0ERU Icelandair Group Hf

Electronic Meeting - Live stream from Hilton Reykjavik Nordica - 4.00 pm

The Board of Directors has decided that Icelandair Group‘s Annual General Meeting on 3 March 2022 will be held electronically, cf. Article 4.6 of the Company‘s Articles of Association. Shareholders who intend to participate electronically in the meeting shall notify the Company with 5 days notice thereof and submit written questions regarding the agenda or documents to be presented at the meeting which they require answers to, cf. Article 4.4 of the Company‘s Articles of Association. Registration at the meeting takes place at www.icelandairgroup.com/agm. Registered participants will receive information via e-mail prior to the meeting on how to participate and cast their votes together with a link to a live stream of the meeting. The meeting will be live streamed from Hilton Reykjavik Nordica but will be open for physical attendance subject to restrictions on public gatherings and prior registration. Voting and other discussions will be electronic only.

AGENDA

1. The Board of Director‘s report on Icelandair Group‘s operations in 2021
2. Confirmation of Annual Accounts and decision on the handling of profit or loss for the financial year
3. Decision on payments to Board Members
4. Proposal of the Board of Directors regarding the Remuneration Policy
5. Report and proposal from the Nomination Committee regarding Board Membership
6. Election of Board Members
7. Election of Auditors
8. Share-Based Incentive Program
9. Changes to the Articles of Association
10. Authorization to purchase Treasury Shares
11. Other lawfully submitted matters

PROPOSALS

1. Annual Accounts (Item 2)

The Board of Directors proposes to the Annual General Meeting that the Annual Accounts of the Company for 2021 will be approved.

2. Dividends payments (Item 2)

The Board of Directors proposes to the Annual General Meeting that no dividends will be paid for the 2021 financial year.

3. Remuneration to Board Members (Item 3)

The Board of Directors proposes to the Annual General Meeting that remuneration to Board Members and Sub-Committee Members shall remain unchanges: Each Board Member will receive ISK 330,000 per month, the Chairman will receive ISK 660,000 per month, the Deputy Chairman will receive ISK 495,000 per month, Sub-Committee Members will receive ISK 120,000 per month, the Chairman of the Audit Committee will receive ISK 275,000 per month and the Chairman of other sub-committees will receive ISK 150,000 per month. The Board of Directors will decide on compensation for the members nominated by shareholders in the Nomination Committee. Compensation will be paid on hourly basis.

4. Remuneration Policy (Item 4)

The Board of Directors proposes to the Annual General Meeting that the attached updated Remuneration Policy will be approved. The main changes are as follows:

• More thorough description of the total compensation scheme of the Company and main components of performance assessment.
• More thorough description and rationale regarding base salaries, short-term incentives (bonus scheme) and long-term incentives (stock options).
• Terms and conditions of stock option programs have been added.
• Description of the Company’s Equal Pay System has been added.

The updated Remuneration Policy is a part of the meeting documents. The main reason for the proposed changes to the Remuneration Policy is to provide shareholders with more detailed information on the Company’s compensation scheme and performance assessment. The updated policy reflects the Company’s efforts to attract and retain exceptional employees and align their interests with the interests of the Company and the shareholders. Furthermore, terms and conditions have been added for a stock option program for the Company’s key employees provided that such program will be approved on a shareholders’ meeting.

5. Nomination Committee (item 5)

Icelandair Group’s Nomination Committee proposes that the following candidates, listed in alphabetical order, will be elected to the Board of Directors of Icelandair Group hf. on the Company’s Annual General Meeting:

1.  Guðmundur Hafsteinsson
2.  John F. Thomas
3. Matthew Evans
4. Nina Jonsson
5.  Svafa Grönfeldt

6. Auditors (Item 7)

The Board of Directors proposes to the Annual General Meeting that KPMG ehf. will be the Company’s auditors.

7. Share-Based Incentive Program (Item 8)

The Board of Directors proposes to the Annual General Meeting that a  long-term incentive program will be approved.

The objective of the performance based incentive program is to strengthen the Company by incentivizing its key employees to deliver exceptional performance, set clear standards for expected performance and significantly reduce the likelihood of such employees leaving the Company on a short notice. Furthermore, the program would assist the Company in attracting and retaining good key employees worldwide and thus strengthen the competitiveness of the Company. This would both be benificial for the Company’s interests short-term and long-term to secure exceptional employees in the key employee positions going forward. Such long-term incentive program would also be beneficial to the shareholders since it would align the interests of shareholders with those of the key employees which would not solely be compensated by their annual base salary but also based on their performance and the success of the Company. Short-term and long-term incentive schemes also require an effective performance evaluation and the company will strengthen that process in 2022 by implementing a new and more robust evaluation system. The new evaluation system is intented to include more regular reviews, be less subject to discretionary bias and to set clear standards for expected performance. The estimated cost of the incentive  program is USD 3.6  million based on the Black-Scholes model. However, the program would not require any direct cash outflow from the Company since new shares would be issued in order to fulfill the Company’s obligations in relation to the incentive program instead of purchase of treasury shares.

