Corporate Governance

Eimskip is a limited liability company that is governed by the Public Limited Companies Act, No. 2/1995, its Articles of Association and the Board of Directors’ Rules of Procedure. Under its Articles of Association, the Company is governed by shareholders’ meetings, the Board of Directors and the Chief Executive Officer.

Corporate Governance practices are designed to ensure open and transparent relationship between the Company's management, its Board of Directors, its shareholders and other stakeholders. The Corporate Governance in Eimskip is also designed to ensure sound and effective control of the Company’s affairs and a high level of business ethics.

The Board of Directors approved an update of the Corporate Governance statement for the Company on 23 February 2017. The statement declares that Eimskip complies with the accepted practices in the 5th edition of Corporate Governance guidelines issued by the Iceland Chamber of Commerce, SA – Business Iceland and Nasdaq Iceland. Eimskip’s Corporate Governance statement is accessible on the Company’s website and in the Company’s Financial Statements for 2016.

The Corporate Governance guidelines, along with the Company's Articles of Association and rules for issuers of securities listed at Nasdaq Iceland, make up the framework for the Corporate Governance practices for Eimskip.


The Annual General Meeting of the Company elects five members and two alternate members to the Board of Directors. As of 1 September 2013, the gender ratio on the Board of Directors must be as even as possible, each gender never accounting for less than 40%. The Board of Directors holds supreme authority between shareholders’ meetings. It shall ensure that the Company’s organization and operations are in good order. It shall promote the development and long-term performance of the Company and supervise its operations and their conformity with existing laws and regulations. Together with the CEO, the Board takes the initiative on formulating policies and setting goals and risk parameters and established an active system of internal controls which is verified regularly. The Board handles the recruitment and dismissal of the CEO.

Rules of Procedure for the Board of Directors were adopted in accordance with the fifth paragraph of Article 70 of the Public Limited Companies Act, No. 2/1995 and are supplementary to the Articles of Association. Under the Rules of Procedure, the Board of Directors elects subcommittees that operate on its behalf. The Rules of Procedure are accessible on the Company’s website.


The Board of Directors appointed two subcommittees in 2012: the Audit Committee and the Remuneration Committee. Rules of procedure for the subcommittees can be found on the Company’s website.

The principal duties of the Audit Committee are to review all financial information and procedures regarding information disclosure from day-to-day managers and the Company’s independent auditors and to ensure the independence of the Company’s independent auditors. The role and main projects of the Audit Committee are set out in its rules of procedure. Members of the Audit Committee are Marc Jason Smernoff, Chairman, Lárus L. Blöndal and Ólafur Viggó Sigurbergsson.

The role of the Remuneration Committee includes preparing the Company’s remuneration policy and ensuring its enforcement and negotiating with the CEO on wages and other employment terms. Eimskip’s Remuneration Policy is accessible on the Company’s website. The role and main projects of the Remuneration Committee are set out in its rules of procedure. Members of the Remuneration Committee are Hrund Rudolfsdóttir, Chairman, Richard Winston Mark d’Abo and Marc Jason Smernof


The CEO is responsible for the day-to-day operations of the Company, in accordance with law, regulations and the Company’s Articles of Association, and follows the policies and instructions laid down by the Board. The CEO must at all times conduct his work with integrity and take account of the Company’s interests. Day-to-day operations do not include matters which are unusual or of great significance. The CEO shall make sure that the Company’s accounts are kept in accordance with law and practice and that the Company’s assets are kept in a secure manner. The CEO is obliged to abide by all instructions of the Board of Directors and to give the auditor any information requested. The CEO does not have the authority to make decisions concerning any matters that are assigned to others by law or are reserved to the Board under its Rules of Procedure.


Eimskip’s Executive Management consists of the Chief Executive Officer, the Chief Financial Officer and the Directors of International Operations and Logistics, Human Resources, North Atlantic Container Liner Services and Iceland Domestic Operations and Services. All the executives have extensive experience within the Company. Further information on the Executive Management is to be found under Organization and Executive Management.


Internal control and active risk management play an important role at Eimskip to ensure stable operations and earnings. The internal control and risk management procedures regarding financial processes are designed to minimize the risk of material misstatements. The Company’s internal control systems are monitored by the Audit Committee and assessed by the independent auditors. The risk management policy is aimed at minimizing potential negative effects on operations and earnings from marketing, operational and financial activities and to keep risks at acceptable levels. Risk management within the Company is governed by the Board of Directors, while the Audit Committee is responsible for its review on a regular basis. Further information on risk management and risk factors is to be found under Risk Management and Risk Factors.


