Annual Report 2011

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CORPORATE GOVERNANCE REPORT 2011 BOARD OF DIRECTORS The Board of Directors of Lundin Petroleum is responsible for the organisation of the Company and management of the Company’s operations. The Board of Directors is to manage the Company’s affairs in the interests of the Company and all shareholders with the aim of creating long-term shareholder value. Composition of the Board The Board shall, according to the Articles of Association, consist of a minimum of three and a maximum of ten directors with a maximum of three deputies, and the AGM decides the final number each year. The Board members are elected for a term of one year and as mentioned previously, Ian H. Lundin, also Chairman of the Board, Magnus Unger, William A. Rand, Lukas H. Lundin, C. Ashley Heppenstall, also CEO of the Company, Asbjørn Larsen and Dambisa F. Moyo were re-elected, and Kristin Færøvik was elected as a new Board member, at the 2011 AGM for the period until the next AGM. There are no deputy members and no members appointed by employee organisations. The Board members, with the exception of the CEO, are not employed by the Company, do not receive any salary from the Company and are not eligible for participation in the Company’s incentive programmes. In addition, the Board is supported by a corporate secretary who is not a Board member. The appointed corporate secretary is as of March 2011 Jeffrey Fountain, the Company’s Vice President Legal. The Chairman of the Board, Ian H. Lundin, is responsible for ensuring that the Board’s work is well organised and conducted in an efficient manner. He upholds the reporting instructions for management, as drawn up by the CEO and as approved by the Board, however, he does not take part in the day-to-day decision-making concerning the operations of the Company. The Chairman further maintains close contact with the CEO to ensure the Board is at all times sufficiently informed of the Company’s operations and financial status and meets, at various occasions during the year, shareholders of the Company to discuss shareholder questions and ownership issues in general. All Board members elected at the 2011 AGM have extensive experience from the world of business and several members are also highly experienced within the oil and gas field. The Nomination Committee for the 2011 AGM considered, taking into account the business operations of Lundin Petroleum and its current phase of development, that the Board is composed of multi-faceted individuals who are well-suited for the job with breadth in expertise, experience and background. Further, in preparation of the elections at the 2011 AGM, the Nomination Committee considered the independence of each (proposed) Board member and determined that the composition of the (proposed) Board met the independence requirements of the Code of Governance both in respect of independence towards the Company and the Group management and towards the The principal tasks of the Board of Directors include: » establishing the overall operational goals and strategy of the Company; » making decisions regarding the supply of capital; » appointing, evaluating and, if necessary, dismissing the CEO; » ensuring that there is an effective system for follow-up and control of the Company’s operations; » ensuring that there is a satisfactory process for monitoring the Company’s compliance with laws and other regulations relevant to the Company’s operations; » defining necessary guidelines to govern the Company’s ethical conduct; » ensuring that the Company’s external communications are characterised by openness, and that they are accurate, reliable and relevant; » ensuring that the Company’s organisation in respect of accounting, management of funds and the Company’s financial position in general include satisfactory systems of internal control; and » continuously evaluating the Company’s and the Group’s economic situation. Company’s major shareholders. The independence of each Board member is presented in the schedule on pages 54–55. Board Meetings and Work The Board is guided by the Rules of Procedure, which set out how the Board is to conduct its work. In addition to the statutory meeting following the AGM, the Board normally holds at least six ordinary meetings per calendar year. At the meetings, the CEO reports on the status of the business, prospects and the financial situation of the Company, in accordance with operational needs. In addition, decision items and issues of material importance to the Company are considered by the Board and the Board Committees report on matters as and when required. Board Meetings and Work in 2011 During 2011, nine board meetings took place, including the statutory meeting. To develop the Board’s knowledge of the Company and its operations, a yearly field trip is in general carried out by the Board to one of the Company’s operational locations and in 2011, the Board visited the French operations. In addition, the Board members were invited to attend a working session in Norway for a detailed review of the Luno field development project and one executive session, together with Group management, was held in France in connection with a Board meeting. At the executive session, an in-depth operations report regarding the Group’s exploration and development activities was given, as well as a reserves and production update. A financial overview of the Group was presented and a CR/ HSE report, with a particular focus on anti-corruption initiatives undertaken by the Company, was given. Group management further attended a number of Board meetings during the year to present and report on specific questions, as and when required. 44 Lundin Petroleum ANNUAL REPORT 2011

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