Annual report 2018
Icelandic law and the company’s corporate governance framework determine the duties of the various bodies within the company. They define and dictate how the company is directed and controlled – including the interaction between the CEO, who is responsible for day-to-day management, the Board of Directors, shareholders, regulators and other stakeholders.
Marel hf. is committed to recognized general principles aimed at ensuring good corporate governance. In 2015, Marel launched an external audit of its corporate governance structure and procedures, followed by a certification of the same. In January 2016, the company received recognition as “Exemplary in Corporate Governance” from the Center for Corporate Governance at the University of Iceland.
Marel’s corporate governance consists of a framework of principles and rules, including its Articles of Association and the Guidelines on Corporate Governance issued in June 2015 by the Iceland Chamber of Commerce, NASDAQ Iceland and the Confederation of Icelandic Employers, which are accessible on the website of the Iceland Chamber of Commerce.
In general, the company fully complies with the Guidelines on Corporate Governance, apart from the following exception:
The company does not have a Nomination Committee. Marel’s Board of Directors regularly evaluates its work, composition and directors’ independence to ensure the members of the Board jointly possess the relevant knowledge, experience and skills to perform the Board’s tasks and responsibilities in the company’s best interest. The Board has taken the initiative in discussing with the company’s largest shareholders the composition of the Board of Directors and long-term succession planning.
The CEO is responsible for ensuring adequate internal controls and risk management in connection with financial reporting. The Board of Directors maintains an ongoing dialogue with the CEO to identify, describe and manage the business risks to which the company may be exposed. Material risks are discussed in the 2018 Consolidated Financial Statements.
The company’s risk management and internal controls for financial processes are designed to minimize effectively the risk of material misstatements in financial reporting. The internal auditor reports to the Board’s Audit Committee and plays a key role in internal control.
An independent auditing firm is elected at the Annual General Meeting (AGM) for a term of one year. The external auditors examine the company’s annual accounts in accordance with generally recognized auditing standards and for this purpose inspect its accounting records and other material relating to the operation and financial position of the company. The external auditors report any significant findings regarding accounting matters and internal control deficiencies via the Audit Committee to the Board of Directors.
KPMG ehf. was elected as the company’s auditor at the company’s AGM held on 6 March 2018. Auditors on KPMG’s behalf are Saemundur Valdimarsson and Hrafnhildur Helgadóttir, both Certified Public Accountants (CPAs). They have audited and endorsed without reservation Marel’s consolidated financial statements for the year 2018.
Marel‘s company values are its shared ideals and standards, providing direction in its everyday operations. The company’s employees took part in defining these values, which are Unity, Excellence and Innovation. The values are continuously promoted in the company’s daily operations.
Marel’s CSR guidelines were approved by the Board of Directors and Marel’s Executive Team in 2016.
Further information on CSR and diversity policies are provided in the section on CSR in Marel’s Annual Report.
Marel’s Board of Directors approved a Code of Conduct with global application in October 2012, which was revised in July 2016. It is closely linked to Marel’s company values and rests on four pillars, i.e. the commitment of employees (including officers’ and directors’) to: (i) each other; (ii) customers and the marketplace; (iii) shareholders; and (iv) partners, communities and the environment.
Marel’s Code of Conduct can be found on the company’s website:
The company has a two-tier management structure consisting of the Board of Directors and Executive Team, led by the Chief Executive Officer. The two bodies are separate and no person serves as a member of both.
The Board of Directors has supreme authority in company affairs between shareholders’ meetings. It is elected by shareholders at the AGM for a one-year term and operates in accordance with applicable Icelandic laws and regulations, the company’s Articles of Association and the Board‘s Rules of Procedure. The Board currently comprises seven directors who were elected at the company’s AGM on 6 March 2018.
The Board of Directors is responsible for the company’s organization, for setting the objectives for long-term performance and business development and ensuring proper conduct of its operations at all times. The Board decides all matters regarded as extraordinary or of major consequence in accordance with the statutory division of responsibilities between the Board, CEO and Executive Team. The Board defines strategic objectives for the company and sets targets aimed at achieving these goals.
Regular board meetings are held with management over the course of the year, including quarterly meetings coinciding with publication of financial results, two off-site strategy sessions and an operational planning meeting for the coming year. A number of on-site visits to company locations as well as to customers are conducted each year. In addition, the Board of Directors meets at least once a year without management to structure its own agenda and conduct a self-assessment. Additional meetings are convened as needed. All matters dealt with at Board meetings are decided by majority vote, provided that the meeting has been lawfully convened. In the event of a tie vote, the Chairman casts the deciding vote. However, important decisions are not taken unless all directors have been given an opportunity to discuss the matter.
The Board of Directors convened 14 times in 2018, with an average attendance of 95.9%.
