Skeljungur's legal and corporate governance environment

The Board of Directors and management of Skeljungur hf. emphasize management of the Company’s activities in accordance with good corporate governance. It is the belief of the Board of Directors and management that good corporate governance is the foundation for both trust and efficiency, thereby enhancing confidence among all the Company’s stakeholders.

The rules and regulations regarding corporate governance on which Skeljungur relies in its activities are laid down in Act no. 2/1995 on limited liability companies, Act no. 108/2007 on securities transactions, Nasdaq Iceland hf.’s Rules for issuers of financial instruments, the 5thedition of the Iceland Chamber of Commerce, Business Iceland (SA) and Nasdaq Iceland Corporate Governance Guidelines, in addition to various rules originating in the Company itself, such as its Articles of Association, the Rules of Procedure of the Board of Directors and its subcommittees, Code of Conduct, Remuneration Policy, Social Responsibility Policy and other policies, all of which can be accessed on the Company’s website, and in the Company’s non-financial information statements.

Skeljungur was in full compliance in 2018 with the guidelines published by the Chamber of Commerce and other entities and other governance regulations, internal and external.

With the latest amendments to Nasdaq Iceland’s Rules for issuers, in force from 1 January 2018, the requirement of disclosure of salaries of individual managers was revoked on the grounds that the right to personal privacy outweighed the need of the market for this information. The Company has information that the Iceland Chamber of Commerce, Nasdaq Iceland and Business Iceland are preparing to publish a new version of their Guidelines. The Annual Accounts Act, no. 3/2006, also only requires companies to publish management salaries as a single aggregated amount. Accordingly, Skeljungur’s Remuneration Committee has now decided to publish management salaries as a single aggregated figure. The salary of the CEO, however, will be stated separately as before.

As a company engaged in the import, supply, distribution and sale of fuels, chemical products for industry and food and fertilizer, Skeljungur is subject to various rules and regulations. Acts specifically relating to the operations of Skeljungur include Act no. 22/1994 on the control of feed, fertilizer and seed, Act no. 103/1994 on equalization of transportation cost of oil products, Act no. 7/1998 on hygiene and pollution control, Act no. 33/2004 on measures to protect against ocean pollution, Act no. 87/2004 on oil tax and mileage fee, Act no. 40/2013 on renewable energy in transportation in Iceland and the Chemical Act no. 61/2013, together with the regulations rooted in these acts of law. Skeljungur has compiled an operational and safety manual detailing numerous procedures that are observed in the Company’s activities.

The Board of Directors annually conducts an evaluation of its own work, procedures and governance, the performance of the Chairman of the Board and CEO, the independence of Board members, and the efficiency of the Board’s sub-committees.

Internal control and risk management

It is the role of the Board of Directors, with the CEO, to take the lead in strategic planning, setting goals and defining risk parameters for the Company, both for the short and long term, and to establish an efficient system of internal controls. Among other things, the arrangement of internal controls needs to be formal and documented, and its effectiveness needs to be verified regularly.

The Company does not have an internal auditor; instead, the Company’s external auditors conduct focused audits of specific procedures. The Board of Directors appoints an audit committee whose task, according to the committee’s mandate, is to review and assess the quality of financial information and the arrangement of reporting information by management and auditors, both within the parent company and on a consolidation basis.

The committee is charged with reviewing information provided to the Board regarding the Company’s business operations, position and future prospects and verifying whether the information is reliable and gives as true and fair a view of the Company as possible at any time. More specifically, the committee monitors procedures for the preparation of financial statements, the organization and effectiveness of internal control in the Company, risk management and other control measures and monitors the auditing of the financial statement, consolidated accounts and other financial information. The committee also evaluates the independence of external auditors and monitors work entrusted to them.

The risk to which Skeljungur is exposed lies in potential events that may prevent the Company from achieving its objectives. The Company’s risk management takes account of all risks, e.g. relating to finance, operations, the environment and quality. The Company’s actions in the field of risk management aim to identify, assess, measure and manage risk in the Company’s activities in accordance with its risk appetite. Skeljungur has established a risk policy which sets a framework for its risk management. The aim is to manage risk effectively, and ensure transparency and awareness of risk management at all levels, from Board to individual employees. The Board of Directors appoints a special risk committee to undertake the task of verifying the effectiveness of the Company’s risk management. Among its other responsibilities, the committee reports on the efficiency and effectiveness of risk management procedures, performs in an advisory and supervisory role on behalf of the Board, regularly monitors and evaluates the success of the risk management policy and makes any modifications in objectives and implementation that may be necessary, evaluates the major risk factors and the risk profile of the Company, reviews risk reports before they are submitted to the Board and reviews contingency plans. Committee meetings are thus a venue for discussions of matters pertaining to the risks to which the Company is exposed and risk trends. The committee meets regularly to discuss the risk factors that have been defined as key factors and also has meetings with all divisions of the Company, on a regular basis.

