The Shareholder Policy defines Gildi’s strategy and corporate governance as an owner in the companies in which it invests. With it, the intention is to increase the Fund’s transparency and responsibility as an owner and investor in the market. Part of that is to publish an overview of how Gildi’s votes are cast at AGMs of registered limited companies and which proposals are made in the name of the Fund. Gildi is the first pension fund in Iceland to publish such information in this way.
In recent years, Gildi has requested that individuals who want to apply for Board membership in limited companies with the support of the Fund, register. We are looking for people who meet the general eligibility requirements of the law and other conditions set by the Fund each time.
The selection of Board members that Gildi nominates or wishes to support is always based on a professional process.
The Gildi Pension Fund’s Shareholder Policy applies to the fund’s investments in registered companies in which it has a significant holding, as long as the market value or book value of the investment exceeds ISK one billion. A significant holding is considered to be:
a) 0.5% of the pension fund’s total assets
b) 5% or more holdings in each company or
< b>c) the fund is among the five largest shareholders of the company.
The policy’s fundamental considerations are taken into account in terms of the Fund’s other investments, as appropriate at any given time.
Gildi Pension Fund is a long-term investor and aims to maximise pension payments to fund members and guarantee them the best possible pension rights through premium returns, risk management and cost-effective operations, in accordance with the Fund’s Investment Policy at any given time.
Gildi Pension Fund’s investment strategy is set by the fund’s Board of Directors every year, and it sets the direction for how the Fund’s asset composition should be structured, taking into account return and risk.
The Shareholder Policy sets out the policy and corporate governance of Gildi Pension Fund as a shareholder in the companies in which it invests and thus promotes transparency in the Fund’s investments and its responsibility as an owner.
The Shareholder Policy is taken into account in Gildi Pension Fund’s decisions on individual investments subject to the policy and follow-up of such investments, as well as being taken into account in formulating and reviewing the Fund’s Investment Policy.
The Managing Director handles the implementation of the policy in consultation with the fund’s Board of Directors and employees. When implementing the policy, the relevant rules on conflicts of interest and disqualification must be observed.
The policy of Gildi Pension Fund as an owner is to protect the interests of the fund’s members in the long and short term. Gildi Pension Fund works as an owner to promote the long-term interests and sustainability and good corporate governance of the companies in which the Fund invests. With mandatory and good corporate governance, this policy, i.a. refers to corporate governance at any given time according to the applicable laws, the Corporate Governance Guidelines issued by the Icelandic Chamber of Commerce, the Icelandic Stock Exchange (NASDAQ Iceland) and the Confederation of Icelandic Employers. At the same time, this Shareholder Policy contains Gildi Pension Fund’s specific emphasis on corporate governance.
5.1. General
Gildi Pension Fund emphasises that the companies in which it invests adhere to mandatory and good governance practices and issue adequate governance statements, protect the rights of shareholders, follow laws and regulations and consider social responsibility, environmental issues and business ethics.
Gildi Pension Fund emphasises that the role of the Board of Directors of the companies in which it invests is defined in the company’s Articles of Association and/or the decision of the shareholders’ meeting as appropriate, for a more detailed description of the mandatory role of the company’s Boards and responsibility towards owners and other stakeholders.
Furthermore, Gildi Pension Fund emphasises that the Board’s Rules of Procedure are in place and that they are tailored to mandatory and good governance practices. Emphasis is placed on the clear role of the Chairman of the Board, the CEO’s mission letter, the Board’s operating plan, sub-committees, disqualifications and conflicts of interest, the Board’s performance evaluation, regular governance reviews and the publication of governance statements.
Gildi Pension Fund will review the governance of companies in which it invests as appropriate, including proposals for shareholder meetings and other disclosures from companies, cf. provision 5.2, and will strive to improve what the Fund believes can be improved, as detailed in provision 5.3, cf. 5.4.
5.2. Company disclosure
Gildi Pension Fund emphasises good and orderly disclosure of company management to shareholders, whether through public announcements/disclosure; the company’s investor liaison; secretary of the Board; website; shareholders’, general and investor meetings; or by other means.
Gildi Pension Fund emphasises that the Board of Directors of companies define rules for disclosure and communication with shareholders in their operating rules and that companies that have listed their shares on a regulated securities market issue an information policy in accordance with the recommendations of the Icelandic Stock Exchange (Nasdaq Iceland) in the Rules for Issuers of Financial Instruments.
5.3. Communication with company boards
Gildi Pension Fund emphasises mutual communication regarding governance with the company’s senior management, with the purpose of building trust and understanding, improving decision-making and strategic planning by the company’s managers, on the one hand, and the Fund’s owner decisions on the other.
