Governance Information • Feb 25, 2015
Governance Information
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Lassila & Tikanoja plc is a public limited liability company that is registered in Finland and listed on NASDAQ OMX Helsinki Oy. In its decision-making and administration, Lassila & Tikanoja complies with the Finnish Companies Act, other regulations governing listed companies and the Articles of Association of Lassila & Tikanoja plc.
In addition, Lassila & Tikanoja complies with the Guidelines for Insiders issued by NASDAQ OMX Helsinki Oy and the Corporate Governance recommendations for Finnish listed companies.
Lassila & Tikanoja plc (L&T) complies with the Finnish Corporate Governance Code issued by the Securities Market Association on 15 June 2010. L&T has not deviated from the recommendations of the Code. The Code is available on the website of the Securities Market Association at www.cgfinland.fi.
This statement was prepared in accordance with recommendation 54 of the Corporate Governance Code and is issued separately from the Report of the Board of Directors. L&T's Audit Committee has reviewed this statement.
The consolidated financial statements and interim reports have been prepared in accordance with the IFRS reporting standards approved for use in the EU, the Securities Market Act, the standards imposed by the Financial Supervisory Authority, and the rules of NASDAQ OMX Helsinki. The Report of the Board of Directors and the parent company's financial statements have been prepared in accordance with the Accounting Act and the instructions and statements issued by the Accounting Board.
The Annual General Meeting, the Board of Directors and its two committees, and the President and CEO, assisted by the Group Executive Board, are responsible for company administration and operations.
The Annual General Meeting is the supreme decision-making body of Lassila & Tikanoja plc. The Annual General Meeting decides on the matters stipulated in the Companies Act, such as the acceptance of the financial statements and proposed dividend, the release from liability of members of the Board of Directors and the President and CEO, the election of the members of the Board of Directors and the auditors, and the compensation paid to them.
The Annual General Meeting is held by the end of April. When considered necessary, an Extraordinary General Meeting is convened to deal with a specific proposal made to a General Meeting. General Meetings are convened by the Board of Directors.
Each share of Lassila & Tikanoja plc entitles the holder to one vote. According to the Articles of Association, at a General Meeting no shareholder may cast more than one fifth of the total number of votes represented at the meeting.
Shareholders are convened to a General Meeting by a notice published on the company's website. The Board of Directors' proposals and the notice to the meeting are also disclosed in a stock exchange release. In addition, if the Board of Directors so decides, the company may also announce the date and venue of the General Meeting and the address of the company's website in a newspaper during the same timeframe. The prospective director candidates and the proposed auditor are disclosed in the notice or in a separate stock exchange release before the General Meeting.
The notice of the General Meeting and the related documents will be available on the company's website http://www.lassila-
tikanoja.fi/en/company/investors/Annual\_General\_Meeting/ no later than 21 days before the General Meeting.
The members of the Board of Directors, President and CEO, principal auditor and prospective directors attend a General Meeting, unless there are well-founded reasons for their absence.
The minutes of the General Meeting will be available on the company's website within two weeks of the General Meeting.
The Annual General Meeting was held in Helsinki on 19 March 2014. The meeting was attended by shareholders representing 46.1 per cent of the votes. All Board members, the President and CEO, and the principal auditor attended the meeting.
In accordance with the Articles of Association, the Board of Directors of Lassila & Tikanoja plc comprises a minimum of three members and a maximum of seven. The members of the Board of Directors are elected by the Annual General Meeting. The term of a member of the Board of Directors expires at the end of the next Annual General Meeting following his/her election. A person who has attained the age of 70 cannot be elected to the Board of Directors. The Board elects a Chairman and a Vice Chairman from among its members.
The biographical details of the member candidates will be available on the company's website before the General Meeting.
The President and CEO is present at Board meetings to present issues to the Board, and the General Counsel serves as secretary to the Board.
The evaluation of the performance and working methods of the Board is conducted annually as an internal self-evaluation.
