CHARTER OF THE BOARD
The work of the Board of Directors is based on the provisions of the Finnish Limited Liability Companies Act and the Company’s Articles of Association as well as on the charter adopted by the Board.
According to the charter, the following key matters are among those to be resolved by the Board of Directors at HKScan:
- appointments and dismissals of the CEO and senior executives, and decisions on the terms of employment of management;
- terms of employment of managing directors of HKScan Group companies and senior management;
- HKScan Group management’s and personnel’s incentive schemes and bonus criteria;
- HKScan Group and organization structure, commencement of new business, changes and discontinuation of central business;
- HKScan Group strategy, business plan and performance targets for the following year, and related underlying assumptions;
- HKScan Group’s significant investments, as well as company, business and real estate arrangements, and sales and outsourcing of significant equipment and machinery;
- other significant contracts of the HKScan Group;
- dividend policy and division proposal to the Annual General Meeting;
- principles of risk management and communication related to HKScan Group’s business and follow up of the legality of business operations;
- approving of investment plans and approval of relevant investments deviating from the plan;
- taking out HKScan Group loans and giving securities;
- giving procuration and other representative rights of the Company.
The meetings of the Board of Directors follow the annually agreed management calendar. Extra meetings may be convened if required. The chair of the Board convenes the Board meetings and prepares the meeting agenda together with the CEO.
PERFORMANCE EVALUATION OF THE BOARD
The Board conducts an annual evaluation of its performance and working methods in the interests of enhancing its operations. The evaluation addresses the composition and processes of the Board, the quality of the Board’s performance, cooperation between the Board and operative management, and the expertise and participation of Board members.
Four committees have been set up in HKScan to streamline the preparation and management of matters for the consideration of the Board. The Board selects the members and chairs of the committees from among its members or deputy members, except for the Nomination Committee, to which members may be selected from outside the Board in order to bring additional knowledge and expertise to bear on key appointments within the Company. With respect to the Nomination Committee, the Company deviates from Recommendation 15 of the Code.
The Board elects at least three members of the Audit Committee from among its members or deputy members. At least one of the members must possess particular expertise in the fields of accounting, bookkeeping or auditing. The majority of the members of Audit Committee shall be independent of the Company and at least one member shall be independent of significant shareholders. The CEO of the Company or other senior executives may not be elected to the Audit Committee.
The Audit Committee assists the Board by preparing matters within its remit for the consideration of the Board and by submitting proposals or recommendations for Board resolution. The duties of the Audit Committee have been determined in its charter adopted by the Board, in keeping with Recommendation 16 of the Code. The tasks of the Audit Committee of HKScan’s Board of Directors include, among other things, the following:
- to monitor the reporting process of financial statements;
- to supervise the financial reporting process;
- to monitor the efficiency of the Company’s internal control, internal auditing and risk management system;
- to evaluate and review the corporate governance statement covering the internal control and risk management related to the financial reporting process;
- to monitor the statutory audit of the financial statements and consolidated financial statements;
- to evaluate the independence of auditors and the provision of related ancillary services to the Company in particular; and
- to prepare the proposal for decision on the election of the auditors.
The Audit Committee reports on its work to the Board at the Board meeting first following the meeting of the Committee and submits for the information of the Board the minutes of the committee’s meeting.
The Audit Committee is chaired by Riitta Palomäki, and its other members are Pirjo Väliaho, Carl-Peter Thorwid and Mikko Nikula.
The Audit Committee held 6 meetings during 2017. The average attendance rate of Committee members was 91.7 per cent. Committee meetings were also regularly attended by the Company’s CEO, the CFO, the internal auditor and by the external auditors. The chair of the Audit Committee prepares the agenda for the meeting based on a proposal made by the CFO and convenes the meetings, under normal circumstances with at least one week’s notice.
The Board elects the three members of the Nomination Committee. The members of the Committee need not be Board members. The CEO of the Company or other senior executives may not be elected to the Nomination Committee.
The duties of the Nomination Committee are defined in its charter adopted by the Board. The Committee is tasked with preparing the proposals to be presented to the General Meeting of Shareholders concerning the number, appointment and remuneration of Board members. The Nomination Committee convenes at least once before the General Meeting of Shareholders and reports on its work to the Board of Directors immediately following the meeting of the Committee.
When the Nomination Committee plans the composition of the Board of Directors, the target is to ensure that the Board of Directors forms a functional entity. The prerequisite is sufficient diversity of the Board of Directors. The Board’s Nomination Committee searches, evaluates and recommends members to be elected in the Board of Directors and evaluates the number of the members of the Board of Directors. When designing the proposal for election of Board members, the diversity principles determined by the Company shall be taken into account:
- both genders should be represented in the Board;
- the Board members should have versatile background regarding profession and education that benefits the business of the Company;
- the Board members should have experience of international tasks; and
- the Board members should represent varied age range.
The members of the Nomination Committee are Jari Mäkilä (Chair), Bengt-Olov Gunnarsson and Mikko Nikula.
The Nomination Committee held 2 meetings during 2017. The average attendance rate of Committee members was 83.3 per cent.
Jari Mäkilä (b. 1970)
Chair of the supervisory board of LSO Osuuskunta
Agricultural technician, pork producer, Oripää, Finland
Bengt-Olov Gunnarsson (b. 1951)
Past Chair of the Board of Lantmännen
Agricultural technologist, farmer, Klockrike, Sweden
The Board elects at least three members of the Compensation Committee from among its members or deputy members. The majority of the members of the Compensation Committee must be independent of the Company. The CEO of the Company or other senior executives may not be elected to the Compensation Committee.
The duties of the Compensation Committee are defined in its charter adopted by the Board of Directors. The Compensation Committee is tasked with preparing matters pertaining to the Company’s compensation schemes, such as CEO compensation, other management compensation, the Company’s incentive and benefit plans and review of other arrangements or agreements between the Company and CEO or other senior executives.
The Compensation Committee convenes at least twice a year and reports on its work to the Board following the meeting of the Committee and submits for the information of the Board the minutes of the Committee’s meetings.
The Committee is chaired by Pirjo Väliaho and its other members are Riitta Palomäki and Tuomas Salusjärvi.
The Compensation Committee held 10 meetings during 2017. The average attendance rate of Committee members was 100 per cent. The Compensation Committee has used external consultants in its work.
Within the Working Committee the Board considers matters without the presence of the operative management of the Company.
The duties of the Working Committee are defined in its charter adopted by the Board of Directors. The Working Committee is tasked with promoting the efficient accomplishment of the duties of the Company’s Board of Directors. The aim of the Committee is to advance compliance with the Finnish Corporate Governance Code in HKScan.
All members and deputy members of the Board are members of the Working committee. The Chair of the Board, Mikko Nikula, acts as the Committee’s Chair. The Working Committee held 6 meetings during 2017. The average attendance rate of Committee members was 95.6 per cent.