Skeljungur hf.

Results of Skeljungur´s AGM 2020

Skeljungur hf. held its Annual General Meeting today, Thursday March 5, 2020 at Skeljungur´s headquarters, Borgartún 26, 105 Reykjavík at 16:00. Chairman of the Board Jens Meinhard Rasmussen addressed the meeting on behalf of the Board, and CEO Árni Pétur Jónsson presented Skeljungur's financial results and went over the highlights of the operations in 2019.

All proposals that were put forward in the meeting can be found on the company's website:
https://en.skeljungur.is/shareholder-meeting-2020

1. Annual accounts for 2019
The meeting approved the Financial Statements for 2019.

2. Allocation of profits 2019
Skeljungur will pay a dividend of ISK 600 million to shareholders for the year 2019, which is approximately ISK 0.28 per outstanding share, according to the Company´s dividend policy. Only shareholders registered in the shareholders’ registry at closing on March 9, 2020 (record day) are entitled to receive dividend payments. The ex-date, i.e. when trading exclusive of dividends begins, will be March 6, 2020, which is the trading day following the AGM. Payment date of the dividend will be April 2, 2020.

3. Proposal regarding an authorisation to purchase Skeljungur’s own shares
Shareholder´s meeting approved to grant authorization to purchase shares in the Company, with the condition that the Company and its subsidiaries shall only hold a maximum of 10% of the Company´s shares. The following annex will be added to the Articles of Association:

“Authorization of the Company to acquire own shares, approved at the Annual General Meeting held on 5 March 2020.
A shareholders' meeting of Skeljungur hf., held on 5. March 2020, authorises the Board of Directors of the Company, subject to compliance with other conditions of law, to purchase, once or on more occasions, shares in the Company, on the condition that the Company together with its subsidiaries shall only hold a maximum of 10% of the Company’s shares. This authorisation shall be exercised for the purpose of setting up a formal repurchase programme in accordance with Chapter VIII of Act No. 2/1995 on limited companies, cf. the annex to Regulation No. 630/2005 on inside information and Skeljungur hf. l AGM March 5, 2020 market abuse entitled Trading in own shares in repurchase programmes and stabilisation of financial instruments.”

4. Proposal to reduce Skeljungur´s share capital
The Shareholder´s meeting approved to reduce the share capital of the company from the nominal value of ISK 2,152,031,847 to the nominal value of ISK 1,985,675,666 through the cancellation of all the company‘s own shares which the company itself currently holds, in the nominal amount of ISK 166,356,181. Consequently, no payments will take place from the company in relation to the reduction of the share capital according to the proposal. The company´s Articles of Accusation will be changed in accordance with the reduction in share capital.

5. Proposals to amendments to Skeljungur´s Articles of Association

Shareholder´s meeting approved the following changes to Art. 4 of the Articles of Association:

To the effect that the authorization to issue shares in different nominal amount than 1 ISK is cancelled.

To the effect that the authorization for the board to increase the company’s share capital with the subscription of new shares in order to fulfill the company’s obligations in accordance with options, purchase and/or subscription agreements with its employees is extended until 1 September 2021, whereas the maximum nominal amount of such increase is reduced to ISK 1,622,156.

To the effect that the board is authorized to increase the share capital of the company in the nominal amount of up to ISK 215,203,184 as long as the increase does not exceed 10% of the outstanding share capital of the company. Shareholders of the Company shall have pre-emptive rights, in proportion to their holdings, to the shares that are issued in accordance with the decision of the Board of Directors on the basis of this authorisation. The shares to which shareholders do not exercise their pre-emptive rights may be used as remuneration in transaction(s).
Shareholder´s meeting approved amendments to Art. 6 of the Articles of Association to the effect that an explanation is added stating that shareholders cannot utilize their shareholders’ rights in the company unless they have been registered in the company’s register of shares

Shareholder´s meeting approved to delete Art. 7 of the Articles of Association.

