Governance Information • Mar 3, 2017
Governance Information
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This Corporate Governance Statement of Apetit Plc has been drawn up in accordance with the Finnish Corporate Governance Code 2015 of the Securities Market Association. The Corporate Governance Statement has been considered by Apetit Plc's Board of Directors and is issued separately from the Board of Directors' report. The company's auditors have confirmed that the Corporate Governance Statement has been issued and that the description it contains of the main features of the internal control and risk management systems pertaining to the financial reporting process is consistent with the financial statements.
Apetit Plc complies with the Finnish Corporate Governance Code 2015 published by the Securities Market Association, which came into effect on 1 January 2016.
The company does not follow recommendation 5 concerning the election of the Board of Directors. Recommendation 5 of the Corporate Governance Code states that the general meeting shall elect the members of the Board of Directors. Under Apetit Plc's Articles of Association, however, the Supervisory Board elects the members of the Board based on the proposals of the Nomination Committee, and decides on their remuneration. The company has chosen to deviate from the recommendation because the Supervisory Board, as the body that oversees the company's Board of Directors, is best placed to assess the composition of the Board of Directors and the attributes required of Board members.
The company deviates from the Corporate Governance Code recommendation (no. 9) on the composition of the Board of Directors, which states that both sexes shall be represented on the Board. Although the company considers it important that its Board of Directors should have a diverse composition, it has been necessary to deviate from the recommendation because in the selection process it was emphasised that candidates should have experience of the retail trade and of primary production. In the future, the company will put more emphasis on the search for representatives of both sexes for membership of the Board of Directors.
The Corporate Governance Code is publicly available on the website of the Securities Market Association at www.cgfinland.fi.
Under Apetit Plc's Articles of Association, the Supervisory Board decides the number of members of the Board of Directors and their remuneration based on the proposals of the Nomination Committee, and elects the members of the Board of Directors.
In accordance with the Articles of Association, Apetit Plc's Board of Directors consists of a minimum of five and a maximum of seven members. The Articles of Association do not limit the number of terms served by members of the Board of Directors nor is the Supervisory Boards decision-making power in the election of members of the Board of Directors restricted in any other way.
In the period up to 28 April 2016, Apetit Plc's Board of Directors comprised the six members elected by the
Supervisory Board on 15 April 2015. Lasse Aho, Esa Härmälä, Aappo Kontu, Tuomo Lähdesmäki, Veijo Meriläinen and Niko Simula formed the Board of Directors during 1 January–28 April 2016.
At a meeting held on 28 April 2016, the Apetit Plc Supervisory Board decided to elect six members to the Apetit Plc Board of Directors. Lasse Aho, Esa Härmälä, Aappo Kontu, Seppo Laine, Veijo Meriläinen and Niko Simula were elected as members of the Board of Directors.
Veijo Meriläinen, b. 1952, M.Sc. (Agric.), eMBA Principal occupation: Merive Oy, President Chairman since 2015, Deputy Chairman since 2013, member since 2012 CEO of Apetit Plc until 15 March 2015 Share ownership 31 December 2016: 2,702 shares
Lasse Aho, b. 1958, M.Sc. (Soc.) Principal occupation: CEO, Olvi plc Member since 2015 Share ownership 31 December 2016: 3,011 shares
Aappo Kontu, b. 1952, M.Sc. (Tech.) Principal occupation: Valor Partners Ltd, Senior Advisor Deputy Chairman since 2015, Chairman since 2013, Deputy chairman 2012, member since 2004 Share ownership 31 December 2016: 7,223 shares
Esa Härmälä, b. 1954, M.Sc. (Agric.) Principal occupation: Metsähallitus, General Director 2014–2016 Member since 2014 Share ownership 31 December 2016: 1,915 shares
Principal occupation: Professional board member Member since 2016 Share ownership 31 December 2016: 2,065 share
Tuomo Lähdesmäki, b. 1957, M.Sc. (Tech.), MBA Principal occupation: Boardman Ltd, partner, 2002– Member 2013–2016 Share ownership 31 December 2016: 3,000 shares
Niko Simula, b. 1966, L.L.M. with court training Principal occupation: farmer Member since 2015 Share ownership 31 December 2016: 1,368 shares
The company's Board of Directors has performed an evaluation of the independence of the Board's members in relation to the company and in relation to the major shareholders, in accordance with recommendation 10 of the Corporate Governance Code.
The evaluation found that all the Board members are independent of the company and of significant shareholders as referred to in the Corporate Governance Code recommendation.
The rules of procedure of the Board of Directors describe the following
The general function of the Board of Directors is to direct the operations of the company in such a way that in the long run the amount of added value for the capital invested is maximised, taking into account at the same time the expectations of the different stakeholders. The Board of Directors also monitors on a continuous basis the demands placed by shareholders on the Board of Directors and the general development of ownership policy.
