Governance Information • Mar 10, 2016
Governance Information
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This Corporate Governance Statement of Apetit Plc has been drawn up in accordance with Securities Market Association's Finnish Corporate Governance Code 2015. 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 published by the Securities Market Association, which came into effect on 1 January 2016.
The company deviates from recommendation 5 of the Corporate Governance Code concerning the election of the members of the Board of Directors. Recommendation 5 of the Corporate Governance Code states that they shall be elected by the general meeting. 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. 8) 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. Persons who would already have attained the age of 68 at the time of being elected are not eligible for election to the Board of Directors. The Articles of Association do not limit the number of terms served by members of the Board of Directors nor is the Supervisory Board's decision-making power in the election of members of the Board of Directors restricted in any other way.
In the period up to 15 April 2015, Apetit Plc's Board of Directors comprised the six members elected by the Supervisory Board on 11 April 2014. Esa Härmälä, Aappo Kontu, Tuomo Lähdesmäki, Veijo Meriläinen, Samu Pere and Helena Walldén comprised the Board during 1 January – 15 April 2015.
At a meeting held on 16 April 2015, Apetit Plc's Supervisory Board decided to continue to elect six members to Apetit Plc's Board of Directors. The Board members elected were Lasse Aho, Esa Härmälä, Aappo Kontu, Tuomo Lähdesmäki, Veijo Meriläinen and Niko Simula.
Principal occupation: Merive Oy, President Chairman since 2015, Deputy Chairman since 2013, member since 2012 CEO of Apetit Plc until 15.3.2015 Share ownership 31 December 2015: 1,196 shares
Principal occupation: Valor Partners Oy, Senior Advisor Deputy Chairman since 2015, Chairman 2013-2015, Deputy Chairman 2012, member since 2004 Share ownership 31 December 2015: 2,387 shares
Lasse Aho, b. 1958, M.Soc.Sc Principal occupation: CEO, Olvi plc, 2004 member since 2015 Share ownership 31 December 2015: 2,053 shares
Esa Härmälä, b. 1957, M.Sc. (Agric.) Principal occupation: Metsähallitus, General Director Member since 2014 Share ownership 31 December 2015: 1,157 shares
Tuomo Lähdesmäki, b. 1957, M.Sc. (Tech.), MBA Principal occupation: Boardman Ltd, partner Member since 2013 Share ownership 31 December 2015: 1,657 shares
Niko Simula, b. 1966, Master of Laws Principal occupation: Farmer Member since 2015 Share ownership 31 December 2015: 610 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:
companies to be audited
Members of the Board of Directors are also entitled to have a matter of their choosing discussed by the Board by first notifying the chairman of this.
Based on proposals presented by the CEO, the Board of Directors:
management and personnel
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 Board of Directors has not elected any committees from among its members.
As the Board of Directors has not elected an audit committee from among its members, the Board itself is managing the audit committee duties laid down in recommendation 16 of the Corporate Governance Code.
In 2015, the Apetit Plc Board of Directors met 12 times. One of these meetings were conducted by telephone. The average attendance rate of members was 94,3 %.
In accordance with the Articles of Association, the Supervisory Board comprises a minimum of 15 and a maximum of 20
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.
Persons who have attained the age of 68 are ineligible for election to the Supervisory Board. 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 deputy chairman of the Board of Directors based on the proposals of the Nomination Committee, and decides on their remuneration.
The Supervisory Board's functions also include supervision of corporate administration, issuing instructions to the Board of Directors, issuing an opinion on the financial statements, Board of Directors' report and auditor's report, and other duties prescribed for it in the Limited Liability Companies Act.
In the period up to 25 March 2015 the Supervisory Board consisted of 18 members elected by the general meeting. On 25 March 2015, the Annual General Meeting decided to elect 18 members to the Supervisory Board.
