Annual Report 2010

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DIRECTORS’ REPORT BOARD’S PROPOSAL FOR REMUNERATION TO THE EXECUTIVE MANAGEMENT During 2010, new rules regarding management remuneration were introduced in Sweden following the introduction of a revised Code of Corporate Governance (Code of Governance). In light of these changes, the Company’s Compensation Committee considered the implications of the new rules on the content and scope of the Company’s Policy on Remuneration. Based on its review, the Compensation Committee concluded that the Policy remains in compliance with the rules of the Code of Governance and that no changes to the content of the Policy, as a result of the new rules, are required. In connection with this review, the Compensation Committee also considered the Company’s internal decision-making processes. Since 2009, when Lundin Petroleum’s Investment Committee was established, all major management decisions regarding the worldwide operations and the ﬁnancial position of the Company are submitted for consideration and approval to the Investment Committee, which consists of the Company’s President and Chief Executive Oﬃcer, Chief Operating Oﬃcer, Chief Financial Oﬃcer and Senior Vice President Operations. Considering this development, the Compensation Committee determined that the Executive Management of the Company, to which the Company’s Policy on Remuneration shall be applicable, shall be the members of the Investment Committee. As a result, it is the intention of the Board of Directors to propose to the 2011 AGM the adoption of a Policy on Remuneration for 2011 that follows the same principles as applied in 2010 and that contains similar elements of remuneration for the Executive Management as the 2010 Policy on Remuneration being basic salary, yearly variable salary, Long-term Incentive Plan (LTIP) and other beneﬁts. An LTIP for the Executive Management consisting of a Phantom Option Plan was approved by the 2009 AGM. No new LTIP for the Executive Management for 2011 will be included in the Board’s proposal. In addition, as in previous years, the Board of Directors will further seek authorisation to deviate from the Policy on Remuneration in case of special circumstances in a speciﬁc case. For a detailed description of the Policy on Remuneration applied in 2010 and the Board and Management remunerations for the year ended 31 December 2010, refer to Note 45 SHARE INFORMATION For the AGM resolution on issuance of new share capital see page 54, The Lundin Petroleum Share and Shareholders. DIVIDEND The Directors propose that no dividend be paid for the year. For details of the dividend policy refer to the share information, page 54. PROPOSED DISPOSITION OF UNAPPROPRIATED EARNINGS The Board of Directors propose that the unrestricted equity of the Parent Company of TSEK 6,487,891, including the net result for the year of TSEK 3,936,086 be brought forward. CHANGES IN BOARD At the AGM held on 6 May 2010 the current Board of Directors of Lundin Petroleum were re-elected. It is proposed that Kristin Færøvik be elected as a new member of the Board of Directors at the 2011 AGM. FINANCIAL STATEMENTS The result of the Group’s operations and ﬁnancial position at the end of the ﬁnancial year are shown in the following income statement, statement of comprehensive income, balance sheet, statement of cash ﬂow, statement of changes in equity and related notes, which are presented in US Dollars. The Parent Company’s income statement, balance sheet, statement of cash ﬂow, statement of changes in equity and related notes presented in Swedish Kroner can be found on pages 93–98. 64 Lundin Petroleum ANNUAL REPORT 2010

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