Kesko's Corporate Governance

Kesko Group's Corporate Governance structure
 

* Kesko's divisional structure has changed as from 1 January 2015 so that the building and home improvement trade and the home and speciality goods trade divisions have been combined into the home improvement and speciality goods trade division, and the non-food part of K-citymarket Oy, previously part of the home and speciality goods division, has been integrated into Kesko Food as the grocery trade division.

 

Kesko's compliance with regulations and the Corporate Governance Code

Kesko Corporation (Kesko or the company) is a Finnish limited liability company in which the duties and responsibilities of the executive bodies are determined in accordance the laws of Finland. Kesko Group is composed of the parent company, Kesko, and its subsidiaries. The company is domiciled in Helsinki.

The highest decision-making power in Kesko is exercised by the company's shareholders at the company's General Meeting. The company's shareholders elect the company's Board of Directors and auditor at the General Meeting. Kesko Group is managed by the Board of Directors and the Managing Director, who is the President and CEO. The President and CEO is appointed by the Board of Directors. The company uses a so-called one-tier governance model.

Kesko's decision-making and management are guided by Kesko's values and responsible operating practises. Decision-making and management are in compliance with the Finnish Limited Liability Companies Act, regulations concerning publicly quoted companies, Kesko's Articles of Association, the charters of Kesko's Board of Directors and its Committees and the rules and guidelines of Nasdaq Helsinki. The company complies with the Finnish Corporate Governance Code for listed companies (Corporate Governance Code) effective 1 October 2010. The code can be read in full at www.cgfinland.fi. As provided by the Comply or Explain principle of the Corporate Governance Code, the company departs from the Corporate Governance Code's recommendation concerning a Board member's term of office as described below.

Departure from a Corporate Governance Code recommendation

The term of office of the Kesko Board members departs from the one year term of the Corporate Governance Code's recommendation 10 – Term of the directors. The term of office of the company Board is determined in accordance with the company's Articles of Association. The General Meeting makes decisions on amendments to the Articles of Association. 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.

A shareholder, which together with related entities, represents over 10% of all votes carried by Kesko shares, has informed the company's Board of Directors that it considers the term of three (3) years to be good for the company's long-term development and has not seen any need to shorten the term of office set in the Articles of Association.