For over a century, Eimskip has connected Iceland and the rest of the world with its transportation services. The Company has played an important role in Iceland’s history; it realizes its responsibility and is committed to maintaining its presence and services in the North Atlantic, where reliable transport is crucial to the economy and prosperity of the region. To attain this, Eimskip strives to provide the most efficient and sustainable transportation options combined with outstanding services to customers, while being profitable for shareholders and responsible towards the society, environment and the workforce.

The Company has set out its values, which are: Achievement, Cooperation and Trust. These are the employee’s guiding principles in the Company’s endeavor to preserve and protect the environment, to work for a better society wherever it operates and to be a role model when it comes to responsibility and trust.

Further information on Eimskip’s social responsibility, environmental and other non-financial issues is to be found under Corporate Social Responsibility.

Shareholder Information


Eimskip’s shares started trading on Nasdaq Iceland on 16 November 2012 with the ISIN number IS0000019800 and under the ticker symbol EIM.

The total number of Eimskip’s shares is 200,000,000. Each share has a nominal value of ISK 1.00 and entitles its holder to one vote. The Company holds 13,360,770 shares in treasury, corresponding to 6.68% of the total issued share capital of the Company and the number of outstanding shares is 186,639,230. There were 806 shareholders at the end of 2016.


A1988 hf. is the current name of the company formerly known as HF. Eimskipafélag Íslands, for which a composition agreement was accepted by all creditors in August 2009. The composition agreement included a provision by which unsecured creditors received shares in a new company, Eimskipafélag Íslands hf.

Under the composition agreement for A1988 hf., a 4.2% shareholding in Eimskip was not distributed to creditors but reserved for A1988 hf. to satisfy contingent claims that might arise in the coming periods resulting from events prior to the composition agreement. These shares do not carry voting rights.

If the value of the shares exceeds the contingent claims accepted by A1988 hf. in accordance with the composition agreement, the remaining shares will be transferred to Eimskipafélag Íslands hf. without any compensation. These shares are not recognized in the statement of financial position at year-end. To date, no material unrecorded contingent claims have been accepted by A1988 hf.

In March 2014, Eimskip received 7,441,950 shares from A1988 hf. The shares correspond to 3.72% of total share capital in Eimskip. A1988 hf. still holds 1,000,000 shares, corresponding to 0.5% of total share capital in Eimskip.


Three of Eimskip’s shareholders each owned over 10% in the Company at the end of 2016. The two Yucaipa American Alliance funds owned 15.25% and 10.05%, or a total of 25.3% of issued share capital. Lífeyrissjódur verzlunarmanna was the second largest shareholder with a share of 13.74%.

The 20 largest shareholders held 82.07% of the total shares at year-end 2016.

List of 20 largest shareholders as at 31 December 2016

    Shareholders   Shares   %
1.   Yucaipa American Alliance Fund II, LP   30,504,030   15.25%
2.   Lífeyrissjódur verzlunarmanna   27,485,070   13.74%
3.   Yucaipa American Alliance (Parallel)   20,095,970   10.05%
4.   Gildi - lífeyrissjódur   18,846,139   9.42%
5.   Lífeyrissj.starfsm.rík. A-deild   11,200,000   5.60%
6.   Stapi lífeyrissjódur   10,092,555   5.05%
7.   J.P. Morgan Clearing Corporation   7,672,360   3.84%
8.   Sameinadi lífeyrissjódurinn   5,379,852   2.69%
9.   Sjóvá-Almennar tryggingar hf.   5,017,349   2.51%
10.   Lífeyrissj.starfsm.rík. B-deild   4,080,000   2.04%
11.   Söfnunarsjódur lífeyrisréttinda   3,102,823   1.55%
12.   Festa - lífeyrissjódur   2,937,005   1.47%
13.   Almenni lífeyrissjódurinn   2,911,558   1.46%
14.   IS Hlutabréfasjódurinn   2,851,413   1.43%
15.   Global Macro Portfolio   2,775,070   1.39%
16.   Global Macro Absolute Return Ad   2,347,670   1.17%
17.   Birta lífeyrissjódur   2,060,799   1.03%
18.   A.C.S safnreikningur I   2,040,000   1.02%
19.   Brú Lífeyrissjódur starfs sveit   1,515,982   0.76%
20.   Íslandsbanki hf.   1,220,984   0.61%
    20 largest shareholders total   164,136,629   82.07%
    786 other shareholders total   22,502,601   11.25%
    Eimskipafélag Íslands hf.   13,360,770   6.68%
    806 shareholders total   200,000,000   100.00%

