Icelandic Whaling CEO Defends Suspended Vessel

Hvalur, whaling company,

In a recent interview with RÚV, Kristján Loftsson, CEO of Iceland’s only whaling company, defended a recent incident that led to the suspension of one of his vessels. Kristján cited mechanical failure and criticised the Icelandic Food and Veterinary Authority (MAST) for its lack of expertise and procedural lapses.

Untenable situation

In a recent interview with the news programme Kastljós, Kristján Loftsson, CEO of Iceland’s sole whaling company, addressed questions concerning an incident that resulted in the suspension of operations for one of his whaling vessels.

Kristján explained that the incident on September 7 was accidental, involving a hook entangled in a winch. This mechanical failure left the harpooned whale alive and attached to the hook, with the crew unable to either reel it in or release it. “It was an untenable situation with no better course of action available,” Kristján stated.

He further argued that a video capturing the incident was misleading. “The footage, taken by an inspector from the Directorate of Fisheries, employed by the Icelandic Food and Veterinary Authority (MAST), utilised zoom features that distorted the actual distance of the whale from the vessel,” Kristján said. He contended that the whale was out of range for immediate euthanisation, making the suspension of the vessel’s activities based on the video unjust.

Kristján criticised MAST’s expertise, stating, “To my knowledge, the organisation lacks individuals with a comprehensive understanding of fishing.” He estimated that approximately 70% of MAST’s staff consists of general office workers and veterinarians. Kristján also claimed that MAST had failed to consult with the Directorate of Fisheries before making the decision to suspend operations, thereby violating its own protocols.

Fulfilling the quota impossible

When questioned about the likelihood of the suspension being lifted with only ten days remaining in the hunting season, Kristján Loftsson responded, “I’m loathe to peer into the brains of MAST’s employees. I refuse to do it.”

Kristján concluded by revealing his intention to apply for a new whaling licence once the current one expires. He also disclosed that the company has thus far hunted fifteen whales, approximately 10% of the total quota of around 160, acknowledging that fulfilling the quota is unlikely. While he confirmed experiencing significant financial losses, he declined to specify the amount.

New Íslandsbanki CEO Aims to Restore Trust: “Challenging Times”

CEO

The new CEO of Íslandsbanki, Jón Guðni Ómarsson, has stated that his priority is to restore trust in the bank. In an interview with RÚV yesterday, he admitted that the mood among the bank’s employees, following recent events, and in light of the public discourse, has been fraught.

“Challenging times”

On Wednesday morning, Birna Einarsdóttir, CEO of Íslandsbanki, announced her decision to step down. Birna’s resignation came on the heels of Íslandsbanki agreeing to pay a fine of ISK 1.2 billion [$8.8 million, €8.1 million] due to “serious and systematic violations” during the sale of the state’s 22.5% stake in the bank in March of last year.

At the same time, Íslandsbanki announced that Jón Guðni Ómarsson would be replacing Birna as CEO. “Naturally, these are very challenging times,” Jón Guðni told RÚV yesterday. “We need to throw ourselves back into our daily work and focus on taking care of our customers as well as we can.”

As noted by RÚV, Jón Guðni has been with Íslandsbanki for nearly two decades and served as the finance manager since 2011. Jón Guðni told RÚV that he did not participate in the sale of the government’s share in the bank. “I was introducing the bank to investors. Regarding the sale itself and the bank’s involvement in it, I did not take part.”

Jón admitted that the mood among employees, following recent events, and in light of the public discourse, has been fraught. “It has, of course, been a big shock for the employees and some customers, as well. It’s something we take very seriously and will take time to address; that’s the task that lies ahead.”

Rebuilding trust a priority

Jón Guðni admitted that he had not expected Birna Einarsdóttir to step down following the bank’s settlement with the Financial Supervisory Authority of the Central Bank (FME). This having been the case, however, it was now necessary to start repairing the bank’s reputation.

“First of all, we need to throw ourselves into implementing these changes that are requested in the agreement with the Central Bank.” One of the first issues under consideration is whether further personnel changes need to be made, although “no decisions have been made,” according to Jón Guðni. Other changes are yet to be revealed.