Skeljungur owns five subsidiaries. One of these subsidiaries, P/F Magn, engaged in extensive operations in the Faroe Islands in 2018. Magn’s accounts are audited in accordance with Faroese legislation. Magn has an active internal control, which is tested for efficiency on a regular basis. Magn also has three security committees that supervise operations, distribution and retail sales. Magn observes international quality standards in all aspects of its business. Magn has implemented and is certified according to the following quality standards: ISO 9001 on quality management, ISO 14001 on environmental management and OHSAS 18001 on occupational health and safety management. In addition, the Company complies with ISO 27001 as regards information security management. All the quality standards are certified by independent certification bodies and audited once or twice a year. The Company has also obtained Achilles, FPAL and EPIM certification, which is renewed regularly, thereby meeting all the security requirements that international companies in the oil industry impose on their partners.

Social responsibility and ethical standards

Skeljungur’s Board of Directors has established a Company policy on social responsibility. The policy concerns Skeljungur’s principal stakeholders, which are society as a whole, the environment, partners and suppliers, customers and Skeljungur’s own human resources. With the establishment its CSR policy Skeljungur has shown its desire to act responsibly as a participant in the community and to contribute to a healthier economy.

The Board of Directors and employees of Skeljungur have also established rules of business and ethics as further guidelines on dealings with stakeholders for use in the Company’s day-to-day operations. The rules entail a promise to stakeholders concerning the community, health, safety and the environment, social responsibility, sustainable development, equal opportunities and protection against harassment. The rules also deal with integrity in business in various forms, the safeguarding of information and assets, both Skeljungur’s own assets and those of others, and relations with stakeholders.

Administration

Skeljungur’s Articles of Association do not provide for the election of a supervisory board, which under Article 73 of the Companies Act would, if elected or appointed, monitor the Board of Directors’ and CEO’s management of the Company’s affairs and submit a recommendation to the Company’s Annual General Meeting whether the annual financial statement should be approved and proposals of the Board of Directors regarding the disposal of retained earnings accepted. In the absence of an enabling provision in the Company’s Articles of Association a supervisory board cannot be, and has not been, elected or appointed.

Board of Directors:

Five persons are elected at Skeljungur’s Annual General Meeting to serve on the Company’s Board of Directors. The Board of Directors is the Company’s supreme authority between shareholder meetings. The role of the Board is to ensure that the organization and operations of the Company are at all times in good order. Furthermore, the Board has the task of promoting the Company’s development and long-term performance and supervising its day-to-day operations.

The Board of Directors has established working procedures which can be accessed on the Company’s website. The procedures are reviewed annually. The Board evaluates the performance of the Company each year, and also its own functions, composition, and practices, as well as the work of subcommittees and the performance of the CEO and other executive management. The Board evaluates the progress made by the Company regularly over the year to ensure that the progress is consistent with established goals.

The Board met eight times in 2018. In addition to the Board members, meetings are attended by the Company’s Chief Executive Officer, Chief Financial Officer and Chief Legal Office. Nearly all Board meetings last year were fully attended.

The Board of Directors of Skeljungur is composed of the following members:

Name and Id number

Jón Diðrik Jónsson, kt. 110463-2009

First elected to the board

janúar 2014

Education

B.Sc. Marketing, Florida Institute of Technology 1988, Master Int´l Management, Thunderbird School of Global Management 1990, Owner/President Management (OPM), Harvard Business School Executive Education 2013.

Main occupation

CEO Sena ehf.

Career

Markaðsstjóri Olís 1988-1989, stjórnandi hjá Coca-Cola Company 1990-2001 á Norðurlöndunum, Singapore og Malasíu, Póllandi og Slóveníu, forstjóri Ölgerðar 2001-2004, framkvæmdarstjóri hjá Íslandsbanka / Glitni 2005-2007, eigandi / stjórnandi Draupnis Fjárfestingafélags ehf. frá 2007 og forstjóri Senu frá 2015.

Other positions of trust

Stjórnarformaður Senu ehf. og dótturfélaga, Draupnis fjárfestingafélags ehf., Draupnis-Siglu ehf. og Húsafells hraunlóða ehf., meðstjórnandi í stjórn Magn P/F, Húsafell Resort ehf. og Alþjóðaskólans á Íslandi ehf., sæti í fulltrúaráði Verzlunarskóla Íslands, og í fjárfestingaráði fyrir SÍA I slhf. og SÍA II slhf.