Distribution of shares as at 31 December 2016

Shareholding Number of shareholders % Number of shares %
1 - 5,000 564 69.98% 1,270,828 0.64%
5,001 - 10,000 57 7.07% 468,866 0.23%
10,001 - 100,000 128 15.88% 3,966,055 1.98%
100,001 - 200,000 10 1.24% 1,305,137 0.65%
200,001 - 1,000,000 23 2.85% 11,168,384 5.58%
1,000,001-10,000,000 18 2.23% 50,236,196 25.12%
10,000,001 + 6 0.74% 118,223,764 59.11%
Total without treasury shares 806 100.00% 186,639,230 93.32%
Treasury shares   0.00% 13,360,770 6.68%
Issued shares total 806 100.00% 200,000,000 100.00%


The price of Eimskip’s shares in the IPO in 2012 was ISK 208.00 and the closing price on the first day of trading was ISK 225.00. As shown on the above graph of share prices in 2016 and 2017, there have been some fluctuations during the period but the share price has been rising. The closing price of the year 2016 was ISK 322.50 which represented Eimskip’s market capitalization based on outstanding shares at year-end 2016 in the amount of ISK 60.2 billion, the equivalent of EUR 505.3 million. The market capitalization of the Company in relation to the restructuring in 2009 was EUR 167.8 million.

The closing price of Eimskip’s shares on 20 March 2017 was ISK 318.50 per share with market capitalization based on outstanding shares in the amount of ISK 59.4 billion, equal to EUR 510.2 million.


The policy of Eimskipafélag Íslands hf. is to pay annual dividend that equals an amount in the range of 10-65% of net earnings. Decisions on dividend payment, and the exact amount, are subject to the Company’s future investment plans, market outlook and satisfactory capital structure at any given time. The dividend policy is accessible on the Company’s website.

Eimskip paid dividend in the amount of ISK 6.50 per share on 14 April 2016. The total dividend payment amounted to ISK 1,213.2 million, which represented 48.4% of net earnings for the year 2015. The paid dividend was equivalent to EUR 8.6 million.

The Board of Directors proposed to the Annual General Meeting 2017 a dividend payment of ISK 6.80 per share in 2017, amounting to a total of ISK 1,269.1 million or EUR 11.0 million, which represents approximately 50.0% of net earnings for the year 2016.


Eimskip recognizes the value of transparent and open communication with the Company’s stakeholders, consistent with commercial confidentiality and regulatory considerations. Stakeholders include investors, employees, customers, suppliers, the media, local communities and authorities.

The Board has issued an IR Policy which outlines the objectives and processes for effective communication between Eimskip and its various audiences. The IR Policy is available on the Company’s website.


Eimskip’s Investor Relations website provides information for investors, market participants and others. The website contains information about the Company, such as Corporate Governance documents, financial reports and presentations, Annual Reports, documents relating to Annual General Meetings, general presentations, share information, news releases and investor contacts.

Investment Strategy

Eimskip’s strategy is to use its strong financial position for external growth by making accretive acquisitions that create synergies, strengthening the Company’s performance and increase shareholder value. The plan is to issue additional debt for the investments, increasing the leverage of the company to more normal levels, still maintaining a strong balance sheet.

Eimskip’s Board of Directors and management have in recent years spent time on evaluating potential investment projects in the Company’s search for opportunities to grow and to strengthen its current position.

One of the Company’s Strategic Priorities 2017 is EXTERNAL GROWTH AND INTEGRATION, where the main focus is on continued execution of the Company's investment strategy for external growth and on integrating new companies to ensure maximized synergy.

Eimskip will continue to evaluate potential investment projects and is currently working on several potential acquisitions in its core business. Evaluation of vessel investments will also continue on an ongoing basis and the Company seeks to take advantage of attractive opportunities in the second hand vessel market.

In 2015 and 2016, Eimskip entered into partnerships, established and invested in several companies and infrastructure projects which have played an important role in further strengthening the Company’s services. Synergy has followed all of the acquisitions and the new companies have been performing in line with the Company’s expectations.