Shareholder´s meeting approved the following changes to Art. 8 of the Articles of Association:

To the effect that the term “shares” shall be used instead of “share capital”.

To iterate that an annotation of the above authorization to purchase own shares in the articles of association shall not be deemed to constitute an actual amendment to the articles of association.

Shareholder´s meeting approved to delete in Art. 9. of the Articles of Association, the provision stating that a registration at a securities depository shall be deemed to be proof of the ownership of the company’s shares.

Shareholder´s meeting approved to amend Art. 10 of the Articles of Association to the effect that shareholders may not be forced by the provisions of the articles of association, or amendments thereto, to increase their ownership of shares in the company or be subject to redemption of their shares unless authorized by law; and to the effect that a provision stating that redemption rights shall be in accordance with the Act. No. 108/2007 on Securities Transactions shall be deleted in its entirety

Shareholder´s meeting approved to amend Art. 11 of the Articles of Association to the effect that it shall be authorized to use electronic exchange of documents and email in the correspondence between the company and its shareholders.
Shareholder´s meeting approved the following changes to Art. 13 of the Articles of Association:

To add amendments to the wording regarding shareholders’ proxies and the right of shareholders, directors, auditors, CEO and if board of directors find it applicable; other specialists, to attend a shareholders’ meeting.

To add to paragraph 4 that an AGM can be summoned by an advertisement in a newspaper or electronically.

To add paragraphs 5., 6., 7. and 8 regarding notice to shareholder meeting, shareholders rights, final agenda of shareholder´s meeting and items of business which are not included in the Agenda for a shareholders meeting shall not be voted upon as a final resolution unless agreed upon by all shareholders; and on amendments lawfully made to existing resolution.

Shareholder´s meeting approved to amend Art. 14 of the Articles of Association to the effect that the provisions of paragraph 3 of Art. 14, on the shareholders’ rights to have matters addressed at a shareholders’ meeting, shall be deleted, as the substance of the provision has been inserted into Art. 13 according to a proposal above.

Shareholder´s meeting approved to amend Art. 16 of the Articles of Association to the effect that a discussion on the company’s remuneration policy shall be addressed as item no. 4 on an AGM’s agenda instead of item no. 8.

Shareholder´s meeting approved to delete Art. 21 of the Articles of Association as the substance of the provision shall be inserted into Art. 13.

Shareholder´s meeting approved the following changes to Art. 23 of the Articles of Association:

To iterate that a meeting of the board of directors shall be competent to make decisions when a majority of the board is present and that the call to the meeting was lawful.

The term “book of records” is replaced by “minutes from meeting”.

To add an additional provision to the effect that the chairman of the board shall see to it that the board agrees on rules of procedure.

Shareholder´s meeting approved the following changes to Art. 24 of the Articles of Association:

An addition to paragraph 1 of Art. 24 to the effect that the board shall wield supreme powers over the affairs of the company between shareholders’ meetings within the boundaries of the articles of 3 association and law.

To the effect that the term “code of conduct” for the CEO shall be used in place of “term of reference”.

Shareholder´s meeting approved the following changes to Art. 25 of the Articles of Association:

To the effect that the CEO shall follow the provisions of the articles of associations and the instructions of the board, where the reference to shareholders’ meetings is deleted.

The provision on the CEO’s authorization to buy and sell real-estate on the company’s behalf for up to ISK 25 million in each case without the board’s approval is deleted.

Shareholder´s meeting approved amendments to Art. 26 of the Articles of Association deleting a provision stating that the annual accounts for the company shall be prepared no later than two weeks before the AGM each year and handed over to the accountants for review.