Holdings in Skeljungur

98% hlutur í Draupni fjárfestingafélagi ehf., sem á um 1% hlut í Skeljungi og tæpan 0,7% hlut í SÍA II slhf. (Stefnir íslenski athafnasjóðurinn II), sem er eigandi að rúmum 14,5% hlut í Skeljungi.

Jobs for Skeljungur

Stjórnarstörf og seta í undirnefndum stjórnar Skeljungs. Stjórnarseta hjá dótturfélagi Skeljungs í Færeyjum, Magn P/F

Related interests

Auk framangreinds eignarhlutar á Jón Diðrik, sem áður segir, sæti í fjárfestingaráði SÍA II slhf., sem á um 14,5% hlut í Skeljungi. Samkvæmt mati tilnefningarnefndar Skeljungs er Jón Diðrik óháður félaginu, daglegum stjórnendum þess og stórum hluthöfum í félaginu, samkvæmt skilgreiningu í leiðbeiningum VÍ o.fl. um góða stjórnarhætti.

independent

Samkvæmt mati tilnefningarnefndar Skeljungs er Jón Diðrik óháður félaginu, daglegum stjórnendum þess og stórum hluthöfum í félaginu, samkvæmt skilgreiningu í leiðbeiningum VÍ o.fl. um góða stjórnarhætti.

Name and Id number

Birna Ósk Einarsdóttir, meðstjórnandi, kt. 090476-4759

First elected to the board

maí 2015

Education

Frá HR, BS gráðu í viðskiptafræði. M.Sc. í stjórnun og stefnumótun frá Háskóla Íslands og AMP (Advanced Management Program) frá IESE Business School.

Main occupation

Director of sales and customer service Síminn hf.

Career

Ýmis sérfræði- og stjórnunarstörf hjá Símanum frá árinu 2001, t.a.m. kynningafulltrúi, ráðningastjóri, stjórnendaráðgjafi, forstöðumaður verkefnastofu og markaðsmála, framkvæmdastjóri einstaklingssviðs og framkvæmdastjóri vöru- og nýsköpunarsviðs.

Other positions of trust

Meðstjórnandi hjá Sensa hf. og Radíómiðunar ehf. Varamaður stjórnar hjá Magn P/F.

Holdings in Skeljungur

Enginn.

Jobs for Skeljungur

Stjórnarstörf og seta í undirnefndum stjórnar Skeljungs. Varamaður stjórnar dótturfélags Skeljungs í Færeyjum, Magn P/F.

Related interests

Engin.

independent

Samkvæmt mati tilnefningarnefndar Skeljungs er Birna Ósk óháð félaginu, daglegum stjórnendum þess og stórum hluthöfum í félaginu, samkvæmt skilgreiningu í leiðbeiningum VÍ o.fl. um góða stjórnarhætti.

Name and Id number

Trausti Jónsson, varaformaður stjórnar, kt. 100582-5389.

First elected to the board

febrúar 2016

Education

B.Sc. í hagfræði frá Háskóla Íslands 2006, próf í verðbréfaviðskiptum frá Háskólanum í Reykjavík 2008.

Main occupation

Fund Manager at specialized investments at Stefni hf

Career

Stundakennari við Viðskipta- og hagfræðideild Háskóla Íslands 2006- 2009, stundakennari við Háskólann á Bifröst 2009, Eignastýring Kaupþings Banka 2005-2008, Fyrirtækjaráðgjöf Arion banka 2009-2012, sjóðsstjóri hjá Stefni hf. frá 2012

Other positions of trust

Ýmis stjórnarseta og framkvæmdastjórn lögaðila tengdum SÍA sjóðum Stefnis hf., meðstjórnandi hjá Verne holdings ltd og sæti í varastjórn Jarðborana hf. og Magn P/F

Holdings in Skeljungur

Enginn

Jobs for Skeljungur

Stjórnarstörf og seta í undirnefndum stjórnar Skeljungs. Varamaður stjórnar dótturfélags Skeljungs í Færeyjum, Magn P/F.

Related interests

Framkvæmdastjóri og prókúruhafi SÍA II slhf., sem á um 14,5% hlut í Skeljungi

independent

Samkvæmt mati tilnefningarnefndar Skeljungs er Trausti óháður félaginu og daglegum stjórnendum þess en háður stórum hluthöfum í félaginu, samkvæmt skilgreiningu í leiðbeiningum VÍ o.fl. um góða stjórnarhætti.

