Kesko Oyj — Proxy Solicitation & Information Statement 2020

Feb 14, 2020

Notice of Kesko’s Annual General Meeting

Notice of Kesko’s Annual General Meeting

Shareholders of Kesko Corporation are invited to the Annual General Meeting to
be held at Messukeskus Helsinki, Rautatieläisenkatu 3, Helsinki (Siipi
entrance), on Monday, 30 March 2020, starting at 13.00 EET. The reception desks
for those registered for the meeting will open and voting tickets will be
provided starting from 12.00 EET. Refreshments will be served after the meeting.

A. Items on the agenda of the General Meeting

1. Opening of the meeting

2. Calling the meeting to order

3. Election of persons to scrutinise the minutes and to supervise the counting
   of votes

4. Recording the legality of the meeting

5. Recording attendance at the meeting and adoption of the list of votes

6. Review by the President and CEO

7. Presentation of the 2019 financial statements, report by the Board of
   Directors, and Auditor's Report

8. Adoption of the financial statements

9. Use of the profit shown on the balance sheet and resolution on the payment
   of dividend

The Board of Directors proposes to the Annual General Meeting that based on the
adopted balance sheet, a dividend of €2.52 per share be paid for the year 2019
on shares held outside the Company at the date of dividend distribution. The
remaining distributable assets will remain in equity. The Board proposes that
the dividend be paid in two instalments.

The first instalment, €1.28 per share, is to be paid to shareholders registered
in the Company’s register of shareholders kept by Euroclear Finland Ltd on the
first dividend instalment payment record date 1 April 2020. The Board proposes
that the first dividend instalment pay date be 8 April 2020.

The second instalment is to be paid to shareholders registered in the Company's
register of shareholders kept by Euroclear Finland Ltd on the second dividend
instalment payment record date, 1 October 2020. If the Board proposal concerning
a share issue without payment is approved, the second instalment will be divided
between one current and three new shares, so that a dividend of €0.31 per share
is paid on each share. If the Annual General Meeting does not approve the Board
proposal concerning a share issue without payment, the second dividend
instalment will be €1.24 per share. The Board proposes 8 October 2020 as the
second dividend instalment pay date. The Board proposes that it be authorised to
decide, if necessary, on a new dividend payment record date and pay date for the
second instalment if the rules and statutes of the Finnish book-entry system
change or otherwise so require.

1. Resolution on discharging the Board members and the Managing Director from
   liability

2. Reviewing the Remuneration Policy for Governing Bodies

Presenting and reviewing the Company’s Remuneration Policy for Governing Bodies
approved by the Board of Directors. The remuneration policy is appended to this
Notice of General Meeting and available at the Company’s website at
www.kesko.fi/en/investor/General-Meeting.

1. Resolution on the Board members' remuneration and the basis for
   reimbursement of their expenses

Shareholders jointly holding 15% of the votes attached to Kesko Corporation’s
shares have made the following proposals regarding the fees and the
reimbursement of expenses for Kesko Corporation’s Board members:

· Board Chairman, an annual fee of €97,000
· Board Deputy Chairman, an annual fee of €60,000
· Board member, an annual fee of €45,000
· Board member who is the Chairman of the Audit Committee, an annual fee of
€60,000
· A meeting fee of €500/meeting for a Board meeting and its Committee's
meeting. The meeting fee for the Board Chairman is €1,000/Board meeting.
However, a meeting fee of €1,000/Committee meeting is paid to a Committee
Chairman who is not the Chairman or Deputy Chairman of the Board. The meeting
fees are paid in cash.
· Daily allowances and the reimbursements of travel expenses are paid to the
Board members in accordance with the general travel rules of Kesko.

It is proposed that the payment of the aforementioned annual fees be made in
Kesko Corporation’s B series shares and in cash, with approximately 30% of the
fees paid in shares. After the transfer of shares, the remaining amount is to be
paid in cash. The Company will acquire the shares or transfer shares held by the
Company as treasury shares in the name and on behalf of the Board members. The
Company is responsible for the costs arising from the acquisition of the shares.
The shares will be acquired or transferred to the Board members on the first
working day to follow the publication of the interim report for the first
quarter of 2020. A Board member cannot transfer shares obtained in this manner
until either three years have passed from the day the member has received the
shares or their membership on the Board has ended, whichever comes first.