The Board of Directors has evaluated the independence of its members in accordance with recommendation 15 of the Corporate Governance Code. All of the members of the Board of Directors are independent of both the company and its major shareholders.
The Board of Directors is responsible for the management of the company, the proper arrangement of the company's operations, and the proper arrangement and supervision of the company's accounting and financial management. The Board of Directors decides upon matters that are of major importance, in view of the ssope and size of the operations of the company. The Board of Directors is also responsible for the duties specified in the Companies Act and the Articles of Association, and in other regulations.
The duties of the Board are defined in a written charter adopted in 2014, which the Board complies with in addition to the Articles of Association and Finnish laws and regulations.
Duties of the Board of Directors:
handling and adopting interim reports, consolidated financial statements and annual reports
confirming the Group's operating plan, budget and investment plan
• confirming treasury, disclosure and risk management and insurance policies as well as internal control policy
• nominating and dismissing the President and CEO and monitoring and evaluating his work
• deciding on the nomination, remuneration and other financial benefits of the President and CEO's immediate subordinates
The Board of Directors convenes as often as its tasks require. It confirms its annual, regular meetings. Meetings held annually prior to the publication of the financial statements and each interim report as well as strategy, budget and other meetings confirmed in the annual programme of the Board are considered regular meetings. In addition to regular meetings, the Board can hold extraordinary meetings, which can be arranged as telephone conferences.
Minutes are prepared of Board meetings, subject to the signature of members of the Board of Directors participating in the meeting as well as the President and CEO of the company and secretary to the Board. These minutes are kept at the company's headquarters.
The President and CEO is responsible for ensuring that the Board is provided with sufficient information for assessing the operations and financial situation of the company. He also supervises and reports to the Board on the implementation of the Board's decisions.
The Board of Directors comprises the following persons: Mr Heikki Bergholm, Chairman, Mr Eero Hautaniemi, Vice Chairman, Mrs Hille Korhonen, Ms Laura Lares, Mr Sakari Lassila and Mr Miikka Maijala. Information on their holdings in the company and their remuneration is provided in the Remuneration Statement in the Annual Report in the section Remuneration and shareholding of the Board members.
The Board of Directors met 13 times during 2014. The average attendance rate of the members at the meetings was 97.3 per cent.
Key themes in Board work included strategy and directing and supporting the implementation of it, monitoring strategic projects, clarifying the business portfolio and directing risk management.
| Board | Audit Committee | Remuneration Committee |
|
|---|---|---|---|
| Heikki Bergholm | 13/13 | 4/4 | |
| Eero Hautaniemi | 11/13 | 5/5 | |
| Hille Korhonen | 13/13 | 4/4 | |
| Laura Lares* | 10/10 | 4/4 | |
| Sakari Lassila | 13/13 | 5/5 | |
| Miikka Maijala** | 13/13 | 1/1 | 3/3 |
The Board of Directors met three times before 19 March 2014 and 10 times thereafter. The Audit Committee met once before 19 March 2014 and four times thereafter. The Remuneration Committee met once before 19 March 2014 and three times thereafter.
* Member of the Board of Directors and the Audit Committee since 19 March 2014
** Member of the Audit Committee until 19 March 2014 and member of the Remuneration Committee since 19 March 2014
born 1956, M.Sc. (Eng.)