    Acquisition of a forwarding company in Rotterdam.
    Joint Venture in ship management and trading established in Hamburg.
    Eimskip took over a 21,500 m2 warehouse operation in Århus.
    Acquisition of a cold storage operation in Newfoundland and Labrador.
    Acquisition of a leading forwarder in St. John’s, Newfoundland and Labrador.
    Acquisition of a ferry-operating company in Stykkishólmur on Iceland’s west coast.
    A new 10,000-ton cold storage facility built in Hafnarfjördur. Two new Gottwald harbor cranes, one for Reydarfjördur and another for Grundartangi, and 22,410 m2 of land at Grundartangi to prepare for the area’s future development.


    Cooperation agreement with Royal Arctic Line in January 2017. A contract signed with a shipyard in China on building two 2,150 TEU ice class Polar Code container vessels for Eimskip. Royal Arctic line signed contract to build one vessel with the same shipyard and design. Expected delivery of the three vessels is in 2019.
    Acquisition of a 90% share in a specialized forwarding company in Rotterdam in October 2016.
    Acquisition of an 80% share in a specialized reefer logistics company in Antwerp in January 2017.
    Eimskip signed an agreement to acquire the Norwegian shipping and logistics company Nor Lines in November 2016 and is waiting for the final conclusion of the Norwegian Competition Authority. The authority issued a notice on an objection regarding the acquisition in February 2017.

Risk Management and Risk Factors


Risk management is the process of analyzing and measuring the risk factors which could prevent the Company from achieving its set goals. It also includes that remedial action is taken to minimize the anticipated effects of such risk factors.

Eimskip’s internal control and risk management procedures regarding financial processes are designed to minimize the risk of material misstatements. The Company does not have an internal audit function, but it uses internal control systems that are monitored by the Audit Committee and assessed by the independent auditors. The independent auditors’ evaluation of these processes is included in the Independent Auditors’ Report in the Financial Statements.

An independent auditing firm is elected at the Annual General Meeting each year. The auditors are supposed to review the Company’s accounting records and material related to the Company’s operations and financial position and they shall have access to the Company’s books and documents at all times. They must examine the Company’s consolidated financial statements in accordance with international standards on auditing. Significant findings regarding accounting and internal control deficiencies are reported to the Board of Directors through the Audit Committee. Independent auditors are not allowed to own shares in the Company.

The Company goes through a detailed strategic and budgeting process each year and a strategy and budget report is prepared. I has also defined its strategic priories for the year 2017, as described under Strategic Priorities 2017. The Board of Directors approves the Company’s strategy and budget each year. Deviations from the strategy and budget are carefully monitored on a monthly basis.

Active risk management plays an important role in Eimskip to ensure stable operations and earnings. The risk management policy is aimed at minimizing potential negative effects on operations and earnings from marketing, operational and financial activities and to keep risks at acceptable levels.

The Board of Directors regularly communicates with the CEO regarding the identification of, description of and response to business risks which the Company may be faced with. Risk management within Eimskip is governed by the Board of Directors while the Audit Committee is responsible for its review on a regular basis. The Executive Management is responsible for identifying material risks and developing the Company’s risk management strategy. The Company’s risk exposure is discussed at Board meetings and its risk management and risk factors are discussed in the Annual Report.

Eimskip monitors its financial risk factors and has defined treasury policies and procedures which, among other, sets acceptable risk limits and stipulates how to identify, measure and manage financial risk exposure. The Company has in place a financial reporting and internal control manual to which the group reporting entities must adhere.


Detailed information about risk factors, presented as of the date of the Company’s Prospectus, 22 October 2012, can be found in Chapter 1 of the Registration Document, which is a part of the Prospectus. The Prospectus is accessible on the Company's website.

The risk factors and uncertainties described in the following text are not the only risks that the Company as a whole faces; nor are they listed in order of priority with regard to significance or likelihood of occurrence.


Demand for transportation services has historically been highly cyclical and closely correlated with global economic activity. Eimskip is thus exposed to a possible economic downturn or recession, either globally or in one or more of the Company’s main markets. The Company is also sensitive to foreign exchange fluctuations and changes in its competitive position.