1. Resolution on the auditor's fee and the basis for reimbursement of expenses

At the recommendation of the Board’s Audit Committee, the Board of Directors
proposes to the Annual General Meeting that the auditor's fee and reimbursement
of the auditor's expenses be paid according to an invoice approved by the
Company.

1. Election of the auditor

At the recommendation of the Board’s Audit Committee, the Board of Directors
proposes to the Annual General Meeting that based on a tendering of auditors,
the firm of authorised public accountants Deloitte Oy be elected as the
Company’s auditor for the financial year 2020. If Deloitte Oy is elected as
Kesko's auditor, the firm has announced that APA Jukka Vattulainen will be the
auditor with principal responsibility.

The Audit Committee’s recommendation for the election of auditor is available on
the Company’s website at www.kesko.fi/en/investor/General-Meeting.

1. The Board of Directors’ proposal on a share issue without payment (share
   split) and on the amendment of section 3 of the Company’s Articles of
   Association

The Board of Directors proposes to the Annual General Meeting a resolution on a
share issue without payment in order to enhance the liquidity of the Company’s
share. The Board also proposes a related amendment to section 3 (“Shares”) of
the Company’s Articles of Association.

The Board proposes that new shares be issued to the shareholders without payment
in proportion to their holdings so that three (3) new A shares are issued for
each current A share, and three (3) new B shares are issued for each current B
share. In addition, in the share issue without payment, new B shares will
similarly be issued without payment to the Company on the basis of B shares held
by the Company. Based on the number of shares on the date of the Board’s
proposal, a total of 95,211,021 new A shares and a total of 204,848,235 new B
shares will be issued. The shares shall be issued to shareholders who are
registered in the Company’s register of shareholders kept by Euroclear Finland
Ltd on the record date of the share issue, 1 April 2020. The share issue without
payment shall be executed in the book-entry system and will not require any
action on the part of the shareholders. The new shares will generate shareholder
rights as of 1 April 2020 when they have been registered in the trade register.
The registration of the new shares in the shareholders’ book-entry accounts is
planned to occur on 2 April 2020. The new shares will not entitle their holders
to the first instalment of dividend in accordance with the Board’s proposal for
the distribution of profit of €1.28 per share, but they will entitle the holder
to the second proposed dividend instalment of €0.31 per share.

A resolution on the share issue requires that section 3 of the Company’s
Articles of Association be amended so that the maximum number of B shares as
well as the maximum aggregate number of A and B shares be increased. The Board
proposes that the maximum numbers be increased to rounded figures so that the
maximum number of B shares would be increased from 250,000,000 shares to
360,000,000 shares, and the maximum aggregate number of A and B shares would be
increased from 400,000,000 shares to 610,000,000 shares. Each A share would
continue to entitle the holder to ten (10) votes and each B share to one (1)
vote.

The proposed new wording of section 3 of the Articles of Association is as
follows:

“3 § Shares

The company has A shares and B shares. Concerning A shares the minimum number is
one (1) and the maximum number two hundred and fifty million (250,000,000),
while concerning B shares the minimum number is one (1) and the maximum number
three hundred and sixty million (360,000,000), provided that the total number of
shares is at minimum two (2) and at maximum six hundred and ten million
(610,000,000).

Each A share entitles the holder to ten (10) votes and each B share to one (1)
vote.

The company's shares are included in the book-entry securities system.”

1. Board of Directors' proposal for its authorisation to decide on the issuance
   of shares

The Board of Directors proposes to the Annual General Meeting that the Board be
authorised to decide on the issuance of new B series shares as well as of own B
shares held by the Company as treasury shares on the following terms and
conditions:

Under the authorisation, the Board shall be authorised to take one or more
decisions on the issuance of B shares, provided that the number of B shares
thereby issued totals a maximum of 40,000,000 B shares. This number of shares is
equivalent to approximately 10% of all shares in the Company after the new
shares to be issued in a share issue without payment pursuant to the proposal of
the Board of Directors have been registered.

B shares can be issued for subscription by shareholders in a directed issue in
proportion to their existing holdings of shares in the Company, regardless of
whether they own A or B shares. B shares can also be issued in a directed issue,
departing from the shareholder's pre-emptive right, for a weighty financial
reason for the Company, such as using the shares to develop the Company's
capital structure, to finance possible acquisitions, capital expenditure or
other arrangements within the scope of the Company's business operations, or to
implement the Company's commitment and incentive scheme. For the latter purpose,
however, the maximum number of B shares that can be issued is 800,000 shares.
This number of shares is equivalent to approximately 0.2% of all shares in the
Company.