According to Jón Guðni, the priority is to restore customers’ trust in the bank. “First of all, it will take some time. We just need to dedicate ourselves to the project and implement these requirements requested by the Central Bank. All in all, we must show humility and roll up our sleeves,” Jón Guðni observed.

As noted by RÚV, FME’s report concluded that many of the things that went wrong at Íslandsbanki during the sale were to be ascribed to the bank’s corporate culture. Jón Guðni believes that a lot can be learned from the report while maintaining that the bank’s corporate culture is strong: “The risk and corporate culture in the bank is very strong in many respects. We simply need to ensure that this culture extends fully to all of the bank’s activities.”

Birna Einarsdóttir, CEO of Íslandsbanki, Resigns

Íslandsbanki bank

In a press release sent to the media last night, Birna Einarsdóttir announced her decision to step down as the CEO of Íslandsbanki. Birna’s resignation comes on the heels of Íslandsbanki agreeing to pay a fine of ISK 1.2 billion [$8.8 million, €8.1 million] due to “serious and systematic violations” during the sale of the state’s 22.5% stake in the bank in March last year, RÚV reports.

Shouldering responsibility

In a press release sent to the media at 4 AM tonight, Birna Einarsdóttir, CEO of Íslandsbanki, announced her decision to step down. The decision was made with “the bank’s interests in mind” and in order “for peace to be attained following Íslandsbanki’s agreement with the Financial Supervisory Authority of the Central Bank (FME).”

The resignation, Birna states, is her way of shouldering responsibility for her role in the affair. “The discussion has been unsparing and various politicians have frequently called for my resignation; I wish them well in their work,” Birna stated.

While reluctant to leave Íslandsbanki, she highlighted her long-standing commitment to the bank throughout her career, emphasising that the settlement with the Financial Supervisory Authority only pertains to a single project and the rest of her tenure has been successful.

“Under my management, the bank’s equity has increased by almost ISK 150 billion [$1.1 billion, €1.1 billion], and more than 110 billion [$810 million, €740 million] have been paid in dividends to shareholders,” Birna stated.

In her concluding remarks, Birna expressed a bittersweet farewell to the bank. She extended well wishes to her colleagues and expressed her hope that her decision to step aside would foster a sense of peace within the company and among the individuals she holds dear.

Jón Guðni Ómarsson will succeed Birna as the CEO of Íslandsbanki.

Birna’s full statement was posted on Vísir this morning.

National Pact Required to Fight Ongoing Inflation

The Governor of the Central Bank has stated that a national pact may be needed in order to overcome persistent inflation, RÚV reports. Whether or not the country is able to leave indexed loans behind, depends, to some extent, on the nation itself. The Finance Minister agrees with these ideas.

Depends on the nation to some extent

As noted by RÚV, the Governor of the Central Bank, Ásgeir Jónsson, was quoted in an article in Markaðurinn, on June 17, 2020, as saying that “an increase in the issuance of non-indexed loans would be a major turning point and would mean that indexation would die out.” He believes that it depends, to some extent, on the nation itself whether or not indexed loans would become a thing of the past:

“I had envisioned that we could have a nominal interest loan system, which I believe has many advantages over indexed loans. Based on both lower macroeconomic and a more active monetary policy. But it’s quite obvious that if we don’t succeed in keeping inflation down, it’s difficult to adopt such a system,” Ásgeir told RÚV yesterday.

Ásgeir stated that it was possible to change the terms of non-indexed loans to accommodate borrowers when instalments rise. He believes that a new national pact may be needed to overcome persistent inflation. When asked what such a consensus would entail and who would participate, Ásgeir responded thusly:

“A National pact is, naturally, based on parties within the labour market, as was the case when the first national pact was struck around 1990, regarding realistic targets for purchasing power, and so on. Such a pact is also predicated on a certain level of trust between the parties – and government involvement.”

Minister of Finance agrees

The Minister of Finance, Bjarni Benediktsson, told RÚV yesterday that he agreed with the Governor of the Central Bank regarding this national pact against inflation, stating that such efforts had long been discussed within parliament.