Shareholder´s meeting approved amendments to Art. 28 of the Articles of Association, to the effect that a reference to the Act. No. 144/1994 is added.
The Articles of Association with amendments can be found on the Company´s website: https://en.skeljungur.is/shareholder-meeting-2020

6. Proposal to amendments to the Company´s Remuneration Policy

Shareholder meeting approved the following changes to the company´s Remuneration Policy:

i) Better defined goals for remuneration policy and its scope. It is proposed that the Policy applies for Skeljungur as a parent company and on a consolidated basis. The Board of Directors is entrusted to ensure the implementation within the Group.

ii) A clear definition of roles between board members, Remuneration committee members and CEO, regarding the implementation of individual features of the policy.

iii) Minimum benchmarks should be defined and included in CEO and Executive team employment contracts.

iv) Proposed is a change to the bonus program and it is made simpler. In addition, a tighter framework is set for the maximum remuneration, as the remuneration may not surpass three months’ salary, or 25% on top of employee’s years’ salary.

v) The bonus program is based on the following fundamentals. The plan’s performance benchmarks are twofold:

a. The Skeljungur operating performance (EBITDA). Success in this benchmark can remunerate an employee up to two months’ salary.

b. Other goals and personal performance. Success in this benchmark can remunerate an employee up to one month’s salary.

vi) It is proposed that the permission to pay employees who retire after 20-40 years service for Skeljungur particular bonuses is deleted. On the other hand, the CEO is given permission to pay an employee a bonus of up to two months’ salary given

special circumstances. These circumstances include exemplary performance exceeding expectations, important milestones, or if employee contribution or workload exceeds the norm.

vii) Shares in the Company may not be given in the form of a delivery of shares, call or put options, the right of first refusal of shares or any other remuneration related to the shares in the Company or the development of the share price, unless the before-mentioned is authorized by shareholders or if it is necessary to hold up agreements which are in force when this policy is adopted.

viii) Information reporting at AGM and in the financial statement from the Board is defined regarding bonus payments

The following is the Remuneration Policy as it was accepted in its entirety:

1. Aims and scope

This Remuneration Policy is established in accordance with the Company´s Articles of Association and the principles set forth in Article 79. in Act no. 2/1995 on Public Limited Companies. This Policy applies to Skeljungur as a parent company and on a consolidated basis. The Board of Directors is entrusted with ensuring its implementation within the Company Group.

The objective of this Remuneration Policy is to make working for Skeljungur hf. Group an attractive option for first rate employees and thereby to ensure that the Company will be in a leading position. In order to make this happen it is necessary that the Company's Board has the authority to offer competitive salary and other benefits.

This objective of this Remuneration Policy is furthermore to:

• Give the Company’s shareholders information about remuneration of the Board of Directors, Board Sub-committees, Chief Executive Officer (CEO), The Executive management and other employees.
• Encourage the management to increase shareholder value without promoting unethical behavior.
• Combine company, shareholder and employee as well as the interests of other stakeholders.
• Ensure that remuneration facilitates the Company’s performance, both in terms of its financial objectives and the effectiveness of the management implementation strategies.

2. Terms of employment for members of the Board of Directors
Members of the Board of Directors shall receive a fixed monthly compensation in accordance with the decision of the annual general meeting (AGM) every year, as provided for in Article 79 of the Act on Public Limited Companies. Alternates, if they are employed, shall receive a monthly remuneration or a fixed amount for each meeting they attend. The Board Members shall receive a special remuneration for their place on various Board sub-committees as further described in article 3. The Board shall make a proposal regarding the Board Members compensation for the coming operating year and in this matter take account of the time that the Board members devote to this task, their special knowledge and experience, the responsibility which they carry, and the performance of the Company.

The Board Members shall not receive shares, call or put options, the right of first refusal of shares or any other remuneration related to the shares in the Company or the development of the share price.
No severance agreements are permitted with members of the Board.

3. Terms of employment for the members of Skeljungur´s sub-committees
The members of the Remuneration Committee, the Audit Committee and the Nomination Committee shall receive a monthly remuneration, remuneration for each meeting or per hour, according to the AGM each year. The Board makes a proposal to the AGM regarding the remuneration for the upcoming year. The proposal shall relate to the time that the sub-committee members put into the project, their special knowledge and experience, their responsibility and the Company´s results. The Board of Directors may appoint the Remuneration Committee to propose to the Board the remuneration of sub-committees.