The new B shares may be issued only against payment. Own B shares held by the
Company as treasury shares can be conveyed either against or without payment.
According to the Finnish Limited Liability Companies Act, a directed share issue
can only be without payment if an especially weighty financial reason exists
thereto, both from the viewpoint of the Company’s interests and taking into
account the best interests of all its shareholders.

The Board of Directors shall decide on the subscription price of the shares upon
the issuance of new shares, and the possible amount that is payable upon the
conveyance of B shares held by the Company. The Board of Directors is also
entitled to issue shares against non-monetary consideration. The subscription
price and possible amount payable for the shares shall be recorded in the
reserve for invested non-restricted equity.

The Board of Directors shall make decisions concerning any other matters related
to the share issues.

The authorisation is valid until 30 June 2021. The authorisation revokes the
authorisation granted by the General Meeting of 4 April 2016 to the Board of
Directors to convey a total maximum of 1,000,000 B shares held by the Company,
which would have expired on 30 June 2020. The authorisation also revokes the
authorisation granted by the General Meeting of 11 April 2018 to issue a total
maximum of 10,000,000 new B shares, which the Board of Directors has not used.
That authorisation would have expired on 30 June 2021.

If the Annual General Meeting does not approve the Board’s proposal on a share
issue without payment, the Board of Directors of Kesko Corporation proposes to
the Annual General Meeting to be held on 30 March 2020 that the Board be
authorised to decide on the conveyance of own B shares held by the Company on
the following terms and conditions:

Under the authorisation, the Board shall be authorised to take one or more
decisions on the conveyance of the B shares, provided that the number of B
shares thereby conveyed totals a maximum of 200,000 B shares. This number of
shares is equivalent to approximately 0.2% of all shares in the Company.

B shares can be conveyed to shareholders in a directed issue in proportion to
their existing holdings of shares in the Company, regardless of whether they own
A or B shares. B shares can also be conveyed in a directed issue, departing from
the shareholder's pre-emptive right, for a weighty financial reason for the
Company, such as using the shares to develop the Company's capital structure, to
finance possible acquisitions, capital expenditure or other arrangements within
the scope of the Company's business operations, or to implement the Company's
commitment and incentive scheme.

Own B shares held by the Company as treasury shares can be conveyed either
against or without payment. According to the Finnish Limited Liability Companies
Act, a directed share issue can only be without payment if an especially weighty
financial reason exists thereto, both from the viewpoint of the Company
interests and taking into account the best interests of all its shareholders.

The Board of Directors shall decide on the possible amount that is payable upon
the conveyance of the B shares held by the Company. The Board of Directors is
also entitled to convey shares against non-monetary consideration. The possible
amount payable for the shares shall be recorded in the reserve for invested non
-restricted equity.

The Board of Directors shall make decisions concerning any other matters related
to the share issues.

The authorisation is valid until 30 June 2021. The authorisation revokes the
authorisation granted by the General Meeting of 4 April 2016 to the Board of
Directors to convey a total maximum of 1,000,000 B shares held by the Company,
which would have expired on 30 June 2020. The authorisation does not revoke the
authorisation granted by the General Meeting of 11 April 2018 to issue a total
maximum of 10,000,000 new B shares, which the Board of Directors has not used.
That authorisation is valid until 30 June 2021.

1. Board Of Directors’ proposal for establishing a Shareholders’ Nomination
   Committee

The Board of Directors proposes that the Annual General Meeting resolve to
establish a Shareholders’ Nomination Committee, the duty of which would be to
prepare proposals related to the number, election and remuneration of board
members to the Annual General Meeting and, when necessary, to an Extraordinary
General Meeting. According to the Board’s proposal, the Shareholders’ Nomination
Committee would be established for the time being, until decided otherwise by
the General Meeting. The Board proposes the confirmation of the rules of
procedure of the Shareholders’ Nomination Committee appended.

1. Donations for charitable purposes

The Board of Directors proposes that the Annual General Meeting resolves to
authorise the Board to decide on donations in a total maximum of €1,000,000 for
charitable or corresponding purposes until the Annual General Meeting to be held
in 2021, and to authorise the Board to decide on the donation recipients,
purposes of use, and other terms and conditions of the donations.