After the economic crisis in 2008, economic stability was tackled by the government. A consultation forum was established with the aim of increasing prosperity, where it became clear that various reforms were necessary; the Central Bank had been afforded better management tools, public finances were cleaned up, and actions were taken to strengthen the framework for economic stability.

“There is no question that the stakes are high, regarding, for example, the next round of wage negotiations and our plan to improve the state finances over the coming years. It is of great importance, first of all, for households; second, for the economy as a whole, and this matters, also, in regard to the state treasury and the local authorities, too. It’s simply really important to keep inflation down; interest rates will follow suit and capital costs will decrease,” Bjarni Benediktsson told RÚV.

Bjarni added that inflation expectations were out of control and that the market had “lost faith that inflation could be contained.” The Central Bank’s primary role was to bring inflation down to 2.5%, however, Bjarni noted, it could not tackle the issue alone. The labour market played a big role, given, especially, that there was currently no wage agreement with government employees and that it would not be long before contracts on the public market would expire again. Bjarni also noted that the excessive salaries of CEOs would need to be addressed.

“I completely agree [that CEO salaries need to be curbed]. In terms of taxation, we have a special tax bracket for such income and there is no doubt that we do not want to see wage increases in the upper brackets given the circumstances. Such increases are absolutely the worst solution in a situation where we are trying to create harmony and convince everyone to pitch in.”

Play Launches Flights to the US Next Spring

PLAY airline airplane Keflavík flight

The Icelandic airline Play will begin offering flights to the US next spring. The airline will add three new aircraft to its fleet next year.

Flights to the east coast starting in April

As reported by Business Insider, the Icelandic airline PLAY has received initial approval from the US Department of Transportation to operate flights to the US.

Tickets to the US went on sale yesterday. Play will begin flying to Washington/Baltimore on April 20 and Boston starting May 11. It will thereby become the third carrier to offer flights to the US; Icelandair offers flights to over a dozen destinations in the States, and the US airlines Delta and United are currently offering flights to the States in the summer.

Low prices, high demand

Speaking to RÚV yesterday, Play’s CEO Birgir Jónsson suggested that the airline would continue to focus on low prices – “a comfortable, clean, and secure way of transport,” as he remarked in his interview with Business Insider, as opposed to “an experience.”

“It’s always been our aim to operate according to this model,” Birgir said to RÚV. “We’ve seen that what matters most in this business are ticket prices and, therefore, operational costs. We believe that we can secure our place in the market by offering the lowest prices.”

Birgir added that he was not afraid of Icelandair responding to Play’s foray into the US market by lowering its prices – that lower prices would benefit all consumers. According to the flight schedule, Play will offer daily flights to the abovementioned destinations in spring, leaving Iceland in the afternoon and returning on the following mornings.

Great expectations

As has been widely reported, the COVID-19 pandemic has had a profound impact on the airline industry. Birgir remains hopeful, however, that the state of affairs vis-a-vis the pandemic will have improved by next summer.

“I think most of us expect the tourism industry to return to normal next summer, but like before, we must proceed cautiously; we’ll begin by offering flights to two new destinations and go from there.”

With the addition of the three new aircraft next year, Play’s fleet will number six aeroplanes, and four new aircraft are expected to be added in 2023. When asked about the impact of COVID-19 on the airline’s operations, Birgir stated that it’s had its effect but that bookings have been steady:

“All in all, we’re happy with the reception and how things have progressed.”

Women Hold Less than 35% of Leadership Positions in Large Companies

Ten years after a law was enacted to rectify gender imbalances on corporate boards, women still only fill less than a quarter of CEO and chair positions in Icelandic businesses, according to Statistics Iceland.

The proportion of women on boards for companies with more than 50 employees was just under 35% last year, having increased around one per cent from the year before. Per a law that was passed ten years ago, boards should never be less than 40% female—or less than 40% male for that matter. Women have not achieved the aimed-for 40% of corporate leadership positions since the law went into effect.

