Hf. Eimskipafélag Íslands - Company Announcement

- Claims of Baldur Gudnason, former CEO of Hf. Eimskipafélag Íslands, dismissed

The District Court of Reykjavík today ruled in favour of Eimskip regarding
claims brought by Baldur Gudnason, the company's former CEO, for the payment of
wages for two years up to the end of February 2010. The ruling is based on the
fact that Baldur abused his position and, as a result, his severance agreement
should be invalidated. 

Baldur requested the recognition of his rights with respect to Eimskip to full
wages, holiday pay and pension contributions from 1 May 2008 up to and
including 28 February 2010 on the basis of an annex to his employment contract.
Monthly payments would have amounted to approximately EUR 56,520 per month,
i.e. wages, holiday payment and pension contributions. Based on the current EUR
rate of exchange, this would have meant a payment of approximately ISK 10m a
month for just under 2 years. 

Eimskip based its request for the claim to be dismissed on the fact that
Baldur's employment contract had been cancelled and that he had acted
fraudulently in the preparation of the annex to the employment contract.
Furthermore, they countered the claim on the basis of Articles 33 and 36 of the
Contract Act, i.e. the dishonesty and unfairness displayed by Baldur. Finally,
the company also based its request for the claim to be dismissed on the fact
that prerequisites for the annex to Baldur's employment were no longer valid. 

The District Court agreed with Eimskip that Baldur had, against his better
judgement, abused his position and, as a result, that the agreement should be
invalidated on the basis of Article 30 of Act No. 7/1936, and upheld the
company's request for the claim to be dismissed.