1. Closing of the meeting

B. General Meeting documents

The above resolution proposals on the agenda of the General Meeting, the
Remuneration Policy for Governing Bodies, the rules of procedure of the
Shareholders’ Nomination Committee, as well as this notice of the meeting are
available on Kesko Corporation's website at www.kesko.fi/en/investor/General
-Meeting. Kesko Corporation's financial statements, the report by the Board of
Directors, and the Auditor's report will be made available on the website on 6
March 2020. The resolution proposals and other documents specified above will
also be available at the General Meeting, and copies of them and this notice
will be sent to shareholders on request. The minutes of the General Meeting will
be made available to shareholders on the website on 13 April 2020 at the latest.

C. Instructions for meeting participants

1. Right to participate and registration

Shareholders have the right to participate in the General Meeting if they are
registered in the Company's register of shareholders kept by Euroclear Finland
Ltd on 18 March 2020. Shareholders whose shares are registered on their personal
Finnish book-entry account are registered in Kesko’s register of shareholders.

A shareholder in the register of shareholders wishing to participate in the
General Meeting must register for the General Meeting by 25 March 2020 at 16.00
EET at the latest, by which time the registration will have to have been
received by the Company. The registration can be made either

a. online at www.kesko.fi/en/investor/General-Meeting following the
instructions provided there
b. by email to keskoyhtiokokous@kesko.fi
c. by telephone +358 105 323 211 (from Monday to Friday between 9 and 16)
d. by fax +358 105 323 421, or
e. by letter to Kesko Corporation/Group Legal Affairs, PO Box 1, FI-00016
Kesko.

The registration information must include the shareholder's name, personal
ID/business ID, address, telephone number and a possible assistant's name or a
proxy representative's name and personal ID. The personal data will only be used
in connection with the General Meeting and when processing related necessary
registrations.

1. Holder of a nominee-registered share

Holders of nominee-registered shares have the right to participate in the
General Meeting by virtue of the shares which would entitle them to be
registered in the Company’s register of shareholders kept by Euroclear Finland
Ltd on the Annual General Meeting record date 18 March 2020. Attendance also
requires that the shareholder is temporarily registered in the Company's
shareholder register kept by Euroclear Finland Ltd by virtue of this
shareholding by 25 March 2020 at 10.00 EET at the latest. With respect to
nominee-registered shares, this constitutes as registration for the General
Meeting.

Holders of nominee-registered shares are advised to request instructions for
registering in the register of shareholders, submitting their proxy documents
and participating in the General Meeting from their custodian banks well in
advance. The account operator of the custodian bank shall request a holder of a
nominee-registered share wishing to participate in the Annual General Meeting to
be temporarily registered in the Company's register of shareholders by the
aforementioned deadline at the latest.

1. Proxy representative and proxy documents

Shareholders may participate in the General Meeting and exercise their rights at
the meeting by way of proxy representation. The proxy representative of a
shareholder will have to produce a dated proxy document, or otherwise in a
reliable manner demonstrate their right to represent the shareholder. If a
shareholder participates in the General Meeting by means of several proxy
representatives who represent the shareholder with shares on different
securities accounts, the shares with which each proxy representative represents
the shareholder are to be identified in connection with the registration.

Possible proxy documents are to be delivered to the above registration address
before the end of the registration period, either as originals by mail or as
email attachments (e.g. pdf).

1. Other information

Pursuant to Chapter 5, Section 25 of the Limited Liability Companies Act, a
shareholder who is present at the General Meeting has the right to request
information with respect to the matters to be dealt with at the Meeting.

Changes in the ownership of the shares that take place after the General Meeting
record date do not affect the right to attend the General Meeting or the
shareholder’s number of votes.

As at the publication date of the notice of the meeting, Kesko Corporation has a
total of 31,737,007 A shares, which carry 317,370,070 votes, and a total of
68,282,745 B shares, which carry a total of 68,282,745 votes. There are
100,019,752 shares in aggregate, and the aggregate number of votes attached to
the shares is 385,652,815. Each A series share carries ten votes and each B
series share carries one vote at the General Meeting.

Helsinki, 4 February 2020

KESKO CORPORATION

BOARD OF DIRECTORS

Further information is available from Lasse Luukkainen, Group General Counsel,
tel. +358 105 322 818.

Appendix 1 Kesko Corporation’s Remuneration Policy for Governing Bodies

Appendix 2 Rules of procedure of Kesko Corporation’s Shareholders’ Nomination
Committee

Kesko Corporation

DISTRIBUTION
Nasdaq Helsinki Ltd
Main news media

www.kesko.fi

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