As a Board, we have made a particular effort during 2019 to improve our dialogue and engagement with shareholders. The additional statement on the Company’s remuneration policy and Report announced and posted on the Investment Association’s Public Register in response to shareholder feedback is an indication of the Board’s commitment to such dialogue.
We will continue to review and develop our corporate governance practices in 2020 to ensure full compliance with regulatory requirements, to strive for best practice and to ensure that all our practices promote the long-term success and development of our business as a whole for the benefit of all its stakeholders and the communities in which we operate.
Statement of compliance
Nostrum fully complied throughout 2019 with the provisions of the 2018 version of the UK Corporate Governance Code except in the following respects:
Following the appointment of Ms Van Hecke as Chief Executive Officer on 16 December 2019 and Mr Cocker as Interim Chief Financial Officer on 1 April 2020, at least half of the Board, excluding the Chair, are no longer considered to be independent. Given recent changes in various directors’ respective roles, the Company’s announced engagement with its bondholders and the ongoing uncertainties caused by the COVID 19 coronavirus, the Board has not yet commenced a search for an additional independent non-executive director to join the Board but this subject is being kept under review.
Provisions 24 and 32
Following the appointment of Ms Van Hecke as Chief Executive on 16 December 2019, she was no longer considered as independent for the purposes of the Code and her continued membership of the both the Audit Committee and the Remuneration Committee contravened Provisions 24 and 32 of the Code, respectively. On 27 January 2020, Ms Van Hecke stepped down as a member of the Audit Committee and the Remuneration Committee and Mr Cocker was appointed as a member of the Remuneration Committee to ensure full compliance with the Code in this respect. No additional changes were made to the composition of the Audit Committee as following Ms Van Hecke’s departure as a member, the membership of the Audit Committee still consisted of three independent non-executive directors in full compliance with the Code.
Following the appointment of Martin Cocker as Interim Chief Financial Officer on 1 April 2020, he was no longer considered by the Board as independent for the purposes of the Code and as a result his continued membership of both the Audit Committee and the Remuneration Committee contravenes Provisions 24 and 32 of the Code, respectively. On 1 April 2020 Mr Cocker stepped down as Chairman of the Audit Committee and was replaced by Sir Christopher Codrington, Bt. so that the Chairman of the Audit Committee is an independent non-executive director. However, the Board determined that given that it is intended that Mr Cocker will only serve as Chief Financial Officer on an interim basis he should remain as a member of the Audit Committee and the Remuneration Committee at this time and this matter will be kept under review going forward.
The Company’s LTIP has a total holding and vesting period of no more than three years and therefore does not comply with the requirements of Code Provision 36 which requires share awards to be released for sale on a phased basis and be subject to a total vesting and holding period of five years or more. As explained in the press release issued by the Company on 28 August 2019, a copy of which has also been published on the Public Register maintained by the Investment Association, the Board and the Remuneration Committee believe that the current provisions of the LTIP relating to the performance period and vesting period are appropriate and aligned with the interest of shareholders, so that modifying such provisions of the LTIP at this time would not be the right course of action. The full text of the announcement is available on the Company’s website.
Nostrum is committed to transparency in its business activities and payments to governments.
Nostrum’s payments to governments report provides an overview of the payments to governments made by Nostrum Oil & Gas PLC and its subsidiary undertakings (hereinafter referred to as “Nostrum”) in the relevant year as required under the UK’s Report on Payments to Governments Regulations 2014 (as amended in December 2015). These UK Regulations enact domestic rules in line with Directive 2013/34/EU (the EU Accounting Directive (2013)) and apply to LSE listed companies like Nostrum that are involved in the exploration, prospection, discovery, development and extraction of oil and natural gas deposits. This Report is also intended to satisfy the requirements of the Disclosure Guidance and Transparency Rules of the Financial Conduct Authority in the United Kingdom.