Corporate governance
JL is wholly-owned by JL-Fondet (JL Foundation), a commercial foundation that is the parent foundation and sole shareholder of Vesterhavet A/S, which is in turn the parent company of J. Lauritzen A/S.
JL-Fondet’s policy is to grant the greatest possible degree of autonomy to its subsidiaries, allowing JL’s Board of Directors and Executive Management extensive independence in strategy formulation and execution.
JL complies with generally recognized corporate governance guidelines to the greatest possible extent where relevant for a company owned by a foundation.
The corporate governance policies applied by JL are by and large determined by the company’s Articles of Association and the Board of Directors’ standing orders.
Management structure
JL is managed by a non-executive Board of Directors and an Executive Management. Day-to-day management is conducted by the Executive Management in line with rules laid down by the Board of Directors.
Board of Directors
The Board of Directors has eight members, three of whom are elected by the employees as required in Danish law.
Members of the Board of Directors serve for one year and may stand for re-election. Board members elected by the employees have four-year tenure and may also stand for re-election. At year-end 2007, the average length of service on the Board of Directors was 6.4 years. Board members can not be re-elected after their 70th birthday.
The Board ensures that an annual strategic plan and a budget are prepared and approved and that monthly and quarterly reports are submitted.
The Board met six times in 2007, including a mid-year strategy review meeting. Otherwise the Board convenes when deemed necessary. Between meetings recommendations on investments and/or divestments are submitted to the Board for written resolution.
Executive Management
The Executive Management is appointed by the Board of Directors. Extraordinary or major dispositions may only be implemented by the Executive Management on the basis of specific authorization granted by the Board.
An Executive Committee functions as a coordinating forum for the day-to day management of the JL Group and consists of the Executive Management - Torben Janholt (CEO) and Birgit Aagaard-Svendsen (CFO) - and the heads of JL’s business units Jens Ditlev Lauritzen (President, Lauritzen Bulkers), Jan Kastrup-Nielsen (President, Lauritzen Kosan) and Anders Mortensen (President, Lauritzen Tankers).
Financial management
JL’s financial management comprises long-term financial projections and annual budgets followed up by quarterly and monthly reports. Internal quarterly reports include profit forecasts for the full year and half-yearly estimates for the subsequent year.
Capital management
Capital management is an important, integral part of the financial management process.
The capital requirement (total equity) for the Group is derived on the basis of a minimum solvency ratio (cf. p. 2) of 35-40% and pre-defined minimum liquidity (USD 50-200m). Based on a dividend of 25% for JL’s share of results and given the defined minimum capital and cash requirement, JL’s additional investment capacity is calculated at a minimum of USD 1bn.
Risk management
Business strategies and policies and the overall limits for time chartered tonnage, fuel oil hedging and financial risks are approved by JL’s Board of Directors. Business risks are also included in the reporting routines and when considering investments.
Commercial risks are managed through a balanced portfolio of owned vessels, time-chartered tonnage and contract coverage supplemented with fuel oil hedging and to some extent Forward Freight Agreements (FFAs). JL’s fleet and cargoes are insured by first class international insurance companies and vessels are always insured above their market value.
JL recognizes the risks and potential hazards involved in owning, operating and managing a large, diversified fleet of ships worldwide. These risks are mitigated by ensuring that all ships under JL control comply with comprehensive internal management systems that exceed the requirements of the International Safety Management (ISM) code. Management systems and reporting practices are regularly revised so as to communicate best practice across the fleet thus avoiding or minimizing the risk of incidents, accidents and time loss.
Compliance management
To ensure JL compliance with national and international competition regulations, JL conducts regular self-assessments. Memos and instructions on international competition law have been drawn up and introduced to all employees. Such memos and instructions are kept updated and are posted on JL’s intranet.