If Gildi Pension Fund considers it necessary to communicate directly with the boards about individual issues or projects of the boards, such communications are established with the chairmen of the companies’ boards and in other respects in accordance with the operating rules of the respective boards. Communication with boards takes place at meetings, incl. shareholders’ meetings, or in the form of messages sent to the boards, whether about individual viewpoints, interests, research, expertise or other things that the Fund considers to be relevant to the Board.
Gildi Pension Fund does not initiate direct communication with individual board members about individual issues or Board projects. This provision does not prevent communication with individual board members on their own initiative or communication regarding issues other than individual matters or tasks of the Board, e.g. the provisions of this Shareholder Policy.
In Gildi Pension Fund’s communications, the provisions of the Act on Insider Information and the rules of the Competition Act, as well as the principles of the Act on the Board’s Confidentiality Obligation to the Company, Employees, Customers or Others, and the equality of shareholders must always be observed.
The Managing Director of Gildi Pension Fund handles communication on behalf of the Fund according to this article, together with the employees the Managing Director deems appropriate at any given time. They must keep a record of all communications with boards and board members of companies.
5.4. Participation in the decisions of shareholders’ meetings
If it is the opinion of Gildi Pension Fund that the company’s disclosure according to 5.2 and communications with company boards according to 5.3 is not sufficient to achieve the Fund’s objectives, the Fund will exercise its rights as an owner due to companies’ governance, such as submitting proposals and/or resolutions at shareholders’ meetings, voting on such proposals and resolutions or selling the Fund’s holding.
The Managing Director of Gildi Pension Fund and the Fund’s employees review all proposals that, according to the agenda, are to be submitted to shareholders’ meetings. The Managing Director of Gildi Pension Fund is also in charge of making proposals and managing voting rights on behalf of the Fund and must keep a record of such communications and votes. The Fund’s handling of voting rights at shareholders’ meetings shall be published regularly on the Fund’s website.
5.5. Capital structure of companies
It is the position of Gildi Pension Fund that companies should regularly communicate their policy regarding the optimal capital structure and capital needs, as well as clarifying their dividend policy and policy regarding other allocation of funds to shareholders. It is the general position of the Fund that the funds that are not of good use in maintaining or promoting the activities and operations of companies in an efficient manner should be returned to the shareholders. It is desirable that dividend payments, as well as other payments to shareholders, contribute to a favourable and appropriate capital structure, without impairing their financial strength.
5.6. Authorisations of shareholders to company boards, e.g. regarding share capital
Gildi Pension Fund emphasises that the authorisations granted by the shareholders’ meeting to the Board of Directors of a company, e.g. regarding the change of share capital or the purchase of own shares, are well justified in terms of purpose, limited and not more extensive than is necessary based on the circumstances in each case.
5.7. Election to Boards
Gildi Pension Fund encourages well-qualified individuals to run for company Boards when appropriate, either alone, in collaboration with other parties or by participating in the work of the Nomination Committee. Board members and employees of the Fund are not supported to run for the boards of companies to which this policy applies, cf. provision 4.13 in the Articles of Association of Gildi Pension Fund.
Gildi Pension Fund supports the establishment of Nomination Committees in accordance with the guidelines on corporate governance, published by the Icelandic Chamber of Commerce, the Icelandic Stock Exchange (Nasdaq Iceland) and the Confederation of Icelandic Employers. The Fund emphasises that the shareholders’ meeting makes a decision on this and that representatives of the Nomination Committee are elected by direct election at the shareholders’ meeting, unless the shareholders’ meeting approves the arrangement that the Board of Directors appoints one board member to the Committee.
The Managing Director, Chairman of the Board and Vice-Chairman of the Board of Gildi Pension Fund make up the Fund’s Selection Committee. The role of the Selection Committee is to encourage individuals to run for company boards and to decide on the distribution of the fund’s votes when board elections take place. The Committee is assisted by the Fund’s employees and/or external consultants as appropriate.
The fund’s Selection Committee meets as necessary in the run-up to the AGMs of companies or when the election of board members is imminent in companies. The Selection Committee shall keep minutes of what happens at the meetings and of its decisions. The Selection Committee shall keep the Board informed of its decisions as appropriate.
The allocation of the Fund’s votes during board elections is based on a professional process where the background, professional knowledge, experience, skills and qualifications of the candidates are examined as appropriate. Special consideration must be given to the composition of each board, taking into account diverse knowledge, experience and gender ratio. Care should also be taken to ensure that there are no conflicts of interest between the relevant party and the company and/or competitive reasons that prevent the nomination of the relevant person.