Eimskip’s operations are dependent upon many factors, e.g. access to terminals, IT systems, operation and ownership of vessels, supply of and demand for fuel, international and EU regulations on lower sulphur emissions, inflation, the reputation of the Company and its ability to retain key personnel and customer contracts. Further, refugees and stowaways and incidents involving significant damage, loss or environmental pollution are a risk factor to the Company. Changes in the legislative, political, governmental and economic framework may have a material impact on the Company’s business. The Company is dependent on various licenses relating to its operations and is subject to contractual risk in relation to its obligations to fulfill various provisions of its contracts.




Eimskip is exposed to risks related to the availability of funding. The Company is, to some extent, dependent on access to sufficient funding at acceptable terms and may not be able to secure new sources of liquidity or funding, should projected or actual liquidity fall below the levels it requires. These factors could also impact the ability of Eimskip’s shareholders to provide it with liquidity and there can be no assurance that the Company could obtain additional shareholder funding. To manage this risk factor the Company seeks long-term borrowings where applicable, maintains a healthy and stable current ratio and produces internal short-term cash flow reports on a regular basis.


Interest rate risk is the risk borne by an interest-bearing liability, such as a loan or a bond, due to variability of interest rates. Eimskip’s interest rate risk exposure is due to its debt and lease liabilities, which are mainly denominated in EUR. The Company’s long-term debt is primarily based on floating interest rates and consequently Eimskip is exposed to fluctuations in the general level of interest rates. However, the Company’s current funding structure limits to some extent risk against an increase in interest rates. The Company does not currently use any interest rate swaps or options to hedge its exposure. Its position is, however, carefully monitored and reviewed in line with interest rate developments on financial markets. For further information on Eimskip’s nominal interest rates, reference is made to note 16 in the Consolidated Financial Statements.


Eimskip has liabilities and obligations which arise over time and the Company may not have the liquidity to meet its liabilities as they fall due. Eimskip’s approach to managing liquidity, i.e. cash on hand or short-term marketable securities, is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation. For further information on liquidity status, reference is made to note 18 in the Consolidated Financial Statements.


Credit risk is the risk of financial loss to the Company if a customer or counterparty in a financial instrument fails to meet its contractual obligations, and arises principally from the Company’s receivables from customers and its investment in securities.

Eimskip’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, no single customer accounts for more than 5% of the Company’s revenue.

Eimskip has established a credit policy under which each new customer is individually analyzed for creditworthiness before the Company’s standard payment and delivery terms and conditions are offered. The Company’s review includes external ratings when available and in some cases bank references. Customers that fail to meet the Company’s creditworthiness benchmark may transact business with the Company on a pre-payment basis only.

In spite of these precautionary measures, a general downturn in financial markets and economic activity may result in a higher volume of late payments and outstanding receivables. Eimskip’s sales will depend on the financial position of its counterparties and there can be no guarantee that the financial position of the Company’s customers and other contract parties will be sufficient to honor their obligations under their contracts with the Company. Even though the Company seeks to recover all outstanding receivables, the amounts of write-offs may increase. Trade and other receivables of Eimskip amounted to EUR 96.6 million at the end of 2016, which represents 18.8% of the Company’s revenue.


The supply and demand of fuel is unpredictable and price fluctuations are based on events which are outside of Eimskip’s control. Therefore, the Company cannot accurately predict the future availability or price of fuel. A number of issues, including geopolitical developments, supply of and demand for oil, actions by the Organization of Petroleum Exporting Countries (OPEC) and other oil producers, war and unrest in oil-producing countries and regions, regional production patterns, environmental concerns and other unpredictable events can affect the availability and price of fuel and may result in future fuel supply shortages and price increases.

Fuel costs accounted for 5.2% of Eimskip’s expenses in 2016. The Company is exposed to fluctuations in the price of crude oil and oil products. In order to minimize its exposure to fluctuations in oil prices, the Company adds a surcharge to its prices, commonly referred to as the Bunker Adjustment Factor (BAF) and the Bunker Adjustment Trucking (BAT) depending on the oil prices at the time of transport. The BAF, BAT and other pricing adjustments compensate for approximately 80% of Eimskip’s risk relating to fluctuations in oil prices. However, significant increases in oil prices could lead to downward pressure on the Company’s tariffs from its customers.

Majority of Eimskip’s sailing routes lie through Emission Control Areas (ECA). Within ECA shipping companies are obliged to use fuel with a sulphur content no higher than 0.1%, which is more expensive than fuel with higher sulphur content. In order to compensate for the higher cost, the Company charges its customers a Low Sulphur Surcharge (LSS).