Nostrum attaches high priority to good practice in corporate governance, the system by which the Group is directed, managed and controlled in the interests of all its stakeholders.
The ordinary shares of Nostrum Oil & Gas PLC are admitted to the premium listing segment of the Official List of the Financial Conduct Authority and to trading on the London Stock Exchange plc’s main market for listed securities. As a result, the company issues a disclosure statement concerning its application of the principles of, and compliance with the provisions of, the UK Corporate Governance Code (the “Code"). The Code sets out standards of good practice in relation to issues such as board composition and development, remuneration, accountability and audit and relations with shareholders.
Pursuant to the Code, the company's Board of Directors (the “Board”) has adopted and published a formal schedule of matters specifically reserved for its decision and includes in the company's annual report a high level statement of which decisions are to be taken by the Board and which may be delegated to management. The company also includes a statement in its annual report as to whether it has complied with the Code, or to the extent that it has not done so explains any divergences from the Code's recommendations (the “comply or explain” principle).
The company complies with all of the provisions of the Code, with the following exceptions:
B.1.2 Given that as a result of changes to the Board composition in April 2017: (a) one of the independent non-executive directors (Atul Gupta) was appointed Chairman, and (b) a non-executive director (Michael Calvey) joined the Board who is not considered by the Board to be independent because he represents a significant shareholder, currently only three of the the seven directors (excluding the Chairman) are considered by the Board to be independent for purposes of the Code. As previously announced, the Company is currently in the process of recruiting additional independent non-executive directors onto the Board so that once again at least half the Board (excluding the Chairman) is comprised of independent non-executive directors, in accordance with the Code.
D.2.1 The Company’s Remuneration Committee consists of three independent non-executive directors (Mark Martin, Kaat Van Hecke and Sir Christopher Codrington, Bt.) and one non-executive director (Michael Calvey) who is not considered by the Board to be independent because he represents a significant shareholder.
Provision D.2.1 of the Code provides that the Remuneration Committee must include at least three independent non-executive directors and the Company’s remuneration committee meets such requirement. However, the Company understands that the most common interpretation of provision D.2.1 of the Code is that any additional director appointed as a member of the committee must also be an independent non-executive director. If such interpretation is correct, Mr. Calvey's membership in the Remuneration Committee does not comply with provision D.2.1 of the Code.
However, the Company believes that there are good reasons for having Mr. Calvey as a member of the Remuneration Committee, in that a director representing a significant shareholder can bring a valuable additional perspective to discussions regarding the remuneration and incentivisation of directors and senior management in the long-term interest of the Company.
E.2.3 All directors did not attend the 2016 Annual General Meeting, however those directors who did not attend were available by teleconference to answer questions from shareholders.