Board of Directors
According to the Articles of Association, the term of office of a Board member is three (3) years, starting at the close of the General Meeting electing the member and expiring at the close of the third (3rd) Annual General meeting after the election.
According to the Articles of Association, Kesko's Board of Directors consists of a minimum of five (5) and a maximum of eight (8) members. All members of the Board of Directors are elected by the General Meeting. No special procedures are in place for the nomination or election of Board members by the General Meeting. Instead, the number of Board members is resolved and the members are elected by the General Meeting by majority vote based on shareholders' proposals. The Board elects the Chair and the Deputy Chair from among its members for the whole term of the Board.
The Board of Directors elected by Kesko's Annual General meeting of 16 April 2012 consists of seven (7) members:
- Esa Kiiskinen (Ch.)
- Seppo Paatelainen (Deputy Ch.)
- Ilpo Kokkila
- Tomi Korpisaari
- Maarit Näkyvä
- Toni Pokela
- Virpi Tuunainen.
In accordance with the Articles of Association, the term of office of each Board member will expire at the close of the 2015 Annual General Meeting.
Independence of Board members
All of Kesko's Board members are non-executive directors. The Board of Directors evaluates the independence of its members annually on a regular basis in accordance with recommendation 15 of the Corporate Governance Code. In the latest evaluation carried out on 16 April 2012, the Board found all members independent of the company's significant shareholders, and the majority of the members also independent of the company. A Board member is obliged to provide the Board with sufficient information to allow the Board to evaluate his or her independence.
Principal functions
Kesko's Board of Directors ensures that the company's administration, operations and accounting as well as financial management controls are in place. It is also responsible for the Kesko Group's management and control. The Board has confirmed the written charter for its duties, matters to be considered, meeting practice and the decision-making process. In accordance with the charter, the Board considers and decides on all matters that are financially, commercially or fundamentally significant for the Group.
According to the Board of Directors' charter, its principal functions include:
- making decisions on the Group's strategy and confirming strategies for the divisions
- confirming the Group's rolling plan, which includes the capital expenditure plan
- approving the Group's financial and capital expenditure policy
- confirming the Group's risk management policy and considering the Group's most significant risks and uncertainties
- reviewing and adopting the consolidated financial statements, interim reports and related stock exchange releases and the report by the Board of Directors
- making decisions on strategically or financially important individual capital expenditures, acquisitions, disposals or other arrangements, and contingent liabilities
- making decisions on management authorisation rules
- making decisions on the essential Group structure and organisation
- appointing and dismissing the company's President and CEO, approving his or her managing director's service contract and making decisions on his or her compensation and other financial benefits
- making decisions on the nomination, compensation and financial benefits of the Corporate Management Board members responsible for business divisions
- making decisions on Kesko's remuneration plans and monitoring the implementation of the plans
- preparing possible proposals to the General Meeting for share and share-based remuneration plans, and making decisions on granting shares or option rights under possible share and share-based remuneration schemes, and on the terms and conditions for granting them
- establishing a dividend policy and being responsible for the development of shareholder value
- confirming the company's values
- reviewing the Corporate Responsibility Report
- being responsible for other statutory duties prescribed to the Board of Directors by the Limited Liability Companies' Act or some other, and for duties prescribed by the Finnish Corporate Governance Code.
Decision-making, operations and meetings
The duty of Kesko's Board is to promote the best interests of Kesko and all of its shareholders. The Board members do not represent the interests of the parties who have proposed their election as Board members. A Board member is disqualified from participating in the handling of any matter between him/her and the company. When a vote is taken, the Board's decision will be the opinion of the majority. If a vote results in a tie, the decision will be the opinion supported by the Chair. If the votes cast at an election of a person end in a tie, the results will be decided by drawing lots.
In 2011, the Board held 10 meetings. The Board members' attendance rate at the Board meetings was 94.3%.
In its strategy work in 2011, the Board discussed the expansion of especially the food trade and other business operations into Russia, and continued to discuss electronic customer communications and e-commerce. The
Board approved and reformed the Kesko Group management's incentive plans by introducing a new share-based compensation plan. It also approved the Group's updated risk management policy. As in previous years, the Board reviewed the financial reports and monitored the Group's funding situation, approved the most significant capital expenditures, monitored the progress of Group-level projects and approved interim reports and the financial statements prior to their disclosure.
The Board meetings regularly include a review by the President and CEO on topical and important issues, as well as reports by the Chairs of the Board's Audit Committee and Remuneration Committee on preparatory committee meetings preceding Board meetings. The auditor regularly presents his findings to the Board once a year in connection with the review of the financial statements.
The Board regularly assesses its operations and working practices and carries out a related self-assessment once a year. Most recently, the Board made a self-assessment of its operations and working practices in December 2011 based on a questionnaire and followed by the Board's discussion on the results and further actions. In the assessment, the Board noted that, for example, the two annual strategy meetings had enhanced the handling of the matters most significant for Kesko.
Board Committees
Kesko has a Board's Audit Committee and a Remuneration Committee, both of which consist of three (3) Board members. At the close of the Annual General meeting, the Board elects the Chairs, Deputy Chairs and the members of the Committees from among its members for one year at a time.
All members of the Audit Committee are independent of the company and its significant shareholders. In the election of the Audit Committee members, the relevant qualification requirements have been taken into account.
All members of the Remuneration Committee are independent of the company's significant shareholders and the majority of them are also independent of the company. In the election of the Remuneration Committee members, the relevant qualification requirements have been taken into account.
The Committees regularly evaluate their operations and working practices and carry out a related self-evaluation once a year. The Board of Directors has confirmed written charters for the Committees that lay down their key duties and operating principles.
The Committees have no independent decision-making power. Instead, the Board makes decisions based on the preparation by the Committees. The Chair of the Committee reports on the work of the Committee at the Board meeting following the Committee meeting. The minutes of Committee meetings are delivered to the Board members for information.
Kesko's Board of Directors has not established any other committees in addition to the Audit and Remuneration Committees. Nor has the General Meeting established any committees or commissions.
The organisational meeting of the Board of Directors, held after the Annual General meeting on 16 April 2012, elected the members of the Audit Committee and the Remuneration Committee.