Board of Directors
Composition, term of office and selection process for the Board of Directors
According to the Articles of Association, Kesko's Board of Directors con-sists of a minimum of five (5) and a maximum of eight (8) members. The General Meeting decides on the number on Board Members, elects all Board members and makes resolution on their remuneration. Related to these items, the Shareholders' Nomination Committee prepares the proposals for the General Meeting. The Board elects the Chairman and the Deputy Chairman from among its members for the whole term of the Board.
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.
Main duties
Kesko's Board of Directors is responsible for the Company's corporate governance and for the proper organisation of its operations. The Board is responsible for the proper organisation of the Company's accounting and financial management controls. The Board of Directors has confirmed a written charter for the Board of Directors' duties, principles of operation, meeting practice and decision-making procedure. In accordance with the charter, the Board deals with and makes decisions on matters that are financially, operationally or fundamentally significant to the Group. Board members are to attend at least 80% of all Board meetings.
According to the charter, the Board of Directors’ main duties include:
Strategic and financial matters
- deciding on the Group strategy and confirming the divisions’ strategies
- confirming the Group's budget and forecast update, including a capital expenditure plan
- reviewing the Group’s most significant risks and uncertainties
- deciding on strategically or financially significant individual investments, acquisitions, divestments or arrangements, and commitments
- confirming Kesko's values
- approving Group policies, such as the treasury and investment policy and risk management policy
- establishing a dividend policy and being responsible for shareholder value performance
Organisation and personnel matters
- appointing and discharging the Company's President and CEO, approving his/her managing director's service contract and deciding on his/her remuneration and other financial benefits, and making corresponding decisions also for the Deputy to the President and CEO
- deciding on the appointments of the Group Management Board members responsible for lines of business, their remuneration and financial benefits
- deciding on the essential structure and organisation of the Group
- ensuring the proper operation and supervision of the management system
- deciding on management authorisation rules
- deciding on the principles of Kesko's commitment and incentive schemes, the terms and conditions and distribution of shares or options under the remuneration policy in force, and monitoring the results of the schemes
Reporting matters
- reviewing and adopting the Group’s financial statements, half year financial reports and interim reports and related stock exchange releases and the Report by the Board of Directors
- reviewing Kesko’s Annual Report
Other duties
- submitting Board proposals to the Annual General Meeting on matters such as dividend distribution, Auditor, and authorisations to issue and acquire shares
- approving the Board’s principles concerning diversity
- being responsible for the other statutory duties prescribed to the Board of Directors by the Limited Liability Companies Act or other, and for duties prescribed by the Finnish Corporate Governance Code.
Decision-making
The duty of Kesko's Board of Directors is to promote the interests of Kesko and all of its shareholders. In the Company, the Board members do not represent the parties that have proposed their election as Board members. A Board member is disqualified from participating in the handling of any matter between him/her (including entities over which he/she exercises control) and the Company. When a vote is taken, the Board's decision will be the opinion of the majority and if a vote results in a tie, the decision will be the opinion supported by the Chair. If the votes taken at an election of a person end in a tie, the result will be decided by drawing lots.
The Board's self-assessment on its operations
As part of the development of the Board's work and operations, the Board assesses its operations and working methods regularly, at least once a year. An external party is used for the assessment at least once during the Board's three-year term of office.
Board of Directors' operations in 2021
In 2021, the Board held 13 meetings. The Board also held a seminar day with the Company’s acting management. Board meetings regularly discuss the review by the President and CEO on key topical issues, as well as the reports by the Chairs of the Board's Audit Committee and Remuneration Committee on Committee meetings preceding the Board meetings. The Auditor presents their findings to the Board once a year in connection with the review of the financial statements.
As in 2020, in 2021 the Board paid particular attention to the Covid-19 pandemic and assessed its impact on the sales and profit of Kesko and K Group. Positive profit warnings were issued on 15 April 2021, 14 June 2021, and 14 October 2021 to cancel the previous profit guidances and issue new ones.
As in previous years, in 2021, the Board reviewed the financial reports and monitored the Group's financial situation, approved the most significant capital expenditure, monitored the progress of Group-level projects, and approved the interim reports, the half-year financial report and the financial statements before they were published.
In 2021, the Board confirmed an updated version of the Company’s strategy as well as new medium-term financial targets for the Company (Stock exchange release 27.5.2021). The Board monitored the financial performance of previously acquired companies and their integration into Kesko Group, and the implementation of divestments decided. Among other things, the Board reviewed Kesko’s 2020 Annual Report and the results of goodwill impairment testing; decided on the acquisition of plots for new logistics centres for the grocery trade and Onninen; decided to amend the managing director’s contract and retirement contract of the President and CEO (Stock exchange release 12.4.2021); discussed the appointment of Matti Virtanen as the new President of the car trade (Stock exchange release 9.4.2021); made decisions regarding the initiation of new share plans for remuneration, the performance bonus criteria for 2022, the use of donation funds approved by the General Meeting, updates to the Board’s Charter and diversity policy; and approved the Group’s updated governance policy, tax policy, and treasury policy.
The Board carried out a self-assessment, conducted via discussions between the Board’s Chair and each Board member based on a predetermined discussion agenda. Among other things, Board members assessed the performance of the Board and its Committees and their Chairs and the working and leadership culture, Group and division strategies and related company management, how efficiently the Board received information and reports, risk management and information on key risks, and finally the Group management and related contingency planning. The Board reviewed a summary of the results at its December meeting. In addition to the summary, each Board member received personal feedback.