Chairman of the Board since 2011 and member since 2008, Chairman of the Remuneration Committee since 2011 and member since 2010, independent member
Work experience:
Suominen Corporation Oyj: President and CEO 2002–2006 The former Lassila & Tikanoja Group: President and CEO 1998–2001, Vice President 1997– 1998, President of business units 1986–1997 Lassila & Tikanoja Oy: CFO 1985–1986 Industrialisation Fund of Finland Ltd: Researcher and development manager 1980–1985
Solidium Oy (2013–), Lakan Betoni Oy (1986–, COB), Maillefer International Oy (2010–2014), Seniorirahasto Oy (2010–), Finnish Foundation for Cardiovascular Research (2013–), Yrjö-Koskinen Family Association (2013–), Duckies Kindergarten (2012–), Institutum Romanum Finlandiae (2011–), Etua Oy (2008–), Association for the Foundation for Economic Education (2005–), Henna and Pertti Niemistö Ars Fennica Art Foundation (2005–), Tehokkaan Tuotannon Tutkimussäätiö (2003–), MB Funds (2002–), Spa Hotel Ikaalinen Holding Oy (2010–2014), Forchem Oy (2007–2013), Componenta (2003–2012, COB), L&T Recoil Ltd (2010–2012, COB), Helsinki Bourse Club (2003–2010), Kemira Oyj (2004–2007), Pohjola-Yhtymä Oyj (2003–2005), Sponda Oyj (1998–2004) and Suominen Corporation (2006–2011)
born 1956, M.Sc. (Econ.)
President and CEO of Oriola-KD Corporation 2006–
Vice Chairman of the Board since 2011 and member since 2007, Chairman of the Audit Committee since 2011 and member since 2009, independent member
Work experience: GE Healthcare Finland Oy: President 2004–2005 GE Healthcare IT: General Manager, Oximetry, Supplies and Accessories business area 2003–2004 Instrumentarium Corporation: positions in financial and business management 1990–2003
Other key positions: Finnish Commerce Federation (2014–), Ecostream Oy (2012–2013), L&T Recoil Oy (2010– 2012), Nurminen Logistics Oyj (2009–2012)
born 1961, Lic. Tech. President and CEO of Alko Oy 2013–
Member of the Board since 2009, member of the Remuneration Committee since 2010, independent member
Work experience:
Fiskars Corporation: Vice President, Operations (responsible for manufacturing, sourcing and logistics strategies) 2008–2012; Iittala Group: Group Director, Operations 2003–2009 Executive positions within worldwide delivery chain strategies and processes at Nokia Corporation 2000–2003, Nokia Networks 1998–2000 and Nokia Mobile Phones 1996– 1997
Outokumpu Copper: positions in logistics and marketing development 1993–1996
Other key positions:
Nokian Tyres plc (2006–), Ilmarinen Mutual Pension Insurance Company, Supervisory Board (2014–), Federation of Finnish Commerce (2014–), Mint of Finland Group (2008– 2010)
born 1966, Ph.D in Technology
Managing Director of Woimistamo Oy 2012–
Member of the Board and the Audit Committee since 2014, independent member
Work experience:
Kalevala Koru Oy & Lapponia Jewelry Oy: Managing Director 2007–2012 UPM Kymmene Corporation: Director of Wood Products Division, Director of Business Development & Human Resources 2004–2006
Other key positions: Lappeenranta University of Technology (2009–), Woikoski Oy (2012–), Aalef Oy (2013–), Krtiimi Oy (2013–), Kinkaronkka Oy (2014–)
born 1955, M.Sc. (Econ.)
Managing Director and partner of Indcrea Oy
Member of the Board and the Audit Committee since 2011, independent member
Work experience:
Cupori Group Oy: member of the Management Board (2008–2014), Managing Director of Cupori AB (2012–2014)
Carnegie Investment Bank AB, Finland Branch: executive positions 2002–2005 Alfred Berg Finland Oyj: executive positions within investment banking 1994–2002 Citibank Oy: head of corporate bank 1991–1994 Union Bank of Finland: supervisory and executive positions 1983–1991
Other key positions:
Evald and Hilda Nissi Foundation, Vice Chairman of the Board (member 1987–), Aplagon Oy, Chairman of the Board (2009–)
born 1967, M.Sc. (Eng.)
CEO of Clinius Ltd 2006–
Member of the Board since 2010, member of the Audit Committee 2010–2014, member of Remuneration Committee since 2014, independent member
Work experience: GE Healthcare Finland Oy: Business Segment Manager 2004–2006 Instrumentarium Corporation (now GE Healthcare Finland Oy): Director, Business Development 2000–2004 Instrumentarium Corporation: supervisory and executive positions within sales, marketing and financial management 1992–2000
The Board has an Audit Committee and a Remuneration Committee.
