Ownership Policy
About the ownership policy
With a clear strategic direction from the owners, a well-defined role for the company, a clear mandate for the holders of ownership authority, the board of directors, and the CEO, a description of corporate governance requirements, along with a robust monitoring system, municipally-owned companies are provided with the basis to carry out specific activities for the public good.
A clear ownership policy seeks to clarify the role and responsibility of the owners and ensure their participation in decisions on important issues and strategy. In this way, the ownership policy is intended to ensure the democratic, transparent, professional, and efficient management of the company.
The ownership policy is a partnership agreement between the owners, and no changes shall be made to it except by their mutual agreement, approved by the municipal councils, and confirmed at an owners' meeting.
The ownership policy shall be accessible to the public and the media, including on the websites of Orkuveita Reykjavíkur and its owners.
1. Guiding Light
In its operations, Reykjavík Energy shall emphasise respect for the environment, responsible use of resources, and responsible use of funds. Reykjavík Energy acts with integrity and trust and exercises social responsibility in its operations. The company has the interests of the community at heart and treats nature, resources, and customers with respect. The owners want the company to be regarded as a reliable partner, a desirable place to work for and with, and for it to play a significant role in the community.
2. Role
Reykjavik Energy is an energy and utility company that lays the foundation for the quality of life in the municipalities it serves. It utilizes resources in a responsible, sustainable, and economical manner, respecting nature without infringing on the rights of future generations.
Reykjavik Energy carries out statutory utility projects and other projects in the municipalities of its owners and other municipalities in accordance with this policy.
Reykjavik Energy serves households, companies, and institutions within its service area in accordance with its statutory obligations and ensures the agreed-upon quality and security of supply for the company's products and services.
Reykjavik Energy shall ensure its customers service at a fair and competitive price.
3. Core Activities
The core operations of Orkuveita Reykjavíkur consist of the operation of water, heating, electricity, and sewage utilities, and the sale and production of electricity and hot and cold water. Orkuveita Reykjavíkur may utilize the company's expertise to participate in other utility operations, such as data transmission, provided that it serves the owners' objectives and the participation is approved by them.
4. Area of Operation
The main operational area of Reykjavík Energy is Southwest Iceland. Opportunities elsewhere are assessed based on the company's role, profitability, and risk, and must be confirmed by the owners before any commitments are made.
5. Corporate Governance
The corporate governance of Orkuveita Reykjavíkur shall ensure professionalism, efficiency, prudence, transparency, and accountability in its operations.
6. Strategy formulation
The Board of Directors shall submit a proposal for the company's strategy and vision, with an elaboration of metrics and a report for confirmation at a shareholders' meeting. The proposal shall cover the overall strategy and policy regarding:
- Dividend Policy
- Risk Policy
- Quality Policy
- Procurement Policy
- Gender Equality Policy
- Code of Conduct
- Remuneration Policy
- Human Resources Policy
- Policy regarding safety, health, and occupational safety
- Environmental and Resource Policy
- Information Technology Policy
- Information Security Policy
When preparing the strategy, the board shall consider the owners' priorities regarding financial objectives and profitability (6.1), risk (6.2), the environment and resource utilisation (6.3), and terms of employment (6.4).
The strategy for subsidiaries must be consistent with the current policy at any given time in the aforementioned matters.
6.1 Financial objectives
The company's board of directors and management must exercise prudence in operations and investments.
The dividend policy of Orkuveita Reykjavíkur shall provide its owners with a return on the capital invested in the company, in accordance with the risk involved in the company's operations and financing. The return on capital shall, at a minimum, exceed the company's cost of capital by an amount corresponding to a reasonable risk premium, in line with the operating environment of Orkuveita Reykjavíkur.
Reykjavik Energy shall implement metrics that show how the owners' required rate of return is met, taking into account their risk from guarantees related to the company. The required rate of return shall be analyzed by business segment, the risk of each business segment, and its financing. The Board of Directors' proposal and a report on profitability and financial metrics shall be submitted to an owners' meeting for confirmation.
The Board of Directors of Orkuveita Reykjavíkur shall submit a proposal to the owners' meeting regarding a dividend policy, which entails that dividends are, on average, paid out to the owners, provided that financial conditions are met, including that the company's financial strength is sufficient and that there is enough liquidity available for the company's operations and investments.
6.2 Operational risk
Reykjavik Energy must establish a risk policy to mitigate, as far as possible, the impact of external financial risk factors on the company's income, services, assets, and liabilities. Before making decisions on investments and financial commitments, Reykjavik Energy must assess the risks they may entail.
Reykjavik Energy must generally finance projects in the same currency as their expected revenues.
Commitments include, among other things, new loans, debt restructuring where loan terms differ from previous agreements, energy sales agreements, and the purchase of land or equipment. Commitments referred by the board to the owners must be accompanied by a detailed risk assessment.
Reykjavik Energy shall establish response plans to ensure, as far as possible, the security of the company's operations, services, and assets in the event of threats, such as those caused by natural disasters, accidents, or other reasons. Response plans shall be reasonably consistent with the civil protection plans of the state and municipalities in Reykjavik Energy's operating area and other security measures of public authorities.
6.3 Environment and Resource Utilisation
Reykjavik Energy shall strive to improve the utilisation of resources and supplies in accordance with the principles of sustainable development.
Reykjavik Energy shall annually calculate and make public an assessment of the value of resource utilisation by type of resource, regardless of whether they are owned by the company or others.
6.4 Terms of Employment
The Board of Directors of Orkuveita Reykjavíkur shall establish a remuneration policy for the company that entails moderation regarding the salaries and terms of employment of its staff. The salaries of executives shall be comparable to similar positions, taking into account, however, that the company is publicly owned. The terms of remuneration for executives and other staff of Orkuveita Reykjavíkur shall not be market-leading.
7. Communication and information
The owners of Orkuveita Reykjavíkur (Reykjavik Energy) wish to create an environment for the company's Board of Directors that enables it to carry out its duties at all times in the interest of the company and within the framework of the owners' policy. To this end, communication between the owners and the company shall follow formal channels, and efforts shall be made to direct it through general meetings and regular owners' meetings.
This places a significant duty of disclosure on Orkuveitan towards the owners covered by the joint ownership agreement.
Reykjavík Energy shall be a model for providing information to the public. Information about its operations shall be presented in such a way that general readers can get a clear view of them.
Those exercising ownership authority shall seek to promote informed and democratic debate on the affairs of Orkuveita Reykjavíkur within the municipal councils and at owners' meetings.
8. Decisions requiring shareholder approval
The following decisions of the board of directors shall be subject to the approval of the owners:
New commitments: If the amount of an individual new commitment by Orkuveita Reykjavíkur exceeds 5% of the book value of equity according to the most recent annual or interim financial statements, the commitment in question shall be submitted to the owners for approval before it is entered into.
Unusual and strategic decisions, along with risk assessments, shall be submitted by the board to the owners to enable them to evaluate these in accordance with their role as the responsible party.
Decisions on power plants or other utilisation of resources in undeveloped areas, as well as those projects that require an environmental impact assessment, whether the areas are owned by Orkuveita Reykjavíkur or others, are considered major and strategic decisions and shall therefore be referred to the owners.
Reykjavík, 25 April 2014.On behalf of the Municipality of AkranesOn behalf of the City of ReykjavíkOn behalf of BorgarbyggðRegína ÁsvaldsdóttirJón GnarrPáll S. Brynjarsson