

Remuneration paid to members of the Board of Directors, which is proposed by the Election Committee and approved by the general meeting, is not performance-based or linked to options in DNB ASA. The Board of Directors must approve any remuneration from the company to members of the Board of Directors other than ordinary remuneration for their service on the Board of Directors, the Audit Committee, the Risk Management Committee and the Compensation Committee. Note 48 to the annual accounts for the DNB Group shows remunerations to senior executives and elected officers in DNB ASA.

No deviations from the Code of Practice.

– Section 12

REMUNERATION OF THE EXECUTIVE PERSONNEL
Guidelines for executive pay

DNB’s guidelines for determining remunerations to the group chief executive and other members of the group management team should, at all times, support prevailing strategy and values, while contributing to the attainment of the Group’s targets. The total remuneration to the group chief executive and other senior executives consists of basic salary (main element), benefits in kind, variable salary, pension and insurance schemes. When determining the variable remuneration of the group chief executive and other senior executives for 2016, strong emphasis was once again placed on group measurement parameters for financial key figures, customer satisfaction and corporate reputation.

DNB’s variable remuneration scheme is in accordance with the regulations on remuneration schemes in financial institutions, investment firms and management companies for mutual funds. The Group has prepared separate group guidelines for the scheme. In accordance with the guidelines, the Board of Directors’ Compensation Committee determines the Group’s total annual variable remuneration limit. In addition, the Group has identified senior executives, risk takers and independent control functions etc. Remuneration to the group chief executive and other senior executives is described in further detail below.

Group chief executive

The total remuneration to the group chief executive is determined on the basis of a total evaluation of performance, in addition to comparisons with remuneration levels for corresponding positions in the market. The remuneration should be competitive, but not market-leading.

The variable remuneration of the group chief executive is performance-based and determined on the basis of the Group’s return on equity, Tier 1 capital ratio and cost/income ratio, in addition to developments in customer satisfaction, DNB’s reputation and internal measurement parameters related to corporate culture. In addition, an overall assessment related to the Group’s values and leadership principles is made. The variable remuneration of the group chief executive cannot exceed 50 per cent of fixed salary. Payment of minimum 50 per cent of variable remuneration is deferred and conditional in the form of DNB shares. The remuneration paid in the form of shares is divided into three, subject to minimum holding periods (deferred and conditional), with one-third payable each year over a period of three years.

Other senior executives

The total remuneration to other senior executives is determined based on the need to offer competitive, but not market-leading terms, promote the Group’s competitiveness in the labour market and enhance profitability in line with the Group’s income and cost targets. The total remuneration should ensure that DNB attracts and retains senior executives with the desired skills and experience.

Variable remuneration is awarded to individual employees within limits allocated to each unit and an overall assessment of the individual’s attainment of predetermined financial and non-financial targets.

The variable remuneration scheme is performance-based without exposing the Group to unwanted risk. This is ensured by the strong correlation between individual targets and the Group’s governance model. Payment of minimum 50 per cent of variable remuneration is deferred and conditional in the form of DNB shares. The remuneration paid in the form of shares is divided into three, subject to minimum holding periods (deferred and conditional), with one-third payable each year over a period of three years. Variable remuneration cannot exceed 50 per cent of fixed salary for senior executives. The level of variable remuneration in DNB is considered to be moderate relative to prevailing levels in international financial institutions and other large Norwegian groups of companies.

The Board of Directors’ statement concerning executive remunerations

The Board of Directors presents a statement to the general meeting proposing guidelines for remunerations to senior executives. The statement and information about remunerations paid to the individual members of the group management team can be found in note 48 to the annual accounts for the DNB Group. 

Other aspects

No employees in the DNB Group have any outstanding subscription rights etc. See also the description of the Board of Directors’ Compensation Committee in Section 9 above.

No deviations from the Code of Practice.

– Section 13

INFORMATION AND COMMUNICATIONS

The Group presents the Norwegian and international markets with extensive analytical information in connection with the quarterly reporting of financial information and presentations on particular topics. Parallel to this, the same information is made available to all interested parties on the websites of Oslo Børs and the Group.

Guidelines have been drawn up for the reporting of financial information to shareholders, investors and analysts. The guidelines also cover the Group’s contact with shareholders other than through general meetings. The guidelines are based on openness and take into account the requirement for equal treatment of all participants in the market. They can be found on the Group’s website dnb.no/en/about-us.

An overview of the dates for major events such as the annual general meeting, the publication of interim reports, public presentations and dividend payments is published on the Group’s website.

All DNB employees have access to the guidelines for financial reporting, including requirements for the internal control over financial reporting. Group Finance holds regular meetings with units in the Group to give information about and increase the understanding of the requirements for internal control over financial reporting.

No deviations from the Code of Practice.

– Section 14

CORPORATE TAKE-OVERS

The Board of Directors of DNB ASA will handle any take-over bids in compliance with the principle of equal treatment of shareholders. Parallel to this, the Board will help ensure that shareholders are given as complete information as possible in all situations that will affect shareholder interests. Cf. section 4, which gives an account of the Norwegian government’s intention to retain its 34 per cent holding in DNB ASA, as required by the Norwegian parliament.

Deviations from the Code of Practice: The Board of Directors has chosen not to determine explicit guiding principles on how to act in the event of a take-over bid. The background for this exception is that the Norwegian government owns 34 per cent of the shares in DNB ASA, making such principles not very relevant. The Board of Directors otherwise endorses the wording in this section of the Code.

– Section 15

STATUTORY AUDITOR

The statutory auditor annually submits a plan for the audit to the Audit Committee. Guidelines have been drawn up in respect of relations with the statutory auditor, including restrictions on what additional services can be undertaken, approval of fees and guidelines to invite tenders for external audit services. The audit partner responsible for carrying out the audit can hold this responsibility for maximum seven years, and tenders will normally be invited every seventh year. 

The Audit Committee submits a recommendation regarding the choice of statutory auditor to the Board of Directors, which submits a recommendation to the general meeting. At least once each quarter, the Committee has separate meetings with the auditors on behalf of the Board of Directors without any representatives from management present.

The Committee submits a recommendation regarding the statutory auditor’s remuneration to the Board of Directors, which presents the remuneration proposal to the Annual General Meeting for approval.

The statutory auditor must provide a report to the Audit Committee on the main features of the audit carried out in the previous accounting year, including particular mention of any material weaknesses identified in internal control relating to the financial reporting process. The auditor must also provide the committee with:

  • an annual written confirmation of the auditor’s independence
  • information on services other than statutory audit provided to the company during the course of the financial year
  • information on any threats to the auditor’s independence, and documentary evidence of the measures implemented to combat such threats.

The Audit Committee evaluates the work performed by the statutory auditor on an annual basis.

No deviations from the Code of Practice.

Governing bodies in DNB ASA (as at 31 December 2016)

BOARD OF DIRECTORS
No. of shares as at
31 December
 2016 1) No. of shares as at
31 December 2015 1)
Members
Anne Carine Tanum, Rømskog (chairman) 400 000 300 000
Tore Olaf Rimmereid, Oslo (vice-chairman) 10 611 8 111
Jarle Bergo, Ytre Enebakk 225 225
Carl A. Løvvik, Bergen2) 1 191 1 040
Vigdis Mathisen, Asker2) 481 405
Jaan Ivar Semlitsch, Stabekk 12 300 12 300
Berit Svendsen, Oslo 0 0
     
Deputies for the employee representatives
Jorunn Løvaas, Kristiansund 2) 0 0
Stian Samuelsen, Svelvik 2) 480 480

 

ELECTION COMMITTEE
No. of shares as at
31 December
 2016 1) No. of shares as at
31 December 2015 1)
Eldbjørg Løwer, Kongsberg (chairman) 200 200
Camilla Grieg, Bergen 0 0
Karl Moursund, Oslo 0 0
Mette Wikborg, Oslo 0 0

 

RISK MANAGEMENT COMMITTEE
No. of shares as at
31 December
 2016 1) No. of shares as at
31 December 2015 1)
Tore Olaf Rimmereid, Oslo (chairman) 10 611 8 111
Jarle Bergo, Ytre Enebakk 225 225
Jaan Ivar Semlitsch, Stabekk 12 300 12 300
Berit Svendsen, Oslo 0 0

 

AUDIT COMMITTEE
No. of shares as at
31 December
 2016 1) No. of shares as at
31 December 2015 1)
Tore Olaf Rimmereid, Oslo (chairman) 10 611 8 111
Jarle Bergo, Ytre Enebakk 225 225
Jaan Ivar Semlitsch, Stabekk 12 300 12 300
Berit Svendsen, Oslo 0 0

 

COMPENSATION COMMITTEE
No. of shares as at
31 December
 2016 1) No. of shares as at
31 December 2015 1)
Anne Carine Tanum, Rømskog (chairman) 400 000 300 000
Vigdis Mathisen, Oslo 481 405
Tore Olaf Rimmereid, Oslo 10 611 8 111
Berit Svendsen, Oslo 0 0

 

GROUP MANAGEMENT
No. of shares as at
31 December
 2016 1) No. of shares as at
31 December 2015 1)
Group chief executive
Rune Bjerke 52 964 46 156
Chief financial officer
Bjørn Erik Næss 53 485 48 880
Group executive vice president Personal Banking
Trond Bentestuen 20 692 16 823
Group executive vice president Corporate Banking
Benedicte Schilbred Fasmer 2 000 183
Group executive vice president Large Corporates and International
Harald Serck-Hanssen 31 770 26 644
Group executive vice president Markets
Ottar Ertzeid 220 140 200 000
Group executive vice president Wealth Management
Tom Rathke 35 366 30 809
Executive vice president Wealth Management
Bengt Olav Lund 3) 9 238 6 797
Group executive vice president Vipps and Payments
Rune Garborg 10 931 4 451
Group executive vice president IT and Operations
Liv Fiksdahl 25 858 21 989
Group executive vice president HR
Solveig Hellebust 17 560 14 329
Chief risk officer
Terje Turnes 21 375 19 027
Group executive vice president Corporate Communications
Thomas Midteide 7 928 5 188
Group executive vice president Group Projects
Kari Olrud Moen 23 440 19 955
Group executive vice president
Kjerstin Braathen 22 931 19 190

 

GROUP AUDIT
No. of shares as at
31 December
 2016 1) No. of shares as at
31 December 2015 1)
Tor Steenfeldt-Foss 0 0

 

EXTERNAL AUDITOR

Ernst & Young AS

 

1) Shareholdings in DNB ASA, shares held by the immediate family and companies in which the shareholder has such influence as stated in Section 7-26 of the Act relating to annual accounts etc.
2) Not independent, see “Corporate governance”.

3) Acting head of Wealth Management since May 2016.