Iceland’s Lífeyrissjóður Verzlunarmanna (LV), the pension fund for those working in retail, has written to listed Icelandic companies in which it holds shares to underscore the need for nomination committees to improve their reporting processes on who is running for board positions.

The letter aimed to encourage increased transparency regarding candidacies for the boards of directors of companies and support a “good” exchange of views and informed positions of shareholders in board elections.

LV has said it is well known that nomination committees are responsible for proposing the composition of the boards of most listed companies and as part of their work these committees invite and review candidate applications, assess their qualifications, communicate with potential board members, and ultimately present a proposal for the board's composition.

The fund believes the process offers several advantages in preparing for board elections at shareholder meetings.

The fund has held several meetings with nomination committees and representatives of listed companies to discuss board elections and evaluate candidates in recent years.

It said that a key topic of discussion was how to increase transparency in evaluating board candidates and ensure greater shareholder participation.

However, the fund said a concern was that candidates who express interest in the role but are not included in the nomination committee’s final proposal withdraw their candidacy before their names are made public.

This limits shareholders' ability to assess the committee’s proposals for the composition of the board, as well as to consider other candidates that may be better suited to the company's interests.

LV suggested that there may be several reasons for candidates withdrawing their applications.

Therefore, LV has called for nomination committees to review this procedure to increase transparency and provide shareholders with better information about all candidates, not just those selected by the committee.

The fund said that if this is successful, shareholders would have a “broader and more solid” basis for discussions about the board’s composition, both in the run-up to shareholder meetings and at the meetings.

LV said it hopes the companies’ boards of directors and their nomination committees will consider this and said it remains open to discussion on how to improve the board election process.

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