For the purpose of performing its functions the Board of Directors:
Based on proposals presented by the CEO, the Board of Directors:
defines the company's dividend policy
approves the annual operating plan and budget on the basis of the strategy, and supervises their implementation
The Board of Directors draws up an operating plan for itself for the ensuing 12 months. The plan includes a schedule of meetings and, for each meeting, the most important issues for discussion.
The Board of Directors assesses its performance annually through a self-evaluation, and the evaluation results are submitted to the Supervisory Board for its information. The evaluation results are taken into consideration in the
preparation of proposals for the composition of the new Board of Directors.
The Apetit Plc Board of Directors convened 10 times in 2016. One of the meetings was held by written procedure. The meeting attendance rate of members was as follows: Veijo Meriläinen 100% Lasse Aho 100% Esa Härmälä 88.9% Seppo Laine 100% Tuomo Lähdesmäki 100% Aappo Kontu 100% Niko Simula 100%
The Board of Directors has elected an Audit Committee from among its members. The Chairman of the Committee, established in August 2016, is Seppo Laine and the members of the Committee are Esa Härmälä and Aappo Kontu. The Committee convened once in 2016. All members attended the meeting.
financial statements and the consolidated financial statements and on the Group's financial reporting,
In accordance with the Articles of Association, the Supervisory Board comprises a minimum of 15 and a maximum of 18 members elected by the general meeting. In addition, the personnel choose from among its members a maximum of four Supervisory Board members at a time, and each of these members has a personal deputy. The members' term of office ends at the close of the third Annual General Meeting following their election.
The Supervisory Board elects the members, chairman and vice chairman of the Board of Directors, and decides on their remuneration in accordance with the preparation of the Nomination Committee.
The Supervisory Board is also responsible for supervising the corporate administration, issuing instructions to the Board of Directors, issuing an opinion on the financial statements, the Board of Director's report and the auditors' report, and other duties that are prescribed for it in the Limited Liability Companies Act.
In the period up to 31 March 2016 the Supervisory Board consisted of 18 members elected by the general meeting. On 31 March 2016, the Annual General Meeting decided to select 18 members to the Supervisory Board.
Harri Eela, b. 1960, wood-products industries technician, Sales Director
Chairman of the Supervisory Board since 2014, member since 2012
Marja-Liisa Mikola-Luoto, b. 1971, M.Sc. (Agric.), farmer Deputy Chairman of the Supervisory Board since 2011, member since 2005
Jaakko Halkilahti, b. 1967, farmer Member since 2011
Jussi Hantula, b. 1955, farmer Member since 1995
Laura Hämäläinen, b. 1975, M.Sc. (Agric.), farmer Member since 2009
Aki Kaivola, b. 1960, M.Sc. (Agric.), farmer Member since 2015
Risto Korpela, b. 1949, M.Sc. (Econ. & Bus. Adm.), commercial counsellor Member since 2007
Jonas Laxåback, b. 1973, M.Sc. (Agric.), Secretary General Member since 2013
Mika Leikkonen, b. 1963, farmer , agrologist Member since 2008
Ilkka Markkula, b. 1960, farmer, agrologist Member since 2003
Jari Nevavuori, b.1966, M.Sc. (Agric.), Product Manager, farmer
Member since 2012
Pekka Perälä, b. 1961, M.Sc. (Admin.), CEO Member since 2016
Markku Pärssinen, b. 1957, M.Sc. (Agric.), Secretary General Member since 2012
Petri Rakkolainen, b. 1966, engineer, Managing Director, farmer
Member since 2014
Timo Ruippo, b. 1968, Agricultural Technician, farmer Member since 2013
Veli-Pekka Suni, b. in 1964, farmer, Bachelor of Natural Resources
Member since 2016
Johanna Takanen, b. 1973, BBA, Managing Director Member since 2015
Mauno Ylinen, b. 1965, M.Sc. (Agric.) Member since 2005
Jari Heiskanen, b. 1979, shop steward Member since 2015 Deputy member Kirsi Turunen
Timo Hurme, b. 1959, shop steward Member since 2015 Deputy member Päivi Hakasuo
Mari Saarinen, b. 1982, shop steward Member since 2015 Deputy member Marika Palmén
Heikki Vesanto, b. 1949, shop steward Member since 2012 Deputy member Kirsi Roos
The Supervisory Board convened four times in 2016. The average attendance rate of members was 80.2%.
The Supervisory Board's Nomination Committee, which prepares the names for election to the Board of Directors, consists of two members chosen by the Annual General Meeting, the chairman of the Supervisory Board, the deputy chairman of the Supervisory Board and the chairman of the Board of Directors, in accordance with the Articles of Association. The Nomination Committee is chaired by the Supervisory Board's chairman, and in his/her absence, by the Supervisory Board's deputy chairman.