The Audit Committee consists of at least three members, who are all elected annually by the Board of Directors from among its members for the duration of the Board's term. The members of the Audit Committee shall be independent of the company and at least one member shall be independent of any major shareholders of the company. On an annual basis, the Board of Directors shall likewise select one member as Chairman of the Committee, for the term of the Board. The members of the Audit Committee shall have the qualifications necessary to perform the responsibilities of the committee, in particular, sufficient knowledge of bookkeeping, accounting and financial statements practices.
The duties and operating principles of the audit committee are defined in a charter approved by the Board of Directors. The Audit Committee will convene at least four times a year.
The duties of the Audit Committee include:
As from 19 March 2014, the members of the Audit Committee are Eero Hautaniemi, Chairman, and members Laura Lares and Sakari Lassila. The Audit Committee met five times in 2014. The attendance rate of the members at the meetings was 100 per cent.
The Remuneration Committee has at least two members, who are elected annually by the Board of Directors from among its members for the duration of the Board's term. In compliance with the Corporate Governance Code for listed companies in Finland, the members must be independent of the company. On an annual basis, the Board of Directors shall likewise select one member as Chairman of the committee, for the term of the Board. The committee will convene at least twice a year.
The duties of the Remuneration Committee include:
As from 19 March 2014, the Remuneration Committee comprises Heikki Bergholm, Chairman and Hille Korhonen and Miikka Maijala as members. The Remuneration Committee met four times in 2014. The attendance rate of the members at the meetings was 100 per cent.
Lassila & Tikanoja plc's President and CEO is appointed by the Board of Directors. The President and CEO is responsible for day-to-day operations in keeping with the instructions of the Board of Directors. He is also responsible for the strategy process. The President and CEO is Pekka Ojanpää.
The Group Executive Board assists the President and CEO in the management of the company. Information on the Group Executive Board members' holdings in the company and their remuneration is provided in the Remuneration Statement in the Annual Report in the section Remuneration and shareholding of the Group Executive Board members.
born 1966, M.Sc. (Econ.) President and CEO since 2011
Kemira Oyj: President, Municipal & Industrial segment 2008–2011, President, Kemira Specialty business area 2006–2008, Executive Vice President of Procurement & Logistics 2005–2006 Nokia Oyj: Vice President, Electromechanics Supply Line Management 2001– 2004, Managing Director of Nokia Hungary 1998–2001, sales and logistics managerial positions in Nokia Mobile Phones 1994–1998
Other key positions:
Ilmarinen Mutual Pension Insurance Company: Supervisory Board member (2012–), Kiinteistötyönantajat ry: Board member (2013–), Technopolis Oy: Board member (2014–)
born 1970, M.Sc. (Admin.) Chief Financial Officer since 2013 Ixonos Plc: CFO 2008–2012 Suomen Terveystalo Plc: CFO 2006–2008 Tieto-X Plc: CFO 2002–2006, business controller 2000–2002 APT Sijoitus Ltd: Financial Advisor 1999–2000 Uusimaa Regional Tax Office: Tax Auditor 1998–1999
born 1970, QBA
Lassila & Tikanoja plc: Business Director, Environmental Services 2009– 2012, Sales Director, Environmental Services 2003–2009, Sales Manager, Environmental Services 2001-2003
Europress Oy: Sales Director 1998–2001, sales managerial positions 1995– 1998
born 1978, M.Sc. (Econ.)