The Board of Directors proposes that the terms of the long-term incentive program will be as follows:

Type of share-based incentive program: Stock options

Participants: The Executive Committee and other selected key employees.

Total number of share options: The total maximum amount of shares granted under the program would be 900 million during a three year period following the approval of the long-term incentive program on the Annual General Meeting 2022.

Granting: Granting would be yearly and based on the performance of the participants in the preceding year. No more than 250 million shares will be granted under the program in 2022.

Vesting time: Three years from the granting date.

Exercise period: One year following the three years vesting period. Exercise periods are two per year in April and October for 15 days following the disclosure of the respective Q1 and Q3 financials.

Exercise price: The exercise price will be based on the share price in Icelandair Group at closing of NASDAQ Iceland on granting date with the addition of 3% annual interests. The exercise price shall be adjusted for any future dividend payments decided after the granting date.

Other key terms and conditions:

• The Remuneration Committee shall have sole discretion on granting to each participant based on performance assessment.
• Vested stock options which will not be exercised within the exercise periods will become invalid.
• Participants are required to hold shares, corresponding to the net profit gained from the options (after tax) measured in total share value as decided by the Board of Directors and the Remuneration Committee.
• The options are valid only if the holder is still employed by Icelandair Group or its subsidiaries on the exercise date. The Remuneration Committee can waive this condition under certain circumstances.
• If a change of control occurs, in accordance with Article 100 of the Icelandic Takeovers Act No. 108/2007, any outstanding stock options shall vest.
• The Company shall not grant any kind of loans or guarantees on relation to the stock option program.
• Rights and obligations under the stock option program cannot be assigned to a third party.
• The Company has the option to reclaim, in whole or in part, remuneration that has been based on false, misleading, insufficient or incorrect data, or if the recipient acted in bad faith in respect of other matters, which resulted in too high remuneration or remuneration which would otherwise not have been granted.
• The Company will issue new shares following the exercise periods corresponding to the total number of exercised shares. The Annual General Meeting 2022 approves that the Board of Directors will have authority to issue new shares in accordance with the terms of the long-term incentive program.  

8. Changes to the Articles of Association (Item 9)

The Board of Directors proposes the following changes to Article 15 of the Articles of Assocation. It is being proposed that the current Article 15.1, which has lapsed, is replaced with the following provisions subject to approval of Item 9.

“The Company’s Board of Directors is authorized to increase the share capital of the Company in stages by up to ISK 900,000,000 shares of nominal value. This authorization shall only be utilsed to fulfil terms under stock option agreements granted pursuant to the Company’s Share-Based Incentive Program approved by the Company’s annual general meeting held on 3 March, 2022. The shareholders of the Company will not have pre-emptive subscription rights to shares issued pursuant to this provision. Share prices and subscription shall be in accordance with the Share Based Incentive Program and stock option agreements entered into pursuant to that. This authorization shall be valid until 31 December 2027.”

1. Authorization to purchase Treasury Shares  (Item 10)

The Board of Directors of Icelandair Group proposes to the Annual General Meeting that the Company will be authorized to purchase in the next 18 months up to 10% of its own shares in accordance with Article 55 of the Icelandic Companies Act No 2/1995 in order to set up a formal buy-back programme in accordance with the provisions of Article 5 of MAR (Regulation (EU) No 596/2014 of the European Paliament and of the Council), which has been transposed into Icelandic legislation with Act No 60/2021, as well as the provisions of the Commision Delegated Regulation (EU) 2016/1052 which contains regulatory technical standards for the conditions applicable to buy-back programmes.    

All the current board members have confirmed that they intend to seek renewed mandate from shareholders at the meeting. Those who intend to run for the Board of Directors shall notify the Board of Directors of their candidacy at least 7 days before the meeting. A request for proportional or cumulative voting shall be presented to the Board of Directors at least 5 days before the meeting. 

Shareholders have the right to put items on the agenda of the Annual General Meeting and submit proposed resolutions, provided a request thereof has been received by the Company no later than 10 days prior to the meeting via email to compliance@icelandairgroup.is.

For further information:

Ari Guðjónsson, General CounselEmail: ari@icelandairgroup.is or Tel: +354 661-2188

Attachments

• Remuneration Policy 2022
• Nomination Committee Report 2022

Icelandair Group Hf (LSE:0ERU)
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Icelandair Group Hf (LSE:0ERU)
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