The Nomination Committee has the task of preparing proposals for the Supervisory Board on the number of members of the Board of Directors, the names of the members, chairman and deputy chairman of the Board of Directors and the remuneration payable to them. The Committee's tasks also include searching for successor candidates to replace members of the Board of Directors, as necessary. The Committee asks shareholders with significant voting power for their views concerning the proposals being put to the Supervisory Board.
In 2016 the Nomination Committee convened three times to discuss matters pertaining to the Committee's tasks. The average attendance rate of the Committee's members was 100%.
Harri Eela, b. 1960, wood-products industries technician, Chairman of the Apetit Plc Supervisory Board
Sauli Lähteenmäki, b. 1960, agricultural engineer
Veijo Meriläinen, b. 1952, M.Sc. (Agric.), eMBA Apetit Plc Board Chairman
Marja-Liisa Mikola-Luoto, b. 1971 Deputy Chairman of the Apetit Plc Supervisory Board
Jorma Takanen, b. 1946, B.Sc. (Chem. Eng.)
Juha Vanhainen, b. 1961, M.Sc. (Tech.) Share ownership 31 December 2016: 12,500 shares
It is the CEO's duty to direct the operations of the company according to the instructions and provisions issued by the Board of Directors and to inform the Board about the development of the company's business operations and financial situation.
The CEO is also responsible for arrangement of the day-to-day management of the company and for seeing that the company's accounts are in compliance with the law and that its financial affairs have been arranged in a reliable manner.
The Group's Corporate Management is chaired by the CEO of Apetit Plc. Its members are:
Johanna Heikkilä, b. 1962, M.Sc. (Econ & Bus. Admin) HR Director Share ownership 31 December 2016: 0 shares
Eero Kinnunen, b. 1970, M.Sc. (Econ & Bus. Admin) Vice President, strategic projects Share ownership 31 December 2016: 750 shares
Anu Ora, b. 1973, M.Sc. (Econ & Bus. Admin.) Vice President, Food Business Share ownership 31 December 2016: 0 shares
Asmo Ritala, b. 1958, LL.M. Corporate Counsel Share ownership 31 December 2016: 0 shares
Sami Saarnio, b. 1973, M.Sc. (Econ & Bus. Admin.) Chief Financial Officer Share ownership 31 December 2016: 0 shares
Kaija Viljanen, b. 1952, M.Sc. (Econ & Bus. Admin.), eMBA Director of Grains and Oilseeds business Share ownership 31 December 2016: 0 shares
The Corporate Management does not exercise powers based on law or the Articles of Association. The Corporate Management is an advisory body appointed by Apetit Plc's CEO and has the task of discussing Group-wide development projects and Group-level principles and procedures as necessary. The CEO is responsible for choosing the members of the Corporate Management.
Apetit Plc's Board of Directors confirms the operating principles for the Apetit Group's internal control and assesses the state of internal control at least once a year.
Internal control refers to all the operating methods, systems and procedures with which the company's management seeks to ensure efficient, economical and reliable operations. Internal control comprises financial and other control. At Apetit, internal control is performed by the company's management and by all other personnel.
Risk management as part of internal control refers to the identification, assessment, restriction and monitoring of risks arising in business activities and risks that are materially related to this.
Apetit Plc's Board of Directors is responsible for arranging and maintaining sufficient and effective internal control within the Apetit Group.
As part of the arrangement of internal control and risk management, the company's Board of Directors regularly monitors the results and operating risks of the Group and its business units, and decides on the reporting, the procedures and the qualitative and quantitative indicators for assessing the efficiency and profitability of operations. The Group's Board of Directors confirms annually the Group's risk policy, risk management principles and key risk limits.
To ensure implementation of the Group's ownership policy towards the Group companies and to monitor the effectiveness of internal control, the boards of directors of the main Group companies include one or more members of the Group's Corporate Management. Group-level risk management and financial reporting are performed on a
centralised basis in the Group Administration, independent of the different business activities. The boards of directors of Group companies are responsible for the highest level of management duties related to the internal control of their respective companies. The operating organisation's management in each of the Group companies is responsible for the implementation of internal control and risk management in line with the pre-determined principles and operating guidelines, and for reporting on the company's operations, risk-bearing ability and risk situation in accordance the Group's management system.