In smaller companies, where there are fewer than 50 employees, women make up an even smaller percentage of leadership positions, or 26% last year.

Hulda Ragnheiður Árnadóttir, chair of the Association of Women in Industry, told RÚV that the percentage of women in leadership positions increased significantly after the law was first passed, but little has changed since then and she believes that little will change in the absence of penalties.

Share of women in boards of directors by enterprise size 2009-2019
Statistics Iceland.

New Bill Proposes Fines on Companies with Gender-Imbalanced Boards

Prime Minister of Iceland Katrín Jakobsdóttir.

A new parliamentary bill would impose fines on Icelandic companies that do not fulfil a gender quota on their corporate boards, mbl.is reports. The bill was presented by Left-Green MP Lilja Rafney Magnúsdóttir and has the support of Prime Minister Katrín Jakobsdóttir, who says she believes it will be welcomed by the business community.

According to the terms of the bill, which is currently under consideration in Alþingi, a daily fine of between ISK 10-100,000 ($80-790/€75-730) would be levied against companies whose corporate boards are not comprised of a legally mandated gender balance – namely that no gender may have less than 40% representation. The fine would be assessed until the company submitted an updated notice to the Register of Corporations showing a more equal gender balance.

According to recent reports, the percentage of women on corporate boards in Iceland is just over 30%, despite the fact that a higher rate is mandated by law and has been since 2010. It has also become clear that laws on gender quotas have not had the hoped-for spillover effect and led to more women entering executive or senior management positions.

“I think parliament should approve this bill,” the Prime Minister remarked during her speech at the Iceland Chamber of Commerce’s business conference in Harpa on Thursday. “…I believe that it will be welcomed by the business community.” Indeed, earlier in the conference, when Chamber of Commerce Chair Katrín Olga Jóhannesdóttir asked all attendees who were committed to being part of the solution when it comes to equality issues in the industry to stand, nearly every person in attendance did so.

“We all know that men and women are equal,” the Prime Minister concluded. “The fact that there are not more women executives [in Iceland] is a waste of human resources.”

Minister of Finance Calls for Immediate Review of Bank CEO Salaries

Bjarni Benediktsson

Minister of Finance and Economic Affairs Bjarni Benediktsson has requested an immediate review of CEO salaries at state-owned banks, Kjarninn reports. In a letter sent to the office of Icelandic State Financial Investments (BR) on Thursday, Bjarni stated that the decision of Landsbankinn and Íslandsbanki to raise their CEOs’ salaries “has already had a considerably negative impact on their reputations…as well as sending unacceptable messages” to those union members—specifically hotel cleaning staff—currently involved in ongoing wage disputes.

Bank CEO salaries have come under fire from many quarters after it was learned that Landsbankinn CEO Lilja Björk Einarsdóttir received significant pay raises twice in one year. She received her first raise of ISK 1.2 million [$10,045; €8,831] in July 2017, and then another increase of ISK 550,000 [$4,604; €4,047] in early 2018, making her total salary ISK 3.8 million [$31,809; €27,966] a month. Meanwhile, as of January 2017, Íslandsbanki CEO Birna Einarsdóttir was making ISK 4.2 million [$35,162; €30,912] a month, on top of which she also received ISK 200,000 [$1,674; €1,472] in perks and additional benefits.

In response, Már Guðmundsson, governor of the Central Bank of Iceland, warned against excessive pay raises in a recent video, saying they would inevitably lead to increased interest rates and unemployment in the country. The Confederation of Icelandic Enterprise (SA) also weighed in, with director Halldór Benjamín calling the Landsbankinn bank council’s decision to raise Lilja Björk’s pay twice in one year “tone deaf.”

In his letter to BR, Bjarni stated that this current state of affairs requires “…a prompt review of salary decisions and preparation for changes in current wage policies, which will be submitted at the upcoming general meeting of the banks.” The letter continues by saying that the banks have not respected the state’s requests as far back as January 2017 that restraint and prudence be exercised in respect to all salary decisions.

