Iceland’s largest pension fund GIldi has published a report on its shareholder policy work for 2024 and set out plans to continue its work on remuneration in 2025.

A key area of focus for 2024 was remuneration policy, as the pension fund believes there is a need for “continued restraint” in relation to clarity and appropriate metrics for performance-based payments.

In addition, the fund believes that too few companies prepare reports on the implementation of their remuneration policies.

During 2024, Gildi also took action on nomination committees, as it believes that all committee members on nomination committees should be elected at shareholder meetings and that board members should not sit on the committees unless specifically justified.

“It is still necessary to call for nomination committees to adequately justify the reasons for choosing a particular board and not to simply describe general qualifications and the final outcome,” the pension fund said.

Looking forward to 2025, Gildi will continue to work on improving corporate governance, focusing on three main areas: remuneration policies, nomination committees, and policies on important environmental and social issues.

Regarding remuneration policies, Gildi believes that they should take into account the long-term interests of the company.

“The need for incentive systems must be justified, which should be moderate and contain appropriate metrics. Boards of directors are encouraged to consider more diverse options than just stock options in this context, but in the fund's opinion, extensive stock option systems are generally not the best way in this context to align the interests of the parties,” it stated.

“Reports on the implementation of the remuneration policy should be published in a timely manner and shareholders should be informed of deviations from approved policies.”

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