The proposals submitted at Annual General Meeting of Kaupthing Bank on Friday 16 March 2007 were approved.
1. The following proposal on dividends was approved:
The Board of Directors of the Bank proposes that shareholders be paid dividends amounting to ISK 10,366 million (EUR 118 million) for the operating year 2006, or ISK 14 per share, which corresponds to 12.2% of net earnings. The record date for dividends will be on the morning of 19 March 2007 in Iceland. The record date for dividends will be on 21 March 2007 in Sweden. The ex-date in Iceland and Sweden will be on 19 March 2007. The payment of dividends shall be effected on 28 March 2007 (29 March 2007 in Sweden). In other respects, reference is made to the Annual Accounts of the Company as regards the further disposal of profits and other changes to the Company's equity.
2. The following proposals on amendments to the Articles of Association were approved:
A) The following Paragraph shall form a new Paragraph 2 in Article 4 of the Articles of Association. The current Paragraph 2 which contains an authorisation to increase share capital by up to 49,100,000 shares or up to ISK 491,000,000 nominal value, shall be deleted.
"The Board of Directors of the Company is authorised to increase the share capital of the Company by up to ISK 1,500,000,000 nominal value through the subscription of up to 150,000,000 new shares. The current shareholders waive their pre-emptive rights to the new shares pursuant to Article 34 of Act no. 2/1995 on Public Limited Companies. The Board of Directors may, however, authorise shareholders in each instance to subscribe for the new shares, in part or in whole. There will be no restrictions on trading in the new shares. The new shares shall belong to the same class and carry the same rights as other shares in the Company. The new shares shall grant rights within the Company as of the date of registration of the increase of share capital. The Board of Directors of the Company shall determine more specifically how this increase will be executed, with reference to price and terms of payment. The Board of Directors shall also determine the stages in which the authorisation will be exercised. The Board of Directors of the Company is authorised to decide that subscribers pay for the new shares in part or in whole with other valuables than cash. This authorisation shall be effective until 16 March 2012, to the extent that it has not been exercised before that date."
B) The following new point, which shall be Point 5, shall be added to Paragraph 1, Article 13 of the Articles of Association. The numbering of subsequent points shall be altered accordingly.
"A proposal of the Board of Directors on a remuneration policy."
C) Following the words "annual accounts" in the second paragraph of Article 15 of the Articles of Association, the words "report of the Board of Directors, the Board's proposal on the remuneration policy" shall be added.
D) The following paragraph shall form a new Paragraph (Paragraph 5) in Article 15 of the Articles of Association: "If the Board of Directors has decided that a shareholders' meeting shall be held partly electronically, shareholders who participate electronically in the meeting shall submit questions on the agenda or submitted documents etc. related to the shareholders' meeting, not later than 5 days before the shareholders' meeting."
E) The following sentence shall be added to the third Paragraph of Article 19: "Information on the candidates shall be available at the Bank's office no later than two days prior to the shareholders' meeting."
3. The following proposal of the Board of Directors on a remuneration policy was approved:
The Remuneration Policy of Kaupthing Bank
The Board of Directors of Kaupthing Bank proposes that the AGM held on 16 March 2007 confirm the following Remuneration Policy of Kaupthing Bank:
I. General
In accordance with Act 2/1995 article 79a and rules on good corporate governance the Board of Directors of Kaupthing Bank shall approve the Bank's remuneration policy concerning wages and other payments to the Chief Executive Officer and other senior managers of the Company as well as its Directors.
The remuneration policy is binding on the Company's Board of Directors where it pertains to payments in the form of share certificates, call and put options, priority purchase rights and other kinds of payments which are linked to share certificates in the Company or the development of the price of shares in the Company. In other respects the remuneration policy is of guidance for the Company's Board of Directors.
II. Compensation Committee
The Board has nominated a Compensation Committee to advise the Board on matters relating to executive compensation and administration of the Company's incentive compensation and equity-based plans. The Compensation Committee reports its activities to the Board on a regular basis and makes such recommendations as the Compensation Committee deems necessary or appropriate.
This arrangement is in accordance with the guidelines from the Iceland Chamber of Commerce on Corporate Governance issued in 2005 and recommendations from UK Corporate Governance Committees on the Code of Best Practice.
III. Remuneration Policy
The Annual General Meeting of Kaupthing Bank held on 27 March 2004 confirmed the submitted policy from the Compensation Committee regarding employee stock options and the financing of employee share purchases.
The principal in compensating executives is to align the incentives of the executives with actions that will enhance long-term shareholder value. The continued growth and strong position of the Bank lie to a large extent in the Bank's ability to retain existing key employees and to attract new ones.
The key principles of the Compensation Committee are:
A. Key employees are regarded as corner stones in the continued growth of the Bank and its good standing.
B. Compensation to key employees must be attractive and competitive.
C. Option schemes for key employees are to be continued and financing to be provided in this context.
IV. Remuneration to Board Members
Board Members shall receive a fixed monthly payment in accordance with the decision of the AGM, as stipulated in article 79 of the Act no. 2/1995 on Public Limited Companies. The Board of Directors shall submit a proposal on the remuneration for a term of one year, taking into account the time board members spend on their duties, the responsibility involved and the Bank's operations in general.
