Chairman of the Year 2009 Iceland
Vilhjálmur Thorsteinsson, CCP

Vilhjálmur Thorsteinsson received the award 27th of May from Trade Minister Gylfi Magnusson at the PwC office.

Mr Thorsteinsson has been Chairman of the Board in CCP for 2 years, and the difficult 2008 is overcomed by increase in turnover and profits.
CCP is an online/offline playing company whose financial results over the last two years have been above average, with a 75% increase in turnover from 2006 by a merger in the USA.

99% of the business comes from customers in Europe, Australia, North America, Russia and China thus decreasing the company’s overall financial risk.

Finding the best Chairman is based on 13 pre set criteria, and data from a market survey with 35 questions among board members.

Vilhjálmur Thorsteinsson has provided strong leadership in CCP through its rapid growth.
He runs meetings efficiently and effectively by prioritizing the right cases, drawing conclusions and formulate decisions. He engages board members and management to draw in each person’s skills and knowledge. He provides a framework for annual evaluation of management. He works hands-on with management in cases where his own skills and personal network are of value to the company and shareholders. He provides good counsel on shareholder rights and guides decisions toward what is best for shareholders (not merely what is correct procedure for shareholder rights).

He is an excellent leader and mentor for the CEO. He is mature and show authority as a chairman. Vilhjálmur is very respected for his personal integrity.

Through serving only on 3 boards in private enterprises, Vilhjálmur shows a very strong overall commitment to the board work at CCP.

The other persons at the board are:
Board members: Birgir Mar Ragnarsson, David Fialkow, Sigurdur Olafsson, Stephen Wieck

The share of women at the board is 0%.

Vilhjalmur Thorsteinsson, 44 years, elected beginning of 2007, he has been an entrepreneur and investor for 25 years in the information technology and telecommunication business. He currently serves on several boards Verne Holding, Teton Capital and Höfdl. He has a college degree in science/physics.

CCP was founded in the summer of 1997 with the goal of becoming a leading massively multiplayer game company. With the launch of EVE Online (the worlds largest virtual gaming universe where space flight is the path to all commerce, communication and conflict) in May 2003, CCP has established itself as one of the leading companies in the field, winning numerous awards and receiving critical acclaim worldwide. In November 2006 CCP merged with White Wolf Publishing in the USA, the second largest developer of offline roleplaying, strategy and collectable card games.
In May 2009 the company reached 300.000 subscribers. Total revenues reached $ 46,7 mill in 2008 an increase of 24%. In 2006 the revenues were $ 26,3 mill. Profit before tax increased 16% to $ 5,2 mill in 2008. Shareholders equity is $ 18,8 mill or 43%.
CCP has headquarters in Iceland, United Kingdom, China and USA.

The award is funded by: PricewaterhouseCoopers Iceland, Lysi Iceland and BoardNews.no Norway

Contact info:Chairman of 2009
Vilhjálmur Thorsteinsson, vt@extrada.com

Jury leader: Board analyst Gunnar Eckbo, +47 92024576, post@styreinfo.no 

Jury members :

Left: Managing dir. Ragnar Thorsteinsson, PwC

Right: Dosent Einar Gudbjartsson, Iceland University
 

Gunnlaugur S Gunnlaugson, Chairman Lysi and managing dir. Aslaug Palsdottir was not present.

 
The thank you speech of Chairman of the Year 2009 Vilhjalmur Thorsteinsson:

Minister of Commerce, distinguished members of the jury, ladies and gentlemen,
I am deeply honored to receive this award of the title of Chairman of the Year, for my work as chairman of the board of CCP Games. Even though it could be observed that any Icelandic company simply surviving through 2008 would probably have a good chance of putting its chairman on a Top-10 list of candidates this year, in actual fact it was a great year for CCP.
For those of you who may not be familiar with CCP Games, let me do a quick recap of its key facts. It was founded in 1997 to create multiplayer online games, what we now like to refer to as virtual worlds. Six years ago, in May 2003, the company launched its first game, EVE-Online, which is set in space in the distant future. That game now has 300,000 subscribers who each pay 15 dollars or 15 euros a month to participate. CCP had revenues last year of just over 46 million dollars and projected revenues this year of close to 60 million dollars. Translated to „icelandic króna“ using the current dollar „exchange rate“, that would be around 6 billion ISK last year and 7,5 billion ISK this year. Profit last year was 5 million dollars after tax.
CCP employs 380 people, of which 220 are in Reykjavík, 100 in Atlanta, and 60 in Shanghai, and is hiring more people as we speak. The company sees itself as a multi-national, multi-cultural citizen of the world, that just happens to have its headquarters in Iceland – the land of story-telling and virtual world creativity all the way from Snorri Sturluson to Halldór Laxness to Arnaldur Indriðason to movies, Björk, Sigur Rós, Latibær – and CCP.
I have been involved in the Icelandic information and communication technology industry since 1983, when I founded a software company with my business partner Örn Karlsson, whom I still work with. Over the course of over a quarter of a century, I have been acquainted with many companies, as an employee, as a manager, as a shareholder, board member, and chairman of the board. I have been on the boards of startups and large companies, unlisted and public, in good times and bad. I have seen examples of well functioning companies as well as of companies that were in pretty bad shape – to say the least in some cases.

