Nostrum Oil & Gas Plc ABOUT OPERATIONS SUSTAINABILITY INVESTORS CAREERS MEDIA CONTACT Governance Much of the Board’s effort and attention in 2020 has been focused on stabilising the financial position of the Group and looking to secure its future, whilst at the same time ensuring that our employees and contractors remained safe. A number of executive and non-executive members left the Board in 2020, and given the financial position of the Group, the decision was taken not to recruit new members to the Board until such time that the restructuring was substantially complete. As a result, and as explained in the Nomination and Governance Committee report in our Annual Report, no formal Board evaluation took place in 2020. An evaluation of the Board structure, membership and skill set will be reviewed in 2021 at the conclusion of the restructuring of the Notes. We will continue to review and develop our corporate governance practices in 2021 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. Leadership Your Board rigorously challenges strategy, performance, responsibility and accountability to ensure that every decision we make is of the highest quality. Effectiveness Your Board continuously evaluates the balance of skills, experience, knowledge and independence of the directors. Accountability All of our decisions are discussed within the context of the risks involved. Effective risk management is central to achieving our strategic objectives. Remuneration Our remuneration policy and practices aim to attract, retain and motivate by linking reward to performance. Relations with shareholders The Board seeks to engage with shareholders regularly. Statement of compliance Nostrum fully complied throughout 2020 with the provisions of the 2018 version of the UK Corporate Governance Code except in the following respects: Provision 9 Contrary to Provision 9, which states that the roles of chair and chief executive should not be exercised by the same individual, due to a new Chief Executive Officer not having been identified by the time of the planned resignation of Ms van Hecke on 31 August 2020, the responsibilities of the Chief Executive Officer were discharged by Mr Gupta from 1 September 2020 until the appointment of Mr Khan on 26 January 2021. Provisions 10 Ms van Hecke joined the Board of the Company on 31 December 2016, serving as an independent Non-Executive Director. Following the departure of Mr Kessel as Chief Executive Officer in December 2019, Ms van Hecke was asked by the Board to assume the executive responsibilities of the Chief Executive Officer on an interim basis. Ms van Hecke agreed to do so and from 16 December 2019 to 31 August 2020 she was not considered an independent Non-Executive Director by the Board. Following the completion of her duties as interim Chief Executive Officer, the Board considered whether it was appropriate that Ms van Hecke resume her previous role as an independent Non-Executive Director. In that regard the Board took into account Provision 10 of the Code and the circumstances listed therein that are likely to impair, or could appear to impair an independent Non-Executive Director’s independence. It further took note of the requirement in Provision 10 that where any such circumstances apply and the Board nonetheless considers the Non-Executive Director to be independent, a clear explanation should be provided. The Board recognised that while Ms van Hecke previously served as an independent Non-Executive Director of the Company for three years, for a period of just over 8 months she assumed executive responsibilities and was remunerated for this and also participated in the Company’s annual bonus scheme, and that the following circumstances listed in Provision 10 of the Code did apply during this interim period: Is or has been an employee of the company or group within the last five years; and Has received or receives additional remuneration from the company apart from a director’s fee, participates in the company’s share option or a performance-related pay scheme, or is a member of the company’s pension scheme. However, as Ms van Hecke only assumed executive responsibilities at the request of the Board for a short interim period, the Board did not believe these circumstances would be or were likely to impair her ability to act independently as foreseen in Provision 10 of the Code. The Board considered that Ms van Hecke had demonstrated throughout the period during which she has acted as an independent Non-Executive Director of the Company that she acted independently in her role as a Director. The Board was of the view that following the end of her interim role Ms van Hecke remains fully capable of scrutinising and holding to account the performance of management and individual executive directors against agreed performance objectives as foreseen in Provision 13 of the Code. In that regard the Board also took note of Provision 75 of the Guidance on Board Effectiveness (the Guidance) which supplements the Code and contains suggestions of good practice to support directors and their advisers in applying the Code, which provides: “It is important that non-executive directors do not operate exclusively within the