Both Landsbankinn and Íslandsbanki’s board of directors have responded on their salary decisions in recent weeks. In a letter published on their website, Landsbankinn’s board noted that the criticism they’d received was “understandable,” given that they are owned by the state, but that the decision to raise Lilja Björk’s salary twice was due to the fact that “it was clear that [her salary] was lower than that of the highest executives at other large financial institutions.” They asserted that their CEO salaries had been much lower than those of their counterparts for “many years,” and thus the recent wages were more about establishing wage parity. In its own letter, Íslandsbanki noted that Birna’s salary has decreased ISK 600,000 [$5,025; €4,414] since 2016, but commended her abilities as a CEO, calling her a “strong leader” and similarly stating that the bank’s wage policy requires that CEO salaries be competitive with those of other banks.

Bjarni stated that both banks’ interpretation of the standards for salary increases is “narrow and one-sided” and hasn’t been put into the necessary context. “Trust and confidence must be able to prevail between those who’ve been entrusted with the management of important corporations and those authorities who are responsible for their management as owners.”

This current letter is Bjarni’s second on the matter; he first sent a letter to the two banks about their salary decisions on February 12.

All Executive Positions in Stock Market Companies Held by Men

All of the executives for all of the companies listed on the Icelandic Stock Exchange are men, RÚV reports. Fourteen men have been hired as CEOs at these companies in the last seven years, while not a single woman has been hired to an equal position in same time period.

There are eighteen companies listed on the Icelandic Stock Exchange (also known as Nasdaq Iceland). Eighteen men are employed as executives or directors there, but no women. There are twelve men in management positions at these companies, while six women act as managers for Arion Bank, Marel, Hagar, Síminn, Sjóva, and VÍS.

It’s a status quo that people such as Katrín Olga Jóannesdóttir, the chairman of the board at the Iceland Chamber of Commerce, lament in light of Iceland’s professed commitment to correcting gender imbalances and addressing equality issues. It’s also notable that when Katrín Olga took over as the Chamber of Commerce’s chairman last year, it was the first time since 1914 that a woman had held the position. At a recent conference on commerce and business, she took the opportunity to call attention to women’s status in the business world.

“I think it’s sad, I must admit. Business opportunities are being missed,” she remarked. “This is, of course, the tradition—men are normally the role models. And maybe it’s normal, too, that when women are knocking on the door, they don’t want to move over.”

Iceland established a gender quota by law six years ago, and yet women still only have executive roles at less than 10% of the country’s 400 largest companies.

“It’s not because of the Icelandic business world that Iceland is number one on equality issues,” continued Katrín Olga. “It’s because of the public sector.”

Katrín Olga believes that more men need to be involved in the process of overcoming the gender deficit. “It’s so easy to dismiss women who talk about equality issues because a woman is, in a way, talking about herself,” she said. “It pains me as the chairman of the board at the Chamber of Commerce, because we are working from the premise that private enterprise and individual freedom is what matters. Which is why I think that we need to be a role model in this area.”

 

Former EFTA Chairman Takes Over as Temporary CEO of Reykjavík Energy

Helga Jónsdóttir, a former chairman of the European Free Trade Association (EFTA) is temporarily stepping in as CEO of Reykjavík Energy, RÚV reports. Helga’s two-month appointment was unanimously approved by the board. She is taking over for Bjarni Bjarnason, who temporarily stepped down while the organization conducts an investigation of its “workplace culture.”

Bjarni Bjarnason has been implicated in a still-unfolding workplace harassment scandal which originally centered around the “inappropriate behaviour” of Bjarni Már Júlíusson, the former CEO of ON Power, which is a subsidiary of Reykjavík Energy. Bjarni Már has been fired from his position, while Bjarni Bjarnason, his former boss, has been accused of knowingly turning a blind eye to his behavior.

According to former employee Áslaug Thelma Einarsdóttir, she spoke up about the CEO’s misogynistic behaviour over a period of 18 months and was fired for doing so. In a Facebook post, Áslaug claimed that Bjarni Bjarnason had known about her several complaints for months but done nothing about them because Bjarni Már ‘had been running the company so well’.