The main principles of internal control observed within Apetit Plc and the Group companies are:
The basis for internal control is the function-specific line organisation that is further divided into departments, units and teams, as necessary. The organisational units are allotted defined tasks and responsibilities required for the company's operations. The task of the operating organisation's management, i.e. the managers of the Group's business areas and operations, is to set quantitative and qualitative targets for the various areas of the business in accordance with the business plan approved by the Board of Directors. For the units, decision-making bodies and people operating within the framework of the organisation there are separately defined decision-making and operating powers set out in work and job specifications, as well as obligations to report to one's superiors or otherwise to a higher organisational level. The task of the operating organisation's management is to ensure that those working under them are familiar with their own duties, and the management are required to create the right conditions for their personnel to be able to perform their work and achieve the targets.
Significant commitments or other actions deemed to carry risks are subject to the approval of the Group's Board of Directors. Business units are responsible for formulating proposed decisions and for putting decisions into effect. Reporting on the implementation of decisions is made in connection with the management reporting.
Business activities and processes are guided within the confines of operating guidelines and descriptions, which are monitored to ensure they are complied with and kept up-to-date. All decisions taken are documented and archived. An essential aspect of risk management is the performance of daily controls in the operating chains and processes.
The internal and external risks of Apetit Plc and the Group companies that could have an adverse effect on achieving business targets are identified, assessed regularly and reported quarterly to the Group Board of Directors. The risks are contained and the confining limits are monitored.
The Group Administration's risk management has the task of monitoring, measuring and reporting risks and of maintaining, developing and preparing risk management principles for the Board of Directors' approval, and of drafting procedures for use in risk assessment and measurement. Roles and responsibilities are defined in Apetit's risk management policy and risk management principles, which are approved by the Group's Board of Directors.
The basis for business and other activities is provided by the accounting, information and business IT systems. The parent company and the Group companies have an IT strategy in accordance with currently assessed needs and sufficient and appropriately organised IT systems. The IT function ensures that the company's data resources can be utilised in the planning, management, execution and monitoring of the company's business.
The operating organisation's management has the primary responsibility for ensuring the implementation of practical measures for internal control. The management must constantly monitor the operations it is responsible for and must take the necessary development measures if action contrary to guidelines or decisions or action that is otherwise ineffective or inappropriate is observed. In a transparent and effective organisation the entire personnel are all responsible not only for the appropriate discharging of their own duties but also for the fluency of operations with the rest of the organisation.
Internal control is supported by appropriate reporting that allows monitoring of operations, results and risks. Achievement of the business targets and developments in the Group's financial situation are monitored with the aid of a Group-wide management system. The Group's accounting principles, controls and responsibilities are described in the Apetit Group's accounting manual. Reporting guidelines and timetables have been drawn up in writing for monthly reporting and preparation of interim reports and annual financial statements. The company's financial management unit constantly monitors the business units' reporting and develops and produces guidelines on the content of reporting, taking into account the needs of internal control. The Group prepares financial information for publication, complying with the international financial reporting standards (IFRS). Interim reports and annual financial statements are reviewed by the Group's Board of Directors and are subject to its approval.
The business units update the longer term financial estimates each year. The annual budgets are prepared on the basis of these strategic figures. The Group's Board of Directors assesses and approves the business units' annual budgets. In addition, on a quarterly basis or more often, the business units update the profit and balance sheet estimates to cover at least the ensuing 12 months.
Monthly reporting and related analysis for budgets and estimates constitute a key element of Apetit's management system and internal control. Financial figures are assembled from the business units' data systems every month for the Group's joint accounting system.
The outturn information and up-to-date estimates are reviewed monthly at Group level. The management system comprises the actual profit and balance sheet information, the key figures and the written management report of those responsible for the businesses. The management report covers the factors that affected the results given in the month's report, the measures planned for the immediate term and an assessment of the operating profit for the current quarter and the full year, consisting of best case, probable and worst case scenarios.
The Group CEO and members of the Corporate Management are issued with the reports, and the Group's Board of Directors is issued with a summary for the Group and summaries of the data for each business unit.
The business units' management groups examine their own financial outturn data at least once a month and compare them with budgets and estimates, and also examine the results of the various units' monitoring measurements used for business management purposes and compare them with estimates and targets, and the reasons for any significant discrepancies between these. In addition, the business units' results, estimates and state of business are reviewed at business unit review meetings, attended by members of Group management and those responsible for the business units based on the agenda in question. Per business unit, these meetings are held once a month or less frequently.
The internal audit unit functions objectively and independently in support of the Board of Directors, the CEO and Group Administration, for the purpose of assessing and developing the level of internal control in the Group's different units by providing an independent and objective
Remuneration, insider issues
assessment and advisory service for risk management and monitoring processes within the organisation.
Internal audit is performed on the basis of a pre-determined plan. The internal audit is overseen by the Audit Committee, which submits the annual audit plan to the Group's Board of Directors for its approval.
The internal audit is performed by an external service provider.
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