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 Chair and the Deputy Chair 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. As of the 2024 Annual General Meeting, the term of Board members elected is one (1) year, so that the term begins at the close of the General Meeting electing the member and expires at the close of the next Annual General Meeting.
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 as necessary
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 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 2022
In 2022, the Board held 11 meetings. 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.
In 2022, the Board focused in particular on general economic developments, the war in Ukraine and geopolitical tensions overall, and evaluated the impact of these factors on the sales and profit of Kesko and K Group. The Board evaluated their impact also on cyber security and on securing business continuity.
As in previous years, in 2022, 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 as well as the Report by the Board of Directors prior to their publication. A positive profit warning was issued on 25 April 2022 to announce the Board’s decision to cancel its previous profit guidance and issue a new one.
During the year, the Board confirmed Kesko’s sustainability strategy for 2022-2024. The Board made decisions, among other things, on the construction of a new logistics centre for Onninen and K-Auto, on the use of the donation funds approved by the Annual General Meeting, on the establishment of new share plans for compensation purposes and the principles for performance bonuses in 2023, and on updating the Board’s diversity policy. The Board also approved updated versions of the Group governance policy and risk management policy.
The operations and working practices of the Board were evaluated by an external party. The evaluation was conducted through personal interviews of the Board members and the President and CEO, as well as using an electronic survey. The evaluation focused, among other things, on the Board’s work and leadership culture, the operations of Board committees, Group and division strategies, risk management and crisis management, the Board’s general access to data and reporting, and preparations for the future. The Board reviewed the results of the evaluation in its meeting in December. Each Board member also received a personal report. A summary of the evaluation results was also made available to the Shareholders’ Nomination Committee.