Name and Id number

Gunn Ellefsen, meðstjórnandi, kt. 281275-2599

First elected to the board

apríl 2016

Education

Cand. Jur. frá Háskólanum í Kaupmannahöfn 2004.

Main occupation

Lawyer in Advokatfelagið at Strond 4.

Career

Störf fyrir Advokatfelagið frá 2004; sem lögmaður frá 2007 og eigandi frá 2012.

Other positions of trust

Stjórnarmaður hjá Magn P/F, Sp/f Advokatsmápartafelagið Gunn Ellefsen og Advokatfelagið við Strond 4 Í/F

Holdings in Skeljungur

Enginn.

Jobs for Skeljungur

Stjórnarstörf og seta í undirnefndum stjórnar Skeljungs. Stjórnarmaður dótturfélags Skeljungs í Færeyjum, Magn P/F.

Related interests

Engin.

independent

Samkvæmt mati tilnefningarnefndar Skeljungs er Gunn óháð félaginu, daglegum stjórnendum þess og stórum hluthöfum í félaginu, samkvæmt skilgreiningu í leiðbeiningum VÍ o.fl. um góða stjórnarhætti.

Name and Id number

Jens Meinhard Rasmussen, meðstjórnandi, kt. 290774-3659

First elected to the board

maí 2014

Education

Skipstjórapróf frá Faroese Maritime Academy, Tórshavn 1997. Cand. Jur. frá Háskólanum í Kaupmannahöfn 2005.

Main occupation

Director of Skansi Offshore.

Career

Fyrsti stýrimaður hjá Bornholmstrafikken A/S 2002-2004, skipamiðlari hjá Atlantic Shipping 2005-2006 og framkvæmdastjóri Skansi Offshore frá 2006.

Other positions of trust

Stjórnarformaður P/F Smyril Line, Magn og the Faroese Merchant Shipowners Association, meðstjórnandi hjá International Chamber of Shipping.

Holdings in Skeljungur

Enginn.

Jobs for Skeljungur

Stjórnarstörf. Stjórnarformaður dótturfélags Skeljungs í Færeyjum, Magn P/F.

Related interests

Jens Meinhard er stjórnarformaður Smyril Line A/P, sem er viðskipta-vinur Magn P/F, dótturfélags Skeljungs í Færeyjum.

independent

Samkvæmt mati tilnefningarnefndar Skeljungs er Jens Meinhard óháður félaginu, daglegum stjórnendum þess og stórum hluthöfum í félaginu, samkvæmt skilgreiningu í leiðbeiningum VÍ o.fl. um góða stjórnarhætti.

According to the Board´s Rules of Procedure, the Chairman of the Board is responsible for the communication between the Board and the shareholders. Formal relations between the board and the shareholders take place at shareholder meetings. Shareholders may, however, at any time submit comments and questions to the board via the e-mail investors@skeljungur.is . The CEO and CFO receive such emails and communicate with the whole board. 

Subcommittees:

In the past year there were three subcommittees of the board operating, as well as a nomination committee.

The role of the Nomination Committee is to nominate board members to the board of Skeljungur. Two outsiders, one with experience with recruitment and the other versed in the Law, shall be elected annually at the AGM to serve for a one-year term. The third committee member shall be nominated by the Board. At the AGM 2017 the shareholders voted to the committee Katrínu S. Ólafsdóttur, CEO of Hagvangur, and Trausta Fannar Valsson, Associate Professor at the University of Iceland. The Board of Skeljungur appointed Jón Diðrik Jónsson, chairman, to serve on the committee. All are independent of the company, its management and of major shareholder’s in the company, as defined in the guidelines on good corporate governance. At the confirmation of this statement, the committee has met three times for the preparation of a proposal for the Annual General Meeting 2018, with or without the board member depending on the subject matter of the meetings. The committee has met with both board members and those shareholders who have requested a meeting. The committee´s rules of procedure can be found on Skeljungur´s website.5  

The Audit Committee is a subcommittee of the board of Skeljungur and as such appointed by the board for a one-year term, at the first board meeting after the AGM. Its goal is to strive to ensure the quality of financial statements and other financial information and independence of its auditors. During the year 2017-2018 members of the committee were Jens Meinhard Rasmussen and Trausti Jónsson, board member, and Helena Hilmarsdóttir, Certified Public Accountant. All are independent of the company, its managers and its auditors, as well as Jens Meinhard and Helena being independent of major shareholders of Skeljungur the whole term. The committee met five times, besides meeting with the board of directors, and there was full attendance at meetings of the committee. The committee also met with the external auditors, the company´s CFO, and the director of computer and information technology department. The committee´s rules of procedure can be found on Skeljungur´s website.6  

