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Governance

The company’s corporate governance is prescribed by Act No. 2/1995 on Public Limited Companies from August 2012, the company’s Articles of Association and Rules of Procedure of the Board.

GOVERNANCE STRUCTURE

Isavia is a publicly owned company owned by the Icelandic state. The operations of the company are in accordance with Act No. 153/2009 on the Merger of the Government-owned Limited Companies Flugstoðir and Keflavík Airport, Act No. 76/2008 on Establishing a Government-owned Limited company for the Running of Keflavík Airport, Act No. 102/2006 on the Establishment of a Public Limited company for Air Navigation Services and Airport Operations by the Icelandic Civil Aviation Authority, and the Aviation Act (Act No. 60/1998).

The company’s corporate governance is prescribed by Act No. 2/1995 on Public Limited Companies (August 2012), the company’s Articles of Association and Rules of Procedure of the Board.

The company’s Board refers to the Guidelines of Corporate Governance and complies with them in all major respects, although it is not legally bound to do so. Isavia received renewed certification, following a formal assessment, as a Model company in good corporate governance in 2019.

Two formal sub-committees – the Remuneration Committee and the Audit Committee – currently operate under the company’s Board. No court rulings have been issued during the year in which the company is believed to have broken any laws or regulations.

The Board of Directors of Isavia consists of five members and five alternates, all of whom are elected at the Annual General Meeting for a term of one year. Board members are nominated by the Minister of Finance and Economic Affairs. The gender ratio among Isavia’s Board members and alternates is 50% women and 50% men. All Board members are considered independent in the sense of the Guidelines on Corporate Governance. All Board members have given the Board an account of their assets in other companies, and their participation in them does not have an effect on their work as Isavia Board members.

BOARD’S ACTIVITIES AND RULES OF PROCEDURE

The Board has established detailed Rules of Procedure defining its scope of authority and the divisions of tasks between it and the CEO. The current Rules of Procedure were approved at a meeting of the Board of Directors on 24 April 2019. They include the division of tasks between Board members, rules on the eligibility of politicians to take part in processing matters, procedure and minutes for meetings, rules on confidentiality, the obligation to provide information to the Board and the decision-making powers of the Board.

The Board of Directors shall constitute the supreme authority in the affairs of the company from one shareholders’ meeting to the next, in accordance with laws and the company’s Articles of Association. The Board’s main role is to manage the company between shareholders’ meetings and ensure adequate supervision of the accounts and disposal of the company’s property, as well as confirm the operating budget and investment plans and ensure compliance with them. The Board makes all major decisions concerning the company’s operations and ensures that the company is operated in accordance with the relevant laws and regulations. Furthermore, the Board has the goal of promoting the company’s growth and results in the long term by formulating company policy in consultation with company management.

THE BOARD’S PERFORMANCE ASSESSMENT

The Board regularly evaluates its performance, its practices and rules of procedure, company development, the performance of the CEO and the efficiency of sub-committees if present. The performance assessment is intended, among other things, to evaluate the strengths and weaknesses of the Board’s work and practices and take into consideration the components which the Board believes may be improved. The Board’s performance assessment was carried out during a meeting of the Board in March 2020. 

INTERNAL MONITORING AND RISK MANAGEMENT

The Board has submitted a comprehensive risk policy for the company and defined the major operational risks. The main risks for the Group’s financial transactions are exchange rate risk, currency risk and indexing risk. A special risk committee is active and is authorised by the Board to determine the scope and nature of risks and profit analysis for projects and ventures that could have significant effects on operations and financial position. The Risk Committee, consisting of the CEO, Assistant CEO, Director of Finance together with experts on risk management, submits regular reports on risks for the company to the Board.

At the close of 2019, the company reached an agreement on internal auditing with PwC. Internal auditing assesses and improves the function of risk management, monitoring activities and governance through systematic and disciplined work practices, thereby helping the company to achieve its goals. Internal auditing operates independently, does not make any decisions relating to the day-to-day activities of the company and is recruited by the Board.

sUB-COMMITTEES

Two sub-committees operate under the Board of Directors:

REMUNERATION COMMITTEE

The Committee consists of two members of the Board of Directors. The main tasks of the Remuneration Committee are to annually prepare a draft remuneration policy which is submitted to the Annual General Meeting, prepare proposals submitted to the AGM as regards the employment terms of Board members and prepare proposals for the Board as regards criteria for the wages and other employment terms of the CEO and the Chiefs of the subsidiaries. The Remuneration Committee monitors that the remuneration policy is followed, and that wages and other employment terms are in accordance with laws, regulations and best practices as current from time to time.

AUDIT COMMITTEE

The Audit Committee is made up of three members: one of whom must be independent of the company and its employees, and two Board members. The main tasks of the Audit Committee involve the evaluation of monitoring environment of the company, analysis of the effectiveness of internal audits, the monitoring of the execution of auditing and the preparation of proposals for the selection of an external auditor in consultation with the Icelandic National Audit Office (INAO) according to Article 7 of Act No. 46/2016 on the Auditor General and the Auditing of Government Accounts. The Committee evaluates the independence of the auditor, the effectiveness of risk policies, risk willingness and risk management and ensures compliance with laws and regulations. The Audit Committee monitors working processes in the preparation of financial statements to increase the trust in and safety of financial information.

CEO OF Isavia

The CEO is responsible for the management of all day-to-day operations in accordance with the policies and instructions of the Board. Day-to-day operations do not include measures which are unusual or extraordinary. He has decision-making powers regarding all the operational and financial issues of the company and manages its assets. He submits an account of the company’s operations and performance at Board meetings and answers to the Board for all day-to-day operations and compliance with the company’s Articles of Association, laws and regulations.

Björn Óli Hauksson left as CEO of Isavia in April 2019, and Sveinbjörn Indriðason took over as CEO in June 2019.

Sveinbjörn Indriðason, CEO
Sveinbjörn Indriðason, CEO

 

COMMUNICATION ARRANGEMENTS BETWEEN SHAREHOLDERS AND THE BOARD

One shareholder, the Icelandic state, holds all shares, and the Minister for Finance has all shareholder rights. Shareholders’ meetings are the main venue for the formal provision of information to shareholders and hold the supreme authority of the company. The Chair of the Board and the CEO variously met the Minister or the employees of the Ministry of Finance last year. The Board of Directors and CEO conduct themselves in accordance with the general policy on state ownership of limited liability and partnership companies. The company releases press releases on the company’s performance and other matters pertaining to its operation.


2020 CORPORATE GOVERNANCE STATEMENT

The 2020 Corporate Governance Statement was approved at the Board meeting of 18 March 2020.

CODE OF ETHICS

Isavia’s Code of Ethics applies to all employees and management of the company and is an integral part of all employment contracts. In addition, there is a separate section on disqualification in the Board’s Rules of Procedure. The Code of Ethics is available to all employees on the intranet of the company and on the Isavia website.