4. The CEO's terms of employment
The Board of Directors is responsible to draw a written contract of employment with the CEO and may renegotiate the contract of employment during its period of validity. Such contract shall include all terms of the employment, including basic salary, performance related remuneration, (including bonus programs), pension fund payments, leave, holiday allowance and term of notice.
The amount of the base salary and other compensation to the CEO shall take account of education, work experience and this amount shall be consistently competitive with respect to the market in which the Company operates. Other terms of employment shall be similar to that of comparable companies such as pension fund payments, holiday allowance, use of car and term of notice.
When determining the term of notice in the contract of employment special provisions may be included concerning the length of the term of notice which shall take account of the CEO's period of service with a maximum of 12 months. When drawing up the CEO's contract of employment it should be kept in mind that no further payments shall be made upon the termination of office than that which is stated in the contract of employment. Termination payments shall not exceed the employee’s legal rights or standards.

The Board of Directors reviews annually the basic salary of the CEO and shall take account of the Board's evaluation of the performance of the CEO, the development of salaries at similar companies and the performance of the Company. The Board of Directors may appoint the Remuneration Committee to review the basic salary of the CEO and propose to the Board if and what changes should be made thereto.

5. Terms of employment of the Executive Management

The CEO hires employees in the Executive Management and informs of such hiring to the Board of Directors.
The CEO is responsible to draw a written contract of employment with the employees in the Executive Management and may renegotiate their contract of employment during its period of validity. When determining the terms of employment of the Executive Management the same aspects shall apply as cited in Article 4, except that the term of notice of the management shall be 6 months maximum unless the Board decides otherwise.

6. Indemnity of Board Members and the Executive Management

The CEO shall ensure that at any given time there is valid customary director and officers´ indemnity insurance for the Company´s both current and former Board Members and the Executive management, in relation to their work for the Company. The Company shall pay the insurance premium and the insurance shall, according to its terms, cover the normal cost of litigation or other procedures relating to such claims or investigations.
The Company shall indemnify the Board Members and the management from claims in relation to their work for the Company, to the extent that such claims do not lead from conduct of gross negligence or willful misconduct.

7. Bonuses for CEO and other managers
The Board of Directors is authorized to pay bonuses to the CEO and other managers in accordance with the special Bonus Program.
The Bonus Program shall be designed to facilitate the Company’s performance, both in terms of its financial objectives and the effectiveness of the management’s implementation of its strategies. The Bonus Program shall encourage management to increase shareholder value and reward proper management, professional conduct, and performance. The Bonus Program shall also contribute to the Company in achieving its financial goal and other objectives that it intends to do, but in so doing not encourage unethical behavior.
The interests of the Company and normal and good practice shall be taken into account when determining performance payments. Remuneration to the CEO and other managers shall therefore comply with the purpose and the interests of the Company in the long term.
The performance criteria of the Bonus System are twofold:

1. Skeljungur´s Operating Performance (EBITDA). Performance in this criterion can yield an employee bonus up to two months’ salary.
2. Other goals and personal performance. Performance in this criterion can yield an employee bonus up to one months’ salary.

The following rules apply to performance criteria and maximum bonuses:

• The Board of Directors determines annual EBITDA goals according to calculated cost of employee bonuses. When the Board determines annual EBITDA goals the Board shall take into account real-profits and the Company´s estimated EBITDA according to publication to the market (Nasdaq Iceland).
• Bonus is paid for financial performance that exceeds 90% of the set goal and increases proportionally to the maximum when the goal is reached.
• Bonus for other goals and personal performance is based on 2-5 performance indicators that support the Company´s policies and objectives. The Board decides on performance criteria and benchmarks for the CEO and the Board may assign the Remuneration Committee to submit a proposal to the Board on such criteria and benchmarks. The CEO determines criteria and benchmarks for other managers and informs the board about them.

