Menu Corporate Governance Implementing and reporting on corporate governance SATS considers good corporate governance to be a prerequisite for value creation and trustworthiness as well as for access to capital. In order to secure strong and sustainable corporate governance, it is important that SATS ensures good and healthy business practices, reliable financial reporting, and an environment of compliance with legislation and regulations across the Group. SATS has governance documents setting out principles for how its business should be conducted. These apply to all of SATS’ subsidiaries as well as SATS itself. SATS’ governance regime is approved by SATS’ Board of Directors. Applicable rules and regulations SATS is incorporated and registered in Norway and subject to Norwegian law. SATS’ shares are listed on the Oslo Stock Exchange (Oslo Børs). As a Norwegian public limited liability company listed on Oslo Børs, SATS must comply with the Norwegian Securities Trading Act and Regulation, the Continuing Obligations for Companies Listed on Oslo Børs, the Norwegian Public Limited Liability Companies Act, and all other applicable laws and regulations. The company endorses the Norwegian Code of Practice for Corporate Governance (Norsk anbefaling for eierstyring og selskapsledelse) issued by the Norwegian Corporate Governance Board and most recently revised on 17 October 2018 (“the Code”). If SATS does not fully comply with the Code, the company will provide an explanation for the deviation and the relevant basis for the chosen solution. Deviations from the Code, Section 1: None Main objectives for corporate governance in SATS Corporate governance in SATS involves the set of relationships between the company’s management, its Board, its shareholders and other stakeholders. Corporate governance also provides the structure through which the objectives of the company are set and determines the means of attaining those objectives and monitoring performance. The SATS governance structure consists of (governing bodies): The shareholders annual general meeting (AGM), which elects the Board of Directors after input from the Nomination Committee The Board of Directors, which sets the strategic direction and overall organization of the company, hires the Chief Executive Officer (CEO), and monitors performance, risks and controls The CEO, who operationalizes and implements the Board of Directors’ strategies and directions, is responsible for the day-to-day management of the company, and reports back to the Board of Directors Group functions, which support the CEO in maintaining Group-wide policies and oversight and follow up on Group-wide initiatives Business units, which have been delegated responsibility for achieving business objectives SATS’ corporate governance policy is based on the Code and, as such, it is designed to establish a basis for good corporate governance and support achievement of SATS’ core objectives on behalf of its shareholders, including the achievement of sustainable profitability for the shareholders. The manner in which SATS is governed is vital to the development of its value over time. SATS believes that good corporate governance involves openness and trustful cooperation between all parties involved in the Group: the shareholders, the Board of Directors, executive management, employees, members, suppliers, public authorities and the society in general. By pursuing the principles of corporate governance that were approved by SATS’ Board of Directors, the Board and management must contribute to achieving the following objectives: Openness. Communication with SATS’ interest groups shall be based on openness on issues relevant for the evaluation of the development and position of the company. Independence. The relationship between the Board of Directors, management and shareholders shall be based on independence. Independence shall ensure that decisions are made on an unbiased and neutral basis. Equal treatment. One of SATS’ primary objectives is equal treatment and equal rights for all of its shareholders. Control and management. Good control and corporate governance mechanisms shall contribute to predictability and reduce the level of risk for shareholders and other interest groups. Shareholders TG Nordic Invest is the largest shareholder, owning 30.0% of total shares at year-end 2020. Sustainability SATS’ sustainability and social responsibility work is presented in the company’s annual sustainability report. The report is prepared in accordance with the Core option of the Global Reporting Initiative (GRI) Standards. SATS’ main focus areas for sustainability and social responsibility work are public health and environmentally sustainable operations. The report also considers activities and the approach to employees and business ethics. SATS has made significant efforts in 2020 in terms of measuring and understanding the carbon footprint and climate risk. The company will continue to work on its sustainability strategy to find ways to strengthen the contribution of the core business to public health and improve the sustainability performance in the operations. Deviations from the Code, Sections 2–6 and 13: None The Nomination Committee The articles of association stipulate a Nomination Committee composed of between two and three members. The company’s Nomination Committee comprises Erik Thorsen (chairperson), Andreas Hall (committee member) and Søren Rene Kristiansen (committee member). The members of the Nomination Committee are appointed until the company’s 2021 Annual General Meeting. The Nomination Committee shall recommend shareholder-elected members of the Board of Directors and remuneration for the Board members. Deviations from the Code, Section 7: The Code recommends that no more than one member of the nomination committee should be a member of the Board of Directors, and any such member should not offer himself for re-election to the Board (which is also reflected in the company’s articles of association). In this regard, committee member Mr. Kristiansen is also a company Board member. As it has not yet been decided whether Mr. Kristiansen will offer himself for re-election to the Board at the next vote in 2021, his committee membership may be classified as a soft deviation from the Code. However, the Code also takes into account that elected officers of the company with experience from the Board of Directors contribute positively with a general understanding of the company’s situation. On this basis, and in the general interest of the shareholders, the company has decided that Mr. Kristiansen’s value to the committee outweighs a potential soft deviation. Board of Directors: Composition and independence The articles of association stipulate that the Board of Directors shall consist of a minimum of three and a maximum of nine members elected by the company’s shareholders. The current Board of Directors consists of five Board members as listed below: Hugo Lund Maurstad (Chair) Søren Rene Kristiansen (Board member) Siren Sundby (Board member) Eivind Roald (Board member) Rebekka Glasser Herlofsen (Board member) Pursuant to the Code, the majority of the shareholder-elected members of the Board of Directors should be independent of the company’s executive management and material business contacts, at least two of the shareholder-elected members of the Board of Directors should be independent of the company’s main shareholders (shareholders holding more than 10% of the shares in the company), and no members of the company’s executive management should be on the Board of Directors. All Board members are independent of the company’s executive management and material business contacts, and Siren Sundby is independent of the company’s main shareholders TG Nordic Invest and AF III HOLDCO AS. Rebekka Herlofsen, who is a member of the board of directors of SATS ASA, took in September 2020 up a position as Industrial Advisor with Altor Equity Partners. Due to such position, Herlofsen will no longer be deemed independent of SATS ASA’s main shareholders. The board of directors of SATS ASA will therefore only have one board member who is deemed independent of such shareholders (Siren Sundby). Although it is a requirement for listing on the Oslo Stock Exchange that at least two board members are independent of the company’s main shareholders, such requirement is not a continuing obligation for listed companies. Consequently, SATS ASA does not have an obligation to propose any changes to its board of directors due to Herlofsen’s new position. It is however a recommendation pursuant to the Norwegian Corporate Governance Code to have at least two board members who are independent of the company’s main shareholders. The nomination committee will assess the composition of the board of directors in connection with the annual general meeting of SATS ASA to be held in 2021 and intends to propose candidates to the board of directors which will bring the board of directors in compliance with the recommendations in the Norwegian Corporate Governance Code. Deviations from the Code, Section 8: There is only one shareholder-elected member of the Board of Directors who is independent of the company’s main shareholders. The Nomination Committee will propose two independent members of the Board of Directors to the Annual General Meeting in 2021. The work of the Board of Directors The Board of Directors is responsible for the governance and administration of the company and must ensure an appropriate organization of the company’s business. While the Board of Directors has the formal and overall responsibility for the administration of the company, the day-to-day administration and activities must be delegated to the CEO. However, it is the Board of Directors’ responsibility to ensure that the company’s activities are properly organized, and the Board of Directors must keep itself informed on the company’s financial position and ensure that its activities, accounts and asset management are subject to adequate control. The Board of Directors conducts its work according to the “Instructions for the Board of Directors” and the Board of Directors’ annual agenda. Key activities include: Setting and overseeing achievement of SATS’ overall long-term strategies and goals Setting the overall organization and principles for company operations and monitoring compliance with these Approving budgets, business plans and investment limits Handling capital and financing issues (capitalization, etc.) Issuing CEO instructions and monitoring the CEO’s work and the company’s performance Evaluating the company’s internal control functions, risk management, sustainability reporting and Code of conduct compliance Additional matters requiring the Board of Directors’ attention are included in the Board of Directors’ agenda as needed. The Board of Directors’ agenda, meeting materials and minutes are distributed and archived by the CFO. SATS’ Board of Directors is composed with the intention of exercising significant involvement and extensive oversight of SATS’ operations. CEO The CEO is responsible for the company’s business development and leads and coordinates