The Remuneration Committee is also a subcommittee of the board and thus appointed by the board for one-year term, at the first meeting after the AGM. The aim of the committee is to increase the efficiency, hone practices and reinforce the governance of the board relating to remuneration within the company. During the year 2017-2018 members of the committee were Jón Diðrik Jónsson and Birna Ósk Ellefsen, directors. Both are independent of the company, its management and large shareholders. The committee had four formal meetings during the year, as well as other meetings and communications including with external consultants. The committee´s rules of procedure can be found on Skeljungur´s website.7 

The risk committee is another subcommittee of the board of Skeljungur. The purpose of the committee is primarily to verify the effectiveness of risk management within the company. Committee meetings are a forum for risk related issues the company faces and risk development. According to the committee´s procedures, the committee comprises of the CEO, CFO, COO and the HSEQ manager. The committee held eight meetings during last year, where identified risk factors were regularly discussed, and where divisions gave reports to the committee regarding related risk factors. The committee´s rules of procedure can be found on Skeljungur´s website.8 

Management:
 
The CEO shall be responsible for daily operations and adhere to policies and directions that are given by the board. The role of the CEO is further defined in the Articles of Association and the board´s rules of procedure, as well as in the CEO´s employment contract with the company. Skeljungur´s Articles of Association and the boards Rules of Procedure are available on Skeljungur´s website.9  
 

Name and social Id

Hendrik Egholm, kt. 230474-4279

Date of recruitment

October 2017

Education

M.Sc. from Copenhagen Business School, 2002.

Main occupation

CEO Skeljungur.

Career

CEO of Magn P/F since 2007. Prior occupations at SMyril Lyne and VELUX.

Holdings in Skeljungur

1,643,836 shares.

Stocks option in the company.

811,078 shares at retirement.

Related interests

None

Other postion of trust

Board Membership in the Company´s subsidiaries, other than P/F Magn.

Other members of management of Skeljungur are Benedikt Ólafsson, CFO, Ingunn Agnes Kro, CCO, Mar Erlingsson, Vice-CEO and COO, and Þórður Guðjónsson, CSO. The Executive Board of Skeljungur meets once a week. 

On the Executive Board of the consolidated company are Hendrik Egholm, CEO, Mar Erlingsson, Vice-CEO, Benedikt Ólafsson, CFO, Ingunn Agnes Kro, CCO, Johnni Poulsen, CEO of Magn and Leif Hovgaard, Director of International Sales at Magn.


 Policy on diversity

 

 
In the opinion of the company diversity of skills and perspectives of the board members and managers results in a better understanding of the company and its affairs. It allows the board and committee members to challenge the conventional opinions and decisions and makes it easier for innovative ideas to be presented and carried further. Diversity increases the perspective of the managers and supports the successful management of the company.
 
Skeljungur has not established a written policy on diversity but the above mentioned opinions are visible in various parts of the company´s governance. A nomination committee has been established, which has the written objective and the main activity to ensure that the board has the creative breath of skills, experience and knowledge. The company has established a gender equality policy, which prescribes specific analysis of gender issues and an action plans accordingly. Advertisements for jobs with the company are not gender-focused and gender ratios are viewed at recruitment. Additionally, in the Code of Conduct the company promises that job-related decisions shall be based on relevant qualifications, merit, performance and other work-related factors. The company will not accept discrimination. Furthermore, the employees promise respect each other, as well as different perspectives, and to understand the value of which is implicit in diversity.

Ruling and judgements related to Skeljungur

On February 4, 2016 a final judgement of the Supreme Court (no. 272/2015), was given in the case of the competition authorities vs. the oil companies, in connection with violation of the Competition Act in the years before 2001.10  

The Consumer Agency´s decisions, where advertisings of Skeljungur have been deemed to violate act no. 57/2005 on the control of business and marketing, are the following.

Decision 45/2015 regarding Orkulykillinn 11

Decision 1/2013 regarding V-Power12

Decision 33/2010 advertising Bensínorkan, a subsidiary of Skeljungur, with the cheapest fuel. 13 

Decision 29/2004 advertising Bensínorkan, a subsidiary of Skeljungur, with the cheapest fuel.14  

Approved by the Audit Committee on February 13, 2018.

Approved by the Board of Directors on February 21, 2018.