Harri Eela, b. 1960, wood-products industries technician, Sales Director, Cursor Oy 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
Heikki Aaltonen, b. 1956, M.Sc. (Agric.), farmer Member since 2007
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, s. 1960, M.Sc. (Agric.), farmer Member since 2015
Risto Korpela, b. 1949, M.Sc. (Econ. & Bus. Adm.), Commercial Counsellor Member since 2007
Jonas Laxåback, s. 1973, M.Sc. (Agric.), Secretary General Member since 2013
Mika Leikkonen, b. 1963, farmer Member since 2008
Ilkka Markkula, s. 1960, farmer Member since 2003
Jari Nevavuori, b.1966, M.Sc. (Agric.), Product Manager, farmer Member since 2012
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 Esa Ruohola, b. 1946, farmer Member since 1998
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 Debuty member Kirsi Turunen
Timo Hurme, b. 1959, shop steward Member since 2015 Debuty member Päivi Hakasuo
Mari Saarinen, b. 1982, shop steward Member since 2015 Debuty member Marika Palmén
Heikki Vesanto, b. 1949, shop steward Member since 2012 Debuty member Kirsi Roos
The Supervisory Board met four times in 2015. The average attendance rate of members was 83.1 %.
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 2015 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 %.
Chairman Harri Eela, b. 1960, wood-products industries technician, Sales Director, Cursor Oy Chairman of the Supervisory Board
Veijo Meriläinen, b. 1952, M.Sc. (Agric.), eMBA Principal occupation: Merive Oy, President Apetit Plc Chairman of the Board of Directors
Sauli Lähteenmäki, b. 1960, agricultural engineer, dairy farm entrepreneur Principal occupation: Valio Pension Fund Chairman of the Board of Directors, Valio member of the Board of Directors Marja-Liisa Mikola-Luoto, b. 1971, M.Sc. (Agric.), farmer Deputy Chairman of the Apetit Plc Supervisory Board Jorma Takanen, b. 1946, B.Sc. (Chem. Eng.) Principal occupation: Sievi Capital Oyj, member of the Board of Directors
Juha Vanhainen, b. 1961, M.Sc. (Tech.) CEO of Apetit Plc since 16 March 2015 Share ownership 31 December 2015: 12,500 shares
Veijo Meriläinen, b. 1952, M.Sc. (Agric.), eMBA CEO of Apetit Plc until 15 March 2015 Share ownership 31 December 2015: 1,196 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 dayto-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 has a corporate management whose chairman is the CEO of Apetit Oyj and members are:
Johanna Heikkilä, b. 1962, M.Sc. (Econ. & Bus. Adm.) HR Director Share ownership 31 December 2015: 0 shares
Eero Kinnunen, b. 1970, M.Sc. (Econ. & Bus. Adm.) Chief Financial Officer, deputy CEO Share ownership 31 December 2015: 360 shares
Anu Ora, b. 1973, M.Sc. (Econ. & Bus. Adm.) Vice President, Food Business Share ownership 31 December 2015: 0 shares
Asmo Ritala, b.1958, OTK Corporate Councel Share ownership 31 December 2015: 0 shares
Kaija Viljanen, b. 1952, M.Sc. (Econ. & Bus. Adm.), EMBA Director of Grains and Oilseeds Business Share ownership 31 December 2015: 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. 2. Role of company boards in arranging internal control
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 the 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
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-todate. 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.
Responsibility for the effectiveness of internal control 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.
The monthly reporting and the 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 in Group-level results meetings, which are attended by the the Chief Financial Officer (CFO) and those in charge of the Group's accounting. 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, business unit's results, estimates and state of business are reviewed on business unit review meetings where participants are corporate management and responsible persons from the business unit based on the agenda in question. These meetings are held once a month or less frequently in the case of one business unit.
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 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 Group's CFO, who submits the annual audit plan to the Group's Board of Directors for its approval.
Internal audit reports annually in writing to the Apetit Plc Board of Directors on the audit findings and areas for improvement in internal control. Where necessary, the internal audit also reports on individual audit findings during the annual planning period to the Board of Directors.
The internal audit is performed by an external service provider, and KPMG Oy Ab was selected to perform the audit.
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