Lassila & Tikanoja plc: Chief Officer responsible for procurement and supply chain, 2012–2014
Siemens, North West Europe: Head of Commodity Management 2009–2012, Work Stream Lead, Procurement & Supply Chain Management 2008–2009 Siemens Oy: Director, Procurement 2005–2009, Procurement Manager 2003– 2005, Supply Chain Consultant 2001–2003
born 1964, M.Sc. (Econ.) Vice President, Facility Services since 2013
ISS Palvelut Oy: Business Director, Uusimaa region customer accounts 2011–2012, Business Director, Technical Service and Building Management 2005–2011
Are Oy: Executive Vice President and Vice President, Maintenance and Service Business 1999–2005, Service Manager 1995–1999, managerial and planning positions at Onninen-Termo Oy 1989–1994
born 1968, M.Sc. (Econ.) HR Director since 2012
Atria plc: Group Vice President, Human Resources 2010–2011 Pfizer Oy: HR Director 2007–2010 Nokia Mobile Phones: Senior Business HR Manager 2004–2007 Nokia Mobile Phones and Nokia Networks: Business HR Manager and Competence Development Manager 1998–2003 Adulta Oy: Program Manager 1996–1998 Shell Oil Products: Product Manager 1994–1995
born 1978, M.Sc. (Econ.)
Deloitte: Management Consultant, Strategy & Operations 2005–2012 Fiskars Corporation: Project Manager 2004–2005 Rieter Automotive Management AG: Market Analyst 2003 Tapiola Group: Finance Assistant 2000–2002
born 1970, Lic. Tech. Director, Supply Chain since 16 February 2015
Hartwall Oy: Operations and Supply Chain Director 2014 Rexel Finland Oy: Director of Marketing and Business Development 2011–2014 YIT: managerial positions in procurement and logistics 2004–2008 and in YIT's Building Services and Building and Industrial Services divisions 2009–2011 Ensto: Director, Production and Logistics 1998–2004
The statutory audit of the financial statements of Lassila & Tikanoja is carried out by KPMG Oy Ab, Authorised Public Accountants, elected by the Annual General Meeting. The principal auditor is Lasse Holopainen, Authorised Public Accountant.
The auditors and the Board agree on the audit plan annually and discuss the audit's findings. The principal auditor and the auditor manager attend at least one meeting of the Board of Directors annually.
In 2014, the fees paid for statutory auditing to KPMG group totalled EUR 102,761. The fees paid to the auditing company and companies belonging to the same group for non-audit services such as tax, IFRS and due diligence services totalled EUR 43,488.
Lassila & Tikanoja plc's Board of Directors has taken a decision that the Group observes the Guidelines for Insiders issued by NASDAQ OMX Helsinki. In addition, the Board has issued complementary guidelines that are in some respects more stringent.
The insider register is maintained in the SIRE service of Euroclear Finland Ltd. Insiders with a duty to declare include the members of the Board of Directors, the President and CEO, the principal auditor and the Group Executive Board. Persons included in the companyspecific permanent insider register based on their position include the General Counsel, Internal Auditor, Chief Information Officer, Director of Corporate Relations and Responsibility, Communications Manager and persons designated by them, divisional management teams, executive assistants and persons participating in group accounting, persons preparing stock exchange releases, as well as other separately designated persons. Separate project-specific sub-registers are kept for extensive or otherwise significant projects. The General Counsel is the person responsible for insider issues.
Lassila & Tikanoja's insiders are not permitted to engage in trading in company shares during the period between the end of the financial period and the disclosure of the result.
The shareholdings and option holdings of the public insiders are listed on the company's website.
The financial reporting principles represent an essential element of L&T's Integrated Management System (IMS). The Group's financial reporting process includes both financial accounting and management accounting. The internal control and risk management systems and procedures pertaining to the financial reporting process are explained in more detail below. Their purpose is to ensure that the information disclosed in the financial reports published by the company is essentially correct.
The Audit Committee supervises and monitors the efficiency of L&T's financial reporting process and internal control systems. The duties and operating principles of the audit committee are defined in a charter approved by the Board of Directors. The Audit Committee has reviewed L&T's internal control policy and the Board of Directors has approved it.
The Audit Committee meets at least four times a year before the publication of interim reports and the financial statements release. In its meetings, the Audit Committee reviews the financial information presented by the Chief Financial Officer, as well as interim reports and financial statements releases. The auditor is also invited to attend the meetings. The Audit Committee is presented in more detail in the Committees section.
L&T conducts a significant proportion of its business in Finland. Functions related to accounting, sales invoicing, accounts payable and receivable, payments and financing in the financial reporting process in Finland are centralised. Organisation of these functions into different teams allows the separation of various finance-related tasks. To support the consistent process in Finland, L&T also runs a centralised accounting system and common account framework.
L&T's foreign subsidiaries each have independent financial management departments operating in compliance with the accounting principles and reporting instructions issued by the Group's financial management. Foreign subsidiaries submit a monthly reporting package to the Group according to the Group's instructions. Financial controllers supervise operations related to foreign subsidiaries' financial management, their financial reports and financial statements. They visit companies assigned to them on a regular basis and conduct inspections and prepare written inspection reports.
L&T's Group financial management is responsible for preparing and updating the Group accounting policies and instructions, and for preparing reporting schedules. The financial management department consolidates subsidiaries' financial statements into consolidated financial statements, which include notes to the financial statements, and prepares interim reports and financial statement releases, official financial statements and the annual
The financial development of the company is monitored monthly by an operational reporting system covering the whole Group. In addition to actual data, the system provides budgets, forecasts and investment reports. L&T's operations and financial reports are monitored and compared against budgets and forecasts at different organisational levels. Group management, divisional management and area management as well as business unit management analyse the results and any nonconformities. Divisional business controllers also analyse the financial reports and prepare reports for management use. The duties of controllers also include supervision of the accuracy of financial reports and analysis of results.
L&T's Group financial management has defined and documented the control objectives and control points associated with external financial reporting in 2009. Control points have been specified both for individual companies and for Group accounting, and they represent a minimum requirement imposed by the Group on internal control of financial reporting. Foreign subsidiaries have been informed of the control points, and the Group's financial management assesses foreign subsidiaries' operations against the specified control points as part of their regular visits.
The company has financing, disclosure and risk management and insurance policies as well as an internal control policy confirmed by the Board of Directors.
The risks associated with financial management processes are assessed in the annual risk management process, which is part of L&T's Integrated Management System. Risks identified through risk assessment are prioritised, action plans and schedules are prepared, and persons responsible for implementing the actions are named. Implementation of actions is monitored annually. The risk management process is described in more detail in the next section, Key Risk Management Principles.
Risk management aims to identify significant risk factors, prepare for them and manage them in an optimal way so that the company's objectives are achieved. Comprehensive risk management endeavours to manage the Group's risk as a whole and not just individual risk factors.
The principles of L&T's risk management are approved by the company's Board of Directors. The Board monitors the implementation of risk management and assesses the efficiency of the methods employed. The President and CEO is responsible for the organisation and implementation of risk management. The principles for financial risk management are defined in the Group's Financial Policy. The principles for insurance risk management are specified in the Insurance Policy.
The risk management process is defined in L&T's Integrated Management System. As part of the annual strategy process, risks are assessed at the Group and division levels, in units outside Finland as well as within centralised functions defined as critical. In each responsibility area, the executive management assesses its strategic, financial, operational and accident risk factors. L&T evaluates risks using a risk matrix, thereby also assigning monetary values to risks. Contingency plans are prepared for significant risks. Responsibility for the risk management measures is assigned to the relevant parties. The most significant risks identified and preparations for them are reported to the President and CEO and the Board of Directors.
The company's own internal audit organisation started its operations in early 2014. Its task is to support the company and its senior management in the achievement of goals by providing a systematic approach to assessing and developing the effectiveness of the organisation's internal control, risk management and governance system. In its operations, the internal audit complies with generally accepted international professional standards concerning internal audit and ethical principles, as well as the operating guidelines confirmed by L&T's Board of Directors.
The internal audit operates under the supervision of the Audit Committee of L&T's Board of Directors and the company's President and CEO. It may also utilise external experts in internal audit assignments when necessary.
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