V. The structure of salaries
Basic salaries
In accordance with the Bank's policy the Compensation Committee makes a proposal on the salaries paid to the CEO and the Executive Chairman. The proposal is based on an examination by the Committee of salaries paid to executives of European banks and information from external consultants.
The basic salary to other Managing Directors is determined by the CEO in consultation with the Managing Director of Human Resources taking into account the responsibility and the scope of the management position in question.
Bonuses
Bonus payments are only made when Kauphing Bank's required return on equity of 15% has been achieved. Bonus payments to others than the CEO and the Executive Chairman are determined by the CEO in consultation with the Executive Chairman of the Board of Directors and the Managing Director of Human Resources. A specific proportion of bonus payments above a certain amount will be linked to the price of the Bank's shares and payment deferred for three years. The payment is however subject to the basic condition that the employee remains employed within the group.
Option Schemes
To align the incentives of the employees with actions that will enhance long-term shareholder value, the Bank has enabled employees to purchase shares in the Bank. The Bank has in this context written call options, offered loans, according to general rules, to finance purchases, and in some cases written put options on shares sold.
The total put options and call options written towards employees can at any given time be up to 9% of issued shares in the Bank. The purchase or strike price in options shall be the market price on the date the options are written.
There are still two years left of the current option scheme with the Executive Chairman and the CEO. According to the scheme they are each entitled to 812,000 shares in 2007 and 812,000 shares in 2008 but on the recommendation of the Compensation Committee the Board of Directors of Kaupthing Bank recommends that the scheme be extended for three years, subject to the approval of the AGM. The amount is to be the same as in the current option scheme or 812,000 shares every year in 2009, 2010 and 2011. The price will be the market price on the date of the AGM 2007.
Termination or retirement payments
In general no additional retirement or termination payments to those stipulated in the employment contract shall be agreed upon in the case of termination. However special circumstances may lead to a separate termination agreement being concluded regarding retirement or termination payments.
4. The following persons were elected as members of the Board of Directors for the term of one year:
Board members:
1. Sigurdur Einarsson - United Kingdom, Executive Chairman of Kaupthing Bank hf. (First elected 2003).
2. Hjörleifur Jakobsson - Iceland, CEO of Ker hf. (First elected 2003).
3. Antonios P. Yerolemou - United Kingdom, Member of the Board of Directors of Bakkavör Group hf.
4. Ásgeir Thoroddsen - Iceland, Attorney to the Supreme Court of Iceland. (First elected 2003).
5. Bjarnfredur Ólafsson - Iceland, Attorney to the District Court of Iceland. (First elected 2003).
6. Brynja Halldórsdóttir - Iceland, CEO of Norvik hf. (First elected 2004).
7. Gunnar Páll Pálsson - Iceland, CEO of VR trade union. (First elected 2001).
8. Niels de Coninck-Smith - Denmark, CEO of Ferrosan A/S. (First elected 2005).
9. Tommy Persson - Sweden, CEO of Länsförsäkringar AB. (First elected 2002).
The following substitutes were elected:
1. María Sólbergsdóttir - Iceland, project manager at Kaupthing Bank.
2. Gudný Arna Sveinsdóttir - Iceland, CFO of Kaupthing Bank hf.
3. Martha Eiríksdóttir - Iceland, Head of Business Relations of Landsnet.
4. Margeir Daníelsson - Iceland, former CEO of the Co-operative Pension Fund of Iceland.
5. Thórdur Magnússon - Iceland, Chairman of the Board of Directors of Eyrir Invest ehf.
6. Panikos J. Katsouris - United Kingdom, CEO of Katsouris Brothers Ltd.
7. Hildur Árnadóttir - Iceland, CFO of Bakkavor Group hf.
8. Jónas Gudbjörnsson - Iceland, CFO of Ker hf.
9. Kristin Pétursdóttir - Iceland, economist.
5. The following proposal on remuneration of the Board of Directors for the term of one year was approved:
It is proposed that Board members receive ISK 400,000 per month and that the Executive Chairman receives ISK 800,000 per month. Remuneration to substitutes shall be ISK 400,000 for each Board meeting attended. In addition remuneration for Board members who serve on the sub-committees of the Board shall be ISK 150,000 per month to each member for their position on each committee.
6. The following proposal regarding election of an auditor for the next accounting year was approved:
It is proposed that KPMG Endurskodun hf. be elected the company's auditors and that Sæmundur Valdimarsson, certified auditor, perform this duty on behalf of the auditing company.
7. The following proposal on purchase of own shares was approved:
The Board of Directors, acting for the Bank, is authorised to purchase own shares in the Bank or to accept such shares as collateral. This authorisation shall be effective for 18 months from the date of the Annual General Meeting 2007 with the restriction that the total shares purchased or accepted as collateral shall not exceed 10% of the total shares in the Bank at each time. The price paid shall not be lower than 20% below, and not higher than 20% above, the rate at which the Bank's shares are priced on the Iceland Stock Exchange (OMX Iceland) or Stockholm Stock Exchange (OMX Sweden).
A corresponding authorisation granted by the 2006 Annual General Meeting is cancelled.
Further information:
Please contact Jónas Sigurgeirsson, Chief Communications Officer, tel. + 354 444 6112.
