Kesko's Corporate Governance

Kesko Group's Corporate Governance structure
 

General Meeting - Shareholders Auditor Mikko Nieminen Board of Directors - Board Chair Esa Kiiskinen Audit Committee Remuneration Committee President and CEO Mikko Helander Internal Audit Corporate Management Board Grocery trade - Jorma Rauhala Home improvement and speciality goods trade - Terho Kalliokoski Car trade - Pekka Lahti

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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 Ltd. As of the 2016 financial year, the company will comply with the Corporate Governance Code for Finnish Listed Companies (Corporate Governance Code) entered into force on 1 January 2016. The code can be read in full at www.cgfinland.fi.

In the financial year 2015, the company complied with the Finnish Corporate Governance Code for Listed Companies entered into force on 1 October 2010 and will publish a Corporate Governance Statement and a Remuneration Statement compliant with it in spring 2016. The company will publish a Corporate Governance Statement and a Remuneration Statement compliant with the new Corporate Governance Code entered into force on 1 January 2016 in spring 2017.

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 5 – 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.