The Selection Committee shall present Gildi Pension Fund’s Shareholder Policy to the parties who are encouraged to apply to make sure that the Shareholder Policy does not go against the values, convictions or governance of the parties concerned.
5.8. Competition issues
Gildi Pension Fund encourages active competition and responsibility towards competition laws. The Fund’s ownership of a significant stake in companies operating in the same market calls for special care. Gildi Pension Fund is not involved in co-ordination between competitors or in the transmission of confidential information between them. Gildi Pension Fund does not consider it desirable for board candidates to be connected to competitors in a way that could affect their independence for board duties. Emphasis is placed on the independence of the board members in their duties and that they can protect the independence and interests of the company in question.
5.9. Remuneration policy
5.9.1. Board members’ wages
When assessing what the normal wage payments are for a board position in a company, Gildi Pension Fund believes that it is right to consider the scope and responsibility of the job, as well as the opportunity costs that the board members have to bear in order to fulfil their obligations to the company. Wage payments must be in the form of fixed payments.
If Gildi Pension Fund believes that the proposals for the AGM on board remuneration are very different from what is considered reasonable, taking into account the above-mentioned evaluation factors, the Fund will communicate those views, cf. provision 5.3 and provision 5.4, whether the wage is considered to be too high or low.
5.9.2. Remuneration and remuneration policy
a) Clarity of remuneration and remuneration policy
Gildi Pension Fund emphasises that remuneration policies are clear, understandable, in line with the long-term interests and sustainability of the company and also include provisions that prevent conflicts of interest.
When determining the total wage of the CEO and other senior managers, Gildi Pension Fund considers it appropriate to look at the company’s internal factors, wage distribution within it and the total wage that can be expected to be offered to senior managers in the market in which the company operates.
Gildi Pension Fund emphasises that there is always clear information and reasons for the remuneration of senior managers. It is essential that shareholders are informed about the basic assumptions and rationale for variable wage items and payments and rights related to the company’s share capital. Indicators should be appropriate and based on factors that managers can influence in their work. If companies decide to use performance-based wage systems, fixed wages should be correspondingly lower compared to companies where such performance-based systems are not in place.
b) Information in remuneration policies
It is emphasised that remuneration policies identify how they support the long-term interests and sustainability of the company and that clear conditions and prerequisites for fixed and performance-related wage payments are presented, including benefits.
Gildi Pension Fund directs the boards and Remuneration Committees that the following information is provided in the remuneration policies, if it is considered appropriate to establish performance-related payments or rights related to shares:
a) How high performance-related wage payments can be as a percentage of fixed annual wages or as a fixed amount for each employee or group of employees;
b) How high purchase options and other rights related to the company’s shares can be as a percentage of the fixed annual wage or as a fixed amount for each employee or group of employees, calculated on the basis of a specific rate of return or other criteria considered appropriate when evaluating the value of the rights;
c) How high are performance-related wage payments and purchase options and other rights related to shares according to Item b can be combined as a percentage of the fixed annual wage or as a fixed amount to each individual employee or group of employees;
d) Each ratio between fixed and performance-related wages (cf. a. and b.) can be the highest on an annual basis based on the given criteria.
Gildi Pension Fund believes that remuneration policies should state how they are formulated and all amendments and deviations be explained in reports on the implementation of remuneration policies.
If Gildi Pension Fund believes that a certain remuneration policy is not in accordance with mandatory and good governance, the Fund will convey those views, cf. provision 5.3 and provision 5.4.
c) Information in reports on remuneration policies
Gildi Pension Fund emphasises that reports on the implementation of remuneration policies are written, clear and understandable and contain a detailed overview of the implementation of remuneration policies over the past year, i.e. including justification for the amount of the total wage to the management taking into account the criteria of the relevant policy. It is emphasised that the total wage payments to managers should be disclosed and how they are divided into fixed payments, performance-related payments and payments due to share-based rights, if applicable. At the same time, it is emphasised that the number of shares and stock options that have been delivered or issued to managers and board members and that have not been used, along with the main conditions of such rights, should be disclosed. It is important that such reports are published well in advance of the company’s Annual General Meeting.
If Gildi Pension Fund believes that a certain report on a remuneration policy is not in accordance with mandatory and good governance, the Fund will convey those views, cf. provision 5.3 and provision 5.4.
This Shareholder Policy shall be reviewed at least annually by the Board of Directors of Gildi Pension Fund and as the occasion arises in other respects.
This policy shall be published on the Fund’s website and also sent to the boards of the companies to which the policy applies according to its scope. Any changes that may be made to the Shareholder Policy must also be published on the website and sent to the relevant boards.
Thus approved at a meeting of the Board of Directors on 18 October 2018.