Corporate governance

Corporate governance
Corporate governance in Skipti is defined as the framework by which the Company is directed and controlled and the means by which relationships between the Company's management, its Board, its shareholders and other stakeholders are conducted.

The Board of Directors of Skipti adopted rules of corporate governance at a meeting on 24 April 2007. The aim of the corporate governance programme is to ensure disclosure and transparency, define the responsibilities of the Board and the management, define the rights and obligations of shareholders and stakeholders, ensure the equitable treatment of shareholders and avoid conflicts of interests between the parties. The Board is ultimately responsible for Skipti's system of internal controls and for reviewing their effectiveness. However, such a system is designed to manage rather than eliminate the risk of failure to achieve business objectives, and can only provide reasonable assurance against material misstatement or loss.

The Corporate Governance rules adopted are in accordance with Guidelines on Corporate Governance (2nd edition) published by Iceland Chamber of Commerce, OMX Nordic Exchange and SA - Confederation of Icelandic Employers. Skipti fully complies with the Guidelines and intends to follow them with respect to its future structure and management.

Statutory bodies
The supreme authority in the affairs of Skipti hf., within the limits established by its Articles of Association and statutory provisions, is in the hands of the Company's shareholders' meetings. Shareholders' meetings may be attended by shareholders, their representatives and advisors. Shareholders' meetings are open to representatives of the press and the OMX.

The annual general meeting of Skipti shall be held before the end of May each year and may be held outside the domicile of the Company.

At shareholders' meetings each share carries one vote. Decisions at shareholders' meetings are made by majority vote unless otherwise provided for in the Articles of Association or statutory law. Board committees

The Board of Skipti hf. operates both an Audit Committee and a Remuneration Committee. Each Committee consists of the Chairman and Directors of the Board of Skipti hf. who are competent to deal with the Company's financial issues or remuneration, as the case may be.

The Audit Committee
The Audit Committee's role is to ensure the integrity of the financial information reported to shareholders, control the Company's internal auditing and accounting system, evaluate the work of the Company's financial management and the Company's elected Auditor. The Committee's role should include the tasks stated in Section 3.1.A.3 of the Corporate Governance guidelines published by the Iceland Chamber of Commerce, OMX Nordic Exchange and the SA-Confederation of Icelandic Employers. The Audit Committee shall be comprised of at least three members, the majority of whom must be independent of the Company. The Committee may be comprised of two members, however, in which case both of them must be independent of the company. Committee members must have the requisite experience and knowledge to carry out its work. Since the task of the Audit Committee is to deal with financial issues, results and supervision of the same, all Committee members must have a thorough knowledge of accounting and preparation of financial statements.

Rannveig Rist, Erlendur Hjaltason and Sigurgeir Brynjar Kristgeirsson represent Skipti´s audit committee.

The Remuneration Committee
The Remuneration Committee's role is to ensure that the executives' remuneration reflects the long-term performance of the company, their personal performance and the interests of the shareholders. The CEO is responsible for the remuneration of other employees and for ensuring that it remains in line with the policy of the Remuneration Committee. The Remuneration Committee's policy is to ensure that the Company can attract and retain high calibre executives. For these purposes the Committee consults with external advisers on levels of remuneration in comparable companies where appropriate, the remuneration package for executive directors consists of basic salary, annual bonus, pension arrangements and other taxable benefits. The Committee's role should include the tasks stated in Section 3.1.B.3 of the Corporate Governance guidelines published by the Iceland Chamber of Commerce, OMX Nordic Exchange and the SA-Confederation of Icelandic Employers.

The Remuneration Committee also determines the policy of the Company regarding employee stock options. The principal provisions of stock option plans are to be submitted to a shareholders' meeting for approval. The Remuneration Committee shall be comprised of three members, the majority of whom must be independent of the Company. The Committee may be comprised of two members, however, in which case both of them must be independent of the Company. Due to the nature of its work, neither the CEO nor other employees may serve on the Committee.

Lýður Guðmundsson, Rannveig Rist and Panikos Katsouris represent Skipti´s remuneration committee.