MODELO DE APLICACIÓN CLIENTE/SERVIDOR

52 employees received individual bonuses. Bonuses are rewarded in that the Management fi xes a pool for each de- partment. These pools are then allocated by the heads of department, who are deemed the best able to assess who have delivered outstanding performances. The bonuses range between two weeks’ salary to just over one year’s salary. Bonuses for department managers and the Execu- tive Group are fi xed by the Management on the basis of the Company’s overall performance and the executives’ individual performance. In addition, separate bonus agree- ments have been established for Carsten Mortensen, Presi- dent and CEO, whose bonus is pegged to the development of NORDEN’s net profi t, and for the heads of the Dry Cargo Department and Tanker Department, Jacob Meldgaard and Lars Bagge Christensen, whose bonuses are pegged to the net profi ts of their respective departments. These three bonus agreements are renegotiated annually.

Overall, the bonuses for 2006 represent approximately 5% of the Company’s net profi t, as compared with a level of ap- proximately 3% in previous years. The higher level should not be seen as an indication of a permanent shift, but as a refl ection of the fact that an extraordinary effort was made in 2006, which will manifest itself in considerably improved earnings in future. The total bonus amount for 2007 is ex- pected to approach the level of 3% again.

Long-term conduct

In order to promote long-term conduct and to align em- ployee and shareholder interests, NORDEN increasingly uses share-based payment.

In December 2005, NORDEN introduced an employee share scheme under which all employees who had, or during 2006 attained, one year’s seniority were granted six shares. In Feb- ruary 2007, NORDEN granted a further four employee shares according to the same criteria. In 2007, employees were granted 668 shares all in all with a value of DKK 3.2 million. In both instances, the shares were taken from NORDEN’s port- folio of treasury shares. This will also be the case for future grants, the first of which is expected to take place in 2008. In March 2006, 35 executives and key employees were granted options for 25,000 shares, corresponding to approx- imately 1% of the share capital. The Management received 7,230 options, eleven other executives received a total of 10,095 options and other employees received 7,675 options. The main criterion for the grant was salary level. The pro- gramme was much broader than NORDEN’s previous option programme, which ran from 2001 to 2003 and covered only eight employees and seven board members. The options are exercisable from 29 March 2008 to 29 March 2010.

At the adoption of this annual report, the Board of Direc- tors has granted share options for a total of 22,915 shares in NORDEN to 40 employees. The grant is distributed to the Management, executive employees and other employees in the amounts of 4,739, 10,210 and 7,966 options, respec- tively. The options are subject to the same terms as those in the previous programme and are exercisable from 27 March 2009 to 27 March 2011.

The exercise price is determined as a fi ve-day average of the market price following the grant, less all dividend payments after the grant date and plus an effective interest rate of 8% p.a. until the exercise date. This ensures that the options are not in-the-money until after the shareholders are ensured a return on their investment.

A preliminary assessment of the market value of the options granted in 2007 is approximately DKK 16 million, calculated using the Black-Scholes model and based on the assump- tions that all options are granted and are exercised at the earliest possible date. The calculation is furthermore based on a volatility of 30.2% and a risk-free interest rate of 4.1%. NORDEN expects also in future to issue options to key em- ployees when it is deemed appropriate. The redemption price of future programmes will be above the market price at the grant date and the options will be covered by the Compa- ny’s portfolio of treasury shares.

Remuneration committee

In 2006, the Board of Directors set up a remuneration com- mittee, consisting of the Chairman, the Vice Chairman and Erik Gregers Hansen to discuss and set out a framework for the Company’s remuneration and bonus payments in col- laboration with the Management. The committee was set up because the recruitment and retention of qualifi ed employ- ees is essential in order to ensure maximum return on the Company’s large investments.

32 no r d e n m a n ag e me nt ’ s r ev i e w

NORDEN’s management

NORDEN’s vision, mission and values are the cornerstones of the Company’s management. The management focus is long-term, and the goal is to ensure that the Company is continuously developing and achieving a high performance within the risk framework set out by the Board of Directors. The Board of Directors determines strategies, action plans, goals and budgets, appoints the Management and sets out its terms and tasks. In addition, the Board of Directors sets out the framework for fi nancial and market risk manage- ment and controls the Management’s work and the Compa- ny’s procedures and responsibilities, policies, etc.

Five members of the Board are elected by the shareholders and three are elected by the employees. All board members elected by the shareholders are independent of NORDEN. They have never been employed by the Company and hold no interests in the Company other than their interests as shareholders or representatives of major shareholders. Despite the election of new board members in 2006 as well as in 2005, the seniority is high – almost 13 years on average for board members elected by the shareholders and almost 9 years for the Board of Directors overall. The Board has managed NORDEN during recent years’ market growth, but it was also at the helm of the Company during times of more diffi cult economic climates and tougher mar- ket conditions. The experience and network of the Board of Directors constitute an important asset in the management of an increasingly large and complex business.

In 2006, the Board of Directors reassessed its role, results, work methods and composition on the basis of a question- naire. These discussions were conducted by the Chairman with the assistance of a professor of the management in- stitution IMD in Lausanne. This was the fi rst step toward annual, systematic self-assessment of the Board of Direc- tors and its interaction with the Management. The Board of Directors furthermore set up a remuneration committee, which is to set out a framework for the Company’s remu- neration and bonus payments. The Board of Directors is also planning to set up an audit committee in 2008. In 2006, the Board of Directors held 17 meetings, including two strategy meetings and one seminar at IMD. The many meetings were held because the Board had to assess a large number of proposed exercises of purchase options on ves- sels, newbuilding contracts and long-term charters of ves- sels with purchase option.

Copenhagen Stock Exchange recommendations on best corporate practice

The Copenhagen Stock Exchange has adopted a set of cor- porate governance recommendations. Companies are re- quired to consider these recommendations and specifi cally explain areas in which their practice does not comply with the recommendations. NORDEN complies with the vast majority of the recommendations, but has chosen a differ- ent practice in a number of areas.