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 22 February 2018. 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 2017.

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 has established an active system of internal controls that 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 management and the Company’s independent auditors and to ensure the independence of the Company’s independent auditors. The role and main responsibilities 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 responsibilities 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 Smernoff.


The Company’s CEO is responsible for the day-to-day operations, 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 and the Directors of Finance and Operation, International Operations and Logistics, Human Resources and Marketing, North Atlantic Container Liner Services and Iceland Domestic Operations and Services. All the executives have an 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 is designed to minimize the risk of material misstatements. The Audit committee monitors the Company’s internal control systems. 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.


Eimskip is a registered participant of the UN Global Compact, the United Nation’s initiative for social responsibility with respect to human rights, labor, environment and anti-corruption. With its participation, the Company has committed to manage its business operations so that the UN Global Compact and its Ten Principles become a part of the Company’s strategy, culture and day-to-day operations. The Company has also committed to advocate the UN Global Compact and its Ten Principles through available communication channels and communicate annually on implementation efforts.

Eimskip’s Corporate Social Responsibility (CSR) Policy is based on the Nasdaq ESG Reporting Guide, published in March 2017. The Nasdaq voluntary reporting guide focuses on 33 environmental, social and governance (ESG) performance indicators.

Further information on Eimskip’s social responsibility and its CSR Policy is to be found under Corporate Social Responsibility.


The Board of Directors approved a revision of the Company’s Code of Conduct in February 2018. The Code of Conduct closely links to the Company’s values: Achievement, Cooperation and Trust. The Code is also based on Eimskip’s aim to secure good return for shareholders with profitable growth, create value for customers with outstanding solutions and services, be an outstanding workplace for employees with great team spirit and ambition and show concern for society with social responsibility and reduced ecological footprint.

Eimskip’s Code of Conduct focuses on Human Resources, the Market and on Social Responsibility. It includes the Company’s Human Rights Policy and its Anti-Corruption and Bribery Policy. The Code of Conduct is accessible on the Company’s website.

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 6.7% of the total issued share capital of the Company and the number of outstanding shares is 186,639,230. There were 712 shareholders at the end of 2017.


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 3.7% 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 2017. The two Yucaipa American Alliance funds owned 15.3% and 10.0%, or a total of 25.3% of issued share capital. Lífeyrissjódur verzlunarmanna was the second largest shareholder with a share of 13.9%.

The 20 largest shareholders held 81.8% of the total shares at year-end 2017.

As at 31 December 2017

  Shareholders Shares %
1. Yucaipa American Alliance Fund II, L.P. 30,504,030 15.3%
2. Lífeyrissjódur verzlunarmanna 27,785,070 13.9%
3. Yucaipa American Alliance (Parallel), Fund II L.P. 20,095,970 10.0%
4. Gildi - lífeyrissjódur 18,846,139 9.4%
5. Lífeyrissjódur starfsmanna ríkisins A-deild 12,070,000 6.0%
6. Stapi lífeyrissjódur 9,292,555 4.6%
7. Birta lífeyrissjódur 7,989,966 4.0%
8. Global Macro Absolute Return Advantage Portfolio 5,275,884 2.6%
9. Lífeyrissjódur starfsmanna ríkisins B-deild 4,165,000 2.1%
10. Global Macro Portfolio 4,034,070 2.0%
11. Almenni lífeyrissjódurinn 3,611,558 1.8%
12. The Wellington Trust Company NA 3,293,102 1.6%
13. Festa lífeyrissjódur 3,251,374 1.6%
14. Söfnunarsjódur lífeyrisréttinda 2,755,323 1.4%
15. IS Hlutabréfasjódurinn 2,716,569 1.4%
16. Landsbankinn hf. 2,312,902 1.2%
17. Frjálsi lífeyrissjódurinn 1,771,977 0.9%
18. Fagfjárfestasjódurinn IHF 1,402,952 0.7%
19. Júpíter - Innlend hlutabréf 1,355,290 0.7%
20. Lífsverk lífeyrissjódur 1,099,586 0.5%
  20 largest shareholders total 163,629,317 81.8%
  692 other shareholders total 23,009,913 11.5%
  Eimskipafélag Íslands hf. - treasury shares 13,360,770 6.7%
  712 shareholders total 200,000,000 100.00%

As at 31 December 2017

Shareholding Number of shareholders % Number of shares %
1 - 5,000 471 66.2% 1,025,760 0.5%
5,001 - 10,000 61 8.6% 497,474 0.2%
10,001 - 100,000 116 16.3% 4,033,097 2.0%
100,001 - 200,000 15 2.1% 2,205,331 1.1%
200,001 - 1,000,000 28 3.9% 14,186,397 7.1%
1,000,001-10,000,000 16 2.2% 55.389.962 27.7%
10,000,001 + 5 0.7% 109,301,209 54.7%
Total without treasury shares 712 100.00% 186,639,230 93.3%
Treasury shares   0.00% 13,360,770 6.7%
Issued shares total 712 100.00% 200,000,000 100.00%

