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REC Annual Report 2011
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Authority regulating in detail all matters that are to be decided by the
Board and the matters that may be decided by the administration with a
description of the appropriate level of decision-maker. The Chart of
Authority distinguishes between investment decisions, customer
contracts, procurement contracts, compensation and finance and is
reviewed on an annual basis and adapted if necessary. The Board holds
at least one meeting per year with the auditor and without any members
of the GroupManagement and the administration present.
The Board has currently established two committees – the Audit
Committee and the Compensation Committee. Information about the
members of these committees is included in the Annual Report.
The Board reviews its own performance, including the work of the Board
committees, annually.
The Audit Committee
The Audit Committee consists of three members of the Board. Two
members are independent of the Company’s GroupManagement and
material business contacts. The third member is one of the employees’
representatives at the Board of Directors. Two members are
independent of the Company’s main shareholders, including the
employees’ representative. The Committee has collectively the
competence required in the Public Limited Liability Companies Act §
6-42. Two members are independent according to § 6-42 Public Limited
Liability Companies Act and have the required qualifications within
accounting and auditing.
The Committee supports the Board with respect to the assessment and
control of financial risk, financial reporting, auditing and control and
prepares discussions and resolutions for the Board’s plenary meetings.
It has no decision-making authority. In addition, under the newly adopted
whistleblower procedure, complaints from employees and other
concerned parties are received and followed up by the Committee. The
Chief Financial Officer participates in the meetings of the Audit
Committee. The Committee should hold at least one meeting per year
with the auditor and without the Chief Financial Officer or any other
members of the GroupManagement and the administration present.
The Audit Committee held eight meetings in 2011 and has been in
regular contact with the Company’s auditor regarding auditing of the
statutory accounts and is also assessing and monitoring the auditor’s
independence, including monitoring non-audit services provided by the
auditor to the Company.
The Committee makes recommendations to the Board with respect to
the appointment, retention and termination of the Company’s auditor as
well as the auditor’s fees. The Committee reviews complaints regarding
accounting, internal controls and auditing matters.
The tasks and rules of procedure of the Audit Committee are further
regulated in the Audit Committee Charter.
The Compensation Committee
The Compensation Committee consists of three members of the Board
all of which are independent of the GroupManagement. The Committee
supports the Board by preparing resolutions with respect to the terms
and conditions of employment for the Chief Executive Officer and with
respect to general principles and strategies for the compensation of the
REC GroupManagement, including bonus and option programs as well as
other material personnel related matters. It also makes
recommendations to the Board with respect to Employee Share
Purchase Programs.
The tasks and procedures of the Compensations Committee are further
regulated in the Compensation Committee Charter.
The Compensation Committee held four meetings in 2011.
Corporate Governance Committee
The Board decided not to form a Corporate Governance Committee in
2011 as the reporting on corporate governance as described in the
Accounting Act and the NUES principles should be prepared as part of
the Audit Committee’s tasks.
10. RISK MANAGEMENT AND INTERNAL CONTROL
REC has a risk management system to ensure that all business segments
within the REC Group have a systematic and uniform approach to risk
management. Within the system, the roles, responsibilities, processes
and procedures, standards, tools, facilities and documentation to be
produced are defined. GroupManagement sets the context in which
risks are managed, i.e. how risks are to be identified, analyzed,
controlled, monitored and reviewed. It also supervises the risk
management process, however the business segments are the “risk-
owners” and responsible for ensuring that risk management is a
systematic, integrated part of their day-to-day operations. Each
business segment defines and analyzes risks in order to establish or
update its risks picture through a bottom-up process. In addition, each
segment must carry out a top-down analysis.
Each segment reports a risk picture (top ten per segment area) every
year as an integrated part of the planning process as well as an update in
connection with the quarterly reporting. REC GroupManagement
performs a separate and additional risk evaluation based on a top-down
approach. The quarterly risk assessment is presented to the Board of
Directors.
In addition, REC GroupManagement generates monthly reports that are
sent to the Board of Directors including operational reviews, HSE
(Health, Safety and Environment), financial highlights and key
performance indicators. REC GroupManagement also submits quarterly
sustainability reports to the Board of Directors.
In 2011 REC has further improved the existing risk assessment and
monitoring process related to financial reporting. The risk assessment
has been headed by Group Finance and has a Group perspective (top-
down approach). The risk assessment consists of scoping of the relevant
risks that could have a significant effect on the consolidated financial
statements, as well as evaluating the mitigating controls which are in
place for these risks. Some key risk areas have been indentified and
reviews have been performed on site for all major reporting units. The
risk assessments, findings and mitigating actions have been presented
to the Audit Committee and Board of Directors. The process will be
further developed in 2012.
The Board of Directors’ report on corporate governance