Bonuses may not surpass three months’ salary, or 25% of employee’s yearly salary.

Other matters

The Bonus Program handbook describes the Bonus Program and its execution in detail, including settlements in instances of substantial changes in the Company operations and termination or leave of absence.
If, within 12 months of payment, it becomes apparent that bonuses were clearly based on incorrect, misleading or insufficient information, such bonus payments shall be repaid to the extent that correct information indicates that the bonus-payments should have been lower or not paid at all.

8. Employees

The CEO and the Executive management hire other employees and determine their terms of employment and review thereof. When determining the terms of employment of other employees, the same aspects shall apply as cited in Article 4, except that the term of notice of regular employees shall be 6 months maximum, unless the Board decides otherwise, and severance pay shall not exceed the rights within that notice period.
The CEO is authorized to grant or allow employees of the Executive management to grant other employees special bonus-payments under special circumstances, such as if performance is exceeding expectations, key-milestones have been reached or if employee contribution or workload has exceeded what is normal. Such payments may equal to up to 2 months’ salary of the relevant employee per calendar year. If the CEO grants such permission to an Executive Manager, the CEO must submit a reasoned proposal to that effect to the Remuneration Committee.

9. Call options

Shares in the Company may not be given in the form of a delivery of shares, call or put options, the right of first refusal of shares or any other remuneration related to the shares in the Company or the development of the share price, unless the before-mentioned is authorized by shareholders or if it is necessary to hold up agreements which are in force when this policy is adopted.

10. Disclosure

Board of Directors shall account at the AGM for the total amount of the payroll and Bonus Program expenses and fees of the CEO, the Executive Management and the Board members. The Bonus Program and other earned bonuses by them shall be accounted for as well. The Board of Directors shall furthermore report this information in the Company’s financial accounts.
This Remuneration policy shall be published on the Company's website.

11. Approval of the Remuneration employment policy and other items

The Remuneration Committee shall review this Company's Remuneration Policy every year and propose amendments thereto to the Board of Directors. If the Board of Directors amends this Remuneration Policy, then such amendments shall be put to the AGM for approval or veto.

The Remuneration policy will be binding for the Company's Board of Directors with respect to provisions relating to share option agreements and any type of agreements or payments that are linked to the price development of the Company's shares, cf. paragraph 2 of Article 79 a of the Public Limited Company Act. Otherwise the Remuneration policy is suggestive for the Company, its subsidiaries and its Board of Directors. The Company's Board of Directors shall record in the minutes´ book any important divergences from the Remuneration policy and these divergences shall be supported by detailed reasoning. Divergences shall be accounted for at the Company's next AGM.

7. Remuneration of Board Members, Sub-Committees and the Accountant

The Board’s proposal that the remuneration remains unchanged was approved at the meeting.

a. Chairman of the Board of Directors: 650,000 ISK pr. month
b. Vice-Chairman of the Board of Directors: 450,000 ISK pr. month
c. Board Members: 320,000 ISK pr. month
d. Chairman of the Audit Committee: 100,000 ISK pr. month
e. Audit Committee members 60,000 ISK pr. month
f. Chairman of the Remuneration Committee: 60,000 ISK pr. month
g. Remuneration Committee members: 30,000 ISK pr. month
h. Chairman of the Nomination Committee: 20,000 ISK pr. hour as a contractor
i. Nomination Committee Members: 20,000 ISK pr. hour as a contractor
j. Board member of the Nomination Committee: 60,000 ISK
k. Auditors: according to invoices

8. Proposal to amendments to the Nomination Committees code of conduct

Shareholder meeting accepted the following amendments to the Nominations Committees code of conduct: 

i) Article 2. (e): In the Committee’s roles and obligations it is proposed to add that the Committee shall also evaluate the independence of sitting board members but not only candidates to the board as is now stated.
ii) Article 2. (h and i): It is proposed that the board member in the Nomination Committee does not take part of writing the report of the Committee and does not take part in writing the proposal to the AGM.
iii) Article 2 (k): It is proposed to add that if a request for a shareholders‘ meeting and a proposal for a board election is made, even though it‘s not an annual general meeting, the Nomination Committee shall act as if it were the annual general meeting, mutatis mutandis
iv) Article 3: It is proposed that if an independent committee member is unable to perform his duties due to an impediment the Board shall appoint another one in his place. The Board must ensure that such person meets the independence and competence requirements and other provisions of these rules.
v) Article 5 (paragraph 1): It is proposed that the board member in the Committee does not have voting rights. If the votes are even the vote of the chairman shall be decisive.
vi) Article 5 (paragraph 2): It is proposed that the independent members of the committee decide which meetings the board member shall be involved in. As a rule, the board member shall not attend meetings with other board members, the Company´s CEO, shareholders, other candidates or other meetings which the committee deems it unfit that he attends. The same rules apply regarding the board members access to the Committee’s data and files.

The Nomination Committees code of conduct in its entirety can be found in the Nomination Committee´s report, on the Company´s website: https://en.skeljungur.is/shareholder-meeting-2020

9. Election to the Board of Directors

Following individuals were elected at the meeting to serve on the Board of Directors of the Company until next Annual General Meeting:

• Birna Ósk Einarsdóttir
• Dagný Halldórsdóttir
• Elín Jónsdóttir
• Jón Ásgeir Jóhannesson
• Þórarinn Arnar Sævarsson

10. Election of the Nomination Committee

Following individuals were elected at the meeting to serve on the Nomination Committee:

• Katrín S. Óladóttir
• Sigurður Kári Árnason

11. Election of auditors

The meeting approved to re-elect KPMG ehf. as the Company's auditing firm for the year 2019.

12. Other matters

No other matters were lawfully brought up at the meeting. Meeting dismissed at 17:52.

The Annual Accounts is available on: https://en.skeljungur.is/financialstatements-2019

Other relevant documents from the Annual General Meeting are available on: https://en.skeljungur.is/shareholder-meeting-2020

* * *

Following the Annual General Meeting the Board of Directors met and decided on allocation of responsibilities.

Jón Ásgeir Jóhannesson was elected as Chairman of the Board and Birna Ósk Einarsdóttir was elected as Vice Chairman.

Helena Hilmarsdóttir, Birna Ósk Einarsdóttir and Dagný Halldórsdóttir took place in the Audit Committee.

In the Remuneration Committee Jón Ásgeir Jóhannesson, Dagný Halldórsdóttir and Elín Jónsdóttir were appointed.

Then Þórarinn Arnar Sævarsson was nominated as a member of the Board of Directors to take place in the Nomination Committee.

Gróa Björg Baldvinsdóttir, head of legal, was elected the secretary of the board of directors.

For further information please contact Árni Pétur Jónsson, CEO, [e-mail].

Skeljungur is an energy company with operations in Iceland and in the Faroe Islands. Skeljungur sells fuel and oil to consumers and businesses in fisheries, agriculture, transportation, aviation and construction under the brands Skeljungur, Orkan, and Magn. Skeljungur is also in the retail market under the brand Kvikk. The company also sells fertilizer and other chemical products and is on the retail market. In Iceland the Company runs 65 gas stations and 4 oil depots. Magn P/F, Skeljungur´s subsidiary in the Faroe Islands, runs 11 retail and gas-stations and 2 oil depots. Magn also serves and sells oils for house heating to individuals and companies in the Faroe Islands. Skeljungur´s goal is to serve the energy needs of consumers and businesses in an efficient and safe way and in harmony with the environment.

www.skeljungur.is

https://www.linkedin.com/company/skeljungur-hf/