2017 and 2018


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 2017 and 2018, there have been some fluctuations during the period. The closing price of the year 2017 was ISK 250.50 which represented Eimskip’s market capitalization based on outstanding shares at year-end 2017 in the amount of ISK 46.8 billion, the equivalent of EUR 373.9 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 16 March 2018 was ISK 234.50 per share with market capitalization based on outstanding shares in the amount of ISK 43.8 billion, equal to EUR 356.7 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 6.80 per share on 19 April 2017. The total dividend payment amounted to ISK 1,269.1 million, which represented 48.3% of net earnings for the year 2016. The paid dividend was equivalent to EUR 8.6 million.

The Board of Directors proposed to the Annual General Meeting 2018 a dividend payment of ISK 6.80 per share in 2018, amounting to a total of ISK 1,269.1 million or EUR 10.2 million, which represents approximately 61.0% of net earnings for the year 2017.


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, a general presentation on Eimskip, share information, news releases and investor contacts.

Growth Strategy

Eimskip’s strategy is to grow, both organically and externally, to increase shareholder value.

The Company’s sailing system in the North Atlantic has been going through changes in recent months in order to increase its capacity and reliability, to lay stronger foundation for further organic growth. The Company’s forwarding operations have mainly been growing organically and through strategic accretive acquisitions of specialized forwarding companies in various countries.

The Company’s strategy is to use its strong financial position for external growth by making accretive acquisitions that create synergies, further strengthening the Company’s performance and increasing shareholder value. The Company has increased its leverage by issuing additional debt for its recent investments. The plan is to further increase debt in relation to new investments, which will increase the leverage but still maintain a strong balance sheet.

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 2016 and 2017, Eimskip entered into partnerships and invested in several companies, 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.

Investments and partnerships in 2016 and 2017

    Acquisition of a 90% share in a specialized forwarding company in Rotterdam in the Netherlands in October 2016.
    Acquisition of an 80% share in a specialized reefer logistics company with offices in Antwerp, Belgium and Sao Paulo, Brazil in January 2017.
    A cooperation agreement regarding potential sharing of capacity was signed in January 2017 with Royal Arctic Line, the national carrier of Greenland. The potential cooperation is subject to confirmation from the Icelandic Competition Authority.
    A contract was signed with CSTC and Guangzhou Wenchong Shipyard Co., Ltd. in China on building two 2,150 TEU ice class Polar Code container vessels for Eimskip. Expected delivery of the vessels is in the middle of 2019.
    Acquisition of a 51% share in Container Services International in Boston, USA, a company specialized in container trading, in April 2017.
    Acquisition of a 75% share in a specialized forwarding company with offices in Århus, Denmark and Bangkok, Thailand in June 2017.

Risk Management and Risk Factors


Risk management is the process of analyzing and assessing 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 is 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.

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 are to 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. It has also defined its strategic priorities for the year 2018, as described under Strategic Priorities 2018. 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 financial risk factors, including currency risk, risk related to availability of funding, interest rate risk, liquidity risk, credit risk, tax risk, fuel price risk, risk related to the financial reorganization of A1988 hf. and risk in relation to potential amendments to International Financial Reporting Standards (IFRS).

Some of the financial risk factors are addressed as follows.


Eimskip is exposed to currency risk on sales, expenses and borrowings that are denominated in currencies other than the functional currencies of the Company and its entities. The majority of the Company’s revenue and assets, and of its obligations and interest-bearing debt, are denominated in currencies other than the ISK. The subsidiaries use the local currency where they are based, except Eimskip Ísland ehf., where the functional currency is the EUR.

As can be seen from the graphs below, the revenue and expenses of Eimskip provide, to a certain degree, a natural currency hedge. The Company believes that the natural currency balance of its operations provides hedging and is investing in some external hedging instruments, such as derivatives. When planning for large investments in a non-EUR currency, due consideration is given to whether hedging is prudent. Decisions on this are made on a case-by-case basis.

Assets and liabilities in the balance sheet are mostly denominated in EUR or the relevant operating currency of the entities. The mismatch of other non-operating currencies on the balance sheet is mainly related to two currencies, the ISK and the USD, as is shown in a table under note 18 in the Consolidated Financial Statements 2017.




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 118.9 million at the end of 2017, which represents 17.9% of the Company’s revenue.


The supply and demand of fuel is unpredictable and price fluctuations are based on events that 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 5.6% of Eimskip’s expenses in 2017. 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 Company is also investing in some hedging instruments to minimize further the fuel price risk. 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).