confines of the boardroom, but have a good understanding of the business and its relationships with significant stakeholders. Accordingly, it is advisable for them to take opportunities to meet shareholders, key customers and members of the workforce from all levels of the organisation.” The Board believes that given her deep knowledge of the Company and its business and stakeholders gained as a result of her interim role, Ms van Hecke can make unique contributions to the Board as contemplated by the Guidance. Accordingly, the Board considers Ms van Hecke to be independent and redesignated her as an independent Non-Executive Director of the Company in September 2020. Provision 11 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. Provision 21 Contrary to Provision 21 (which requires a formal and rigorous annual evaluation of the performance of the Board, its committees, the chair and individual directors), there was (for the reasons stated in the report of the Chairman of the Nomination and Governance Committee) no formal Board evaluation during 2020. Provision 24 Following the appointment of Ms van Hecke as Chief Executive Officer on 16 December 2019, she was no longer considered by the Board as independent for the purposes of the Code and her continued membership of the Audit Committee contravened Provision 24 of the Code until 27 January 2020, when Ms van Hecke stepped down as a member of the Audit Committee. Following the appointment of Mr Cocker as Interim Chief Financial Officer on 31 March 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 the Audit Committee contravened Provision 24 of the Code. 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 would remain 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. On 8 October 2020, following the appointment of Ms van Hecke as a member of the Audit Committee, Mr Cocker stepped down as a member of the Audit Committee. Contrary to Provision 24 (which requires the Audit Committee to have a minimum membership of two independent non-executive directors) there was only one such member of the Audit Committee from the effective date of Mr Martin’s resignation until Ms van Hecke re-joined the Audit Committee on 8 October 2020. Requirement Non-compliance All members of the Audit Committee to be independent non-executive directors Non-compliance from 16 December 2019 until 27 January 2020 in respect of Ms van Hecke Non-compliance from 31 March 2020 until 8 October 2020 in respect of Mr Cocker At least two such members Non-compliance from 15 July 2020 until 8 October 2020 Provision 32 Following the appointment of Ms van Hecke as Chief Executive Officer on 16 December 2019, she was no longer considered by the Board as independent for the purposes of the Code and her continued membership of the Remuneration Committee contravened Provision 32 of the Code until she stepped down as a member of the Remuneration Committee on 27 January 2020. Following the appointment of Mr Cocker as Interim Chief Financial Officer on 31 March 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 the Remuneration Committee contravened Provision 32 of the Code. 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 Remuneration Committee. On 8 October 2020 following the appointment of Ms van Hecke as Chairwoman of the Remuneration Committee, Mr Cocker stepped down as a member of the Remuneration Committee. Contrary to Provision 32 (which requires the Remuneration Committee to have a minimum membership of two independent non-executive directors) there was only one such member of the Remuneration Committee from the effective date of Mr Martin’s resignation until Ms van Hecke re-joined the Remuneration Committee on 8 October 2020. Requirement Non-compliance All members of the Remuneration Committee to be independent non-executive directors Non-compliance from 16 December 2019 until 27 January 2020 in respect of Ms van Hecke Non-compliance from 31 March 2020 until 8 October 2020 in respect of Mr Cocker At least two such members Non-compliance from 31 March 2020 until 8 October 2020 Provision 36 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. Documents: 16/8/2021 Group Whistle-blowing policy download 9/4/2020 Payment to Tom Richardson upon departure download 17/12/2019 Payment to Kai-Uwe Kessel upon departure download 27/3/2019 Articles of Association download 27/3/2019 Schedule of matters reserved for the Board download 27/3/2019 Group Code of conduct download 27/3/2019 Group anti-corruption and Bribery policy download Transparency 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. Documents: 18/6/2021 2020 Payments to Governments Report download 25/6/2020 2019 Payments to Governments Report download 27/6/2019 2018 Payments to Governments Report download 27/3/2017 2017 Payments to Governments Report download 27/3/2016 2016 Payments to Governments Report download 27/3/2015 2015 Payments to Governments Report download Strategy Board Management Governance Governance Framework Committees History 9th Floor 20 Eastbourne Terrace London W2 6LG United Kingdom +44 20 3740 7430 Modern Slavery and Transparency Statement Privacy & Cookies Policy Disclaimer © 2021 Nostrum Oil & Gas Plc Website by BRIGHTER*IR follow us on linked in