Norwegian Code of Practise:

• The composition of the corporate assembly should be determined with a view to ensuring that it represents a broad cross-section of the company's shareholders.
• The composition of the board of directors should ensure that the board can attend to the common interests of all shareholders and meets the company's need for expertise, capacity and diversity. Attention should be paid to ensuring that the board can function effectively as a collegiate body.
• The composition of the board of directors should ensure that it can operate independently of any special interests. The majority of shareholder-elected members should be independent of company's executive management and material business contacts. At least two of the members of the board elected by shareholders should be independent of the company's main shareholder(s).
• The board of directors should not include representatives of the company's executive management. If the board does include members of the executive management, the company should provide an explanation for this and implement consequential adjustments to the organisation of the work of the board, including the use of board committees to help ensure more independent preparation of matters for discussion by the board, cf. Section 9.
• The chairman of the board of directors should be elected by the general meeting so long as the Public Companies Act does not require that the chairman shall be appointed either by the corporate assembly or by the board of directors as a consequence of an agreement that the company shall not have a corporate assembly.
• The term of office for members of the board of directors should not be longer than two years at a time.
• The annual report should provide information to illustrate the expertise and capacity of the members of the board of directors and identify which members are considered to be independent.
• Members of the board of directors should be encouraged to own shares in the company.

Composition of the Board of Directors

The Board of Directors consists of eight members and, following the election at the Annual General Meeting on 7 May 2009, has the following composition: Finn Jebsen (Chair), Benedicte Berg Schilbred (Deputy Chair), Anne-Lise Aukner (new), Erik Must, John Giverholt, Roar Marthiniussen, Kai Johansen and Helge Lintvedt (new). The three latter directors have been elected by and from among the employees.

It is essential that the Board as a whole be capable of dealing with Board work and the Group's main business activities.

In addition, the directors are to have the capacity to carry out their duties. According to the Articles of Association, the Group shall have five to eight directors. The CEO is not a member of the Board of Directors.

The directors are elected for two-year terms. The General Meeting elects the Chair of the Board. This is stated in the instructions for the Nominating Committee. Finn Jebsen was elected Chair of the Board.

The Board's independence

All shareholder-elected directors are considered autonomous and independent of the Group's corporate management. The same applies relative to material business associates. Arendals Fossekompani ASA, in which Erik Must directly and indirectly has a substantial stake, owned 7.96 per cent of Kongsberg Gruppen ASA at year end. Ferd AS, where John Giverholt is Chief Financial Officer, had a 0.5 per cent stake in Kongsberg Gruppen ASA at year end. The Board of Directors is favourable to long-term shareholders being represented on the Board. It is important that there be no conflicts of interest between owners, the Board, management and the Group's other stakeholders.

Among the shareholder-elected directors, there are three men and two women, that is, a 40 per cent female share.

Election of the Board of Directors

The General Meeting elects the five shareholder-elected representatives to the Board. The Nominating Committee draws up a recommendation for shareholder candidates to the Board in advance of the election. The roster of nominations is sent to the shareholders along with the notification of the General Meeting. The election of the Board of Directors takes place by simple majority. The Norwegian State currently owns some 50 per cent of the shares, and could, in principle, control the election of the shareholder-elected directors. Three directors are elected directly by and from among the Group's employees.

Directors are elected for two-year terms and are eligible for re-election.

The directors' shareholdings

On 31 December 2008, the shareholder-elected directors held the following portfolios of shares in the Group: Finn Jebsen, Chair of the Board, owns 5 000 shares through his wholly-owned enterprise Fateburet AS. Benedicte Berg Schilbred, Deputy Chair, owns 17 500 shares through the company Odd Berg AS. Erik Must owns 31 150 shares personally and 100 000 shares through Must Invest AS.
 

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