the day-to-day operations in accordance with the Board of Directors’ instructions for the CEO and other decisions made by the Board. Having the overall responsibility, the CEO has the final say in all decisions according to legal requirements after consulting and receiving feedback from relevant members of the management team. The CEO issues a delegation of obligations and authority, which defines the responsibilities of the country managers and group functions, and within which limits they may make decisions. Within this framework, duties and decision authorities are further delegated person-to-person via solid reporting lines based on the roles in the operational organization. Deviations from the Code, Section 9: None Risk management and internal control SATS operates in a broad range of geographical markets in the highly competitive health and fitness industry. In striving to achieve its long-term strategic objectives, SATS is inherently involved in taking risks. Hence, risk management is an essential element of SATS’ culture, corporate governance, strategy and operational and financial management, as further outlined in SATS’ Risk Management Policy and in the risk chapter of the Annual Report. Internal control over financial reporting (ICFR) The SATS system for ICFR is based on the COSO framework and three lines of defense model. The approach is top-down and risk-based, beginning with the assessment of risks of significant errors in the Group financial statements. The controls are designed from the top (Entity Level Controls) down to the process level (Process Level Controls), and it is the sum of all these controls that make up the total ICFR design for SATS. The ICFR Framework at SATS is an integral part of our governance system, and the company has designed an annual process to ensure compliance with policies and procedures, the effectiveness of process level controls, and maintenance of system effectiveness. An ICFR plan for ensuring ongoing effective and efficient ICFR must be prepared every year and presented to the Board of Directors for approval prior to the start of the fiscal year. The ICFR plan must be prepared by the ICFR Officer, taking into account the control owners’ learning and the results from this year’s ICFR process and any changes expected to impact ICFR. Compliance function SATS’ compliance function is responsible for supporting and monitoring compliance with legal requirements and internal governing documents. The function is independent of operational activities and reports to the CEO. The function monitors the development of the company risk exposure and internal control regime and conducts its support and control work according to an annual plan that has been approved by the CEO. The function has the right and obligation to report directly to the Board of Directors if material risks and compliance incidents have not been communicated timely to the Board of Directors through ordinary reporting lines. Deviations from the Code, Section 10: None The Remuneration Committee The Remuneration Committee is a sub-committee of the Board of Directors and consists of two Board members. The members of the Remuneration Committee are appointed for a two-year term, expiring in September 2021. The appointed members of the Remuneration Committee are Eivind Roald (chairperson) and Siren Sundby (committee member). The primary purpose of the Remuneration Committee is to assist the Board of Directors in matters relating to the remuneration of the executive management of the Group, review succession policies, career planning and management development plans, and prepare matters relating to other material employment issues in respect of executive management. The Remuneration Committee must report and make recommendations to the Board of Directors, but the Board of Directors retains responsibility for implementing such recommendations. Deviations from the Code, Section 12: None The Audit Committee The Audit Committee is a sub-committee of the Board of Directors that consists of two Board members. The members of the Audit Committee are appointed for a two-year term, expiring in September 2021. The appointed members of the Audit Committee are Rebekka Glasser Herlofsen (chairperson) and Søren Kristiansen (committee member), and the composition of the Audit Committee fulfils the required qualifications and competence in accounting and auditing under the Norwegian Public Limited Companies Act. The primary purposes of the Audit Committee are to assist the Board of Directors in discharging its duties relating to the safeguarding of assets, the operation of adequate system and internal controls, the control processes and the preparation of accurate financial reporting and statements in compliance with applicable legal requirements, corporate governance and accounting standards; and provide support to the Board of Directors on the risk profile and risk management of the Group. The Audit Committee reports and makes recommendations to the Board of Directors, but the Board retains responsibility for implementation such recommendations. Deviations from the Code, Section 15: None IR CONTACT Cecilie Elde Chief Financial Officer +47 92 41 41 95 cecilie.elde@sats.no IR CONTACT Martin Stenshall Acting Finance and IR Manager +47 47 33 83 31 martin.stenshall@sats.no PRESS CONTACT Julie T. Hæhre Press Contact +47 41 90 10 11 julie.tellugen.haehre@sats.no SATS ASA Nydalsveien 28 0484 Oslo Norway Org. no. 996 739 848 SATS ASA complies with the Oslo Børs Code of Practice for IR of 1 March 2021 © 2021 SATS ASA All rights reserved