Following the resignation of six out of seven members of the board of directors, the shareholders of FL-Group elected a new board at an extraordinary shareholder meeting on Saturday.
The only remaining director is the chairman, Hannes Smárason. He was re-elected both to the board and as chairman.
(See also Iceland Review, Daily News, July 1 “Changes at FL-Group?“; July 2 “One man show at FL-Group?“; July 5 “New board at FL-Group?“)
Joining him on the new board are Einar Ólafsson chairman of cargo airline Bláfugl, recently acquired by FL Group; Baugur CEO Jón Ásgeir Jóhannesson, now facing multiple charges in Iceland for alleged violations of the tax and commercial code; former strip-joint operator Magnús Ármann; Sigurdur Bollason, son of Bolli Kristinsson, an owner of a local retail fashion store; Skarphédinn Berg Steinarsson, a business associate of Jón Ásgeir Jóhannesson; and Thorsteinn Jónsson, chairman of the local Coca Cola bottler and distributor Vífilfell. Alternates are Kevin Stanford, co-founder of fashion retailer Karen Millen; and Smári Sigurdsson, the father of Hannes Smárason.
Under the headline “Board did not discuss investments” Fréttablaðið reported on the shareholder meeting Sunday.
Fréttabladid describes how outgoing director Inga Jóna Thordardóttir explained the reasons for her resignation at the shareholder meeting. “I am not comfortable continuing to serve on the board under current management and governance practices,” she said. She mentioned three issues that needed to be addressed in order to ensure responsible governance. The respective roles and responsibilities of the chairman and the CEO must be clarified; all material investments by the company must be discussed by the board before they were entered into; and the company must articulate a clear investment strategy guided only by the interests of the company. “The company is listed, and we must not violate the public’s trust. That trust is maintained by observing a certain code of conduct,” she said.
Inga Jóna is a long-time member of the Independence Party and an elected member of the Reykjavík City Council; she is also the wife of finance minister Geir H. Haarde.
Fréttabladid quotes the chairman, Hannes Smárason, saying that the market capitalization of FL-Group had doubled over the past 18 months and that he would continue to work as he had before.
Vidskiptabladid reported Wednesday last week in a cover story that the resignations of the six outgoing members of the board were prompted by share investments of ISK 5 billion that had not been referred to the board. The largest single investment was for a 2 per cent share in the Icelandic bank Íslandsbanki, financed by investment bank Straumur. The purchase of five new jets in addition to ten ordered in January also caused concerns. According to Vidskiptabladid, the outgoing directors resigned because they “no longer felt comfortable being responsible vis a vis the shareholders for the way the company conducted its business.”
Daily Morgunblaðið covers the shareholder meeting on page 6 in today’s paper. “Substantial departure from governance rules” reads a prominent headline of the main story. In parallel with Fréttabladid, Morgunbladid describes the criticism voiced by Inga Jóna Thordardóttir at the shareholder meeting. “When it became evident that there was no chance of changing the management and governance practices, I felt unable to continue to serve on the board and resigned,” she said. “Two of my colleagues had already resigned, and three other directors, and two alternates, decided to sell their shares shortly thereafter and move on,” said Inga Jóna Thórdardóttir to Morgunbladid.
On the same page under the headline “Criticism ignored”, Morgunbladid reports that the chairman did not attempt to address any of the criticisms articulated by of his former colleague Inga Jóna Thórdardóttir at the meeting, nor did anyone else present respond to her remarks. The chairman did however say that he was convinced that the new directors would contribute substantially to the continued growth and development of FL Group and that he was looking forward to working with the new board. The company would continue to expand abroad and in Iceland and would continue to engage in “independent investment projects” on both fronts.