In early 2003, the founders and entrepreneurs of CCP Games asked me to join the company‘s board as their representative. I did not really know them beforehand, but they knew that I had a dual background of software development on one hand and board duties and business aspects on the other hand. I got to know the company better and immediately saw that not only was CCP developing what would evidently be the future form of entertainment, but that the company had a very strong, very unique culture. Ambition was very high, there was an uncompromising commitment to quality products and superior aesthetics, and the team was determined to achieve World Domination in its field. I liked everything I saw, decided to say yes to joining the board, and have not looked back since.
The company has close to 300 shareholders, but has not offered any new shares to the public since 2002. After changes in the shareholder group in 2006, I became chairman of the board, working closely with representatives of other large shareholders in the board. In late 2006, the Boston-based private equity fund General Catalyst Partners bought a significant share in the company in the secondary market and has supported the company‘s strategy and its management with great enthusiasm.

There are several keys to CCP‘s success, but the most important ones are a clear, consistent, no-compromises long-term strategy, and a tremendously capable team, headed by CEO Hilmar Veigar Pétursson. With such an amazing executive team, the role of the board and its chairman consists mostly of staying out of the way and giving the CEO the room he needs to manoeuver.

That said, my experience with CCP is consistent with my experience elsewhere: what matters most is to build a close-knit group of board members and executives who have built mutual trust and respect. If that is in place, a natural order of things and a logical division of tasks and duties will follow. It is more important to look for good team dynamics than to appoint superstar individuals, for instance.
CCP‘s culture is strong, and is built on four core values: We are fearless, we stand united, we pursue excellence, we practice transparency. Such values cannot simply be dictated by committe or by installed by fiat. They have to be lived and breathed by everyone in the company, including the board and its chairman, or they are not credible. Also, the values are truly validated only when there is a crisis or a severe test facing the company. Will it then live up to its values, or are they empty talk?

In the case of CCP, the Icelandic banking crisis put us in such a position at the end of last year. All of a sudden, the salaries of Iceland-based employees, many of whom are foreigners, went down by 30-50% compared to previous levels, in real currency (meaning dollars or euros). Suddenly, we were paying people far less than their peers in comparable companies in Europe or the U.S. Our management swiftly came up with the only logical thing to do according to our values: offer our Iceland-based employees to switch their salary into euros, based on the average exchange rate in 2008. Almost everybody took up the offer, and CCP had lived up to its promise of unity, fearlessness, transparency and excellence.

Another lesson learned from experience is that executive management is by nature rather on the aggressive side, looking for growth and willing to take risks. This is normal and to be expected, within reason. The role of the board, however, is to be a careful guardian of the long-term health of the company and of all stakeholder interests. This means being able to evaluate management‘s ideas and to form an informed opinion on risks. The board should then have the gravitas to say no to those ideas that are not within the company‘s profile of acceptable risk. The flip side of this is that the board should be careful to communicate with shareholders, for instance at annual general meetings and through the annual report, exactly which risks the company is taking and willing to take, versus those that the company should not be taking. Only with this risk awareness can shareholders and prospective investors evaluate the company correctly as an investment case.

This is perhaps best illustrated by an example. In Iceland over the last few years, the Central Bank has been trying to cool the economy by raising interest rates. In response, most larger companies moved their financing, to significant degrees, into foreign currency, even though revenues remained largely in króna. This means that shareholders of these companies were in effect holding two instruments: (a) an operating company with its cash flows, and (b) a pretty risky forward contract that was long the Icelandic króna and short foreign currencies. As it turned out, the loss on instrument (b) killed instrument (a), leaving shareholders with nothing. I will posit that may shareholders, especially smaller ones, had no idea that their investment was in reality structured like this.

Going forward, I believe boards will be seen as much more important watchdogs and risk controllers for companies, and that shareholders will increasingly scrutinize the composition of the boards of the companies they invest in, with this in mind. They will be looking for experienced board members with sound and proven ethics, a thorough grasp of business fundamentals and low tolerance for nonsense. Boards will need to take a longer-term view, in terms of overall strategy, compensation policies, risk management, and when balancing all stakeholder interests – including those of employees, customers, suppliers, and society at large. And of course, good old common sense should never be out of style.

I would like to conclude by expressing my thanks to the nomination committee and to my fellow board members at CCP, who by the way must have written some pretty amazing BS about me in their evaluations. Again, I am deeply honored to receive this award and dedicate it to the wonderful World Domination team at CCP.