The Board of Directors has assessed which directors are independent according to the Guidelines on Corporate Governance. All seven directors, Ann Elizabeth Savage, Arnar Thór Másson, Ásthildur Margrét Otharsdóttir, Helgi Magnússon, Margrét Jónsdóttir, Ástvaldur Jóhannsson and Dr Ólafur S. Gudmundsson, are considered independent of the company. Furthermore, five of the Board members, Ann Elizabeth Savage, Arnar Thór Másson, Ásthildur Margrét Otharsdóttir, Helgi Magnússon and Ástvaldur Jóhannsson, are considered independent of the company’s major shareholders.
Once a year, the Board of Directors evaluates the work, results, size and composition of the Board and the Board’s sub-committees. Furthermore, the Board evaluates the work and results of the CEO according to previously established criteria, including whether the CEO has prepared and carried out a business strategy consistent with the company’s established goals. The Board discusses the results of the evaluation and decides on any actions to be taken.
Profiles of the Board members can be found here:
The Rules of Procedure for the Board of Directors as well as for the Board’s sub-committees are accessible here:
A major share of the Board’s work is carried out in its sub-committees, the Remuneration Committee and Audit Committee. Sub-committee members are appointed by the Board of Directors for a term of one year, in accordance with the rules set for each sub-committee by the Board.
The Remuneration Committee is composed of three Board members unless the Board decides otherwise. The majority of the Remuneration Committee shall be independent of the company and possess the knowledge and expertise needed to perform the Committee’s tasks. The Remuneration Committee is intended to assist the Board in ensuring that compensation arrangements support the strategic aims of the company and enable the recruitment, motivation and retention of senior executives while also complying with legal and regulatory requirements. The Committee is responsible for ensuring that the performance of the Board and CEO is evaluated annually and that succession planning is conducted.
The current Board decided to appoint four members to the Remuneration Committee as of March 2018: Ásthildur Margrét Otharsdóttir (Chair), Ann Elizabeth Savage, Arnar Thór Masson and Dr Ólafur S. Gudmundsson.
The Remuneration Committee met 3 times in 2018. All meetings were fully attended.
The Audit Committee is composed of three or four Board directors unless the Board decides otherwise. The majority of the Audit Committee shall be independent of the company and its external auditors and at least one member shall be independent of shareholders holding 10% or more of the company’s total share capital. Members of the Audit Committee must possess the knowledge and expertise needed to perform its tasks. At least one member needs to have solid knowledge and experience of financial statements or auditing. Its work includes monitoring Marel’s financial status and evaluating the company’s internal monitoring and risk management systems, management reporting on finances, whether laws and regulations are followed and the work of the company’s internal and statutory auditors.
Members of the Audit Committee since March 2018 are Arnar Thór Másson (Chairman), Ástvaldur Jóhannsson, Margrét Jónsdóttir and Helgi Magnússon. All members are independent of the company and its auditors, while Arnar, Ástvaldur and Helgi are independent of large shareholders.
The Audit Committee convened 7 times in 2018. All meetings were fully attended.
Árni Oddur Thórdarson assumed the position of CEO of Marel in November 2013. An Icelandic citizen, born in 1969, Thórdarson has extensive international business experience within the industrial sector. He has an MBA degree from IMD Business School in Switzerland and a Cand. Oecon. degree in Business Administration from the University of Iceland. Thórdarson served on the Board of Directors of Marel from 2005-2013, for most of that time as Chairman.
Together with related parties his direct holding is 131,869 shares in Marel. He is a major shareholder of Eyrir Invest, which on 6 February 2019 held 190,366,838 shares in Marel hf. (27.89% of total issued shares).
At least once a year the CEO shall evaluate the work and results of the Executive Team which he heads according to previously established criteria. The CEO shall discuss the results of his evaluation with each member of the Executive Team and decide on any actions to be taken.
At least once a year, the Chairman and the CEO meet to discuss the results of the Board’s evaluation of the CEO’s work and performance and any proposed actions in response. The CEO reviews with the Chairman the results of his/her evaluation of the Executive Team and what actions may be needed, if any. The Chairman reports to the Board of Directors on discussions with the CEO as he/she deems necessary and appropriate.
The company’s Executive Team is composed of twelve members:
Profiles of the Executive Team members can be found here:
Shareholders’ meetings, within the limits established by the company’s Articles of Association and statutory law, are the supreme authority in Marel’s affairs as well as the primary means of communication between shareholders and the Board of Directors. The AGM is held each year before the end of August and other shareholders’ meetings are convened when necessary. The AGM is advertised publicly with at least three weeks’ notice in accordance with Icelandic law.
The Chairman is the Board’s authorized spokesperson. The Board of Directors does not engage in communication regarding details of the company’s operational matters and financial results, which is the responsibility of authorized members of management.
The Chairman communicates with the company’s largest shareholders on an annual basis to exchange views on matters related to corporate governance, and to maintain trust and understanding. All communication with shareholders is governed by rules and regulations on price-sensitive and non-public information (insider information) and on other sensitive business information which could compromise the company’s competitive position.
Further information on communication with shareholders can be found in the company’s Investor Relations Policy: