Annual report 2017
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. (also referred to as the “company”) is committed to the general principles of 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, accessible on the website of Iceland's Chamber of Commerce.
In general, the company is in compliance with the Guidelines on Corporate Governance, with 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 initiates discussions with the company’s largest shareholders on Board composition and long-term succession planning.
The CEO is responsible for ensuring sufficient internal control and risk management in connection with financial reporting. The Board of Directors has an ongoing dialogue with the CEO on the identification, description and handling of the business risks to which the company may be exposed. Material risks are discussed in the Consolidated Financial Statements 2017.
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 company’s 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 accepted 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 any significant 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 2 March 2017. Auditors on KPMG’s behalf are Sæmundur Valdimarsson and Hrafnhildur Helgadottir, both Certified Public Accountants (CPAs). They have audited and endorsed without reservation Marel’s consolidated financial statements for the year 2017.
Marel‘s company values are shared ideals and standards, providing direction in its everyday operations. The company’s employees took part in defining the values, which are: Unity, Excellence and Innovation. These values are continuously promoted in 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 chapter on CSR in Marel’s Annual Report.
The Board of Directors of Marel 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. employees’ (including officers’ and directors’) commitment 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 company’s Board of Directors is the supreme authority in the affairs of the company 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 Board members who were elected at the company’s AGM on 2 March 2017.
The Board of Directors is responsible for the company’s organization, for promoting the development of its long-term performance and ensuring proper conduct of its operation 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 sets targets for the company reflecting its objectives and formulates strategic policy to achieve 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. 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 members of the Board have been given an opportunity to discuss the matter.
The Board of Directors convened 12 times in 2017, with a weighted average attendance of 98%.
The Board of Directors has assessed which Board members are independent according to the Guidelines on Corporate Governance. All seven Board members, Ann Elizabeth Savage, Arnar Thor Masson, Asthildur Margret Otharsdottir, Helgi Magnusson, Margret Jonsdottir, Astvaldur Johannsson and Olafur S. Gudmundsson, are considered independent of the company. Furthermore, five of the Board members, Ann Elizabeth Savage, Arnar Thor Masson, Asthildur Margret Otharsdottir, Helgi Magnusson and Astvaldur Johannsson, 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. In 2017, the Board engaged an external advisor to facilitate the evaluation, which included a thorough anonymous questionnaire, a peer assessment and one-on-one interviews with both members of the Board and senior management. 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 assessment and decides on any actions to be taken.
Profiles of the Board members can be found here:
The rules of procedures for the Board of Directors as well as for the Board’s sub-committees are accessible here:
The Board’s work is supported by 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 2017: Asthildur Margret Otharsdottir (Chair), Ann Elizabeth Savage, Arnar Thor Masson and Olafur S. Gudmundsson.
The Remuneration Committee met 5 times in 2017. All meetings were fully attended.
The Audit Committee is composed of three or four Board members 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 2017 are Arnar Thor Masson (Chairman), Astvaldur Johannsson, Margret Jonsdottir and Helgi Magnusson. All members are independent of the company and its auditors, Arnar, Astvaldur and Helgi are independent of large shareholders.
The Audit Committee convened 6 times in 2017. All meetings were fully attended.
Arni Oddur Thordarson assumed the position of CEO of Marel in November 2013. He has extensive international business experience within the industrial sector. Thordarson has served on the Board of Directors of Marel since 2005, for most of that time as Chairman. He has an MBA degree from IMD Business School in Switzerland and a Cand. Oecon. degree in Business Administration from the University of Iceland.
Thordarson is an Icelandic citizen, born in 1969. Thordarson and related parties hold 131,869 shares in Marel. He is a major shareholder of Eyrir Invest, which on 7 February 2017 held 190,366,838 shares in Marel hf. (25.88% of total issued shares).
At least once a year the CEO shall evaluate the work and results of the Executive Team, for which he is responsible, according to previously established criteria. The CEO shall discuss the results of the assessment 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 hold a meeting to discuss the results of the Board’s assessment 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 eleven 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 with the objective of exchanging view on matters related to corporate governance, as well as establishing 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: